Key News
*U.S. Housing Starts Drop on Apartments, Condominiums (Bloomberg)
* IMF’s Lipsky Warns Against Complacency on Economy (Bloomberg)
*Despite Oil Reserves, Norway Slips Into Recession (NY Times)
*Goldman, Morgan Stanley ask to repay TARP funding (MarketWatch)
The Event Agenda
The Morning Run-Down
After Friday’s break down in stocks and in the risk trade, this week, it’s more optimism. Goldman, JP Morgan and Morgan Stanley are applying to pay back the TARP. The market is taking that as a sign that the banking system is recovering. Alternatively, more likely, these banks just want the government out of their business. When the TARP was a no strings attached free-for-all cash injection everyone was lining up to get in. When the restrictions were later threatened, the entities on the margin wanted their privacy back (read pay packages and business trips). Of course only after the government stepped in a effectively made good on their counterparty hedges with AIG.
Nonetheless, today stocks have been higher, Treasuries lower, commodities higher and the dollar lower. The risk relationships continue to hold across financial markets. It’s a directional trade either for risk or for risk aversion. And right now, the risk taking camp is continuing the climb.
However, as long as stocks remain contained by significant technical resistance, the relative day to day strength in the risk-currencies like the Aussie should be less important unless confirmed by stocks.
The data in focus for the remainder of the weak should be negative—which should not bode well for the risk taking environment. Tonight, Japan reports preliminary GDP for the first quarter. The economy is expected to be contracting at an annualized rate of 16.1%, more than the 12.1% intial estimate. Bank of England and the FOMC both report minutes from their last meetings tomorrow. Then, thursday we get US leading economic indicators which remain negative and in decline the last three months. And Friday, we get another reading on UK GDP for the first quarter, expected to confirm the worst quarterly decline in output since 1979.
{ 4 comments… read them below or add one }
Bryan,
Where is this dollar bull run? every time you call for a dollar bull run it gets crushed. Maybe we`re in the early stages of a new bear run on the dollar?
Ed
Hello Bryan,
Now looks like an favorable time to add British Pound September Puts 151 stike. From an Elliott wave count there is a clear a-b-c expanded flat upwards correction that started from the January £136.17 low. This correction now appears very close to ending if not already so. There is a clear 5 waves up off the March £136.92 wave b low with an extended 5th wave to end wave c. From a technical standpoint Sterling is extremely vulnerable and the next big decline should drive prices well below 1.35. I looked at the weekly slow stochastics and they haven’t been this overbought for over 18 months. This is an incredible set up to go short sterling.
Regards,
Martin
What makes you think we need a strong economy for the Dollar to decline?Take a look at Zimbabwe.Do you really think the reason Zimbabwe has soaring inflation/declining currency due to strong demand for goods?The fact is that the U.S. is a country in real trouble.Too many people spoiled and feeling entitled.The attitude by many that the U.S. is the “richest country in the world” and it isn’t necessary to learn and work hard.Socializing seems to be the primary occupation of much of the populace.I go by schools and see all these “students” holding cell phones in their hands staring at the screens.Read that the average teen cell phone user texts 75 messages a day.Teachers report that students are texting in class and teacher can’t do anything about it.How about a rule of NO electronic devices allowed in school.No,we can’t do that.Not politically correct and might upset someone.Most eligible voters are too ignorant and apathetic to even bother to vote.The ones that do vote,vote their short term greed coming from their long term ignorance.Democrats blame Republicans and vice versa but the real problem is that the citizens elect people who promise them something for nothing.Such as Obama Claus.Citizens are so stupid they actually believe govt has huge amounts of wealth somewhere and they can just vote to get some of it.Remember the old saying,”As GM goes,so goes the country”.Seems that it is true.My observations indicate the U.S. did peak around 1970,when, coincidentally GM’s market share peaked at 57% of U.S. auto market.Maybe now that both the U.S. and GM are bankrupt we are finally at the bottom.Not likely.Probably the new GM will fail eventually and the U.S. and it’s common stock(the Dollar) will decline further.Sorry,I can’t be more optimistic.I believe it’s going to take much worse conditions in this country for citizens to wake up or be forced to wake up.
Hi Bryan,
As you are painfully aware, just about all of your World Currency Flash Alerts for April and May have gone the exact opposite of your intended direction with several of them stopping out for large 5% to 8% losses. Also, there were no recommendations to roll down stops on a short recommendation on 1/14 in which all of the profits vanished and that trade was stopped out.
What are you doing differently now concerning proper entry confirmation and exit management for your subscribers so that they can actually make money. Any description of changes would be appreciated.
Thanks,
Steve