freiheit

I agree for the most part. I don't think the euro will collapse seconds after the dollar, I believe this piece of paper will gain some value, because it's one of the top currencies for people that fly the dollar. Oil producing countries might want to be paid in euros in the future etc., this will help our flawed currency to survive a few more years or decades. The debt in European countries is also not that much out of control compared to the US, mainly because we don't have to finance a huge military industrial complex and an Empire!

Cristian

Hi everyone,

I watch the markets for myself and I'm astonished of what I see. Since the crash from september last year, the US government but not only, injected money in the economy in order to make enough inflation in order to rise the prices of all assets on the stock markets from around the world. Of course, inflation means a lower dollar in the short term and probably intermediate term as well. The bet that every central bank made is to regain the lost productivity through inflation. The rose GDP is a consequence of inflation at this moment, and means that economy got legs on, and the odds are to see even more increased GDP in the next quarters. The signal of a real lucrative economy will be when FED will raise the interest rates, in order to stop a possible over heat of the economy.In the week which almost passed, all the important central banks met to talk about economy and interest rates, and with exception of the australian central bank, none of the important national banks didn't touched the interest rates.
This means that everybody wants to see prices going higher like it did before. John Maynard Keynes said that the price is the sum of desires and expectations of the market participants. Thus the central banks are the judges of the markets, and if they say leave the interest rates unchanged, we should understand that the game is fair and it should continue like it did before. The signs of a full recovery will be when we will see the prices of the stock markets going up in positive correlation with the US dollar. That will mean, the bigger prices is not a consequence of inflation, is a consequence of productivity, prosperity and raising buying power of money.
Unemployment is a leading indicator, you can not speak about recovery when the unemployment is raising with double digits, so regardless of how great things worked until now , it's impossible to raise interest rates if you still want the stock market up. ALL the weekly charts in the currencies has a bearish engulfing, so long positions on the daily are irrelevant, and is possible to see a correction in all majors indices. Lots of economists says the the gold is the new dollar, these are non sens, it's a good sign that gold is going up in positive correlation with the US dollar, it's a hope that we can see in future positive correlations with the stock market and the US dollar.
In short, these are my thoughts about today's markets dynamics, and I hope it makes sense and helps everyone who reads it.


Cheers,
Cristian

freiheit

A rising GDP or inflation is not neccessarily a sign of rising productivity. Inflation is theft of buying power, how does that help the consumer or the economy? The rise in GDP (or halted fall) is mainly due to consumers and governments going even more into debt (cash for clunkers, bailouts, government motors, "free" health care, military adventourism), too much debt is what caused the crisis in the first place, so how can even more debt lead into prosperity? On the other hand I believe that GDP and inflation number are faked for political reasons anyways, so if we don't agree about that, we are not likely to agree on anything.

If I recall correctly, 4 out of 10 years in the great depression we had a strong rise in GDP (about 10%) followed by a sharp decline in the next year (about 20%), so watch out!

jaro g.

too much debt is what caused the crisis in the first place, so how can even more debt lead into prosperity?

lol, it is sooooo easy to understand and soooo true! hell, that's common sense, isn't it? btw, why is there no common sense in washington, berlin, london, FED, NATO, ...

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freiheit

Either they really worship at the altar of Keynes or they know full well what they're doing to us, but view us as peasants anyways, so they don't really care if we lose our future, they care about power and power alone. I think the really powerful ones (globalists) belong to the second group and the clueless local politicians (or puppets) belong to the first group.

By the way, this quote says it all:
"We have to spend money to keep from going bankrupt"
Joseph Biden VP , USA

larryfolson

Cheers to you, as a novice FX trader I'm going to take a sab at your discussion. "First of all it takes time to turn a big ship". So as far as the economy and I believe it is getting better and conditions are becoming ideal for investors to create jobs. But not 100% yet.

I don't believe that the high unemployment report was a big surprise to big money. After all they are the ones with the money to invest and create Jobs. Wise business people always contract operations in boom days and expand operations in depression days or you can say recession time.

I have experienced this. I work for a coffee roasting company and vending service that has bought out one of the largest vending companies in my city. They have expanded their business during this so called recession. Yet, they have not given raises over the last two years because we're in a recession of course. No, wise money is using this recession time, unemployment and the need for jobs, to control their money and expand their businesses at the expense of fear of their employees possibly being laid off. They can't complain about not getting a raise because after all there are no jobs out there so they can't quit. Oh how wonderful for employers. The high unemployment which means the need for jobs is great for investors in a capitalistic society. What this means is they can begin to hire at lower wages to maximize their profits. Why? When people begin to get jobs they won't complain about the pay because they will be grateful to finally have a paycheck.

As far as the stock market, and the dollar I believe this is normal as well. Before there is a reversal or change there is always some type of selling or buying climax before professional money will support the reversal.

We have been in a bear market for some time, what this means is professional money has been buying or you can say accumulating for the distribution phase which is a bull market.

Professional money cannot just go into the market and buy and sell as they feel like because market makers would see their large orders and began to mark the price up against them and professional money never allow the price to work up against themselves.

As far as the U.S. dollar is concern as long as interest rates are low and corporate taxes are high it will continue to weaken. When the fed begins to raise interest rates and the goverment give tax incentives for investors to create jobs I believe then we will see the dollar regain its strength.

