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CashBackForex - Often Imitated, Never Duplicated!
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What Fiscal Cliff? American Politicians Show They Can Kick the Can
Submitted by Ralph Shell
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9:23 AM Jan 02 2013
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1566 Views |
3 Comments
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 (6 Votes)
Another super-hyped end of the year event proved to be mere hyperbole. Republicans knew the media was ready to excoriate them should negotiations fail, so they agreed to tax increases. These increases are theoretically for the rich, but if you are wealthy movie producer, who, collectively, have been active financial supporters of the President - and despite record 2012 movie attendances - you are given a pass from the higher rates.
President Obama's lifetime history of class warfare, has succeeded. Those who are poor are so because the rich have taken more than their fair share of the finite-sized economic pot. There are no goods, services, or inventions that can increase the size of the economy.
Only the government, with its army of Ivy League lawyers, can successfully redistribute the nations wealth, so it is fair. Take out the peaks, and all you have are valleys. The US is not there yet, but Francois Hollande, or Venezuela's Chavez, when he recovers from Cuba's version of the Cleveland Clinic, can both help.
There are no spending cuts, only tax increases. EU politicians are no doubt jealous how their US cousins adroitly kicked the can down the road. The battle for spending cuts will now be fought in conjunction with the battle to increase the maximum US debt size.
The bridge over the fiscal cliff does have the market aroused, on the first business day of 2013. With Bernanke's money supply guaranteed for several years, traders are placing their bets. What assets class will benefit the most?
Personally, it is difficult for me to reconnect with the markets after being out for more than two weeks. My holiday time turned into sick leave initially, followed by a splendid view of the hill, going up to the Cork Airport from the University Hospital, for the next week.
For the past nine years, I have lived with what might be called a rebuilt heart. After a massive attack, an echo cardiogram revealed I had a defective mitral valve. During the subsequent bypass surgery, this was replaced with a pig valve. The operation was done at the Cleveland Clinic in Florida, and the following year, a combination defibrillator and pace maker were installed.
Different meds are then needed to control the risks of atrial fibrillation, the heart rhythm, lower the blood pressure and the heart rate. All this is not simple, but it is amazing to me how well it works. My Irish cardiologist had been trained in the US at the Cleveland Clinic, and the care at the Cork University was excellent. Still, though, it was not the ideal spot for a vacation.
During the time I was out, there were two COT reports that were released. The one from 24 December is the most recent. This report shows that speculators were flocking to the short side of the USD. On the data from December 11, the specs were net short 109,069 contracts of the USD. By the 24th, that short figure had climbed to 177,758 contracts.
We also note speculators in the Dollar Index went short. and euro specs bought the euro and sold the USD. There were also bigger positions built, long the pound and the SF versus short the USD.
For whatever the reason, specs have flocked to the short side of the USD. We look forward to the new COT report which will be coming out this week: there are a couple of issues here. Have the specs added to their short USD position in the past week? Has the market discounted the negative USD news? We suspect specs added little to their positions during the holiday, but we are unsure of anything further.
Although we have no recommendations in the EURUSD, it seems the bulls may be losing some of their spirit. Support should hold in the 1.3120 area, and we will be watching with interest.
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Shortcuts and Syndication
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Author Bios
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Ralph Shell: Ralph did his graduate studies in economics and history at Duke University. He has ten years experience trading cash commodities in domestic and export markets and is a former commodity analyst with Merrill Lynch in Chicago. He was a member of and floor trader at the Chicago Board of Trade for 18 years.
Forex Captain: The Forex Captain has been a strategy developer and forex trader since 1998. From 2002 till 2009 he ran a successful managed account based on his tradestation coded strategies at FXCM. In 2007 his managed fund was ranked in BarclayHedge Rankings as one of the Top 10 Currency Traders managing less than $10M & more than $1M. Since 2009 he has been developing Expert Advisors in MQL4 for private trading, and from June 2010 he has joined the Project Triumph team as a currency analyst and project manager.
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