Fundamentals (funnymentals) & Sentiment

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TopFroxx said:
i'm no arachnophobe and also have lived and traveled through australia for roughly a year already. i'll be fine :) (except a huntsman jumps down in my face while driving, then i might become one of the famous victims in spider caused car accidents)
if australia slumps in 2 years my second choice would be canada btw. havent been there yet, but planning a 3-4 week trip for next year to get to know the country and its people

Canada eh? Pretty sweet choice. Recommend staying away from Edmonton. Not cause I wouldn't like to hang out with you, but because it's a boring hell-hole.
 
the golden gun said:
Canada eh? Pretty sweet choice. Recommend staying away from Edmonton. Not cause I wouldn't like to hang out with you, but because it's a boring hell-hole.

any recommendations then?
 
the golden gun said:
So that info you posted is extremely relevant to anyone trading EUR or AUD, and especially EUR/AUD. Albeit from a longer-term perspective.

Exactly, but only in a back-of-the-mind sort of way. Fundamentals are an interesting distraction but are hazardous to actual trading. How does it go, you can't serve two masters...?
 
TopFroxx said:
any recommendations then?

West Coast. Pretty much all of British Columbia is beautiful, and there's even some nice places in western Alberta. I haven't travelled nearly enough of my own country, but I hear Montreal is a really fun city, especially at night. And if you're a hockey fan, you'd pretty much be in heaven, lol

Sorry, I'm a terrible person to ask, I just think Edmonton is really boring. Just fair warning :p
 
Canada: where you can't escape America and you become weirdly passive-aggressive about your Health Care system. :eek:

Have a few Canadian friends, but the weather seems to remove a good part of the aggressive tendencies of human nature up there. Plus, poutine.
 
TopFroxx said:
any recommendations then?
The east coast is beautiful and the the people may be a little unsophisticated however they are probably the friendliest on the planet. If were in need they would welcome you in to their homes no question asked! :thumbsup:

ps: I live in Ontario which is beautiful but most people are not as nice ;-( Still a good place to visit though :)
 
Surface spray sells very well in this country, you can have half a shelf of noodles on one end & the other half is full of insecticides!
Australia is unreal though, i have been through a lot of its country side, friken great!
The only thing that might kill you though is the cliff you might fall off, from the Roo that kicked you off it...
 
A pretty good summary for the start of the week.

FX Sentiment:

EUR = Negative sentiment. Bad fundamentals, weak outlook, ECB hit lower bound with rate cuts.
GBP = Negative sentiment. Plenty of fear pre-Scottish referendum, will prevent GBP gains even if upcoming data beats expectations.
JPY = Negative sentiment. Weak data, speculation about further BoJ easing measures growing.
AUD = Positive sentiment. Currency to remain bid amid strong carry demand, even as vols are picking up.
CAD = Neutral sentiment. Solid econ data. Canada benefiting from US econ strength. Neutral BoC.
CHF = Negative sentiment. SNB to defend 1.20 floor, breach of that level highly unlikely.
NZD = Neutral sentiment. No surprises from RBNZ expected. To keep main rate unchanged at 3.50 %. May express less worries about NZD levels given recent decline.
USD = Positive sentiment.

Source: http://milancutkovic.com/2014/09/08/european-open-briefing-08092014/
 
AusDoc said:
GBP = Negative sentiment. Plenty of fear pre-Scottish referendum, will prevent GBP gains even if upcoming data beats expectations.

that may create the liquidity for price to rise enough for a good shorting opportunity
 
This article titled Scotland’s currency options provides some interesting discussion about currencies in general and concludes that Scotland would be better off creating their own.

http://reszatonline.wordpress.com/2014/09/16/scotlands-currency-options/

No, they don't suggest using single malts, like someone I know suggested. :))
 
Is China turning into a Japan? This article makes some interesting observations. It is one for all those true believers in doom and gloom who can't wait for the next global financial meltdown. This could do it.

http://www.bloombergview.com/articles/2014-09-15/bad-loans-could-bust-china

No surprise that the twin evils of banking and debt are central to the scenario. >:D >:D
 
For "bad value relative to real value", I don't think anything will ever beat the Japanese Real Estate bubble of '90. But China does have a pretty solid real estate bubble setup, and it's going to be nasty when it goes.

Though China is like Japan in 1 other way: it's "aging" at one of the fastest rates in the world, and it's about to get really nasty.
 
sqa said:
For "bad value relative to real value", I don't think anything will ever beat the Japanese Real Estate bubble of '90. But China does have a pretty solid real estate bubble setup, and it's going to be nasty when it goes.

