Posts Tagged ‘Rally’
Exclusive: Jim Rogers is Long the Euro
Wednesday, March 10th, 2010
This article is a guest contribution by Damien Hoffman, WallStreetCheatSheet.com.
Jim Rogers is one of the best global investors of all-time. Last time we chatted a couple months ago he was sleeping soundly with his investments in commodities. Before Bloomberg interviewed Jim this morning, I caught up with him last week to get some high level perspective on the current issues unfolding in the European Union …
Damien Hoffman: Jim, Do you think the EU will survive economically and/or politically through this entire debacle?
Jim: Well I’m long the Euro because I expect them to come through this one okay. Either Greece is going to be papered over and they’ll give a blast to the Euro, or they’re going to let Greece go bankrupt. In my view, this is what they should do because then people would say, “Wow. They’re serious about sound economies in Europe.” That would make the Euro very strong. Then people would know they are not just going to print money or paper over failure.
Either way, I think there’s probably a rally coming. There’s a huge short position in the Euro and whenever there’s been a huge short position in anything, it’s sometimes profitable to go to the other side. So, I am long the Euro because I think there are too many pessimists.
Maybe Greece will go bankrupt and the Euro will collapse before people realize, “That’s good … that’s not bad.” Sometimes it takes a lot for perception to become reality or reality become perception.
Damien: What other countries are you monitoring to make sure the situation isn’t going to spread or get out of control?
Jim: I’m trying to watch the whole world. We cannot be very successful investors if we don’t know what’s going on everywhere. All of a sudden you’ll something like Iceland will show up and you’ll get killed because you didn’t know that Iceland even existed. Usually these things come out of the blue from some place we’re not thinking of.
Damien: Do you think Greece will be the first to tumble?
Jim: I would suspect that the U.K. is more likely to suffer before Greece, but who knows. Maybe it’s time for all of them to collapse and come down together.
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Damien: Speaking of collapsing together, do you think the creditor-consumer model — as used by the Chinese with the US and the Germans with the Greeks — has been proven unstable and countries should be moving more passionately towards developing organic manufacturing and consumption economies at home?
Jim: The idea of economies built on consumerism has been discredited many times. The last ten or twenty years people have been shouting, “Oh gosh! Thank goodness for the American consumer.” However, no economy has ever been built on consumption for the long term.
The only way you build an economy is through savings and investments. Look at Dubai. The basic economic model in Dubai was to build an economy based on real estate speculation. That cannot work. You’ve got to have savings, investing, and productive capacity.
It’s all wonderful if we can go to the disco every Saturday night or go drinking by paying our bills with transfer payments. But that doesn’t do anything for long term productivity or competitiveness. Also, guys who build tanks have fun building the tank, but that tank then goes out in the sun or rain to rust. It doesn’t do anything for future productivity. The only way to build an economy long term is to save and invest while building infrastructure and productivity. Nothing else has ever worked.
Damien: Which countries are doing things correctly?
Jim: There are some doing better than others. The largest creditor nations in the world now are China, Korea, Japan, Taiwan, Hong Kong, and Singapore. That’s where the assets are. There are hundreds of billions of dollars in these countries because they’ve been doing something right.
You know who the largest debtor nations in the world are? I assure you they’re not in Asia. They’re in the West.
The future has always belonged to the people who’ve got the assets — the people who’ve built up savings and investing. Throughout history, we have never heard people say, “Gosh. Look over there at all those debtors. Why don’t we go over there and join those debtors?”
Instead, throughout history people have said, “Look over there where all the assets are.” People have always said they want to go where the assets are, not where the debts are. That’s what happened in America etc., and that’s what’s going to happen in the future as well.
Damien: Jim, thank you very much for updating us on your view.
Jim: You’re welcome.
Tags: Bloomberg, Commodities, Current Issues, Debacle, Euro, Europe, European Union, Failure, Global Investors, Greece, Hoffman, Investments, Jim Rogers, Last Time, Level Perspective, Out Of The Blue, Perception, Pessimists, Rally, Short Position
Posted in Bonds, Markets | No Comments »
China Cuts Its Holdings in Treasuries?
