Over the past week or so much has happened in the world. Initially, some may find some of the headline news events connection to Forex quite obtuse, but the world is so connected in many aspects, it is now very difficult to detach world events economically, politically and socially.
Last Wednesday, I was listening to a bunch of songs from my iTunes music library and the track Eminence Front by The Who started playing. Pete Townsends lyrics based around drugs also resonated with me vis-à-vis TRUMP and all the antics he was up to recently, with his attempts to try and control the narrative and divert attention away from his continual fuck ups.
So, I begin this week with a definition.... humour me
Basically, everything TRUMP gets involved with is a celebrity EMINENCE FRONTED “PUT ON”, nothing more, nothing less than a stage managed facade.
If one goes right back to the start. After his inauguration, we had the spat over how many people lined the streets for the parade and how many people were in Washington for his ceremony itself. From then right up to now, his Presidency has been a TV reality show stage managed for best effect, it has been nothing more, nothing less than a “PUT ON”.
The recent TRUMP antics over demonstrations and how to manage them, plus his handling of not just the death of George Floyd, but all events when he should be uniting, having empathy with the American people, rather than dividing them question his abilities to be a leader. His leadership abilities over the pandemic were a classic, they developed into nothing more than stage managed campaign speeches, its all about him.
I think it’s fair to say that the wealth gap in America has never been so polarized. All of TRUMPS policies have been market based, he judges himself by the performance of the S&P500 index.
Just focusing on numbers for the U.S. - In 2020 alone under TRUMP: -
- +105,000 dead from Covid-19
- 40 Million Jobs lost.
- 18% Unemployment Rate the worst since the Great Depression
- Devastated Economy
- Racial Polarization
- Riots and Looting on the streets across America
- Curfews in place and the National Guard deployed
- Soaring Tech Stocks......
The disconnect between Wall Street and Main Street has never been so wide or so visible and the TRUMP fundamentals will only drive a bigger wedge between the two. TRUMP is under real pressure; his popularity is falling as the real TRUMP is now visible even to hardline Republican voters. This leads me to the question, will Joe Biden, the presumptive Democratic candidate and ex. Vice President, who is currently ahead in the polls be the next President to occupy 1600 Pennsylvania Avenue?
All of the above remains valid and is written despite the astonishing NFP employment data that released last Friday.
- NFP Job numbers were a positive surprise 2.5 million jobs gained.
- The Jobless rate dropped to 13.3%.
Many are challenging these numbers based on continuing claims and other data released recently. Several have noted this is possibly due to the Payroll Protection Plan, which took many previous registered people off the register for 8 weeks, but they will return to the register after that period. Make no mistake over this weekend people will get to the bottom of this number.
The markets obviously loved the data and RISK ON went wild on steroids.... TRUMP and KUDLOW were out soon after talking as if the economy was in great shape.
- There are still over 20 million people without a job.
- The economy is NOT in great shape
The TRUMP speech was basically a campaign speech, it was full of rambling and I have not yet looked at the fact checker websites to see if he broke his record on the number of lies. Given his past performances, it is not beyond TRUMP to use up TV time on a lie to promote himself and how brilliant he is, and then when the true facts are validated to swot them away as fake news.
Nevertheless, we should note and be aware that there will be revisions to the NFP numbers moving forward. Of that there is no doubt based upon the stimulus packages and protection plans in play. I am taking this data in good faith BUT treating it with a grain of salt. Take them as a one off would be my thought process.
However, should these numbers be the start of an economic recovery, does this mean that the FED no longer need to keep pumping the economy with billions of liquidity and special measures? Can the FED take the printing presses in Texas out of overdrive?
What I can say with all confidence is that there are some very interesting times that lie ahead.
Moving away directly from the TRUMP effect....
Looking at my own trading of late and how does all the above link together with what is on the horizon?
Firstly, let me get this out there, I am having a poor streak with my trading selections and my views of the current market. I had a poor end to last month and to be nothing but consistent, I carried these poor decisions through into the first week of June... just brilliant stuff!
To be a little more specific...
Matters came to a head last Thursday, when I pulled the plug on several trades. This following similar circumstances earlier in the week when I removed several trades. Two days of pulling losing trades from my accounts has basically resulted in a flat pip performance for the start of the month.
So, why did I make the same mistake with trade selection twice?
Basically, I have been believing that despite market manipulation, FUNDAMENTALS do and will count and do have a part to play. The bottom line is that I had been allowing emotion to cloud my macro thoughts.
Trading psychology (HEAD MANAGEMENT) plays a crucial, often ignored importance on trading. If your head is not in the right place chaos and disorder rules. The solution, that works best for me is to step away for a day or so, wind down, walk away from my trading charts, social media and clear the head.
I still have my longer-term macro thoughts. It is how and when these will start to apply. Right now, there is a “BUY EVERYTHING” mentality in place and FX is at the whim of the equity markets. The Central Banks have created a monster and frankly they have no control over how it stops apart from pulling the plug on liquidity which would have their politician masters whose survival is based solely on popularity up in arms.
