Some interesting currency moves today

[JR8]

In the EU it's mostly uncertainty over what the Fed might be thinking. No one knows much at all, and *that* is the problem, i.e. not what they might be planning as such, much more simply having no clue what it might be. The Fed massively talked up the likelihood of an imminent rate rise, rather than just getting on a doing it. To a good extent the Fed usually 'signal' there intentions well in advance, but at such a critical pivot in the economic cycle they haven't done it at all well on this occasion IMO.

Meanwhile China is imploding and there's uncertainty if their central bank have a clue what to do about it. So the CN economy is weakening, hence their currency is. That makes their exports even cheaper (they are exporting deflation), which is one reason the US-Fed arguably should not raise rates. CNese weakness and dithering is doing the Fed's work for them.

So you see why the markets are having a fit? They always do when faced with unknowns like this. Meanwhile some good news for the EU, Greece electing something like a sane and stable government that the EU were obsessed about for months... and now Greece finally have that's immediately ignored and it's all eyes on the Fed. Pretty mental in a way, but such is the 'irrationality' of the markets.

This is when having a LTBH approach helps, rather than at an extreme say day-trading. The markets will come back, perhaps when the Fed are clearer to read. Until that time expect it to be pretty mental.

[Wd40]

The speech by Janet Yellen today, could be the make or break for the markets.

[Wd40]

http://www.msn.com/en-us/money/markets/ ... ar-AAeGKma

"All of a sudden, Volkswagen has become a bigger downside risk for the German economy than the Greek debt crisis," ING chief economist Carsten Brzeski told Reuters.

[calugaruvaxile]

http://www.msn.com/en-us/money/markets/vw-scandal-could-hurt-germany-more-than-the-greece-crisis/ar-AAeGKma

"All of a sudden, Volkswagen has become a bigger downside risk for the German economy than the Greek debt crisis," ING chief economist Carsten Brzeski told Reuters.

greek debt wasn't so bad for germany! the money they spent there was spent to pay mostly german banks and companies. so it returned into german economy. plus with a debt on greece, to boot. the vw story is two-fold problematic: economically, it hurts the economy + politically, it's a sign of the us showing aggression towards germany. as far as i understand, the emission story was known for months. only now the us gov't has decided to attack. exactly when the refugees are hitting germany hard. interesting times

[JR8]

http://www.msn.com/en-us/money/markets/vw-scandal-could-hurt-germany-more-than-the-greece-crisis/ar-AAeGKma

"All of a sudden, Volkswagen has become a bigger downside risk for the German economy than the Greek debt crisis," ING chief economist Carsten Brzeski told Reuters.

The markets always need at least one thing (preferably 2/+) to be obsessing about in a negative/doom-filled way. The moment that resolves (like Greece) then they find another. So here we are, with the Fed issue on a vigorous simmer in the background (which might go on like this right into next year) VW is this weeks useful focus of doom

An angle I find interesting on the VW story is that apparently the EU knew the tricks VW were playing but didn't do anything about it. How about that - if it's true of course? And who wields most power in the EU... ah, Germany, home of VW. Coincidence? I doubt it, but that's just my 2c. I wouldn't be surprised if no one in the EU institutions dared blow the whistle on Germany. Ironic, since the Germans parade around the EU preaching their moral righteousness, then do this, and then (probably) '''overlook''' it too. The Greeks must be loving this

I reckon the US are going to come down on VW like a ton of bricks. I pondered this whilst remembering what that drug-using whoring https://en.wikipedia.org/wiki/Eliot_Spitzer former and then only briefly Gubner of NY tried to do to Wall Street.

VWs fraud looks like a perfect gold-edged invitation to the US to stick it to Germany/EU... this could go on for years and prove veeeery expensive for VW (hence why I wouldn't touch the stock with a barge-pole, at any price).

[JR8]

greek debt wasn't so bad for germany!

Well quite. Germany used EU funds sent via Greece (ostensibly to bail-out Greece) to bail-out German banks who were the majority holders of Greek debt. And in so doing have probably stuffed the Greek economy for the next generation/+. So much for the EUs fraternite.

And now pure and innocent Snow White (that's Angela Merkel ) has been caught red-handed together with her dwarves (the EU institutions) running a crack-house.

Ah.... [rubbing hands]... this is divine justice at it's sweetest

Of course geo-politically the US prosecuting this case is a sensitive matter. But if the law-breaking is as premeditated and egregious as suggested, then I can't see how it can be overlooked. I can't see anything curious/coincidental in the timing in this story breaking, at least not yet. I expect the US simply wanted to get every single one of Germany's ducks in a row before they loaded up their guns...

[JR8]

Imaginary headline, 5 years hence...