Tuesday, February 16th, 2010
It appears that China is doing its best to keep the dollar from strengthening, employing a strategy of “covert easing.” Is this Act One of the US-China divorce Harvard’s Niall Ferguson predicted last year, or is this an intervention on China’s part to moderate the short covering rally in the dollar, as a way to hedge its exports recovery? Only time will tell; either way, it looks as though China is selling U.S. treasuries.
AP/MSNBC reports China cuts holdings of U.S. Treasuries:
The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.
The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits.
The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.
On the surface, this is a story that is likely to get politicized, used in Washington, as bait for continuance of QE. Scratching below, there is far more to this than meets the eye, in what amounts to a very sophisticated monetary shell game of keeping the dollar moderately cheap that is being played out between the U.S and China. Keep your eyes on the ball. The agenda belongs to China, the recovery in its export sector, and currency balance in the yuan/dollar pair.
Is China tightening? Not Really.
Source: MSNBC, February 16, 2010.
Tags: Act One, April, China, Continuance, Control, Currency, Divorce, Dollar, Emerging Markets, Export Sector, Federal Deficits, Federal Treasury, Harvard, Interest Payments, Intervention, Msnbc, Msnbc Reports, Niall Ferguson, Qe, Rally, Shell Game, Short Covering, Treasuries, Treasury Department, Treasury Securities, U S Treasury, Yuan
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Art Cashin: February 8 Insights
Tuesday, February 9th, 2010
The choice selections from today’s Art Cashin comments, via UBS Financial Services:
Greek Rescue Rumor And Chippier Consumer Brings Stocks Back From Brink – For much of Friday’s session, fears about the European Union (particularly Greece) sent folks seeking the safety of the dollar. That, in turn, put pressure on oil; gold and stocks as carry trades were liquidated. The carnage began in earnest as the European markets closed. The dollar began to move steadily higher causing the above-noted damage.
The dollar driven selling was not as vicious as the selling on Thursday, but around 12:45 things started to turn rather ugly. They got even uglier as they headed to the day’s lows at 2:00. Rumors circulated that a trading firm in the crude pits was being forced to liquidate contracts.
But, shortly after 2:00, bids began to pop up in stocks as the dollar eased back. With some investigation, traders learned that there were rumors, or at least speculation, that the ECB and others might be cobbling together a rescue package for Greece over the weekend.
Stocks began to cut their losses as did gold. Crude remained hobbled by those liquidation rumors but cut its losses nonetheless. At 3:00, stocks picked up another tailwind. Consumer Credit fell $1.7 billion not the $10 billion some economists had projected. The hope that the American consumer might be willing to consume again helped the late rally.
That late rally was a bit of a mixed blessing. Had they closed on the lows, the probable course of the market might be a touch clearer. A close at the lows would have suggested an “oversold reflex rally” for Monday extending half-way into Tuesday’s session. The rally would then fail followed by a sharp and severe selloff. The late rally took that specificity off the table. We’ll have to review the napkins for clues to the amended course.
Greece And the Gordian Knot – As noted above, the late rally was sparked by speculation that there would be a rescue package announced over the weekend. When no announcement came forward, there was no follow-through on the rally.
The latest speculation is about the inverted yield curve for Greek bonds. That doesn’t allow any wiggle room or time to ease into austerity. Therefore “instant austerity” runs the risk of public backlash, strikes and maybe even unrest in the streets. To buy some time, some folks speculate, that the ECB or some entity could guarantee short term Greek debt – maybe up to one year. That might buy some time. It will be interesting to see if that’s the road that is taken.
Cocktail Napkin Charting – As noted above, the late Friday reversal rally was primarily the result of rumors of a Greek rescue package. There were also technical contributors to the bounce. The S&P made its intra-day low at 1044. That’s its 200 day exponential moving average. Both Walter Murphy and Stock Market Cycles had listed 1043 as a probable target (darn good call).
Friday’s lows will be a critical testing area on any future pullbacks. If they are violated, things could turn very ugly although some see more support at 1030/1035.
For today, the napkins suggest early support in the S&P may be around 1048/1052 with the backup 1040/1043. Resistance looks like 1070/1074 and then 1080/1085. We need to be careful because the Friday bounce may have released enough of the oversold to allow the bears another shot.