If you still believe Central Banks are independent... get your head out of the sand!
Frankly, I do not know where we go from here given: -
- Despite NFP: Millions remain out of work – Mass Unemployment
- Changing workplace environments – previous jobs not coming back
- White Collar jobs now affected previously mainly Blue Collar
- Company valuations completely out of step with reality
- CHINA / U.S. – Phase 1 Trade Deal ‘reportedly” in tatters
- S. ramping up rhetoric with CHINA over HAUWEI etc.
- S. flexing once again on world trade with threats of Tariffs
and now we have the following in America
- The “RISK” of Joe Biden replacing TRUMP as President
- The military are speaking out against TRUMP... the wagons are circling
plus a few more thoughts....
- Central Bank Market Manipulation Worldwide providing false economies
- Massive Country by Country debt levels with no caps in place
- Record amounts of stimulus in play that have accountancy issues
- We are basically in a Worldwide Economic recession
- Deflation is a real threat
- CHINA breaks agreement and imposes new security law in HONG KONG
and do NOT forget......
- A worldwide Global Pandemic (Covid-19) still living amongst us
and we know what happened last time the pandemic appeared out of control...
- OIL price stability is still an issue – there is still no demand
At some stage, despite the massive stimulus pumped through all markets around the world FUNDAMENTALS and the RISKS associated with them will count, they will come into play once again. The questions are; what will be the trigger? What will be the tipping point?
As equities around the globe power on upwards fueled by Central Bank liquidity and manipulation are we just creating the biggest market bubble in history ever?
We are entering a period of massive uncertainty, the optimism for the future is bewildering and at some stage the chickens do come home to roost. We are living in extraordinary times with extraordinary measures.
Equity traders are backstopped by Central Banks, the now lender of last resort and supporter of markets... just BUY THE DIP.
From an FX perspective it’s always a little more complicated. Correlations do matter when trading forex and they are not 100% in place currently. Over the next few days I will be absorbing all the fresh data and setting up my shorter-term strategy pending the “TIPPING POINT”. There will be opportunities, I just need to be strategic and operate within smaller time frames pending the FUNDAMENTALS kicking in.
FX - FORWARDS, BACKWARDS & SIDEWAYS:
1: - USD INDEX (DXY) TRADE CHART and MY THOUGHTS:
(The Daily DXY chart is below and my thoughts, ideas and comments regarding the DXY are contained on the chart)
MY SHORT-TERM BIAS: Bearish
MY LONGER-TERM BIAS: Bullish
RESISTANCE: 98.47 (200 DAY SMA)
2: - USD MAJORS - TRADING CHARTS and MY THOUGHTS:
3: - THE WEEKLY FX PREMIUM:
3.1: FX PREMIUM MONTHLY PERFORMANCE:
3.2: WEEKLY FX PREMIUM SUBSCRIPTION INFORMATION:
The WEEKLY FX PREMIUM is my subscriber based FX support option, which offers, subscribers’ full access to my suggested trade set-ups and my market commentaries.
If you go to my website https://www.weeklyfxdrivethru.com you will see more information about the WEEKLY FX PREMIUM.
Lots of information about the way I do things, plus, previous reports about my trades, my trade styles and my trade projections for the year are located on my home page by selecting the appropriate tab located at the top of my home page.
There are 3 options for subscribing: - 10, 20 or 40 weeks.
The entry level is with a 3 month’s (10 weeks) subscription in CAD$450.00 equals approximately: -
CAD = CAD$450.00 (CAD$ 45 per week)
USD = USD$340.00 (USD$ 34 per week)
EUR = €310.00 (€ 31 per week)
GBP = £265.00 (£ 27 per week)
AUD = AUD$500.00 (AUD$ 50 per week)
NZD = NZD$520.00 (NZD$ 52 per week)
JPY = JPY 38,000.00 (JPY 3,800 per week)
CHF = CHF 340.00 (CHF 34 per week)
Further information about how to subscribe to the WEEKLY FX PREMIUM is also located at the top of my welcome page under the “SUBSCRIBE” tab.
4: - WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
(This sesction is only available to WEEKLY FX PREMIUM subscribers via a separate blog)
5: - THE FINAL SHOT:
5.1: LOOKING AHEAD – THIS WEEK’S ECONOMIC DATA & MY THOUGHTS:
Not much major news on the horizon this week.
- USD: FOMC Statement and Economic Projections.
This should be a very interesting press conference given the fact that the NFP number, if believed, should bring up questions about how much more should the FED keep stimulating the economy.
Without the FED stimulus how would Wall Street react?
NOTE: The FX market remains headline driven.
5.2: CLOSING THOUGHTS:
Finally, as usual…
Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.
Finally, Be GRATEFUL for your wins and COUNT THEM. Be positive, keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
The Pip Accumulator
BLOG VERSION: #370 FREE NEWSLETTER