Aww c'mon sqa, I know you're really into real estate bubbles, you see them everywhere. ;)

sqa said:
Though China is like Japan in 1 other way: it's "aging" at one of the fastest rates in the world

Actually I didn't realise that. I still have an impression of masses of young people fixed in my mind. I guess that's the thing about demographic bubbles, everyone ages, it just takes some time. I wonder if those alleged 'empty brand new cities' that some nutters like to point to are really old folks homes!
 
Maybe another $15 Billion slap on the collective wrists of some big banks. If you're tempted to say "no tears here" just consider who will really pay the fines. :'(

http://www.bloomberg.com/news/2014-09-15/biggest-banks-said-to-overhaul-fx-trading-after-scandals.html

Maybe it would be a good thing to clear out the corruption in how OTC FX works, but how could we possibly be sure, we've never experienced such conditions. One downside will probably be the end to "leaks" from bank traders, so no more juicy details on placement of options or when certain 'elephants' are taking positions. OMG... we'll just have to trade what we see!
 
I'd have to go look it up again, but one of the reports had the college age population in China dropping from 100 million in 2010 to 50 million in 2020. It's not that China is getting older, quickly, it's that it's hollowed out its youth population.

And it's not that I see real estate bubbles everywhere, it's that real estate has been artificially inflated in much of the world. ;D But when the bubbles go, it's really, really nasty. :'(
 
sqa said:
I'd have to go look it up again, but one of the reports had the college age population in China dropping from 100 million in 2010 to 50 million in 2020. It's not that China is getting older, quickly, it's that it's hollowed out its youth population.

That's a massive change in 10 years! If it is remotely accurate there will be significant jolts to consumption patterns and seemingly no end to the ramifications. Still, a 50% drop in a decade seems difficult to believe. When China instituted 'policies and procedures' to deliberately curb population growth they were never that successful.
 
Here's a good article ostensibly about the Scottish shenanigans.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11103051/Scotland-may-find-it-has-no-EU-no-currency-and-not-much-oil.html

It makes some interesting observations that have far wider implications for global fundamentals and sentiment.
 
For those who are interested, the Financial Stability Review September 2014 produced by the RBA was released today. It naturally has a focus on Australia but it makes some comments about other parts of the world that you might like to see. The virtue here is the absence of any commercial bias, such as one encounters from regular bank reports, etc.

The full report makes for interesting reading but if you're not really into macroeconomics you may find it a little soporific, so bedtime reading then. :)

It can be downloaded from here: http://www.rba.gov.au/publications/fsr/index.html

Oh, the good news for the non-readers out there is that Australia is still in great shape.

For anyone to make money, money has to move. So the present trashing of the Aussie is about people moving and making. As always, we'll bounce back. Be sure you make some more when that happens. ;D
 
It's official (again): Bankers are criminals

While this is not normally thought of as "fundamentals" it really doesn't get more "funnymental" than this. Here are some excerpts from a newsletter by the insightful Larry Levin referring to the most recent fines imposed on some banks for their illegal FX trading practices.

13 November 2014

This morning regulators in the U.S., Britain and Switzerland ordered five banks to pay about $3.3 billion in the first wave of penalties since authorities began a global probe into the rigging of key foreign-exchange benchmarks last year.

While these sound like big scary numbers, we have to remember who is getting whacked. How could any entity survive these fines? Well, the banks have set aside about $5.3 billion in recent weeks for legal matters, including the currency investigations. The fact is that the balance sheets of the big banks can absorb this kind of hit. Not bad to have a spare couple of billion dollars in the rain day fund.

From Bloomberg we get the details:

Switzerland’s UBS AG (UBSN) was ordered to pay the most at $800 million, according to statements from the U.S. Commodity Futures Trading Commission, Britain’s Financial Conduct Authority and the Swiss Financial Market Supervisory Authority. Citigroup Inc. (C) will pay $668 million, followed by JPMorgan Chase & Co. (JPM) at $662 million. Royal Bank of Scotland Group Plc was fined about $634 million and HSBC Holdings Plc (HSBA) $618 million. Barclays Plc (BARC), which had been in settlement talks, said it wasn’t ready for a deal.

Banks and individuals could still face further penalties and litigation following the 13-month probe into allegations dealers at the biggest banks colluded with counterparts at other firms to rig benchmarks used by fund managers to determine what they pay for foreign currency. The U.S. Justice Department and Britain’s Serious Fraud Office are also leading criminal probes into the $5.3 trillion-a-day currency market.

“The traders put their own interest ahead of their customers, they manipulated the market -- or attempted to manipulate the market -- and abused the trust of the public,” FCA Chief Executive Officer Martin Wheatley told reporters at a briefing in London today. The regulator will press firms to review their bonus plans and claw back payments already made.


