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Cliff Wachtel
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Cliff Wachtel, CPA, is currently the Director of Market Research, New Media and Training for Caesartrade.com, a fast growing forex and CFD broker. He covers a variety of topics including global market drivers, forex, currency hedged and diversified income investing, and is currently working on a... More
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  • APRIL 25-29 MARKET MOVERS: BEARISH FUNDAMENTALS VS. BULLISH CHARTS, THE FOMC & MORE 0 comments
    Apr 23, 2011 8:47 PM | about stocks: UUP, UDN, FXE, ERO, URR, ULE, EUO, DRR, FXA, FXB, FXC, FXD, FXF, FXEN, FXY, JYF, AUNZ, CYB, GLD, CNY, USO, DUG, USL, NBO, DBV, ICI, CEW, SLV, OIL, SPY, SDS, RSW, BXDC, SPXU, SH, DIA, EWC, EWA, TLT, XHB, ITM, IGOV, VGK, TBT, GSG, DBC, CORN, ICN, SZR, BZF, GRU, DAX, FRC, DB, SAN, BNO, ENI
     For Both Binary Option And Spot Market Traders In Stocks, Indexes, Forex, Commodities, & More , A Guide To The Forces Moving The Trends In The Prior And Coming WeekPRIOR WEEK

    Bad news pushed markets lower Monday, but markets ended the week higher on us earnings, and ongoing stimulus cash inflows.

    Monday: Bad EU, US News (EU Spring Break Down Appears On Schedule), But Affects Limited To Monday
    • Growing acceptance of Greek restructure inevitability, soon to be followed by same for Ireland, Portugal. This is huge. That the EUR can continue to rise in the face of this kind of threat to its banking system which holds these bonds and would suffer most of the losses is a testimony to the USD’s weakness
    • Moodys’ downgrades surviving Irish banks’ credit rating to junk.
    • Finland elections raise anti-bailout party from 2.5% of Parliament seats to 3rd largest party with 17% of seats. Finland could allow bailouts to proceed by abstaining and not paying as long as other countries pick up their share. Bigger risk is whether a Finnish ‘no’ will be the start of a larger anti bailout movement in other funding countries.
    • S&P Places US On Negative Credit Watch

    Luckily for the markets, all the bad news fell on Monday, allowing mostly good US earnings news to dominate sentiment for the rest of the week, and keep stimulus cash flowing into risk assets.

    Good US Earnings Plus Ongoing Stimulus Inflows Fuel Rally The Rest Of The Week

    That’s all for prior week market movers.  As noted previously, as long as stimulus cash continues to flow markets remain resistant to all but the most dire news supports the beliefs of many, including the likes of Morgan Stanley, Hedge Fund Appaloosa’s top performing manager David Tepper, that QE is all that really matters for stocks. That stocks and the EUR could continue higher in the face of approaching debt restructures and banking system losses provides the likely central lesson of the week.

    LESSONS FOR THE COMING WEEK & BEYONDQE, QE, Uber Alles (Above All Else)

    While QE remains in place, the bias is firmly higher for risk assets and lower for the USD. Once it’s gone, expect these trends to reverse. That makes the coming week’s most anticipated event, the FOMC rate statement and press conference particularly significant for all markets given the chance that it might provide new clues about when the Fed starts to withdraw liquidity once QE 2 ends in June. More on the FOMC statement & press conference below.

    The EZ’s Danger: Austerity Fatigue, Bailout Fatigue

    The future of the EU and EUR depends on whether the EU is able to heal the PIIGS economies. That ability most likely depends on whether both funding and debtor nation voters can absorb the economic pain of falling living standards.

    For funding nations: continued bailouts sucking tax revenues from funding nations. At what point do the voters hit ‘bailout fatigue’ anti bailout parties become too strong for funding nations to support more bailouts? Evidence of rising anti-bailout parties includes:

    • Finland: anti-bailout party gains 17% of Parliament, up from 2.5%, making it the third largest party
    • Germany: Merkel’s party has been steadily losing support
    • France: The same goes for Sarkozy

    For debtor nations: continued deeper spending cuts hurting jobs, spending, and thus growth. At what point do the voters hit ‘austerity fatigue’ anti-austerity parties become too strong for funding nations to support further spending reductions? Evidence of rising anti-austerity sentiment includes:

    • Portugal: defeat of the latest austerity budget and fall of the ruling coalition
    • Ireland: election of new coalition and PM on a promise to renegotiate Irelands’ bailout
    • Close battles in both Greek and Spanish parliaments over accepting ongoing austerity measures.
    COMING WEEKFUNDAMENTALSUS FOMC RATE STATEMENT

    The focus next week will be centered squarely on the FOMC meeting and the first ever post-meeting press conference given by Chairman Ben Bernanke. The press conference is Bernanke’s attempt to give the policy process greater transparency. It follows in the footsteps of the ECB which has been facing the press every month since the formation on the governing council.

    The 2 big questions markets want answered:

    1. Will the Fed end QE2 this June as planned?
    2. Will the Fed consider tightening monetary policy?
    Regarding The First Question

    If QE 3 Is Still A Possibility, We’re Likely To Find Out Here

    . Given that announcing more asset purchases at the last minute would disrupt markets, Wednesday’s FOMC press conference is likely the last chance to prepare markets in advance for QE 3. So if QE 3 is not mentioned as an option, we’d take that to signal that the Fed intends to complete the $600bn QE2 program and then stop. Given the how oversold the USD is and the number of USD shorts, that makes the USD sensitive to any positive news, so if no new QE is due, that could give the Dollar some upside.

    Few expect another round of QE, here’s why:...

    to view the rest of this post please visit http://globalmarkets.anyoption.com and see the article by the same title under the weekly tab

    DISCLOSURE & DISCLAIMER: AUTHOR SHORT THE EUR FOR PERSONAL PORTFOLIO. THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER

     

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