Consensus – Watch the dollar and the headlines and rumors from Euroland. If the dollar rallies smartly, things could get very ugly. Stay very nimble.
Trivia Corner Answer - To heir today - The middle son brought the ailing horse an apple every other day. Today’s Question - Heads up! Each of the following 4 letter words can be made an 8 letter word by adding the same 4 letter word to each one. (Example - If we gave you step, ball, hold, work, path & fall….the answer would be “foot”). What word fits - A) Some; Pick; Bill; Book; Rail. B) Line; Style; Long; Boat; Like; Size. C) Ding; Boy; Man; Vampire. D) Kingdom; Way; Nations, State.
(h/t ZeroHedge.com)
Tags: Art Cashin, Brink, Carnage, Choice Selections, Consumer Credit, ECB, Economists, European Markets, Gold, Gordian Knot, Lows, Mixed Blessing, Napkins, oil, Pits, Rally, Reflex, Selloff, Specificity, Speculation, Ubs, Ubs Financial Services
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Fear, Gold and the Dollar
Sunday, February 7th, 2010
By Frank Holmes
CEO and Chief Investment Officer
The U.S. dollar is up this week against the euro out of fear of how debt problems in Greece and elsewhere in Europe will be resolved, and as a result gold has had a tough week.
The dollar’s rally appears to be a short-term safe haven move, rather than a response to improving economic conditions in the U.S.
In fact, Friday’s report of a net loss of 20,000 jobs in December (the expectation was for a net gain in employment) and that many thousands more would-be workers have given up looking for jobs is evidence that the economy remains somewhat weak.
This weakness makes it less likely that the Federal Reserve will play it safe by not raising interest rates, and more likely that Congress and the Obama administration will pump more financial stimulus money into the system.
Both keeping rates near zero and expanding the monetary base are negative for the dollar, and thus positive for gold. We’ve seen that after a period of money-supply tightening in December and January, it appears that money is loosening again.
The federal deficit is pegged at more than $1 trillion this year and more than $8 trillion through 2019—this will slowly weigh on the dollar. On top of that, the TARP money being repaid by banks is not being removed from the monetary base—we shouldn’t be surprised if that money is used as a stimulus booster shot ahead of the 2010 midterm elections.
Our gold-dollar oscillator (above) shows that the dollar is approaching being overbought over the past 60 trading days, while the gold is showing signs of being oversold.
The magnitude of the current spread between gold and the dollar typically means that both could be close to a price reversal—dollar heading back and gold back up toward the mean.
In the 1990s, a strong dollar was associated with a strong U.S. economy, but the current one-month dollar rally has been accompanied by a drop in the S&P 500. With most of the world’s economic growth coming in emerging markets, many U.S. companies are relying on overseas sales to drive revenue and profit growth. A stronger dollar hurts U.S. companies trying to thrive in the global marketplace.
This is clearly evident in the illustration below. Here you can see that the world has changed and a strong stock market is aided by a weaker dollar.
Tags: 1990s, Chief Investment Officer, Debt Problems, Economic Conditions, Economic Growth, Emerging Markets, Expectation, Federal Deficit, Federal Reserve, Frank Holmes, Gold, Gold Dollar, Magnitude, Midterm Elections, Monetary Base, Money Supply, Oscillator, Rally, Safe Haven, Stimulus, Strong Dollar, Trillion
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Which Way Now? Hard Assets or Government Bonds?
Sunday, January 31st, 2010
The debate in the market between inflationists (majority) and deflationists (minority) continues to complicate investors’ ability to make decisions about where to deploy funds.
During the course of the year, inflationists benefited from the tailwind provided by the declining value of the dollar. The rally in risk assets came thanks to Bernanke’s deflation-busting policy, and, ironically, therefore, as long as the news remained dire on GDP growth and unemployment, we could count on interest rates to remain around zero percent, and the dollar to continue lower as faithless investors ditched it.