'Athens government takes Germany to the EU Court, alleging that Germany used EU funds to bail-out VW. Germany claim there was no national interest at play at all saying 'It was about saving jobs, jobs for all Europeans', adding 'If Athens don't get back in their box and follow Berlin's orders whilst shutting up, we'd like to remind them that we have them very firmly by the nuts over our [cough], we mean their bail-out which they kindly funded' ... [etc etc etc]

p.s. Meanwhile back in reality opinion polls in the UK this weekend show that a majority would now favour exiting the EU. As a result and as might be expected Germany are making a few noises about renegotiating some treaties to keep the UK on board and the plates spinning a bit longer.

[Wd40]

Europe again the culprit. 2% down! Europe is seriously a spineless %$#@ of a market, behaving worse than emerging markets.

[JR8]

Oil, Mining etc. The majority of the big-hitters from those sectors are listed (or dual-listed) in London. Hence given what's happening in China, the FTSE-100 get's whacked, since the resources sector is a big part of the FTSE-100.

I'm rather relieved my FTSE stocks are staying above the fray today, (but then my direct and indirect exposure to China is so small it's immaterial)... well, at the time of writing

This is still down to a pair of opposing stories. a) What will the Fed do to rein it's economy in, when, and will it work? b) What will China do to try and stop their economy imploding, when, and will it work.

[JR8]

p.s. Which bit of Europe (the markets) is spineless? And what IYO should the markets be doing today?

ps2. I'm in the process of progressively reducing my margin, step by step. Hitting 50% by next April is the current thinking. 50% is going to feel pretty gay and uncommitted but I have to keep reminding myself that as life ticks on the ability to leverage can morph from a very useful tool into a liability that you no longer have the time nor interest to recoup.

Today is one of those days though when I look at some of the bargain priced low-hanging-fruit on the tree and have to pinch myself that leveraging back up again is NOT a part of the plan (not even after a 6-pack of beer hehe). It can be damned frustrating as no doubt there are some bargains out there right now.... at the very simplest level, just topping up some of the holdings I already have.

What's catching your attention this week? This might turn out to be the month (if not the week) of 2015 to have been buying, that's IF you are still a buyer.

[Wd40]

US markets are also down. May be EU markets knew what was coming in US, because Asia closed fine.

I have already bought My current allocation to equities is 35% of my net worth. Rest is fixed deposits. I am not sure if I should increase my allocation to equities, now, or wait. I invest completely in Indian markets.

[Wd40]

Both Nikkei and ASX down more than 2%. Today is Asia's turn to take it on the chin.

[Strong Eagle]

Both Nikkei and ASX down more than 2%. Today is Asia's turn to take it on the chin.

What's the point in watching the market chase its tail day to day? Some days it goes up, some days it goes down. On the whole, the market enriches with increased valuations over time. Sure, the market seriously loses value from time to time, mostly because of the gaddamn %^&*^%$* bankers and investment houses but it comes back. We are well beyond the huge decrease in 2008 in case you haven't noticed.

So, unless you are a day trader, why would you give a shit if the market is up or off by 2%? Wan't there some silly nonsense just a couple of weeks ago... China... that caused the markets to swoon and then regroup?

I'm telling you... there are two things that cause these swings. One is program trading, which, at its essence is a blind shot in the dark... an ALGORITHM decides what the market conditions are... and I've yet to see a really good economic model... no matter how good the "quants" think they are.

And the second thing, is far too many participants in the market behave irrationally. There are the day traders and options traders that think they've got a leg up. And there are those that react irrationally to price changes, selling when they should hold.

[earthfriendly]

On the whole, the market enriches with increased valuations over time. Sure, the market seriously loses value from time to time, mostly because of the gaddamn %^&*^%$* bankers and investment houses but it comes back. We are well beyond the huge decrease in 2008 in case you haven't noticed.

This is true of US broad market. It is a more developed, better-regulated and more mature economy. I have bought and held on to single (US) company stock and broad market of emerging economy (Brazil) and it had been heading in one direction since, south. For many years. Best place for your money, once again, US broad economy. The strongest in the world. Unmatched .

[Wd40]

EF, you chose the wrong EM at the wrong time. India is the only EM that is going to benefit from the commodity crash.



Also you must invest in markets in which you are familiar. Brazil is a very volatile country. Just read about the kind of depreciation that their currency has seen in the last 50 years.






https://en.m.wikipedia.org/wiki/Brazilian_real


"Combined with all previous currency changes in the country's history, this reform made the new real equal to 2.75 x 1018 (2.75 quintillions) of Brazil's original "réis".

Similar story for Indonesia. I wont touch these 2 countries with a barge pole.