But then again, it could be just a temporary correction setting the US equity market up for a Jan/Feb peak.
Thursday, December 31, 2009
An Omen for 2010?
The last trading day of 2009 saw a black candlestick that could confirm the end of the bulls' party.
But then again, it could be just a temporary correction setting the US equity market up for a Jan/Feb peak.
But then again, it could be just a temporary correction setting the US equity market up for a Jan/Feb peak.
Wednesday, December 30, 2009
Possible reversal of 9-month bullish trend in S&P 500?
The circled area is a bearish engulfing candlestick pair. This could portend a temporary or, potentially, a more enduring reversal of the equity uptrend in place since March 9th.
Time for Contrarian Thinking in 2010?
Emerging Markets Soar Past Their Doubters
By HEATHER TIMMONS
NEW DELHI — This was a lost decade for the American stock market. But for much of developing world, it was the Roaring ’00s — a period of soaring markets and breakneck investment that left even some bulls wondering if the good times can last.
While the broad American market lost about a fifth of its value in the last 10 years, emerging markets like Brazil, Russia, China and India powered ahead with gains in the double or even triple digits.
The numbers are staggering. On Ukraine’s PFTS Stock Exchange — a Wild East of investing that did not even exist until 1997 — shares soared more than 1,350 percent over the last decade. In Peru, stocks jumped more than 660 percent. Here in India, the Sensex index leaped more than 240 percent.
To believers, those heady gains underscore profound shifts taking place in the global economy, where investment dollars, euros and yen whiz across borders and time zones with the stroke of a computer key. As many Americans wait for an economic recovery, money is pouring into the fast-growing economies of Asia and Latin America, as well as into oil-rich Russia and the former Soviet bloc.
“What we’re living through now is something of epic proportions,” said Allan Conway, the head of emerging markets equities at Schroders, the big money management company in London. He likened the economic rise of nations like Brazil, Russia, India and China — the so-called BRIC countries — to that of postwar Japan.
Amid all this euphoria, even some longtime bulls wonder if investors are getting a bit carried away. Emerging markets have a history of giddy booms and crushing busts dating back to the 19th century. They collapsed spectacularly in 1997, as a chain reaction of currency devaluations, bankruptcies and recessions rocked East Asia. In 1998, the Russian market plunged more than 80 percent after the country defaulted on its debts.
More recently, emerging markets tanked with the rest of the world in 2008, after shellshocked money managers took cash from anywhere that seemed risky. But they were a bright spot in 2009 — the MSCI Emerging Markets index increased 73 percent in 2009, compared with a 25 percent jump in the S.& P. 500 index.
Despite 2009’s gains, few predict a major setback today. Since the 1998 debacle, some developing countries have cleaned up their acts, balancing their budgets and improving their trade balances. As their economies grow, domestic investors have become big supporters of these countries’ stock markets. With interest rates low around the world, companies based in emerging markets, like their counterparts in the developed world, enjoy access to cheap money. High commodities prices have buoyed stock and bond markets in nations that are big exporters of commodities.
But the recent travails of Dubai, where a debt-driven bubble economy is now bursting, provide a powerful reminder that in up-and-coming economies, what goes up can come down — and fast. That these markets have gained so much, so quickly — with some white-knuckled drops along the way — gives some investment professionals pause.
Mark Mobius, one of the deans of emerging market investing, said that while developing markets still have room to run, the first half of 2010 could be bumpy.
“We continue to see upside, but with substantial corrections along the way, which could be as much as 20 percent,” said Mr. Mobius, the executive chairman of Franklin Templeton Investments, which is based in San Mateo, Calif.
Some market specialists worry that asset bubbles akin to the one that inflated and burst in the American housing market might be growing in places like China and Hong Kong. Others fret over the risks posed by volatile commodities prices, as well as over the inevitable end of this period of ultralow interest rates.
Leon Goldfeld, the chief investment officer for HSBC Global Asset Management in Hong Kong, told reporters this month that HSBC had cut its exposure to Asian equities, anticipating a 10 percent to 15 percent decline in early 2010. After that, Mr. Goldfeld said, Asian stocks would represent a “good buying opportunity.”
As long-term investments go, emerging markets seem to have a lot going for them. On average, developing countries have less sovereign, corporate and household debt than developed countries. Their economies are also growing faster than industrialized ones. Merrill Lynch predicts that emerging market economies will grow 6.3 percent next year, while the global economy expands by 4.4 percent.
Emerging markets are eclipsing their developed peers in other ways as well. Imports to the BRIC nations are likely to surpass imports to the United States for the first time ever in 2009, according to Morgan Stanley.
For the moment, the developing world is the engine of global growth. Emerging markets accounted for virtually all of the year’s growth in global output, because developed economies shrank or were flat. Even if developed countries recover completely in 2010, emerging economies will account for 70 to 75 percent of the growth in global output “for the foreseeable future,” said Mr. Conway of Schroders.
Developing nations are also assuming a bigger role in the world economy. Morgan Stanley predicts that developing countries, including those in the Middle East, will account for 36 percent of total global gross domestic product in 2010, up from 21 percent in 1999.