But what do I know, I'm just a novice trader, in the end my philosophy when it comes to trading is this; it's gonna do what is going to do, so go with the flow and let your money grow.

Last Thought, just follow the big money and ride the waves of their coattails. After all, money answer all things!

Cristian

Hi Freiheit,

I didn't meant that inflation in other words is prosperity. I was trying to say that to the rout of prosperity, the easiest way and the faster way is by inflation. Why that? Because without inflation, the recovery will take much longer. In the great depression of 30', the institutions were left by the governments to bankrupt, and just in comparison how worse the standard of life reached then, and how things are now. It's obvious that we are away behind the recovery, but we will reach it faster than most economists expects, because in the statistics nobody says that we can print money how much we want, in order to stabilize the economies. Nobody wants prices to fall, and the prices wont fall as consequence, and in this environment it's much easier to recover than in last depressions. I think I made my point and helps you out.

Cheers,
Cristian

freiheit

Seems like your definition of recovery is totally different from mine. For me a recovery means that the initial cause of the downturn is resolved. In this case nothing got resolved. Americans are still building houses although they already have way too much. Interest rates are still artificial, if they were to be raised by just 2 percent a lot of institutions would immediatly go bancrupt, or need more bailouts, and the stock market might plunge. Americans still buy new cars on credit, although they are already in debt and have more cars than they can afford. The stock market is going up, and that helps a lot of funds and maybe those that lost money on the downturn, but don't hold your breath it can easily go down again. GDP numbers look better on the SURFACE, but the percentage of consumption didn't decrease as it should have. Trade deficits are still huge. To speak at this point from the recovery as if it was a done deal, and as if we could already look back on it like this crisis is a thing of the past (like the Great Depression) that's naive at best.
I'm bullish on Asia, I think they are the first to recover and they'll benefit from huge currency appreciations.
The Great Depression didn't last for so long because central banks and politicians did nothing, on the opposite, there were price controls, a huge increase of the money supply, gold confiscations and more unprecedented interventions in the market. Compare that to the recession in 1921 with nearly no government involvement, just a year later there was a real recovery.
How can anyone claim that the recession is over and that we are in a recovery, when the basic problems that led to the crisis were not solved one bit, they were compounded in my opinion. Fannie Mae and Freddie Mac are again giving government backed credits for houses with no down payments, ring a bell?

Nobody wants prices to fall? That's complete hogwash. As a saver and consumer, as somebody that acts responsibly with money, of course I want to see prices come down. House prices must come down a lot, so that they become affordable for poor people again at reasonable interest rates like 8 percent. I also don't want food prices or car prices to increase. This propaganda that falling prices are bad for the economy and therefore for the people is ridiculous. Companies that can only survive with massive inflation and rising prices are doing something wrong and should go bankcrupt.
Do you know that when food prices increase by only 20%, that the poor people in the world, who can barely survive, and eat for like 20 US cents a day, suffer incredibly?
Real economic growth, with advancements in technology and more capital investments should drive prices down and not up in the long term! Imagine how many people would use a cell phone, when the prices had been increasing for the last 20 years. Let me repeat, rising prices are NOT GOOD FOR POOR PEOPLE. Inspite of all the propaganda.

The media and the policitians and the central bankers that claim that the worst is over, are the same people that didn't see the crisis coming in the first place, and did still deny it when it was already there. Why should anyone trust them, and their solutions, this is beyond me!?

Cristian

I totally agree with you freiheit, I think that everything which you written makes sense and is based on fundamentals.If you look on the eur/usd daily chart, you can see some formations which they occur very rare, in fact I've never seen such formations before, and that signals me that the concept of free market was diminished or suspended. My theory is an optimistic one, and I believe in a possible recovery through inflation, and another meltdown will make very much harm through political classes from around the globe and of course,it will produce much harm for ordinary people.If you look on the gbp/usd daily chart, strange formations as well, I had a lot of doubts when the lows were settled in march this year, suddenly from a parallel channel the market skyrocket, and now it's in a range for 5 months. It's hilarious to think that the british pound could breakout on the upside after 5 months of range, when the main leg of the upright movement didn't last 2 months, but it may be, because of the trend, if the trend says that we are in a period with strange formations is very possible to see even more strange formations. However, I hope and I believe that these matters are regarding everybody on this planet, and the actions of main governments not only affects their country, but affects other countries like Romania, Bulgaria, Hungary, etc. It's almost impossible for me to believe that these people will let the world bankrupt, or anything which could bring financial disasters. I think that we are very privileged because we live in this century, at this moment, because if before the politicians could done everything their heart demands, now their actions are monitored by everyone, and they affect everybody, every nation, and I don't think that they can afford to expand their evil habit. I hope that in a matter of few years, the interest rates will raise, as a consequence of a good monetary policies management, otherwise it means we didn't learned anything from history, like Napoleon.

freiheit

I'm not following the currencies at the moment, so thanks for your input, this is very interesting. My gold stocks are up a lot in the last months, I think that is the place to be and Asian growth stocks.

You are making a very good point about our age, I mean, the age of the truth button, I just hope that there will be a huge world wide awakening. So that people finally begin to elect trustworthy, honest and intelligent polictians, and that they can not set us up for another world war. But I've to admit, I'm still quite pessimistic, as a lot of people are still asleep.