Forgot to mention - meantime checkout Xau/Usd and ‘Turnaround Tuesday’.
Hey guys.
Well, I guess it’s only fair, that I should look at what I was asking last week.
For a refresher, all this was stemming from the MAJOR selling of the JPY.
Ok. So. The very next week produced what for the Yen?
It turns out to be a completely different story. Nothing of the likes happened from this previous week.
How much different?
- The JPY was bought more than any other currency.
- Of all of last year, the most bought currency was the GBP at +19.04%. That’s for one week. The week ending Oct. 11th. Comparison purposes.
Well, if you ask me. All of what I read about the JPY losing credibility of their currency. Their flawed fundamentals. And losing their risk-off edge.
Is nonsense.
Let’s face it. It was an anomaly for one day (possibly 2 days in a row).
Cause the market violently, and revengefully went back to buying up the JPY like never before.
Well, as for me, I will remember this. It’s a good lesson. I shouldn’t get caught up in the moment. I’ll just have to give it a week before thinking major change like that. That’s all. Oh, and try to ignore those articles that go off the deep end.
I digress on the Yen.
But…how about that Gold on Friday, huh?
Well, here’s a shot of the SPX, Oil, Gold. All from the years start. Daily t.f.
I mean, what explains Gold losing -3.6%, wiping out a couple weeks worth of gains? Profit taking?
And the USD/JPY daily chart from the year start.
In any case, there are divergences taking place, for sure.
Mike
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Many players long on equities - now getting margin calls and you cannot pay a margin call with gold?
There is another thing - have noticed it back a couple of weeks ago - the Euro.
On the COT the commercials went long which in itself was no major surprise - what was surprising was the rate of change, when i saw it I figured just some buying because it was cheap, but it seems they were ahead of the game:
https://www.ft.com/content/7e0cf91a-5976-11ea-a528-dd0f971febbc
For learners the vertical line is when I was looking - most sites focus on the bottom line but good to remember that large speculators respond to the commercials.
Edit: for clarity, bottom line are the specs, chart courtesy of myfxbook
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Sometimes my brain moves faster than my typing so should clarify re Gold.
Imagine that you have lots of money and you are a market player. Guys with money seldom are content - they always want more - and what better way to get more in recent times than buy equities.
Then imagine this - there are rumbles of a virus affecting stocks - but it’s a rumour - nonetheless you are a wise investor so rather than liquidate you hedge - buy some gold.
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People tend to over rate golds importance as a safe haven
They also assume that it does not follow the same laws as other markets.
They are wrong on both counts.
Whenever gold has a breakout from low volatility to very high volatility it has to stop at some point.
Lots assume that because its gold it can keep going straight up, but like every other asset class it can get over bought.
I said last week on another post that stretched so far above it 200 day it was likely a top.
At such extremes it’s easy for the swap dealers to start piling on the short side at the Comex, and with few wiling to buy at overbought levels the price collapses, sometimes spectacularly.
Also when you are getting margin calls you sell your profitable assets to cover it such as gold.
This is what happened during in Bear Stearns collapse and this is how I expect it to play out now.
When gold does go much much higher it will be during a highly negatively real rate of inflation scenario and not because of world panic
After all you cannot eat gold, if we truly do have a mad Max environment silver in small coins will be a safer option
No one will want to sell an ounce of gold for a loaf of bread.
Monday spikes during Asia session are rarely sustainable, coupled with the parabolic nature of the spike it’s a tell tale sign of dumb money buying and smart money shorting.
We will have a better idea after the COT report Tuesday on all this though
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Aye, although likely next Friday’s report will reflect a lessening of longs by the comms.
On my little pic the small flat area just above the zero line - that was mid Jan - price had turned since beginning of Jan - so no surprises - what was surprising was the rate of buying in the face of decline - the more price fell the more they bought the bargain.
My wee vertical line was mid Feb - it was when i saw that I guessed not to panic on the Euro and quoted customers a good rate Eur/Gbp - suppose could have been wrong but that’s how the cookie crumbled 
Dow up 5+% , SPX 4.6%, Costco up 10%. Fed cut around the corner, ECB around the corner. BOJ will follow suit. Crazy times.
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One to watch tomorrow is the US10yr - question is will it straddle up there and then continue to back off - there has to be better returns somewhere - but where…
Yep that’s what happened - was important if thinking going long spx
Well, all the fear currencies resumed their normal pattern, USDJPY and USDCHF trending strongly down now. The surprise for me was the EURUSD, I did not expect it to rocket. Gold has climbed a bit but not as much as the Yen and Swissy.
Yes, bond yields are getting pushed way down and stock still look heavily pressured. My personal view is that stock will continue to get pressured as the number of virus cases outside China continues its path. Currently they are climbing a steady logarithmic path upwards, indicating clearly no containment at all. I expect markets to panic as cases climb over the weekend. My figures suggest by Sunday there will be 110000 infections worldwide. Currently (06/03/20) there are 20900 cases outside China so based on the roughly 20% daily climb of cases we should reach around 30000 cases (outside China) by Sunday. This means that there is absolutely no containment at all and it is steadily climbing at the same rate when it started in China.