All of this is a big lure to investors. Funds focused on equities in emerging markets attracted a record $75.4 billion this year, far surpassing their previous high of $54 billion in 2007, according to EPFR Global, which tracks fund flows.
Even after that influx, emerging markets still account for only a small fraction of investment portfolios in United States and Europe, the world’s money management centers. Less than 3 percent of assets managed by United States fund managers are invested in emerging markets. That number could double in the next five years, some investment experts say.
Even normally conservative investors might be tempted to jump into emerging markets, given the sluggish outlook in the United States and Europe. After a dismal decade for the American stock market, the developing countries might seem attractive.
“Investors are starting to look at this asset class and realize that it is a pretty safe place,” said Kevin Daly, who manages $1.7 billion in emerging market debt at Aberdeen Asset Management.
Despite their volatile history, emerging markets strike some money managers as relatively secure places to invest. Of course, such hopes have been dashed before.
Source: http://www.nytimes.com/2009/12/30/business/global/30emerge.html?_r=1&hpw
By HEATHER TIMMONS
NEW DELHI — This was a lost decade for the American stock market. But for much of developing world, it was the Roaring ’00s — a period of soaring markets and breakneck investment that left even some bulls wondering if the good times can last.
While the broad American market lost about a fifth of its value in the last 10 years, emerging markets like Brazil, Russia, China and India powered ahead with gains in the double or even triple digits.
The numbers are staggering. On Ukraine’s PFTS Stock Exchange — a Wild East of investing that did not even exist until 1997 — shares soared more than 1,350 percent over the last decade. In Peru, stocks jumped more than 660 percent. Here in India, the Sensex index leaped more than 240 percent.
To believers, those heady gains underscore profound shifts taking place in the global economy, where investment dollars, euros and yen whiz across borders and time zones with the stroke of a computer key. As many Americans wait for an economic recovery, money is pouring into the fast-growing economies of Asia and Latin America, as well as into oil-rich Russia and the former Soviet bloc.
“What we’re living through now is something of epic proportions,” said Allan Conway, the head of emerging markets equities at Schroders, the big money management company in London. He likened the economic rise of nations like Brazil, Russia, India and China — the so-called BRIC countries — to that of postwar Japan.
Amid all this euphoria, even some longtime bulls wonder if investors are getting a bit carried away. Emerging markets have a history of giddy booms and crushing busts dating back to the 19th century. They collapsed spectacularly in 1997, as a chain reaction of currency devaluations, bankruptcies and recessions rocked East Asia. In 1998, the Russian market plunged more than 80 percent after the country defaulted on its debts.
More recently, emerging markets tanked with the rest of the world in 2008, after shellshocked money managers took cash from anywhere that seemed risky. But they were a bright spot in 2009 — the MSCI Emerging Markets index increased 73 percent in 2009, compared with a 25 percent jump in the S.& P. 500 index.
Despite 2009’s gains, few predict a major setback today. Since the 1998 debacle, some developing countries have cleaned up their acts, balancing their budgets and improving their trade balances. As their economies grow, domestic investors have become big supporters of these countries’ stock markets. With interest rates low around the world, companies based in emerging markets, like their counterparts in the developed world, enjoy access to cheap money. High commodities prices have buoyed stock and bond markets in nations that are big exporters of commodities.
But the recent travails of Dubai, where a debt-driven bubble economy is now bursting, provide a powerful reminder that in up-and-coming economies, what goes up can come down — and fast. That these markets have gained so much, so quickly — with some white-knuckled drops along the way — gives some investment professionals pause.
Mark Mobius, one of the deans of emerging market investing, said that while developing markets still have room to run, the first half of 2010 could be bumpy.
“We continue to see upside, but with substantial corrections along the way, which could be as much as 20 percent,” said Mr. Mobius, the executive chairman of Franklin Templeton Investments, which is based in San Mateo, Calif.
Some market specialists worry that asset bubbles akin to the one that inflated and burst in the American housing market might be growing in places like China and Hong Kong. Others fret over the risks posed by volatile commodities prices, as well as over the inevitable end of this period of ultralow interest rates.
Leon Goldfeld, the chief investment officer for HSBC Global Asset Management in Hong Kong, told reporters this month that HSBC had cut its exposure to Asian equities, anticipating a 10 percent to 15 percent decline in early 2010. After that, Mr. Goldfeld said, Asian stocks would represent a “good buying opportunity.”
As long-term investments go, emerging markets seem to have a lot going for them. On average, developing countries have less sovereign, corporate and household debt than developed countries. Their economies are also growing faster than industrialized ones. Merrill Lynch predicts that emerging market economies will grow 6.3 percent next year, while the global economy expands by 4.4 percent.
Emerging markets are eclipsing their developed peers in other ways as well. Imports to the BRIC nations are likely to surpass imports to the United States for the first time ever in 2009, according to Morgan Stanley.
For the moment, the developing world is the engine of global growth. Emerging markets accounted for virtually all of the year’s growth in global output, because developed economies shrank or were flat. Even if developed countries recover completely in 2010, emerging economies will account for 70 to 75 percent of the growth in global output “for the foreseeable future,” said Mr. Conway of Schroders.