For nine months, the dollar declined as the market put risk back “on.” At the very beginning of the rally, in March 2009, the market’s mood was very dark. The genesis of the rally was the short covering of bank stocks and financials, and the full scale launch of the dollar funded carry trade, mostly taking place in institutional and hedge fund trading rooms. Except for the wiliest, it most certainly was not driven by retail investors. The retail investor is usually late to the party once fear of missing opportunities sets in.
The rally in the dollar as of late November has confused the inflationist view as the tailwinds appear to have reversed. This has been, and remains a difficult time to make risk-based investment decisions.
by Pierre Daillie (AdvisorAnalyst.com), GlobeAdvisor.com, January 31, 2010.
http://www.globeadvisor.com/advisoranalyst/aa20100131.html
Tags: Bank stocks, Bernanke, GDP, GDP Growth, Genesis, Globeadvisor, Government Bonds, Hedge Fund, interest rates, Investment Decisions, Late November, Launch, Nine Months, Rally, Retail Investor, Retail Investors, Short Covering, Tailwind, Tailwinds, Zero Percent
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Japan’s Misfortune Good News for Canadian Market
Sunday, January 10th, 2010
Commodities and the Canadian dollar have continued to strengthen despite the rally in the U.S. dollar. That’s odd, because for nine months, the U.S. dollar was involved in an inverse relationship with commodities, the Canadian dollar, equities, and emerging markets.
That relationship ended in late November as the dollar began its now, six-week old recovery.
It was often reported, from March to November 2009, that commodities prices were rising as a by-product of the falling U.S. dollar. That, indeed was doubly so. Speculative interest in commodities was driving prices higher, while rising short interest in the U.S. dollar, and record deployments of institutional cash were sending the currency lower, against the yen, and euro…
Find out why its possible Canadian stocks, bonds, the loonie, the commodity complex could remain relatively stable, and possibly go higher, though modestly.
Pierre Daillie (AdvisorAnalyst.com), GlobeAdvisor.com, January 11, 2009
Tags: Canada, Canadian Bonds, Canadian Dollar, Canadian Stocks, Commodities, Commodities Prices, Commodity, Currency, Deployments, Emerging Markets, Globeadvisor, Inverse Relationship, Japan News, Late November, Market Commodities, Misfortune, Nine Months, Rally, Short Interest, Speculative Interest, Stocks Bonds, Yen
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Todd Harrison talks about currencies and gold
Thursday, December 31st, 2009
Last week Jordan Roy-Byrne, owner of Trendsman Investment Research and editor of The Daily Gold, interviewed Todd Harrison, founder and CEO of Minyanville, on currencies (and specifically the US dollar) and gold bullion. They discussed the chances of a US$ rally and also of gold strengthening to $4,000/oz. The interview comes courtesy of Wall St Cheat Sheet.
Source: Wall St Cheat Sheet, December 28, 2009.
Tags: Ceo, Cheat Sheet, Currencies, December 28, Dollar, Gold, Gold Bullion, Investment Research, Jordan, Minyanville, Oz, Rally, Roy Byrne, Todd Harrison
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Does the Dollar Rally Threaten the Loonie and Commodities?
Thursday, December 24th, 2009
Since late November the U.S. dollar has rallied strongly against the yen and euro, and also the loonie. What’s unusual is that the Canadian dollar has not weakened proportionally against the dollar in the same fashion as the euro or yen. And, commodities, have, in fact, hardened against the dollar during the last three weeks.
What’s in store for the loonie and commodities?
Read more: Does the Dollar Rally Threaten the Loonie and Commodities?, GlobeAdvisor.com, December 24, 2009
Tags: Advertisement, Canada, Canadian Dollar, Commodities, Euro, Fashion, Late November, Loonie, Rally, Yen
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Griffiths – almost halfway through dollar rally
Thursday, December 24th, 2009
“We are almost halfway through the dollar rally,” said Robin Griffiths from Cazenove Capital. His target for the US Dollar Index is 81 (currently 77.9). Griffiths also sees stock markets “topping” in March next year and suggests investors look at high yield sectors like oils, pharmas, telecoms and tobacco.
Source: CNBC, December 21, 2009.
Considering the short-term technical picture of the US Dollar Index, Adam Hewison (INO.com) also chipped in a few days ago with a short analysis of the outlook for the greenback, concluding that the rally may have more legs, but the primary trend was still down. Click here to access the presentation.