So more shorting of the USDJPY, USDCHF and stocks into next week and beyond? Long on the EURUSD? Are these new trends?
Covid-19 data source: Operations Dashboard for ArcGIS
This is what the market will likely focus on over the weekend - is the climb rate in China topping or not.
From nytimes and other news agencies in the past 12 hours:
In a daily update on its website, China’s National Health Commission reported 126 new infections in Hubei on Friday, but for the first time all of them were in Wuhan, the city of 11 million where the virus is thought to have originated. In total, the country reported 143 new cases on Friday, a sign that Wuhan appears to be the only obvious hot spot of new infections in China.
Bottom line -does the market believe the numbers or will the fear factor prevail?
Jury out, if the numbers were not Chinese based there would be no question, but rules are being changed as we type.
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Maybe not today, but over the next days, weeks and months, the possibility has to exist that the index underlying the futures can indeed go lower.
Yes I think so. The world economies were on tender hooks before the outbreak. There was a trade war that slowed economies a little. The trade war pales in comparison to what the pandemic has brought about financially. Ask yourself if you are willing to travel anywhere overseas on holiday, then extrapolate this to the rest of the world and compute the impact just on the travel industry. Would you go out and buy a new home this year are would you wait? Would you buy an investment property? Would a company manufacturing components for motor vehicles invest in a new £/$ 500 000 robot or hiring new staff ro would they wait? The list goes on and on. I think this is the beginning of very big problems.
The bond rates point to the belief that the market has that the US Fed has to cut rates more this year to stimulate the economy, due to pandemic inflicted economic crises.
The total infections outside China as of yesterday was around 29100. Extrapolating this by the current growth of infection rate at 20% per day means we can expect 72500 infections outside of China by this Friday (13/3/20) and by just under 200 000 by the end of the month. What will the markets be going up under these circumstances? Logic says no.
When the last financial crises came along, Governments all came together to work out a global plan. They worked together. Can you imagine the current bunch world leaders working together for the greater good? I doubt it.
Under these circumstances of fear my thinking is that over the long term, the fear currencies, Yen and CHF are good bets, as well as shorting market indexes and stocks, even the Euro seems like a good currency. The bond rates should be pointing the way, remember the trend is your friend.
Good luck and stay safe.
Isn’t this on the central banks and not so much presidents, PMs, etc? Maybe we’re in better shape at least with some coordinated response.
I requires all the leaders at the very top to work together and disseminate a plan and push that down the chain of command in a coordinated way. A quick duckduckgo search revealed these 3 articles which show how the world leaders united around the crises in 2008:
I know not all will like the guardian as a source, they were just the top results that came up. However, it does show that the world leaders as well as relevant central banking authorities worked together. Central banks have limited remits, there are things the central banks cannot do that world leaders and the support political infrastructure can do, such as cutting or raising taxes, cutting tariffs, releasing government spending to stimulate economies or tackle health issues and so forth. Central banks can’t spend money on fighting health issues.
Compared to 2008 we aren’t seeing anything of the sort.
I fear yes. I’m not super knowledgeable about the workings of the interbank lending system, but all the talking heads on TV seem super worried, and say only a Fed and Administration announcement, very soon, can calm the markets.
And if you really want some doom and gloom
Enjoy! The rest of the week should be very interesting.
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So it is. It’s almost a wonder some can really do business. Automotives trade flat. Volkswagen finds support at 127.500, while Ferrari faces resistance at 135.000. Check them out!
XAUUSD is still gaining value by market fears although many traders realized their profits over the last two days whereas today stock market rebounds dropping XAUUSD prices lower.
USDJPY, finally out of the trough. Yet, how long will it last?
NZDUSD still attracting bears.
Please always use proper risk consultation.
This doesn’t really make sense:
Volkwagen makes cars that people need to buy to move around. Of course they can do business. The value of the car makers falling has nothing to do with their ability to do business in general.
Another quote that is completely contradictory. There is a trend line straight up and you are saying gold is dragged lower? Although the topic is roughly on what is being discussed it seems clear you are just trying to redirect people to your site with advertising.
The bad news for AAATrade is that you are making them look bad. This is further compounded by the poor quality of the information from the links that you have provided lead to. The links are near useless and no-one needs to follow them.
Based on your posts and the very poor quality of the arguments, I would never go near your company with my money. On top of this, when I investigated your fee structure I can warn anyone reading this post that you have heavy fees on deposits and withdrawals compared to other brokers I use.
I would advise you to very carefully think about posting further advertising links on my posts as I may pick apart the posts more deeply and find further issues with your company. I may even contact your company directly and explain how your attempts at advertising are doing them more damage than good.
I am happy though for genuine discussions from genuine traders and brokers who do know what they are talking about, and thank everyone else for their valued inputs.
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