Fed Minutes Blurry As Usual-Stocks To Test Resolve Soon Nov. 20, 2014
Fed Not Coming To The Rescue Next Time?
While on one hand we have the Fed mouthpiece Hilsenrath saying that the Fed has signaled that rate increases could rise faster than many expect once started, we also have to remember that he is their reporter in chief that conveniently tells us what they want us to think. At the same time if we look at the fine print along with what any rate increases above a mere 1% means the US GOVERNMENT CANT AFFORD TO SERVICE ITS DEBT MUCH LESS PAY ON PRINCIPAL. We should come to the logical conclusion that there will never be significant rate increases in the US without growth rates of somewhere around 6-8%. Then and only then would there be a snow balls chance in hell that the US be able to withstand any significant increase in rates. I know its a moot question but I have to ask. Does anybody really think the US is actually at the 3% growth they report? If by chance you answered yes I would have to ask, is there anywhere you see that supported by growth contributing jobs? Sorry, part time service jobs don’t count. In short if the market ever does come back to price in rates like normal the Fed will be stepping in and keeping them down so the US government can keep the spending spree.
I also saw an article this morning pointing out how the language used in the minutes signaled that the Fed wont rescue stocks again. This guy must be nuts. Yes when the big boys test the resolve of the Fed on this (because there was a slight hint, even if I’m sure they weren’t serious) they will probably let the sell off run deeper than the correction in October along with having several market stops as the fall crashes more than 7-10% triggering the “safety stop”. Once this happens, and I am sure it will once the big boys really think the Fed wont rescue them. The Fed will trot in on their white horse and save the day, and/or Janet Yellen will be told as Ben was to “get to work” by congress. The only other choice in the matter is to let the markets correct. Something they (The Fed) has refused to do for over 35 years. I cant see any reason for that to change now since they have squandered all opportunities in the past.
All we have to do is recall the documentary Inside Job, look at how in 1987 when the real life Gordon Gecko was sent to prison and several others were arrested for insider trading. The reaction of Wall Street was panic. They all feared, justifiably, that the business model they had been using for only 10 or so years at the time, was about to change drastically if authorities were to keep up the crack down. Reaction from the fed and regulators alike was at the same time, stop pursuing the illegal activities of Wall Street and a healthy bail out of the banks from the Fed. Since then its has been nothing but a rinse and repeat scenario for Wall Street culminating in what we have today, leaving the Fed no choice but to rinse and repeat again them selves.
EUR/USD Goes Whipsaw
Although the EUR/USD did make an attempt at a second push yesterday the whipsaw toward the end of the day shows topping as seemingly any risk trade was stopped in its tracks. To me this leaves the third push in question since it couldnt run 90% of the ADR or show any conviction above 1.2571. Therefore I will be open on direction today. The best level to take a short right now is at 1.2571 but if they push the Asian range lower this morning the Asian highs are valid at 1.2555 although a higher risk entry. The set up will need to be nice to take the risk there. The only level I will consider a long is at 1.2511 since the level just above at 1.2522 is so close to the daily low.
GBP/USD Makes First Push With Topping As Well
As always I am skeptical of an extended push that ends in a topping formation like we have on the GBP/USD. I will have a slight bias for the second push today but more open for the short as well. The best level for the long is 1.5662 but if they cant run price up and least leave the Asian box closer to the highs or extend the range it adds more risk and likelihood they will test lower or even run to the downside. Otherwise if they hold the Asian range tight and push up first thing I will be open for the short at 1.5695 with a clear trap set up there.
EUR/JPY Opens Door To 156.00 or Higher
As I mentioned yesterday, once the EUR/JPY managed to make the daily close above the September 2008 lows the probability for the push to that monthly highs goes up substantially. Of course the BOJ print fest backs this as well but looking at the move yesterday, being very efficient, there is no reason to believe they will be doing a deeper pullback even though its possible.
Today I will have a bias for the continuation for fundamental reasons only. I will still be open for the short but will need some convincing to take it at the Asian highs. Otherwise I have a sneaking feeling I may have missed the long once again this morning needing to take a Johnny on the spot entry a few minutes ago. The UJ and GJ agree but now I need a pullback. Otherwise I will look to see the conviction and try to catch a back side entry again today.
Forex News Today
The calendar is busier today starting with Manufacturing and Services PMI data from France Germany and the Euro Zone. Most are expecting slight improvements so they should be close. Otherwise with the German figures hovering around the 50 level for Manufacturing a drop close to or below would be bad for the Euro. However large disappoint on either of the others or the Markit PMI could trigger Euro weakness as well.
The UK has Retail Sales data expected to improve also. If it does manage to surprise to the upside then we should get some GBP strength but with it hovering so close to the zero mark potential for disappointment is greater considering recent weakness in the UK economy.
US releases start with yet another Fed member speech to watch out for. I have doubts Turullo will say much that dont back the Meeting Minutes yesterday so should be a non event but worth watching. Just after is CPI data and Unemployment Claims. Baring a large miss Unemployment will be a non event especially if CPI misses. Its a toss up which direction has more potential but a disappointment will most likely have a larger impact. The Philly Fed and Existing Home Sales are released a bit later at the same time. With housing data put on the back burner the Philly Fed will probably run the show but with releases being much closer the last two releases they have better potential to be close again and it be a lower impact event. Having said that a big miss will get them pushing.
STILL NO JOY ON GETTING MY SKYPE ACCOUNT BACK. I WILL ANNOUNCE WHAT CHAT SERVICE I WILL BE MOVING TO AT THE BEGINNING OF NEXT WEEK IF ITS NOT RESOLVED. NOT LOOKING GOOD SO FAR.
MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!
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