Forex Talk In The Street~ Can t get Enough Of The Euro!

After On Day Of driving the Euro down to the 1.35 10 level ,Europe, now the forex
dealing world is even more convinced that the problems in the Middle East shall be
even more detrimental to the welfare of the US. I, rather obviously, find this absurd but we’ve
learned note to argue to vehemently with the market for when it
wishes to price…and/or miss-price…something it can do so, as Lord
Keynes reminds us, for periods “far longer than you or I can remain solvent.” One must learn to respect
the market’s decisions even if they seem at odds with logic, or with one’s
own perspective.
The world, apparently, is concerned that a shut-down of the US
government looms a week or so away as the Republicans and the Democrats in Congress
are at odds each with the other over the debt ceiling.
Remembering the closing of the government in the first term of Congress under Speaker Gingrich, the world is
convinced that the US government shall be brought to its rhetorical knees, be closed and run to default on its debt
obligations. This will not happen. The US will not default on its debts; however, government offices may indeed
close and it will be rather embarrassing as bills go unpaid; as government workers are furloughed; as operations do
come to a close for a short period. But the US will not default upon its debts. Those shall be made good, and once
cooler heads prevail and some extension of some sort is agreed to between the parties involved
the world will go on.

Forex Talk In The Street~ The G-20 They Agree To Disagree!

The G-20 meeting which ended over the weekend and in rather
unusual terms ended with some sort of accord on what economic indicators
should be used in the future to detect economic imbalances between the
member nations. We should remember that nothing was agreed
upon concerning what to do regarding these imbalances; the only agreement was on the accounting of the
imbalances… and even then the discussions were “frank [and] sometimes tense” according to Ms. Christine
Legarde, the French Finance Minister and the ostensible chairperson of the meeting given the location of the
event and given that France holds the Presidency of the European Union at the moment.

In the delicate world of foreign affairs and global economics there are words used that have special
meanings, and “frank” is one of those words. Foreign affairs officials do not use the term “frank” unless they mean
to say that the discussions were heated, that tempers flared, that any agreement reached was reached only
after a great, good deal of anger on both sides et al. “Frank” discussions are not discussions that were pleasant
honest, although almost always they are “honest.” “Frank” discussions were those that ended on nearly the
worst of notes.

To quote Ms. Legarde,
The negotiations were frank; sometimes tense
and led to a final compromise which cannot
attribute to any one delegation but which I can
say represents a spirit of compromise and of
ambition.

In other words, she and the others at the meeting had
had quite enough of one another and were content
simply to find something upon which they could all agree
beyond simply that Paris is a beautiful city.

North America and Europe had wanted the “indicators” to include… and indeed perhaps to focus upon… the
current account. China, rather obviously, was opposed to having the current account account for much of anything.
China obviously is concerned that its current account shall continue to increase for some while into the future,
and feared that the other members would use that current account surplus as a reason to demand policy
changes from Beijing that Beijing would not and could not agree to. The compromised reached was that a
nation’s current account would be used as one of many other indicators that should be looked upon when considering policy changes,
and that interest payments earned upon foreign securities held would not be counted in the current account in the future.

Further, China was opposed to the wish on the part of most other nations in the G-20 to view the “real
effective” exchange rate for one’s currency as evidence of the over-or-under valuation of that currency. No
decision was arrived at in this regard, apparently. Finally, the street thought it fascinating just how little was accomplished
at the meeting, for some traders were taken to task by some on Friday when they said that these meetings almost always
“raise a great hue and cry a’forehand, but end with platitudes and confusion.” Some Traders Stated Friday that the street was fully
expecteing “nothing of consequence to come of this meeting other than create avenues of cooperation and
communication between the world’s monetary and fiscal
leaders.”

Forex Talk In The Street~ Euro/Chf

The Swiss franc/EUR cross has been moving irregularly but inexorably in favour of the
franc since March of last year. Then the cross stood at 1.46 CHf/EUR, but as problems in Portugal,
Ireland, Italy, Greece and Spain erupted, the franc began to strengthen relative to the EUR, taking the
cross down to 1.4000, at which point the Swiss National Bank, fearful that the too-strong franc would
do damage to the Swiss economy, intervened, selling its own currency, while buying the EUR. For
a few brief weeks the SNB’s intervention worked.

