Welcome to 2021.
I have not started full-time trading in 2021 and yet I feel given what has happened in the U.S. over the past 5 days feels like “first footing” of the most extreme variation.
I had intended to get into full swing towards the end of last week but WordPress issues, plugins, Constant Contact forms, htaccess files.... you name it, they all came at me in one swoop, and I would add most of the terminology is way beyond my pay grade. I felt like a fly being swotted down every time I took to flight. The upshot of it all is that I will have to start off a new website, my existing one is basically held together as far as I am told with sections of Elastoplast covering up burns, cuts and scars.
Referring to the paragraph above; my intention to have direct access links from my website to my 2021 E BOOK and ZOOM video presentation about Trading FX with the WEEKLY FX PREMIUM, looking thru the 2021 Goals and Objectives has had to be postponed for a short while.
Therefore, in the interim, I will be posting a separate blog to my website this weekend containing the links to the E BOOK and video ZOOM presentation.
1. THE SOAPBOX:
AMERICAN DREAM: PLAN B
Shocked, stunned but NOT surprised seems to be words that accompany the TRUMP incitement to violence insurrection of Capitol Hill, Washington last week.
In the name of sanity how did an unruly mob get into the building housing the U.S. lawmakers? Has the U.S. learned anything from 9/11? It would appear not.
All I hear when American’s talk is; we are “The Biggest” and “The Best”, well they are “The Loudest” if that counts for anything.
I often use the phrase “Fur Coat and no Knickers” to describe many things in FX trading meaning that on the outside it looks just fine and dandy but beneath there is feck all... that describes America.
My wife and I did the route 66 trip from the West Cost ending up in Newark shipping the truck we bought back to Ireland. All you read on the trip are huge billboards saying: - “Guns for Sale,” “Jesus Loves You” and “If you can eat one of our 32oz T-Bone steaks it’s yours for FREE”.
It’s all very scary, so many mixed messages. America needs a definition. It is so large, trying to be all things to all people, who have been managed by fear for decades. It was only a matter of time before someone (TRUMP) brought the extremes together, galvanized support offered the promised land and like sheep they followed. In 2020 we saw the worst of America; Riots, Looting, Racism, Abuse, Breakdown of Law and Order, Extremists Enabled and all of this whilst a Pandemic was NOT managed resulting in over 300,000 deaths and a Presidential Election was the ONLY focus of a sitting President totally out of his depth occupying the Oval Office in the White House.
There we go, I’ve finally got off that fence and said it...
After all of the above, we now have what Tom Petty aptly wrote, “AMERICAN DREAM PLAN B”. This is now in play because of the failings of the Republican Party to handle TRUMP. The shenanigans since the election back in November 2020 should have alerted those in the hierarchy of the GOP to take action. Obviously, they are just not smart or clever enough.
The Democrats now have the balance of power across both houses and the next 4 years should be very, very interesting to watch. INFRASTRUCTURE SPENDING, COVID-19 STIMULUS and TAX INCREASES are a rather weird collection, but I see these three issues as the key drivers moving forward with the BIDEN PLAN now that TRUMP lost Georgia for the GOP.
From an FX perspective the demolition of the USD should continue and with a YELLEN / POWELL collaboration in place, it is just a question of much lower will the USD be allowed to go. From the American viewpoint, I think that they just don’t care. It will be the other G10 Central Banks that will be raising all the questions, doing all the jawboning. Remember, a weak USD = a strong something else!!
I expect BIDEN and YELLEN to state publicly that they support a strong USD whilst in the background they will be priming POWELL to carry on regardless with a weak USD FED policy.
I am looking at the BIDEN presidency in sections; 2021, 2022 and 2023.
2021: Primary goal get COVID-19 under control, sort out a workable vaccination policy and get out the STIMULUS cheques. If it takes 2 or 3 tranches to regain control so be it.
2022: INFRASTRUCTURE SPENDING to bring back employment. Continuing support to the Hospitality and Travel industries.
LATE 2022 and 2023: TAX INCREASES to pay for it all. Plus, maybe “green shoots” of inflationary pressures.
FED policy will probably remain 100% accommodative throughout. I just cannot see POWELL having big enough samosas to tackle a policy of restoring price normalization. Having said that ... What is normal? If you recall Jerome Powell announced last year at the Jackson Hole, Kansas City FED symposium, that the Fed was not going to have a fixed policy on inflation moving forward. Inflation in the U.S. has not been a consideration for a number of years, but it could be moving forward should the BIDEN spending plans come into play. Let’s be frank, in January 2021, with BIDEN not yet inaugurated talking about a possible inflation issue 2/3 years away is a little pointless but it is worthy to note.
From a macro level...
In 2021 it looks like the USD will without doubt come under pressure. The hunt for yield will continue to drive investors towards equities and the commodity currencies should outperform. Like most of you I have seen and read about potential explosive moves with the AUD/USD and NZD/USD. The USD/CAD, USD/NOK, USD/ZAR and USD/MXN are talked about but to a lesser extent and to be honest there are lots of conflicting views.
I wrote on December 6th, 2020 about “THE OLD NORMAL SHOULD BE BACK IN 2021” and nothing has changed my overview of this belief. The only difference that I had NOT factored in was “THE BLUE WAVE”, slim as it is with regards to the Democrats controlling both houses in Washington.
As already mentioned, the USD will be sacrificed to allow the FED to meet its objectives. However, the question that I do NOT know the answer to yet, is what will be the full add-on effect of “THE BLUE WAVE”?
When you look at last week, with all the headline news (Georgia Senate Run-Off, The Storming of the U.S. Capitol, Record Pandemic Deaths, Hospitalizations and a poor vaccine rollout and finally a 140k miss on NFP), the market hasn’t digested this news or sorted itself out, and it has to transition itself to price in all the changes.
Hence, all FX traders have seen in what seems to have been the longest week in the history of the world, is a chop-fest. Hopefully, once TRUMP is impeached or the 25th Amendment is applied or he goes quietly INTO THE GREAT WIDE OPEN, the markets will settle down and we can start 2021 properly.
2. MY FREE CONTENT SUMMARY:
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To partner my E BOOK I have also completed a short overview ZOOM video presentation, which is now available on my website via a separate blog post.
3. THE WEEKLY FX PREMIUM - PERFORMANCE:
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3.2: THE WEEKLY FX PREMIUM: SUBSCRIPTION INFORMATION:
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5. CLOSING THOUGHTS:
Firstly, before finally...
My “YouTube” channel THE WEEKLY FX DRIVE THRU now has a library of the older DRIVE THRU ZOOM presentations. Check it out and maybe subscribe. My intention is to post other “ZOOMS” there from time to time related to FX Trading.
Why not get positioned at the front of the line!
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. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
Stay safe and wear a mask.
The Pip Accumulator
BLOG VERSION: #396 FREE NEWSLETTER
DATE: 10th January 2021