Developing nations are also assuming a bigger role in the world economy. Morgan Stanley predicts that developing countries, including those in the Middle East, will account for 36 percent of total global gross domestic product in 2010, up from 21 percent in 1999.
All of this is a big lure to investors. Funds focused on equities in emerging markets attracted a record $75.4 billion this year, far surpassing their previous high of $54 billion in 2007, according to EPFR Global, which tracks fund flows.
Even after that influx, emerging markets still account for only a small fraction of investment portfolios in United States and Europe, the world’s money management centers. Less than 3 percent of assets managed by United States fund managers are invested in emerging markets. That number could double in the next five years, some investment experts say.
Even normally conservative investors might be tempted to jump into emerging markets, given the sluggish outlook in the United States and Europe. After a dismal decade for the American stock market, the developing countries might seem attractive.
“Investors are starting to look at this asset class and realize that it is a pretty safe place,” said Kevin Daly, who manages $1.7 billion in emerging market debt at Aberdeen Asset Management.
Despite their volatile history, emerging markets strike some money managers as relatively secure places to invest. Of course, such hopes have been dashed before.
Source: http://www.nytimes.com/2009/12/30/business/global/30emerge.html?_r=1&hpw
Monday, December 28, 2009
Wednesday, December 23, 2009
My bullish bets on the US$,HK$ & CNY are starting to pay off...
The circles indicate the times at which I decided the long the HK$, effectively betting that the Greenback would rise(since the former is pegged to the latter).
After the uptrend line of the S$ against the HK$ was broken in mid-December, the reversal of the uptrend of the S$ against the HK$ has been confirmed & I increased my positions two days ago.
I also increased my positions in the CNY, the Chinese renminbi,on the same day.
Monday, December 21, 2009
My Forex positioning in 2008-2009
My previous JPY positions are not reflected because I started buying the Yen in June-July 2008 at prices ranging from 78-79 to the S$ but disposed all of them when it had advanced to 64 later that year.
Also,at around the same time, I had a profitable skirmish in both the Saudi Riyal and UAE Dirham at about the same time as my first US$ trade(buying @ 1.360 & selling @ 1.45).
Greenback rises in tandem with Equities for the first time since Lehman died
Dec. 21 (Bloomberg) -- The dollar is rallying in tandem with stocks and commodities for the first time since before Lehman Brothers Holdings Inc.’s bankruptcy last year sparked the financial crisis, signaling the worst may be over for the greenback.
The currency, equities and raw materials are on pace for their first simultaneous two-month gain since 2008 as the U.S. Dollar Index rises the fastest in 10 months. The gauge has moved in the opposite direction of either the Standard & Poor’s 500 Index or the Reuters/Jefferies CRB Index of commodities for 15 months straight and diverged from both in all but four.
Correlated trading reflects growing confidence in the U.S. economy and increasing expectations that the Federal Reserve will start draining some of the $12 trillion used to battle the worst global recession since World War II. Until now, the dollar climbed when traders sought protection from turmoil created by the credit freeze that started in 2007. It weakened when they took advantage of record-low interest rates by selling the currency to finance holdings of higher-yielding overseas assets.
The market’s “tremendous dollar-negative sentiment” is “being corrected,” said Adnan Akant, who helps oversee $39 billion and reversed bets against the currency two weeks ago as head of foreign exchange in New York at Fischer Francis Trees & Watts. “The regime is changing, definitely.”
The Dollar Index -- which measures its performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona -- dropped 4.4 percent this year. Its tendency to fall when stocks rise and vice versa, which has prevailed since Lehman’s September 2008 collapse, is breaking down. Until Dec. 1, stocks and the Intercontinental Exchange Inc. currency gauge moved in opposite directions on seven of every 10 days this year. They’re in sync more than half the time this month.
Gaining Gauge
With eight trading days left in the year, the gauge has gained 1.9 percent since the end of October, while the S&P 500 and the CRB Index added 6.4 percent and 2.1 percent, respectively. The last time all rose in a two-month period was April and May of 2008. The three indexes, which haven’t all increased in the same quarter since 2005, also are up since Sept. 30.
Currency strategists are growing less bearish on America’s legal tender versus the euro, predicting it will fall 1.1 percent next year to $1.45, up from Nov. 30’s weaker $1.48 forecast, median estimates of as many as 47 in Bloomberg surveys show. It will rise 8.6 percent against the yen, the median of 42 estimates shows.
The Dollar Index rose 1.6 percent last week. Its 4.9 percent rise from this year’s Nov. 26 low is the steepest since a 17-day climb ending Feb. 2.
Dollar, Yen, Euro
Last week, the dollar gained 1.6 percent against Japan’s currency to 90.49 yen and 1.9 percent versus the euro to $1.4338. It traded at 90.29 yen and $1.4339 per euro as of 2:50 p.m. in Tokyo. The greenback is little changed against the yen this year and up 6.4 percent from its 14-year low on Nov. 27. The dollar is still down 2.6 percent compared with the euro in 2009, though it strengthened 5.5 percent since Nov. 25.
