US Fundamental

FE, of the two books the Briese one is the better - he’s kinda regarded as the father of COT, certainly a pioneer of it’s study and instrumental in helping thwart the efforts of bankers in trying to have the report side-lined some years back.

No need for apologies, I am never offended in this game, we all learn from each other, thks to BD for his insight. :slight_smile:

Hi everyone,

if someone is not bullish yet on the USD here is some further confirmation about the future economic growth and positive outlook:

Charles I Plosser: The economic outlook

Kinda excited for the upcoming FOMC statement, although there’s a good chance that it will be a “buy the rumor, sell the news” event in the short term. Regardless, USD is still in a much stronger fundamental position against most other currencies.

Hi PipDiddy,

that is also how I see it. If you check what I wrote at Pipcrawler’s blog, I am already long with USD. It is a big event with volatility too but I think the chances are quite good for a positive surprise so being already in gives me an edge to avoid possible gaps at the moment of the news. If it is negative news, then I do see a good chance for retracement already in the short-term. USD is just too strong now.

Did you miss yesterday Yellen’s speech? No problem, here it is:

Are they changing their mind about the interest rate? It was going to happen during Q1 of 2015 and not they think about Q3-Q4?

US inflation peaked in May around 2.1% but last August numbers show 1.7% (US Inflation Rate | US Inflation) so it lays quite in the optimum range. Why would they rush about interest rates? US economy is doing well at the moment. They risk messing with exports and increasing the current account deficit if they make the USD even stronger.


if you look at what Yellen has says, you can never understand clearly what she says because in one sentence she is bullish in the next she is already bearish. Still, it looks like they postpone the ratehikes a bit, but it should still come in 2015.


Mr. Dudley had a speech on the US economy. In case you are interested, here is the speech:

William C Dudley: US monetary policy and its global implications

Here are some updates on US Fundamentals:

Charles I Plosser: A longer-term view of the US economy and monetary policy

The long term view of the US economy is good, not one but three(maybe even four) surveys/reports on forward outlook were released last week. All of them good. The labor market is leading the way with steady gains over the past year with expectations and hiring intentions very positive going into next year. This, along with FOMC outlook and interest rate/inflation speculation, has the US market in an uptrend and the USD gaining strength. This will have the usd moving higher versus the yen and the eur, which are both expected to receive additional stimulus in the New Year. The BOJ is the most likely to provide an economic boost, in my opinion, because Mario Draghi and the ECB have been talking stim for a long time but have yet to really do anything about it.

The latest read on GDP is quite bullish, 5.1% is pretty dam strong and reflective of the underlying momentum the economy has been building. I am a long term bull for sure, there may be weakness, correction and even a bear market or two but my targets are hundreds of points higher with 5 to 10 years to get there

How about that rally yesterday? The SPX is bouncing from the long term trend, strongly I might add, with a large white candle and economic tailwind. Today’s data, the NFP, is likely to not be as strong as last month’s 314K but should still be in line with trends and at least over 200K and maybe even as high as 300K. There was a little slumping in labor over the December period, but seasonal layoffs, all other indications of labor remained in line, with positive outlook for 2015, so the NFP should be OK. Unemployment levels should hold steady and maybe decline, jobs creation in November was very robust and likely carried over into December.

i’m learning fundamental analysis . this is value analysis. we can get great profit wit market.

rear looking data for December and the 4th quarter has been weak, but with underlying strength in jobs and the consumer. It is time no to look forward to this weeks data which is the first major reads on January, preliminary reads are already strong and show that economic trends which stalled in December are picking back up in January. ADP, NFP and unemployment are my top data points for the coming week.

Mrs. Yellen said something, so this means there is something to read:

Janet L Yellen: Economic inequality and mobility

I see this thread quite abandoned, and it is a bit disappointing considering what I’m about to talk about. Let me contribute with my 2 cents.

