Key News • The Dollar: It’s an Overhang, not a Hangover One person’s perspective at the Council on Foreign Relations blog. • Bank of England Keeps Purchase Plan at $202 Billion, Leaves Rate Unchanged (Bloomberg) Key Reports Due (WSJ): 8:30 a.m. Initial Jobless Claims For July 4 Week: Expected: -4K. Previous: -16K. 10:00 a.m. May Wholesale Trade: Expected: -1%. Previous: -1.4%. 10:00 a.m. DJ-BTMU Business Barometer For June 26: Previous: +0.1%. N/A June Chain-Store Sales Quotable “Money is the barometer of a society's virtue.”
Ayn Rand FX Trading – Random Thoughts: Stimulus, Confidence, T-Notes, Dollar (yen) It’s
Thursday, the currencies are retracing again so we figured what better
time than now to throw together some random thoughts on the markets,
news and whatever else. Enjoy! Stimulus in the Headlines Bloomberg.com
is guiltiest here, as they seem to have a strict model used in
formulating their headlines and stories. Anyway, it’s starting to get
annoying when everything “positive” coming out of China is credited to
the government’s “stimulus”. Sure, some items have been directly or
indirectly influenced by the stimulus, but to the extreme degree with
which it is painted by reporters? Car sales, corporate
earnings, share prices, commodity demand, manufacturing gains ... all
“undoubtedly” boosted by stimulus. But what about loan growth? The
number of loans issued in June jumped fivefold from the year before.
This 2009 lending surge is certainly a big reason for much economic
activity. Tie it back to stimulus if you’d like, but be sure to tie the
subsequent asset bubble back to stimulus too. In fairness, Bloomberg
did cover this too, but it is there emphasis on the consensus that irks
us a times. But maybe this is part and parcel to why the consensus
view consistently gathers such momentum. Australia: What’s in the water Down Under? Whatever
the Australians are drinking is either really refreshing ... or it’s
making them crazy. I say this because yesterday was a release of
consumer sentiment. After a nearly unprecedented jump in sentiment last
month, the most recent estimate climbed another 9.3%. The last two
months represent the largest two-month increase since this survey began
back in 1975; this 23.2% two-month rise far outpaced the next biggest
18.8% two-month rise back in 1992. With many economic gauges
still flashing mixed signals. It’s believed that an improvement in
national accounts is helping the cause. Additionally, two pieces of
stimulus have been passed through Australia and now, in the wake of the
second stimulus, it seems the handouts are having the desired effect.
I’m just surprised I didn’t see a headline crediting the surge in
confidence to China’s stimulus! A 10-Year Auction for the Ages Late
in the trading day yesterday a 10-year Treasury Note auction went off
extremely well. It was noted as one of the most successful auctions in
several years. The bid-to-cover, if you’re interested was above three.
In other words, there was more than three times as much demand than the
amount eventually sold to bidders. What’s it mean? Well, the
kneejerk reaction was positive for the stock market. But stocks faded
as the results set in. What this auction, plus the fact that 10-year
yields are sharply off their June highs, means for the markets could be
a precursor to renewed risk aversion. The June unemployment numbers
aren’t sitting well. Perhaps that’s given many reason enough to
reexamine several other factors and conclude that recovery may be much
further away than the recent spurt of optimism led us to believe. US Dollar: A whole lot of nothing going on. The
range-bound, choppiness, backing-and-filling, sideways stuff continues.
Some of the currencies, as paired against the dollar, have broken
somewhat key technical levels. But so far it’s been fairly near-term
stuff. And a look at the US dollar index still reveals the big
snooze-fest (of course the Japanese yen is the exception; maybe some
Asian money hiding there on China risk?):
The
longer the sideways price action the more powerful the breakout move is
usually the rule from a technical perspective…stay tuned. Regards, John Ross Crooks, III Black Swan Capital LLC www.blackswantrading.com
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