Euro speculators reversed course after having more bets on dollar losses than gains for seven months, Commodity Futures Trading Commission data compiled by Bloomberg show. Wagers by hedge funds and other large speculators that the dollar will gain against the euro outnumbered bearish bets by 16,448 on Dec. 15. On Dec. 1, bearish dollar contracts were ahead by 22,151, a sentiment that had prevailed since April 28.
U.S. Economy
News that the U.S. unemployment rate had fallen the most in three years pushed the Dollar Index up 1.7 percent on Dec. 4 as traders increased bets that economic growth would spur the Federal Reserve to raise borrowing costs. That was the biggest gain since Jan. 20, when the U.K.’s second bank bailout in three months increased demand for the dollar’s perceived safety.
“We are witnessing a watershed shift in sentiment regarding the dollar,” wrote Dennis Gartman in the Gartman Letter, a daily global markets commentary he publishes from Suffolk, Virginia. “We do not use the term watershed often, but when we do we mean it,” said Gartman, who correctly predicted in June 2008 that commodities would tumble.
The Fed is already taking steps to begin withdrawing money from the financial system. Policymakers will end most emergency lending programs and debt purchases by March because of “improvements in the functioning of financial markets” and stabilizing labor markets, the Federal Open Market Committee said on Dec. 16. At the same time, the central bank reiterated that interest rates will stay “exceptionally low” for an “extended period.”
Fed Drains
The Fed began using Treasuries and agency debt in reverse repurchase agreements this month to test a mechanism for unwinding unprecedented monetary stimulus, removing a total of $990 million in cash from the banking system in five operations since Dec. 3, data from the Federal Reserve Bank of New York show.
“The forex market will anticipate the Fed tightening and price it into the dollar, leading the dollar to rally,” said Steven Englander, chief U.S. currency strategist in New York for Barclays Capital. “Because these programs are so unprecedented, you can already see a high degree of alarm in markets with respect to what the rates implications are going to be when they are withdrawn.”
The unit of London-based Barclays Plc raised its three- month forecast for the dollar against the euro on Dec. 10 to $1.45 from $1.52 and its six-month prediction to $1.40 from $1.45.
Higher Yields
Investors are being drawn to the dollar by U.S. assets that have higher yields than in Japan and Europe. Ten-year Treasuries yielded 40 basis points, or 0.40 percentage point, more than German bunds as of Dec. 18, within 1 basis point of the biggest gap since August 2007. Investment-grade corporate bonds in the U.S. yielded an average of about 4.67 percent, compared with 3.78 percent in Europe and 1 percent in Japan, Merrill Lynch & Co. indexes show.
“The U.S. will be able to attract more capital than its peers in the developed world” for the next couple years, said Mark Farrington who manages $5.8 billion as head of currencies at Principal Global Investors Europe Ltd. in London. “The dollar appreciation will accelerate,” he said, predicting $1.25 per euro in 18 months and 105 yen in 2010.
Thanos Papasavvas, who helps manage more than $5 billion in currencies at Investec Asset Management in London, said the dollar’s strength against the euro is likely to end amid speculation on the timing of interest-rate increases by the European Central Bank.
‘Sell Dollars’
“There is a risk that the ECB could tighten monetary policy before the Fed,” Papasavvas said, predicting the euro will drop no lower than $1.38 before rising back towards $1.50 in the second half of 2010. “Foreign-exchange managers will be looking for opportunities to sell dollars.”
The Fed will raise its near-zero target rate by more than half a percentage point to 0.75 percent next year, while the European Central Bank will increase its rate to 1.5 percent from 1 percent, according median economist forecasts compiled by Bloomberg. Japan’s rate will stay at 0.1 percent, the survey shows.
The cost of hedging against a dollar rise versus the euro increased to the most in more than a year Dec. 17, so-called three-month 25 delta risk reversals show, an indication that options traders are more certain that it will appreciate. The cost of the right to buy the greenback versus the euro exceeded that for options to sell it by 1.80 percentage points.
PowerShares
The PowerShares DB US Dollar Index Bullish Fund ran out of shares on Dec. 18, and trading was halted for the second time in two months. The fund suspended issuing the 200,000-share blocks it uses to match demand for the exchange-traded fund, which is designed to replicate ownership of the dollar versus currencies measured by ICE’s Dollar Index, according to a filing with the U.S. Securities and Exchange Commission.
The dollar is also appreciating against the euro as investors focus on Europe’s economy. Standard & Poor’s and Fitch Ratings downgraded Greece and warned that Spain and Portugal also may have their credit rankings cut. U.S. gross domestic product will expand 2.6 percent in 2010, twice as fast as in the European Union, U.K. and Japan, median economist estimates in Bloomberg surveys show.
“Everyone is on the short dollar trade,” said Ihab Salib, who oversees more than $3 billion as head of international fixed income at Federated Investments Inc. in Pittsburgh and was betting the dollar would decline from March until it hit $1.4950 per euro in October. “When this happens, a reversal of that trade is likely.”
Copyright Bloomberg plc
The currency, equities and raw materials are on pace for their first simultaneous two-month gain since 2008 as the U.S. Dollar Index rises the fastest in 10 months. The gauge has moved in the opposite direction of either the Standard & Poor’s 500 Index or the Reuters/Jefferies CRB Index of commodities for 15 months straight and diverged from both in all but four.
