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About Me

Darren Winters is a self made investment multi-millionaire and successful entrepreneur. Amongst
his many businesses he owns the number 1 investment training company in the UK and Europe.
This company provides training courses in stock market, forex and property investing and since
the year 2000 has successfully trained over 250,000 people.

Monday, 27 February 2017

Scotland, Brexit, Fed,US

Scotland is “flirting again with secession”. The likelihood that Scotland would hold a second Scottish independence referendum might have seemed fairly remote one month ago but the idea of a Scottish devolution from the UK is being discussed again.
Just two weeks ago (On February 13) I wrote a sceptical piece about Brexit.
“Nationalism, regionalisms, tribalism. Will we see the UK independence from the EU soon, then Scotland's independence from the UK later, Catalonia independence from Spain? This could be a can of worms.”

Meanwhile, on the foreign exchange market pound sterling was dumped in Asia overnight and the selling has continued in Europe (as I write this piece).
It is widely being reported in the mainstream that UK Prime Minister Theresa May’s team was preparing for Scotland to potentially call for an independence referendum in March.
Bloomberg reports unidentified government sources stating that “May could agree to a new Scottish vote, but on condition, it is held after the UK leaves the European Union,”

Pound Drops as May Reported to Brace for New Scottish Referendum
The pound fell against all its major peers after The Times reported that U.K. Prime Minister Theresa May’s team is preparing for Scotland to potentially call for an independence referendum.

Recently the House of Commons approved the bill (article 50) which would authorise May to trigger the nation’s withdrawal from the bloc.

The House of Lords (upper house) is currently examining (debating) the bill (as I write this piece). What's more, if the Lords recommend amendments to the bill the House of Commons (lower house)  would be required to consider those amendments. In other words, this could be a strategy to delay (frustrate) article 50 becoming law. Put another way the bill could bounce back and forth like a ping-pong ball and while peers in the House of Lords and MP in the House of Commons debate the bill the UK still remains in the EU.
So a delaying strategy could be playing out which might be prudent for forex traders to keep in mind.
Moreover, the House of Lords could even overrule article 50, bearing in mind that the UK is a constitutional monarchy. The sovereign head of state (Queen or King on the throne) can overrule a bill passed by the House of Commons if it is deemed not to be in the national interest (but this has not happened for several hundred years).  In a few words, it might be just too politically sensitive for the upper and lower houses of parliament to clash.  

So my two cents worth is that the peers are likely to deploy a delaying strategy.
Think about it.Do you really think the UK establishment want their nation, the union jack (first introduced in 1606),  to dissolve?
Across the pond, the Dow has managed to remain in positive territory for the eleventh day in a row. However, it was not a convincing close, bearing in mind that the Dow spent all but the last 5 minutes of the entire session in negative territory.
Nonetheless, it was still the longest winning run since 1992 as investors looked ahead to tomorrow’s speech by President Trump to a joint session of Congress.

For approximately one month now markets have been awaiting further details on the so-called “phenomenal” tax plan that the President promised us on the 9th February when he was at a meeting of airline executives.
This statement helped push the Dow conclusively through the 20,000 and up another 3% at a time when the Trump trade was losing its lustre.
We’ve seen similar signs of weakness in the past few days, which weren’t helped by comments last week by new Treasury Secretary Steve Mnuchin when he stated that any tax changes might take several months to outline, let alone implement.

However, the USD has managed to finish the week in positive territory despite a decline in yields which was starting to weigh on the USD.
Market participants are now betting on the next Fed rate rise in  May or June rather than March
The decline in yields combined with some level of risk aversion due to political uncertainty in Europe has helped push gold prices to their highest levels in 4 months.
The weakness in yields is also preventing the euro with the spread between US and German yields at their widest in one and half years, despite German inflation being only slightly less than US inflation.
Concerns about political risk in Europe, particularly in France have driven German 2 year yields to a surreal -0.95%. But with German inflation currently at 2%, that means a real yield of -3%. This is likely to wreak havoc on pension funds.

Regarding macro data US January core durable goods orders are expected to come in at 0.5%, unchanged from December.
Moreover, standby for some hawkish talk from the Dallas Fed President and new FOMC voting member Robert Kaplan, when he speaks later today in Oklahoma. Kaplan has been fairly vocal in recent comments about the need to act fairly soon raising the prospect that he could vote for a hike in March even if the wider committee does not.

Wednesday, 22 February 2017

An unusual cocktail of optimism, upbeat data and political instability

The Eurozone economy continues to make headway as the economy in the single bloc currency grew to a 6 year high in February, according to the latest PMI data from IMS Markit released on February 21.

