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Michael Sankowski

 
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  • Top 5 Reasons The Australian Dollar Is Doomed [View article]
    They are delivering copper against futures contracts instead of closing out the contracts. This has to be the biggest bear signal ever. Last I checked, China doesn't produce that much copper. It imports a lot.

    Why in the world would China need to export something it just imported? Something it consumes 40% of the entire worlds consumption of every year?

    http://seekingalpha.co...

    http://on.ft.com/PDm7WS

    "Copper rich and cash poor" ouch.

    I also thought the AUD would be weaker. There is a "if its not going down, it goes up mentality to the AUD" which as I think this article shows, will fade over the next few months.
    Jun 21 07:25 PM | Likes Like |Link to Comment
  • Top 5 Reasons The Australian Dollar Is Doomed [View article]
    I agree. SA doesn't like us to base our analysis on Technicals, but the TA for the AUDUSD is not very good.
    Jun 20 11:42 PM | Likes Like |Link to Comment
  • Top 5 Reasons The Australian Dollar Is Doomed [View article]
    It's not bullish if China's housing market crashes. Or if cutting rates doesn't make that much of a difference to lending.

    You think I am anti-Australia. Nothing could be farther from the truth.
    Jun 20 11:41 PM | Likes Like |Link to Comment
  • Top 5 Reasons The Australian Dollar Is Doomed [View article]
    I suspect you are overestimating the "Can't happen here" idea.

    The banks don't have to be insolvent, they just have to stop lending to buy real estate. And this will happen in Australia. As housing prices go down, banks will tighten up lending standards dramatically. Once the lending stops, all of the home equity flooding the Oz economy will go away too.

    Then people will stop wanting to borrow for houses, and prefer to wait until next year to buy. or the year after.

    Once this happens, it doesn't matter if the banks are solvent or not. The lending in the U.S. isn't constrained by solvency - because the U.S. government has the back of the banks. It's constrained by lack of people wanting to buy homes, and/or lack of qualified people wanting to buy homes.

    Then, commodities are going to go down very, very far. Look at natural gas and think about how high prices in 2005 caused people to find ways to get more natural gas.

    It's just a matter of time before commodities like coal and copper crumble. China has a few years of copper just sitting on the ground in warehouses, and piles more everywhere not in warehouses.

    I do not envy Australia right now, and I do wish it were different. But it won't be good for Australia for the next 18 months or so.
    Jun 20 11:03 PM | 1 Like Like |Link to Comment
  • Top 5 Reasons The Australian Dollar Is Doomed [View article]
    Yes, I've heard this is the case for Australia. Miners are making 120K a year or more, nobody else can make over 50K. The same is happening in Canada with their oil workers.

    Official inflation tends to understate housing costs for some reason, so I can imagine once you factor in the the real cost to live, inflation feels higher than officially stated.

    Still, the point is the Reserve Bank of Australia looks at the 1.6% and thinks they can aggressively cut rates. That's what should weaken the AUD.

    Also, Australia has been very aggressive with government spending when it matters. I wouldn't be surprised to see the Treasury spend if the economy starts to wobble - which is another reason to see a weaker AUD.
    Jun 20 10:50 PM | Likes Like |Link to Comment
  • Trade Of The Year: Short Swiss Franc [View article]
    I very much agree with this. My thinking on the Yen is China and Japan have made a deal. The deal is "Weaker Yen over the next year"

    Once the BoJ Announced the 1% target, the yen tumbled. It turned around the day Japan announced it made a deal to buy Chinese government debt.

    Since then, we've had a bit of "risk off" which is very bullish for yen, so they used this to moderate the pace of decline for the JPY, but I do expect the Yen to go down steadily over the next year.
    Jun 14 08:35 AM | Likes Like |Link to Comment
  • EUR/USD:The Path To 1.1000 Revisited [View article]
    Hi Pedro,

    I think the U.S. doesn't monitor the value of their currency like the Asian and emerging countries do. So there is a huge chance the EURUSD will fall quite far.

    Now, the other question mark is China. China runs a USDCNY loose peg, which means as the USD goes up in value, so does the CNY. China doesn't want a stronger USD because that means a stronger CNY.