Correlated trading reflects growing confidence in the U.S. economy and increasing expectations that the Federal Reserve will start draining some of the $12 trillion used to battle the worst global recession since World War II. Until now, the dollar climbed when traders sought protection from turmoil created by the credit freeze that started in 2007. It weakened when they took advantage of record-low interest rates by selling the currency to finance holdings of higher-yielding overseas assets.
The market’s “tremendous dollar-negative sentiment” is “being corrected,” said Adnan Akant, who helps oversee $39 billion and reversed bets against the currency two weeks ago as head of foreign exchange in New York at Fischer Francis Trees & Watts. “The regime is changing, definitely.”
The Dollar Index -- which measures its performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona -- dropped 4.4 percent this year. Its tendency to fall when stocks rise and vice versa, which has prevailed since Lehman’s September 2008 collapse, is breaking down. Until Dec. 1, stocks and the Intercontinental Exchange Inc. currency gauge moved in opposite directions on seven of every 10 days this year. They’re in sync more than half the time this month.
Gaining Gauge
With eight trading days left in the year, the gauge has gained 1.9 percent since the end of October, while the S&P 500 and the CRB Index added 6.4 percent and 2.1 percent, respectively. The last time all rose in a two-month period was April and May of 2008. The three indexes, which haven’t all increased in the same quarter since 2005, also are up since Sept. 30.
Currency strategists are growing less bearish on America’s legal tender versus the euro, predicting it will fall 1.1 percent next year to $1.45, up from Nov. 30’s weaker $1.48 forecast, median estimates of as many as 47 in Bloomberg surveys show. It will rise 8.6 percent against the yen, the median of 42 estimates shows.
The Dollar Index rose 1.6 percent last week. Its 4.9 percent rise from this year’s Nov. 26 low is the steepest since a 17-day climb ending Feb. 2.
Dollar, Yen, Euro
Last week, the dollar gained 1.6 percent against Japan’s currency to 90.49 yen and 1.9 percent versus the euro to $1.4338. It traded at 90.29 yen and $1.4339 per euro as of 2:50 p.m. in Tokyo. The greenback is little changed against the yen this year and up 6.4 percent from its 14-year low on Nov. 27. The dollar is still down 2.6 percent compared with the euro in 2009, though it strengthened 5.5 percent since Nov. 25.
Euro speculators reversed course after having more bets on dollar losses than gains for seven months, Commodity Futures Trading Commission data compiled by Bloomberg show. Wagers by hedge funds and other large speculators that the dollar will gain against the euro outnumbered bearish bets by 16,448 on Dec. 15. On Dec. 1, bearish dollar contracts were ahead by 22,151, a sentiment that had prevailed since April 28.
U.S. Economy
News that the U.S. unemployment rate had fallen the most in three years pushed the Dollar Index up 1.7 percent on Dec. 4 as traders increased bets that economic growth would spur the Federal Reserve to raise borrowing costs. That was the biggest gain since Jan. 20, when the U.K.’s second bank bailout in three months increased demand for the dollar’s perceived safety.
“We are witnessing a watershed shift in sentiment regarding the dollar,” wrote Dennis Gartman in the Gartman Letter, a daily global markets commentary he publishes from Suffolk, Virginia. “We do not use the term watershed often, but when we do we mean it,” said Gartman, who correctly predicted in June 2008 that commodities would tumble.
The Fed is already taking steps to begin withdrawing money from the financial system. Policymakers will end most emergency lending programs and debt purchases by March because of “improvements in the functioning of financial markets” and stabilizing labor markets, the Federal Open Market Committee said on Dec. 16. At the same time, the central bank reiterated that interest rates will stay “exceptionally low” for an “extended period.”
Fed Drains
The Fed began using Treasuries and agency debt in reverse repurchase agreements this month to test a mechanism for unwinding unprecedented monetary stimulus, removing a total of $990 million in cash from the banking system in five operations since Dec. 3, data from the Federal Reserve Bank of New York show.
“The forex market will anticipate the Fed tightening and price it into the dollar, leading the dollar to rally,” said Steven Englander, chief U.S. currency strategist in New York for Barclays Capital. “Because these programs are so unprecedented, you can already see a high degree of alarm in markets with respect to what the rates implications are going to be when they are withdrawn.”
The unit of London-based Barclays Plc raised its three- month forecast for the dollar against the euro on Dec. 10 to $1.45 from $1.52 and its six-month prediction to $1.40 from $1.45.
Higher Yields
Investors are being drawn to the dollar by U.S. assets that have higher yields than in Japan and Europe. Ten-year Treasuries yielded 40 basis points, or 0.40 percentage point, more than German bunds as of Dec. 18, within 1 basis point of the biggest gap since August 2007. Investment-grade corporate bonds in the U.S. yielded an average of about 4.67 percent, compared with 3.78 percent in Europe and 1 percent in Japan, Merrill Lynch & Co. indexes show.