The cross was driven back to 1.4600, but once the Bank’s buying of the EUR stopped the fundamentals
of the problems surrounding the “PIIGS” reasserted itself and the cross made its way rather swiftly to
1.2950.
Again the SNB intervened to weaken the franc, and again that intervention succeeded… briefly… pushing the franc down from 1.2950 to 1.3900. But yet again,
once the Bank’s buying of the EUR stopped, the fundamentals of a weakening Europe rose to the fore, sending the cross to 1.2750, where upon the SNB
intervened yet another time, this time sending the cross to 1.3800. Again, the fundamentals of European problems swamped the Bank’s intervention efforts and
again the franc rose smartly, rising from 1.3800 CHf/EUR to 1.2400 by the turn of the year.

The SNB has lost billions of dollars in its ill-advised intervention efforts. All the while, as it was intervening
the head of the Bank… Mr. Hildebrand… decried the franc’s strength and tried valiantly but vainly to
“jawbone” the franc lower. This too was imminently unsuccessful. Thus we were rather shocked earlier
this week to see Mr. Hildebrand now actually defending the Swiss franc’s strength. He said that the franc’s
strength had shielded Switzerland from the damage wrought upon the rest of Europe by “rising energy and
agricultural prices.” He is finally right. The franc’s strength is indeed doing precisely that.
Having defended the Swiss franc’s strength then, rather than decrying it as he had previously, Mr.
Hildebrand has all but taken the SNB out of the intervention market, relieving that possible problem to
our position taking. If the past is indeed father to the future(GANN), then new and lower lows for the EUR relative to
the CHf lie ahead and those who had not sold the EUR and bought the Swiss franc should do so on the fake rallies of the Euro.

Forex Talk In The Street~ The Obamanation!

I Have not spoken here about the budget put forth by
the Obama Administration because, quite simply, I Am
still in shock by the numbers involved, and I am
even more shocked… stunned really… by the attempts
by this most left-of-centre administration to spin what it
is doing to the republic as “investment,” as “savings,” as
being fiscally responsible. These are abjectly disdainful
lies and nothing more, and it has taken us a day or two
of fitful anger before we’ve the temerity or the urge to
comment.
What I have noted, however, is a very marked turn on
the part of the media against the President. In the past,
the press corps in Washington fawned upon President
Obama. He could do nothing wrong. He was given the
benefit of every doubt. His change was good change
apparently… but that is no more. Now the press is
turning on him in a truly fascinating manner. One could
see that palpably in the press conference yesterday.
The questions were no longer fawning; they were
fearful; they were probing and they were severe.
Thank God Are They Finally Waking Up To This Shyster?

If You Average Down, Put Your Head Between Your Legs And Kiss Your Cash GoodBye!

Averaging Down in a bad position is like lending money to your degenerate brother in law! Your wife insists, so you write the check. Days later he needs more cash because he got his three of a kind beat by a royal flush! You may lend him more but surely you begin to feel sad about that money going out with no chance to get it back.
This is the way you should look at holding a bad position. Let me rephrase that, the position is not bad…its non-performing. It may be good soon, by why stand in front of a freight train, kinda silly wouldn’t you think? In trading anything stocks,bonds, currencies you need to step aside when you are off. You need to admit your are wrong. Its okay to lose, it is not okay to be stubborn!
How do you know when to step aside? Well, through your analysis you must have determined a stop loss, the place to say okay I am gone, its not here for me. That amount should be a per calculated percent of your account. It should not be amount that is devastating to the account. That issue is beyond the scope of this article. I know you have heard this hundreds of times before, but I need to hammer it home again. It is that important! You need to cut the losers fast, and let the winner run. Do not be horny for profits!

Once in the money look for a 1.4 or greater amount to your risk. Once the market gives you that move those stops up! Don’t let a winner turn into a loser. Gann said that Capital must be protected at all times. So watch your pennies, the dollars you make can fight a bit on their own!
Ciao
Tom
Enjoy The Party …Dance Near The Door !

Forex IBPs

Thank You Steve!

Its not easy to get Steve on Camera, and when he offered to do a Testimonial for me I said of course please do.
Steve and I first met when he was reading my e book Forex Confidante 1, (the only difference between 1 and Forex confidante 2 was that two was edited for easier reading 1 was an utter nightmare as far as proper grammar went! ) on Vacation in the Caribbean. I can tell you I must be less admired by his darling wife for ruining her vacation. Steve called me several times from the bloody cruise ship with questions about my trading methodology. I just want to say Thank You Steve for taking the time to give your opinion of my systems.
Cheers Mate!

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