I’m quite a rookie with fundamentals but this is how I see it (a bit of a mix of technicals and fundamentals). USA inflation is at 0% (United States Inflation Rate | 1914-2015 | Data | Chart | Calendar) which is far from 2%, value considered by many economies as the ideal to contribute to an stable growth. Therefore any increase in the Interest Rate should be postpone. I’m not saying the Fed will go for a QE move but at least any hike in interest rate should be discarded. For that reason it makes little sense that the USD will get stronger due to a interest rate hike.

Last NF Payroll report was a bit disappointing, however it is to early to consider that as a sign, without waiting for at least another one. But if that is the case it would mean that the US could have reached a peak in employment.

Hedge funds might be aware of this and could start unwinding their USD positions. For example, last COT report shows that the number of shorts in EURUSD has decreased in regards the the previous week and if you have a look at the COT chart for that pair it seems to be forming a bottom.

At the same time values like Gold and Oil, that have negative correlation with the USD, seem to be changing trend, call it accumulation area, call it frying pan pattern, but there is a potential and noticeable at first glance change of direction.

Tying all the ends together it looks to me that USD is going to get weaker gradually. From the technical point of view, one key value to give more strength to all this theory is to break above 1.1050-1.11 level, as that would make a higher high after the higher low made on the 13th of this month (provided that the pair doesn’t turn down below that level).

It is not that I want USD to get weaker. I’m a trend follower and not a counter trend trader, but that is what all these points are telling me. Of course I might be wrong, like any other.

Hi alfonsomg,

I agree with everything you said, but as you said you follow trends, just like I do. So at the moment if USD is getting stronger then that is the trend :slight_smile:

One thing to add, the only one I think you might have forgotten. USD can also get stronger even if the US economy is not so strong. How can that happen? Well they are still doing better than many other economies so it is not a who is stronger game in my eyes, but more like a “who is not so weak” setup.

Good luck to you,

In the end no one has a crystal ball, there is no right or wrong beforehand. I’m just pointing signs. If the trend resumes we keep following, but I think it is a moment to pay extra attention :slight_smile:

Don’t get too complacent about the US economy or the dollar just because the winter was a little weak. It was the winter, its always a weak time of the year but you must remember that labor trends are improving, the NFP is only one month, subject to revision and massive margins for error. Unemployment remains low and falling, unemployment claims are near their long term lows, continuing claims just reached a 15 year low. Job openings remain high, layoffs are low (Ex-energy are well below last years levels… the energy loss is less than 0.05% of the entire US workforce), hours worked are edging up and so are wages. The outlook for the spring and summer is very positive despite the anticipated FOMC rate hike, which will just make the banks earn more on what they lend and want to lend more and stimulate more. Every forward looking survey or gauge of the economy is positive for the next 6 months.

And there’s earnings. Earnings are much better than expected and projected to rise into the end of the year and next year. Full year 2015 s&P earnings growth is projected at 2.5%, will probably go up by at least a full % by end of year. Full year 2016 s&p eps growth is projected at 10% and will likely go up. Looking at energy, the end of the year is supposed to remain steady with a projected 45% growth in earnings for next year.

I for one don’t see any reason to get bearish. There could be a correction but I will use it to build a bullish position and use it to sell options… just like I always do.

I agree (or I can’t disagree) with what you said as your words have sense.

However I don’t see any point in an interest rate hike as the US economy is not overheated. It would only make sense if they want to make the USD weaker in favor of, for instance, exports, but the US is an importer country rather than an exporter country, so I have to discard that too. My view is that as long as inflation stays where it is then any interest rate hike will be postponed. However the FOMC has other ways to produce a similar effect. If the Fed keeps interest rates as they are, inflation will rise in the long term as long as employment numbers get closer to full employment.

I agree with you that we could bee a correction, however if we have a look at the recent past corrections are long and take their time.

I’m not bullish or bearish. I just want to see if I can get an understanding of the signals I see in order to be able to decide my moves in the medium term.