“The U.S. will be able to attract more capital than its peers in the developed world” for the next couple years, said Mark Farrington who manages $5.8 billion as head of currencies at Principal Global Investors Europe Ltd. in London. “The dollar appreciation will accelerate,” he said, predicting $1.25 per euro in 18 months and 105 yen in 2010.
Thanos Papasavvas, who helps manage more than $5 billion in currencies at Investec Asset Management in London, said the dollar’s strength against the euro is likely to end amid speculation on the timing of interest-rate increases by the European Central Bank.
‘Sell Dollars’
“There is a risk that the ECB could tighten monetary policy before the Fed,” Papasavvas said, predicting the euro will drop no lower than $1.38 before rising back towards $1.50 in the second half of 2010. “Foreign-exchange managers will be looking for opportunities to sell dollars.”
The Fed will raise its near-zero target rate by more than half a percentage point to 0.75 percent next year, while the European Central Bank will increase its rate to 1.5 percent from 1 percent, according median economist forecasts compiled by Bloomberg. Japan’s rate will stay at 0.1 percent, the survey shows.
The cost of hedging against a dollar rise versus the euro increased to the most in more than a year Dec. 17, so-called three-month 25 delta risk reversals show, an indication that options traders are more certain that it will appreciate. The cost of the right to buy the greenback versus the euro exceeded that for options to sell it by 1.80 percentage points.
PowerShares
The PowerShares DB US Dollar Index Bullish Fund ran out of shares on Dec. 18, and trading was halted for the second time in two months. The fund suspended issuing the 200,000-share blocks it uses to match demand for the exchange-traded fund, which is designed to replicate ownership of the dollar versus currencies measured by ICE’s Dollar Index, according to a filing with the U.S. Securities and Exchange Commission.
The dollar is also appreciating against the euro as investors focus on Europe’s economy. Standard & Poor’s and Fitch Ratings downgraded Greece and warned that Spain and Portugal also may have their credit rankings cut. U.S. gross domestic product will expand 2.6 percent in 2010, twice as fast as in the European Union, U.K. and Japan, median economist estimates in Bloomberg surveys show.
“Everyone is on the short dollar trade,” said Ihab Salib, who oversees more than $3 billion as head of international fixed income at Federated Investments Inc. in Pittsburgh and was betting the dollar would decline from March until it hit $1.4950 per euro in October. “When this happens, a reversal of that trade is likely.”
Copyright Bloomberg plc
Some sample receipts from my purchases of the HK$, US$ & CNY.
The amounts are modest, but I have been adding to them since 18/11/2009 when these purchases were made.
Thursday, December 17, 2009
The Greenback is rising nicely according to plan...
...and I wish I had such fortune in the stockmarket of late.
No matter, I did buy some Dollars, HK$ and Chinese renminbi very close to their November lows and will be going to Singapore soon to add to my holdings as the buy signals are reinforced.
On the monthly chart below, a bullish engulfing pattern is taking hold, which makes the case for a higher dollar in coming months much stronger to argue for.
On the weekly chart, the BUY signal is arguably even stronger!
On the daily chart, the MACD is rising into positive territory after issuing a bullish divergence BUY signal in November.
Looks like 'ol Rogers is right again!
No matter, I did buy some Dollars, HK$ and Chinese renminbi very close to their November lows and will be going to Singapore soon to add to my holdings as the buy signals are reinforced.
On the monthly chart below, a bullish engulfing pattern is taking hold, which makes the case for a higher dollar in coming months much stronger to argue for.
On the weekly chart, the BUY signal is arguably even stronger!
On the daily chart, the MACD is rising into positive territory after issuing a bullish divergence BUY signal in November.
Looks like 'ol Rogers is right again!
Tuesday, December 15, 2009
.bmp)
My first(small) stab at trading in the US markets...Wheat drops by $2,then rises by $3
.bmp)
As I'm blogging, the Wheat contract has risen to 541.75
Friday, December 11, 2009
Where goes the Greenback?
Inspired by the recent Jim Rogers interview where he claims to have 'more US dollars today' than he did a short time back, this post explores the likelihood of the Greenback's imminent rally as implied by his statement.
As you can see from the monthly chart against the S$, there is a strong technical case to be made in favour of Roger's unusual decision to go long the dollar for the short-to-medium term:
1. A strong support at the 1.36-1.40 band established by the US$ plumbing lows in 1995 prior to the Asian Financial Crisis of '97-'98.
What I surmise is that from the early 90s to 1995-'96, US money was flooding into emerging markets and especially Asian equity markets as the 'Asia Rising'-themed growth story was widely bought back then. The speed and ferocity of the '97 currency crisis, which was touched off by Thailand, snowballed throughout that year, and send the US$ up by about 30% from 1.40 to 1.82 against the S$, a relatively stable and safe currency(as against a rise of 580% against the volatile Indonesian rupiah!).
Since then, a more pernicuous & pervasive crisis built up in the US itself, which culminated first in the bursting of the Dot.com bubble, & then the channelling of those funds back towards emerging markets from '01-'07, and towards the euphoric phase of the real-estate bubble there, fueled by the Greenspan largesse, as he flipped the interest rate switch to 'ridiculously low' after 9/11.