With these harsh words and stiff penalties the European banks stocks must have taken a hit overnight? Nope.

UBS rose 0.4 percent to 16.82 francs in Zurich, while RBS was also up 0.5 percent at 379.60 pence. Only Barclays fell 1.5 percent to 231.15 pence as of 10:36 a.m. in London trading. By delaying, Barclays won’t now receive the 30 percent reduction in its penalty the FCA awarded the other banks settling today.

14 November 2014

Yesterday I described how the banking cartel were able to fleece (read: screw) all FX traders (read: Muppets) over a period of many years. As usual, the fine did not nearly fit the level of crime committed by the cartel, which may be enormous. According to the Bank for International Settlements, there is at least a DAILY turnover of $5.35 trillion, while the FX rigging scandal went on for years. The penalty? $4.3 billion across all banksters in total...with a blue-light discount of 30% if paid early!

Today, however, I would like to add some color as to what was said between so-called brokers.

JPM triggering client stop loss orders

During its investigation, the Authority identified instances within JPMorgan’s G10 spot FX trading business of attempts to trigger client stop loss orders. These attempts involved inappropriate disclosures to traders at other firms concerning details of the size, direction and level of client stop loss orders. The traders involved would trade in a manner aimed at manipulating the spot FX rate, such that the stop loss order was triggered. JPMorgan would potentially profit from this activity because if successful it would, for example, have sold the particular currency to its client pursuant to the stop loss order at a higher rate than it had bought that currency in the market.

This behavior was reflected in language used by G10 spot FX traders at JPMorgan in chat rooms. For example, a JPMorgan trader explained to other traders in a chat room that he had traded in the market in order “to get the 69 print” (i.e. to move the spot FX rate for that currency pair to the level (“69”) at which a stop loss would be triggered). On another occasion, the same trader disclosed the level of certain clients’ stop loss orders to other JPMorgan traders in a chat room and asked “shall we go get these stops?”


* * *

UBS tigerring stop loss orders

During its investigation, the Authority identified instances within UBS’s G10 spot FX trading business of attempts to trigger client stop loss orders. These attempts involved inappropriate disclosures to traders at other firms concerning details of the size, direction and level of client stop loss orders. The traders involved would trade in a manner aimed at manipulating the spot FX rate, such that the stop loss order was triggered. UBS would potentially profit from this activity because if successful it would, for example, have sold the particular currency to its client pursuant to the stop loss order at a higher rate than it had bought that currency in the market.

This behaviour was reflected in language used by G10 spot FX traders at UBS in chat rooms. For example, one UBS trader commented in a chat room “i had stops for years but they got sick of my butchering”. On a subsequent occasion, the same trader described himself as “just jamming a little stop here.”


UBS leaking confidential information

The attempts to manipulate the WMR and ECB fixes and trigger client stop loss orders described in this Notice involved inappropriate disclosures of client order flows at fixes and details of client stop loss orders.

HSBC cheats too (a lot it seems)

(From an investigation) At 3:36pm, Firm D asked Firm A in a chat room (which included HSBC), for an update on its net sell orders. Firm A disclosed that it had now increased to GBP170 million. Firm D noted that it did not have any fix orders at that time, but commented that he expected Firm A to “bash the fck out of it”.

At 3:38pm, HSBC commented simultaneously into chat rooms in which Firms A, C and D participated that it had net client sell orders at the fix for GBP in a “good amount”.

At 3:42pm, in a one-to-one chat Firm A warned HSBC that another firm which was not a participant in the chat room (Firm E) was “building” in the opposite direction to them and would be buying at the fix.

Have you ever felt like brokers were “gunning” your stops and knew damn well where they were? Hmm, maybe you were correct?


HSBC likes to “gun” client stops:

For example, an HSBC trader in a chat room referred to “going to go for broke at this stop… it is either going to end in massive glory or tears”. On another occasion, the same trader refers in a chat room to the fact he is “just about to slam some stops”. When asked by a colleague whether a particular client’s stop loss orders were “a pain for you guys”, another HSBC trader replied “nah love them … free money” and “we love the orders … always make money on them”.

And there is oh-so-much more but just not enough room to print...

So if you happen to wonder why I call it all “Fraud Street” or “rigged” or anything similar, now you have a better understanding. There are better overall reports of this FX scandal out there, but I hope this starts you on the right path for the truth: It's rigged!

"The banks have been allowed to investigate themselves," one source familiar with the investigation told Reuters. "The investigated decide what they want to investigate, what they admit to, and how much they will pay."
 
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