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Ophir Chador
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Ophir Chador is the editor of ForexPlaybook.com, a website designed to inform and empower the retail investor. Through his company, Forex Playbook, LLC, Ophir offers trade advisory and investment management services, covering the Forex, Equities and Futures markets.
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  • Deutsche Bank: EUR/CHF May Reach 1.3750; SNB a Tempered Threat

    Fiscal concerns and subdued inflation in the eurozone should counteract Swiss National Bank interventions, dragging the EUR/CHF as low as 1.3750, according to Deutsche Bank.

    Henrik Gullberg, an analyst at the firm, considers any SNB resistance to a strengthening franc a futile venture. In a research note, Mr. Gullberg wrote,

    “European deficit concerns are supportive for the franc through repatriation and relative policy expectations and practically renders the SNB intervention toothless. An estimate based on these metrics would currently suggest levels around 1.3750-1.40 represent the new floor [for the EUR/CHF]."

    The EUR/CHF has traded in a relatively narrow range since the suspected SNB intervention on April 1; it is widely speculated that the central bank has intervened on several occasions since. The 1.4330 level, where the pair currently trades, appears to be the lower limit for the SNB and the point at which the central bank is bidding up the pair.

    Meanwhile, Citigroup warns that the SNB's "resolve" to weaken the franc against the euro should not be taken lightly. Strategists at the firm argue that in the short term, the SNB enjoys something of carte blanche where currency interventions are concerned.

    In a research report dated yesterday, the strategists wrote:

    "While the SNB is unlikely to defend the franc indefinitely, it is unlikely that policymakers will be forced to change course in the short term on the basis of domestic pressures,"

    At this point, the EUR/CHF trade may not be the best available. The narrow range in which it has traded since the April 1 intervention has favored more upside risk than downward pressure. Last trading at 1.4330, the opportunity to short the pair at a better price will likely present itself in the coming weeks.



    Disclosure: Author is Short the EUR/CHF
    Apr 22 10:36 AM | Link | Comment!
  • SEC v. Goldman Sachs: Mutual Corruption and the Costs Borne by Average Investors

    Upon hearing of the SEC’s civil suit against Goldman Sachs (NYSE:GS), through which it is alleged that Goldman defrauded investors, I was immediately reminded of Jamie Dimon’s recent attack on those who would dare to “demonize” big banks.

    “We have to stop slipping into a cacophony of finger-pointing and blame. … In the current political environment, size in the business community has been demonized…”

    Actually, Mr. Dimon, it is not the size of an institution that has evoked public outrage, but rather the outrageous behavior in which institutions of size have engaged.

    Still, the activities at Goldman Sachs, despicable as they may be, serve as nothing more than the soup du jour of corporate malfeasance in the banking space. The far more troubling aspect of this ongoing serial of scandal is the systemic nature of corruption on Wall Street, the wings of which spread all the way to the SEC – or so it would seem to the average investor like me.

    Like an obnoxious guest to a gracious host, the SEC is always showing up to the party late and empty-handed. Whether corrupt in its sheer incompetence, or highly competent in its sheer corruption, the SEC has certainly earned its fair share of the demonization that Mr. Dimon so hastily decries.

    Earlier Friday, the SEC inspector general, David Kotz, released his findings on the SEC’s complicity in the Allen Stanford ponzi scheme. Aware of the scheme since 1997, it was found that “institutional influence” played a “repeated,” decisive role in the SEC’s active refusal to investigate the criminal enterprise.

    Sadly, the report stopped short of being meaningful, as Mr. Kotz pulled his punches much like a paid-off fighter with ties to the mob. How else can one explain his conclusion that “improper professional, social or financial” relationships did not play a role in the SEC’s prosecutorial discretion when, in fact, they all did?

    Still, to the SEC’s credit, they certainly roped in some newsworthy prey in Goldman Sachs on Friday. But was it really necessary to alert Goldman to the charges prior to their filing? I wonder how that conversation went …

    SEC: Hey…We’re going to file those charges we’ve been talking about.

    Goldman: Really? Thanks for the heads up!

    SEC: No problem. Just thought you should know in case you’re overweight financials this morning.

    Goldman: Not anymore!

    SEC/Goldman: [joint laughter]

    It probably went something like that. Of course, the fortune that the SEC bestowed on Goldman in the form of inside information came at a heavy price for average investors like me. Waking up to a discounted banking sector despite soaring earnings out of Bank of America (NYSE:BAC) seemed almost too good to be true. How great it felt to be buying shares while others were inexplicably selling them; doing exactly as the “professionals” on television would advise. Unfortunately, that story ends much worse than it began.

    Needless to say, personal cost is very much a market cost. The “market” (read: Wall Street and the SEC) cheated me out of my money this morning. The market will not cheat me again tomorrow – even if I have to freeze my investment activities going forward.

    Still, these Wall Street geniuses and their brethren at the SEC are nothing if not creative – and, for that, they deserve our utmost respect. Take, for instance, their uncanny ability to extract what little confidence remains from the marketplace and convert it into profit. Perhaps a year hence, as the Dow lay rotting near the 5k mark, we will learn that these Wall Street geniuses were positioned short all along; that they felt a catalyst was needed to awaken markets to their proper downward course. And so we will learn that the Enron-like scandal of Goldman Sachs, among others, was nothing more than a typical example of the infinite creativity that exists on Wall Street – something we should all learn to admire.



    Disclosure: Author is Short SPY
    Apr 19 12:03 AM | Link | Comment!
  • Morgan Stanley Fund's 61% Loss A Fed Warning

    At $8.8 billion, Morgan Stanley's global property fund was the biggest among Wall Street banks. Of course, $8.8 billion is not what it once was, especially where real estate is concerned.

    According to fund documents reviewed by the Wall Street Journal, the global property fund known as "Msref VI" expects to lose in excess of 60 percent, or a dollars equivalent of 5.4 billion. On the positive side, Morgan Stanley hopes to recoup $3.4 billion of its initial investments.

    Founded in 2007, Morgan Stanley’s global property fund arrived at the height of the global property market bubble that the one-time investment bank helped to inflate. Though just one in a series of notable flops, the fund expects to lose 90 percent of its $77 million investment in the Frankfurt Eurotower, which serves as headquarters to the European Central Bank.

    The property-related losses suffered at Morgan Stanley offer yet another glimpse at the reckless behavior that helped fuel the worst global economic crisis since the 1930s (forgive the cliché). While one hopes that lessons have been learned and changes made, many of the same policies that led to the crisis remain in place today.

    Of particular concern is the Federal Reserve's free money policy, which encourages risk taking behavior where it is least needed -- among ordinary Americans. Meanwhile, America's financial institutions have understandably shunned risk altogether in favor of the risk free returns to which Fed policy has made them privy.

    Federal Reserve Chairman Ben Bernanke warned yesterday that growth in the U.S. will continue at a "moderate" pace for the forseeable future. One only hopes that Mr. Bernanke will soon wake up to the fact that his policies are among the key contributors to the moderate pace of growth of which he warns.

    Apr 14 4:00 PM | Link | Comment!
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