The '08 Credit Quake caused a sharp reversal from a 1.345 low to 1.555 by March '09 as hedge funds and others mindlessly piled into US Treasury bonds, but the Dollar has since reversed in inverse proportion to a equity and commodity rally since then to touch 1.38 recently.
Having the same conviction as I did when I bought some Dollars at 1.360 on June 24th 2008(which I subsequently sold as it rallied), I made a trip to Singapore recently to do the same, buying some at 1.389, some HK$ for 5.56 and some Chinese renminbi too(the latter two being effectively pegged to the Dollar at the moment).
The downtrend line indicates that the Dollar is still in a secular bear market, which Rogers believes(and Marc Faber would swear to) will eventually result in a total collapse of the dollar.
Although I doubt the Dollar will go the way of its Zimbabwean counterpart(of the 100 Billion dollar note for 3 eggs fame), I believe the only two investment gurus I really listen to these days.
But the fact that Rogers believes the Dollar will embark on a multi-month rally soon gives greater credence to the Greenback's rebound.
Japanese candlestick theory also points to a likely bottom on the weekly chart(not shown here)
2. The Dollar carry trade, that has,in my opinion, been responsible for the bulk of the rise in equities and commodities in '09,could be unwound soon.
A similar unwinding of the Yen carry trade was UGLY in '08, and such an unwinding of the Dollar carry trade could potentially be just as disorderly(and may be chaotic).
As you can see from the monthly chart against the S$, there is a strong technical case to be made in favour of Roger's unusual decision to go long the dollar for the short-to-medium term:
1. A strong support at the 1.36-1.40 band established by the US$ plumbing lows in 1995 prior to the Asian Financial Crisis of '97-'98.
What I surmise is that from the early 90s to 1995-'96, US money was flooding into emerging markets and especially Asian equity markets as the 'Asia Rising'-themed growth story was widely bought back then. The speed and ferocity of the '97 currency crisis, which was touched off by Thailand, snowballed throughout that year, and send the US$ up by about 30% from 1.40 to 1.82 against the S$, a relatively stable and safe currency(as against a rise of 580% against the volatile Indonesian rupiah!).
Since then, a more pernicuous & pervasive crisis built up in the US itself, which culminated first in the bursting of the Dot.com bubble, & then the channelling of those funds back towards emerging markets from '01-'07, and towards the euphoric phase of the real-estate bubble there, fueled by the Greenspan largesse, as he flipped the interest rate switch to 'ridiculously low' after 9/11.
The '08 Credit Quake caused a sharp reversal from a 1.345 low to 1.555 by March '09 as hedge funds and others mindlessly piled into US Treasury bonds, but the Dollar has since reversed in inverse proportion to a equity and commodity rally since then to touch 1.38 recently.
Having the same conviction as I did when I bought some Dollars at 1.360 on June 24th 2008(which I subsequently sold as it rallied), I made a trip to Singapore recently to do the same, buying some at 1.389, some HK$ for 5.56 and some Chinese renminbi too(the latter two being effectively pegged to the Dollar at the moment).
The downtrend line indicates that the Dollar is still in a secular bear market, which Rogers believes(and Marc Faber would swear to) will eventually result in a total collapse of the dollar.
Although I doubt the Dollar will go the way of its Zimbabwean counterpart(of the 100 Billion dollar note for 3 eggs fame), I believe the only two investment gurus I really listen to these days.
But the fact that Rogers believes the Dollar will embark on a multi-month rally soon gives greater credence to the Greenback's rebound.
Japanese candlestick theory also points to a likely bottom on the weekly chart(not shown here)
2. The Dollar carry trade, that has,in my opinion, been responsible for the bulk of the rise in equities and commodities in '09,could be unwound soon.
A similar unwinding of the Yen carry trade was UGLY in '08, and such an unwinding of the Dollar carry trade could potentially be just as disorderly(and may be chaotic).
Taking a longer-term view of the S&P 500 Index
The inverted head & shoulders pattern has proved to be a potent trading signal for me in the past, second only to the double bottom signal in effectiveness(which has been exhibited by many equity markets, including the Hang Seng Index & many stocks in Bursa Malaysia, where I customarily trade).
For instance, it could have been used to predict the exact top in 2000 of the Kuala Lumpur Composite Index after the pattern formed from late '97 to early '99.
The S & P 500 has arguably formed this pattern, and, if one were to strictly follow the plan, this formation calls for a medium to longer-term target of ~ 1 225 points.
For instance, it could have been used to predict the exact top in 2000 of the Kuala Lumpur Composite Index after the pattern formed from late '97 to early '99.
The S & P 500 has arguably formed this pattern, and, if one were to strictly follow the plan, this formation calls for a medium to longer-term target of ~ 1 225 points.
The US stockmarket is in an interesting place...
As can be seen from above, the downtrend line from since before the beginning of the recession has technically been breached.
If the S&P 500 index remains above this line for a week or two(or longer), the case can be more strongly argued that the uptrend will continue.
On a shorter term basis, the Dow Industrials has a reverse head-&-shoulders pattern that points to a minimum target of 10500-10510, but could presage a grinding move higher towards 10 700- 11 000 towards the end of this year and perhaps the first weeks of 2010.
