Intraday Market Thoughts

A few Thoughts from Ashraf on Consumers' Lag & What's Coming

by Ashraf Laidi
May 31, 2012 19:08

I just finished chatting with a reporter friend of mine in NY (former FX trader in the 1980s) and we reached the conclusion that "Just because there is no dollar funding crisis does not mean the world isnt coming to an end"

This very point was shown in my charts yesterday, illustrating the plunging spread between EU & US 3-month LIBOR. We showed in the 2nd of yesterdays 4 charts that BRICs may no longer carry the world economy on its back as all 4 economies are cooling to the extent of cutting rates to all time lowsas in the case of Brazil last night. (More below)

Earlier today, the Chicago PMI hit its lowest level since October 2009 at 52.7 in May, from last months 56.2. The index has fallen by 10 points in 2 months, pushing its New Orders sub-index to the lowest since September 2009. Considering that the correlation between Chicago PMI and ISM surveys is above 0.88, and the ISM manufacturing is due tomorrow, the expected 53.8 reading may prove ambitious. We showed our paid subscribers of Intermarket Insights our prediction for the recurring cycles of 2007/8 into today HERE: (September EURUSD calling 1.29 in December based on macro & technicals) AND HERE:

But last week, the US Conference Board told us consumer confidence hit its highest in 4 years (yes, highest since 2007). So once again the CONSUMERS ARE ALWAYS THE LAST TO KNOW . Yet, govts are ailing and corporations are stashing cash. Gold is no longer a safehaven. Central banks are running of imagination and so are govts.

But one thing you can depend on is the recurrence of these 2007-08 cycles, which we consistently covered in our intermarket charts over the past 4 months.

Yesterdays $1.4650 target in GBPUSD was reached, and so was 1.0360 in USDCAD. GBPUSD call was based on the initial chart posted 2 weeks ago. Both EURUSD shorts are in progress, and only 1 of 2 AUDUSD shorts is in filled and in progress. Gold stopped out at 1570 & were sitting back for now. For direct access to our remaining trades, click here ; Non Subscribers can join here:



Latest IMTs