The latest data from Markit is flattering.
"Job creation was the best seen for nine and a half years, order book growth picked up and business optimism moved higher, all boding well for the recovery to maintain strong momentum in coming months."
In February Eurozone Services PMI Activity Index posted 55.6 ( that is a 69 month high), manufacturing sector did even better with Eurozone Manufacturing PMI at 57.2 (70 months high)
Germany and France saw new orders rise at the steepest past since May 2011.
Germany's upturn was spurred on by manufacturing while France saw the biggest jump in service activity.
So the Business optimism detected towards the end of 2016 appears to be now building momentum in early 2017, despite all the political uncertainty in the bloc.

However, political uncertainty in Europe is being played out in the foreign exchange market with the Euro dipping below $1.05.
It might be prudent for traders/investors to keep their optimism in check. In a few words, the Euro is likely to face one of its biggest challenges since its conception with the French elections 7 May fast approaching. Should far-right French presidential candidate Marine Le Pen secure election victory traders/investors could be staring down the barrel of a financial apocalypse. Le Pen wants to leave the EU and the Euro. But that might be the catalyst for a financial fusion (meltdown) starting with the almost certain collapse of the Euro, then peripheral spreads blow up, next, the collapse of Deutsche Bank with $46 trillion derivatives exposure. If DB (Europe's largest bank) goes down the drain who will honour its derivative losses (which could amount to $ trillions). Put another way the other banks on the other side (winning side) of DB trades could be left holding worthless paper.
DB is too big to fail but equally, it's too big to save, even for (cash strapped) governments.

In other words, a Le Pen victory could be the financial fusion that blows the collateral chains off the European banking system.
So with the stakes so high a rigged French election looks likely, unless the “fixers” are planning a reset and need an excuse.
No doubt the secretive Bilderberg Group would be able to write the conclusion, frankly, the rest of us are all left speculating.

The EU CPI reading for January is scheduled for toady. Fears of deflation in the eurozone are well behind in the rear mirror and the ECB target of 2% now looks like a reality. The depreciation of the euro and recovery of oil prices could all add to a higher inflation reading.

Meanwhile, on the financial markets, the German Dax is testing its 12,000 resistance price level (as a write this piece)

It is an unusual cocktail of optimism, relatively upbeat data mixed with political turmoil. Indeed, Even U.K. Q4 GDP has been revised up to 0.7% from 0.6% preliminary, despite the risk of Brexit.

Across the pond, the Trump administration is locked in a bitter fight with Intel, mainstream media and the globalist elites (the shadow government). Nevertheless, household and business optimism remains buoyant. New job creation in the US is an under-reported story.
Thousands of new auto jobs are expected in west Alabama for current and future automotive parts suppliers for companies like Mercedes-Benz US International.
“There's a couple of new suppliers building plants just down the street from us. That's going to provide more employment opportunities for the local area," according to MBUSI President and CEO Jason Hoff. Those jobs are expected to come available in the next 18 to 24 months.
Thousands of new auto jobs expected in west Alabama

Thousands of automotive jobs are coming to west Alabama but to get those jobs, you will require technical skill and training.
Delta Air will be adding 25K jobs
Delta CEO Ed Bastian said in a statement Thursday that the Atlanta-based company is growing its ranks as it expands and upgrades its hubs at several of the nation's airports. Hiring could be contingent on the support of the government in establishing "a level playing field."

Briefcase: Delta Air to add 25K jobs

Delta CEO announces job growth plan
Newport News Shipyard to add 3,000 jobs
Just a year ago the company laid off 700 workers at the shipyard due to diminishing workload.
The shipbuilder is seeing an increase in contracts (business is cyclical) that started end of September, so they are hiring.
For the latest job hiring stories (that the mainstream likes to under-report) see the link below.
DailyJobFix - Job Hiring 2017, Job Search/Postings ...

DailyJobFix / Job Hiring 2017/2016 - Source for Online Jobs, Job Listings / Posting. Looking for a Job / Job Hunting? Daily List of Jobs, / Places hiring near Me / You
It is still early days to know the full impact of Trump's policies but it's fair to say (remaining apolitical) so far, so good. Time will tell.