Tags: Advertisement, Cnbc, Few Days, Greenback, Investors, Legs, oil, Outlook, Rally, Robin Griffiths, Sectors, Stock Markets, Target, Telecoms, Tobacco Source, Us Dollar Index
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Technical Talk: Uptrend is Still Intact
Tuesday, December 22nd, 2009
The comments below come courtesy of John Murphy, technical analyst and author of a number of best-selling books on the topic.
A Friday stock bounce kept major stock indexes stuck in a two-month trading range. Prices also remain above their 50-day averages which keeps the intermediate uptrend intact. Prices, however, remain below long-term resistance barriers near 10,500 in the Dow, 1120 in the S&P 500, and 2200 in the Nasdaq Composite. Although not shown here, today’s unusually heavy trading is due to quarterly futures and options expiration as well as some index rebalancing. It has little forecasting value.
A modest pullback in the US dollar also provided some short-term relief to stocks and commodities. Gold and oil ETFS (GLD and USO) bounced off their 50- and 200-day moving averages respectively.
Stocks may also be benefiting from a favorable seasonal pattern. Not only is December a strong month seasonally, but a late-month bounce (known as the Santa Claus rally) may still lie ahead. That may not be enough to push stocks out of their trading range, but should be enough to prevent them from dropping much. Stock traders appear to be satisfied with protecting their 60% gains in 2009, and don’t appear in the mood for taking on new risks. That also argues for a trendless market through yearend.
Treasuries bonds and notes lost ground on fears that long-term rates are headed higher in the new year.
Source: StockCharts Blogs - ChartWatchers, December 18, 2009.
Tags: Best Selling Books, Bonds, Commodities, Dow, ETF, Fears, Futures And Options, Futures Options, GLD, Gold, Major Stock Indexes, Moving Averages, Nasdaq Composite, New Year, oil, Options Expiration, Pullback, Rally, Santa Claus, Seasonal Pattern, Stock Traders, Stocks And Commodities, Technical Analyst, Treasuries, Uptrend
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Ed Hyman & Francois Trahan – forecasts for 2010 (WealthTrack)
Sunday, December 20th, 2009
This week Consuelo Mack is joined on WealthTrack by two investment champions from independent research firm, ISI Group. Ed Hyman, Wall Street’s number one ranked economist for an unprecedented thirty years running, and top ranked portfolio strategist, Francois Trahan, share their 2010 forecasts.
ISI believes the economy is going to surprise on the upside next year. Hyman tells us why, where and how much. Trahan hit the bull’s-eye with his forecasts of a very strong and enduring rally this year. He has much more modest expectations for 2010 and shares his predictions and strategy to make money regardless.
Note: The transcript of this interview is not available yet, but will be posted here as soon as it arrives.
Source: Wealthtrack, December 18, 2009.
Tags: Advertisement, Economist, Economy, Ed Hyman, Francois Trahan, Independent Research Firm, Investment, Investment Firm, Investment Research, Isi Group, Mack, Money, Portfolio Strategist, Rally, Shares, Thirty Years, Wall Street, Wealthtrack
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Barry Ritholtz – still bullish on stocks, but not for the long term
Sunday, December 20th, 2009
“The market’s bias is still to the upside. We’re giving the rally the benefit of the doubt. Innocent until proven guilty,” said Barry Ritholtz, CEO of Fusion IQ in an interview on Yahoo Finance - Tech Ticker.
Ritholtz expects the market to continue to go higher in the first part of 2010, suggesting 1,250-1,300 as an upside target for the S&P 500, but still thinks we are in a cyclical (short-term) bull market within a secular (long-term) bear market, which began in 2000.
“The goal from now until let’s call it 2015 is to preserve capital - see if you can make a little money here or there - but be ready for the next 15-to-20 year bull market,” he said.
Source: Yahoo Finance - Tech Ticker, December 18, 2009.
Tags: Amp, Barry Ritholtz, Bear Market, Benefit Of The Doubt, Bias, Bull Market, Ceo, Fusion, Innocent, Iq, Money, Rally, Stocks, Target, Ticker, Yahoo, Yahoo Finance
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