Crude breaks down further as forecasted,but short-term support awaits
My called-for support of $73-74 didn't hold.
Tuesday, December 8, 2009
Gold and Oil fall as anticipated & the latter strikes a key level
The Crude Oil contract has hit the uptrend line earlier surmised at just above $73.
Chances are high that it will be broken considering the new scare on the sovereign debt fear as the Dubai fiasco refuses to die.
The Gold contract has fallen also,continuing a rapid drop since the doji spelt the end of the remarkable run-up since $1000 was breached.
My targets on both commodities remain. For now.
Chances are high that it will be broken considering the new scare on the sovereign debt fear as the Dubai fiasco refuses to die.
The Gold contract has fallen also,continuing a rapid drop since the doji spelt the end of the remarkable run-up since $1000 was breached.
My targets on both commodities remain. For now.
Saturday, December 5, 2009
Tracking Jim Roger's bold calls on commodities...
Starting with Crude Oil:
On the daily chart, yesterday's bearish drop of 99c on the contract seems to presage a downside target of $73-74 on the uptrend line.
On the weekly chart, The resistance-turned-support from '06-'07 seems to suggest that the $73-74 band on the daily chart could turn out to be rather strong.
Also, the Fibronacci retracement target suggests that the bull won't retreat until we hit at least $85, which also happens to be a minor resistance formed due to a small congestion area at the outset of '08.
Now, arguably the hottest commodity of the season. Gold:
The doji in the Dec 3rd session has proven its worth as an omen of the sharp reversal which occurred on the very next session.
A medium uptrend line on the daily chart suggests a downside target of $1030-1075, but the more likely target is suggested by the minor uptrend line: $1080-1100.
On the weekly chart, an ominous 'spinning top'-like black candlestick has appeared which bolsters the case for an immediate correction.
But from the trendlines drawn, one can see why Marc Faber so boldly predicted that Gold will never fall below $1000/ ounce ever again!
On the daily chart, yesterday's bearish drop of 99c on the contract seems to presage a downside target of $73-74 on the uptrend line.
On the weekly chart, The resistance-turned-support from '06-'07 seems to suggest that the $73-74 band on the daily chart could turn out to be rather strong.
Also, the Fibronacci retracement target suggests that the bull won't retreat until we hit at least $85, which also happens to be a minor resistance formed due to a small congestion area at the outset of '08.
Now, arguably the hottest commodity of the season. Gold:
The doji in the Dec 3rd session has proven its worth as an omen of the sharp reversal which occurred on the very next session.
A medium uptrend line on the daily chart suggests a downside target of $1030-1075, but the more likely target is suggested by the minor uptrend line: $1080-1100.
On the weekly chart, an ominous 'spinning top'-like black candlestick has appeared which bolsters the case for an immediate correction.
But from the trendlines drawn, one can see why Marc Faber so boldly predicted that Gold will never fall below $1000/ ounce ever again!
Saturday, November 28, 2009
Re-starting my blog as my interest in Financial markets is re-kindled...
2007 was a forgettable year,while 2008 presented opportunity,which I tried to seize to the best of my ability, at about the same time that I lost my 'career' of seven years.
I bought over 5000 units of Fidelity's China Focus Fund in late September, which turned out to be a badly-timed purchase as the AIG and Citigroup shoes had yet to drop in the ongoing financial crisis.
As markets around the world tanked in earnest in October, I dipped my toes into a Singapore fund and a Japan fund.
On the rebound, I sold the former for a measly $2 profit after fees, while retaining the latter.
Then, in January 2009, I decided to buy into a Vietnam fund, getting over 7000 units of it.
2009 presented me the opportunity to cash out of mistimed positions as markets around the globe rallied between 20% to over 100%, and by May, my China Focus fund, having dropped as much as 26% at the low point in 2008, had climbed past my cost price. My Vietnam fund had already achieved this the previous month, and the Japan fund followed suit shortly after.
On November 17th, I travelled to S'pore just to dispose of these profitable investments, realising a gain of S$ 2 669.82 on an initial investment of S$ 9 400, ergo returning 28.4%.
I bought over 5000 units of Fidelity's China Focus Fund in late September, which turned out to be a badly-timed purchase as the AIG and Citigroup shoes had yet to drop in the ongoing financial crisis.
As markets around the world tanked in earnest in October, I dipped my toes into a Singapore fund and a Japan fund.
On the rebound, I sold the former for a measly $2 profit after fees, while retaining the latter.
Then, in January 2009, I decided to buy into a Vietnam fund, getting over 7000 units of it.
2009 presented me the opportunity to cash out of mistimed positions as markets around the globe rallied between 20% to over 100%, and by May, my China Focus fund, having dropped as much as 26% at the low point in 2008, had climbed past my cost price. My Vietnam fund had already achieved this the previous month, and the Japan fund followed suit shortly after.
On November 17th, I travelled to S'pore just to dispose of these profitable investments, realising a gain of S$ 2 669.82 on an initial investment of S$ 9 400, ergo returning 28.4%.
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