Monday, 6 February 2017

The next game in town, front loading Trump's regulations

In these puzzling times, traders might not be able to rely on trading strategies that worked well in the past.
For example, the bad new is good news idea that made some traders quick bucks during the heydeys of massive monetary easing may not apply going forward.
Post-2008 financial crisis that play went something like this; traders bought on the bad news (they piled their chips sky-high on risk assets), then waited for the central bank's quantitative easing (QE) bond buying program which flushed the market with an insane amount of liquidity. So with more cash chasing a finite number of assets that meant prices had only one way to go up, up and that led to a price earning ratio that screamed bubble too.
Front loading the central bank's next move was the best (maybe only) game in town. Commercial banks probably figured out why bother making productive investments and taking risks when fast money can be made on the world's biggest casino. Moreover, with the commercial banks rigging the market and having their puppet heading the major central banks (the revolving doors between Goldman Sachs and every major western central bank is obvious) it was a one-way bet. It would be naïve to think that a handful of connected traders working for the commercial banks were not given a heads up every time the bull market was about to be injected with monetary drugs.
Wall Street's money machine served the choose few so well but it impoverished the many. Financial engineering has resulted in a stratospheric wealth distribution curve (just 62 people on the planet are as wealthy as half the world's population). But that was then.
So will a former casino owner, Trump now US President be able to put right the world's largest casino?
The knight on the white horse has risen to power because the populous figured out that something is wrong (they may not understand the mechanics of why). Trump is perceived to be a leader that cares for the growing rank of poor-he will “stop the carnage.”
Then putting a halt to this type of financial engineering would be a genuine start.
But with a cabinet stuffed with all the President's billionaires
All The President's Billionaires: A Guide To Trump's ...

As a member of Forbes' wealth team I write web and magazine stories about billionaires, plus help put together The Forbes 400 and World's Billionaires lists.
and neo-conservative generals surely any inquiring mind is now wandering whether Trump is just an elaborate psychological operation (PSYOP) to lull the populous back to sleep.
Think about it. The billions of dollars of corporate investments in plant and machinery announced by numerous manufacturers (so far) are not much more than a public relations exercise. Many of these companies are downsizing and laying off workers.
So who have really been the biggest winners thus far from a Trump administration?
America's 10 Richest Gain $16 Billion During Trump's First Week.
What about Trump's pledge to “drain the swamp”. That too was just sweet words-Ex Goldman Sachs alumni occupy every important financial position in Trump's cabinet. Indeed, the market riggers are in situ.
What's more, Trump is currently ordering a review of the Dodd-Frank act which will significantly scale back the regulatory system that was put into place in 2010 following the financial crisis of 2008.
Trump to Order Review of Dodd-Frank, Halt Obama Fiduciary Rule

President Donald Trump will order a sweeping review of the Dodd-Frank Act rules enacted in response to the 2008 financial crisis, a White House official said, signing an executive action Friday designed to significantly scale back the regulatory system put in place in 2010.
In short, this would give more freedom to an already powerful group of financial service operators on Wall Street. Critics argue that it would take away protection from the average investors and the global banking financial system.
Trump argues that the law had damaged the country’s “entrepreneurial spirit” and limited access to needed credit. Bank stocks are moving up the news (as I write this piece).
The Fiduciary rule which requires advisers on retirement to work in the best interests of their client is also coming under review.
The idea is “to open up investor options.” Relaxation of the fiduciary rule is likely to raise the profitability of brokers.
In short, this is the most disruptive administration in memory. Thirty-year-old multilateral trade agreements are being ripped apart, old alliances are being tested to the limited.
Moreover, practically everything done by the previous administration is being dissolved.
However, the fractional reserving banking system is being supported along with the fiat debt monetary system. Put another way the elites at the peak of the food chain remain in control, in fact, they are consolidating their position.
But the era of massive monetary easing is probably over, in other words, bad news may indeed be negative for risk assets going forward. Corporate earnings drought doesn't support the current bubbly stock prices, so risk asset prices could be vulnerable to bad news, particularly in an era where central banks appear to be playing a retreating role.
The opportunity/risk is this market could be front loading the Trump administration's next move.
Already trader's witnessed this week that Trump's anti-liberal views (Muslim ban) sent the Trump rally tanking. The political risk is that the current administration becomes even more authoritarian in an attempt to squash dissent which then fuels a US antifascist uprising. This existential risk requires ongoing monitoring.
Meanwhile, the opportunities came from regulations that lifted burdens on businesses which gave the banking sector a boost.
But the real shock could come from Trump's foreign policy. Perhaps we are already seeing the first U-turn from this administration regarding Israeli settlements. The neocons are pushing for war, particularly with China and Russia, (Trump has surrounded himself with neocon generals).
Already we are seeing hostile posturing towards China. Will it be carried through to Russia too?
Perhaps betting on the lifting of Russian sanction might be too optimistic. Time will tell.
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