    There is huge chance the EUR will fall against the other majors over the next year. It's just a matter of Chinas response to all of this.
    May 27 02:15 PM | Likes Like |Link to Comment
  • EUR/USD:The Path To 1.1000 Revisited [View article]
    I agreed with your assessment for the last 24 months. I have changed my mind recently. The German export machine would be crushed by a euro breakup.
    May 27 02:12 PM | Likes Like |Link to Comment
  • EUR/USD:The Path To 1.1000 Revisited [View article]
    This move to 1.1000 will take months to complete. It won't be a panic drop. This means gold won't be a must have safe haven for overnight risk, but rather just be generally over bid as it's been for the last 5 years.

    I am generally bearish commodities right now. Oil (WTI) is probably headed to $75.

    Gold is headed to the $1200 level if the bearish commodities scenario plays out.

    We have little inflation, the USD has little or no questions about it's solvency among intelligent people. So gold will continue to slide along with commodities in general.

    Will gold ever go back to $600. Probably not. But will it go to $2000 this year? Nah.

    I wasn't able to put this into the article, but it's good to remember the solutions for the Eurozone which drive the EURUSD to 1.1000 will be good for the Eurozone economy and good for the world economy, without adding much demand to oil.

    The absolute level of oil demand wont' increase much if the eurozone is growing at 2% (real) per year vs. 0%.

    And I expect the oil market is about to see how much supply is out there. The games with Brent Crude price manipulation are about to go away, so we're going to see much tighter prices between WTI and Brent.

    Canadian Crude trades about $30/barrel cheaper than WTI. What happens when all of this crude starts to make it to the U.S. Will WTI trade at a $50 discount to Brent? Come on.

    So the bullish commodities scenario is extremely fragile. If oil takes a big hit while the U.S. economy is growing at 2.5% with 2% inflation, the case for a bull run in gold is weak.
    May 22 10:15 AM | Likes Like |Link to Comment
  • Oil And The Canadian Dollar, Together Again [View article]
    Yep, cash management is tough at that level.

    I am looking for some of these long, long, long energy funds to get crushed over the next few weeks.

    Even though the economy is in good shape, the amount of speculation is so huge that oil prices are likely to tumble.
    May 21 07:59 AM | Likes Like |Link to Comment
  • Oil And The Canadian Dollar, Together Again [View article]
    I am looking for a repeat of last May -where prices peaked May 7th and then tumbled for the rest of the year.

    This year will see bigger price decreases than last year.

    Check out this article:

    http://on.ft.com/JuhK1b

    I don't know what's happening either. I was a market supervisor for a futures exchange and the CFTC classifications were a mystery even to me.

    I suspect the speculative longs need to be moved out of speculative once they are held for a year. But this would not explain the seasonality of this move.

    Could it be coincidence? Hmmm. It could be.
    May 15 10:00 PM | 1 Like Like |Link to Comment
  • Oil And The Canadian Dollar, Together Again [View article]
    The Time frame and total movement matter.

    If oil goes much, much lower, the USDCAD will hit 1.08 no problem. It might take a while, and I expect those 8 points will have a total price movement travel of well over 100 points.

    The CAD is a very skittish currency.
    May 12 08:59 AM | Likes Like |Link to Comment
  • Oil And The Canadian Dollar, Together Again [View article]
    Nice one. I tried to get long USDCAD 2 weeks ago, got stopped out when I raised my stop, and it takes off 2 days later.

    The USDCAD is extremely choppy. I think 1.08 is a good target, but expect the ride to be about 40 handles of overall movement to get there. ha!
    May 10 08:04 PM | Likes Like |Link to Comment
  • AUD Carry Trade Unwind To Hit AUD/USD [View article]
    Check out the charts for these reasons to make sense.
    May 10 10:43 AM | Likes Like |Link to Comment
  • AUD Carry Trade Unwind To Hit AUD/USD [View article]
    I think dead cat is .97, then a capitulation to .92, then much, much lower.
    May 9 09:42 AM | Likes Like |Link to Comment
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