Taking a break from the “ZOOM” (YouTube) version of the blog this week by reverting to the written format. I have received feedback on both delivery styles, both positive and negative, so at the end of the day, it’s down to me to decide what I do and as this is FREE... tough shit for those who prefer one format over the other, as it is often said suck it up and move on!
With moving on in mind....
Another fascinating month is completed. I do feel like I am looking down on an old black and white western movie with a Mexican stand off in play. I feel that I am in the minority with my opinion. I just think Central Bankers are crapping themselves and we are playing a modern-day game of chicken looking to see which Central Bank blinks first. They all followed the FED like lambs to the slaughter, spouting transitory when looking at inflation and now they blame Russia for misreading basic economics. Whilst I would accept the Ukraine war does not help matters, the writing was on the wall long before Putin marched on Ukraine. Do NOT be guilty of a short memory and believe the hype. The FED very simply got it wrong with their call on inflation being transitory and stuck their heads in the sand, bullshitting one and all for months on end.
I believe that the Bank of England (BOE) will be the first to blink with regards to their rate hike trajectory and terminal target rates for 2022 and 2023. Andrew Bailey will sight uncertainties, increased concern over energy and food inflation stating that wage inflation will be difficult to move on, but the BOE does NOT want to be responsible for a prolonged recession in the UK citing raising rates will only kill economic growth. This may do something to protect jobs and boost consumer confidence at least in the short to medium terms, however longer-term a strong combination of fiscal and monetary policy will be required to bring about a consistent upward move in confidence otherwise we will have a downward spiral in place.
Look, let me just say that the UK will NOT be alone with the issues of stagflation and recession, but I believe it will be the first G10 economy to tackle issues in a different way other than a robotic “we will raise rates... we will raise rates... we will raise rates”. Thinking outside the box is required. Let’s see what Andrew Bailey, The Bank of England Governor and the MPC decide.
Moving on once again...
Here is the May performance of the WEEKLY FX PREMIUM.
Total net pips = +2,447 pips.
YEAR TO DATE 2022:
Total net pips = +9,236 pips
(61.90% of my 2022 objective of +14,920 net pips)
1: THE WEEKLY FX PREMIUM – MAY 2022 PERFORMANCE:
1.1: MONTHLY TRADE STYLE PERFORMANCE:
Basically, referring to the spreadsheet above, this reports on potential income for single-lot trades and for simplicity I have valued Micro lots at USD$0.10 per trade, Mini lots at USD$1.00 per trade and finally Standard lots at USD$10.00 per trade.
Obviously, you trade your position size to the levels you can comfortably trade your broker account without creating margin calls etc.
Therefore, on the spreadsheet using the highlighted reference points: -:
A: - This represents at USD$1.00 (Mini Lots) per trade a USD$ income of $2,447 which, correlates to my reporting of net pips for the month of +2,447 pips.
B: - Costs trade reflects the fact that 42 Mini lot trades in total were undertaken at a cost of 42 x USD1.00 = USD$42.00.
C: - When subtracting B from A this gives a net income total based on trading just single Mini lot trades of USD$2,405.00.
1.2: MY THOUGHTS ON THE MONTH (THAT WAS):
Given the fact that last month I generated +2,447 pips it was my second-best month for pips this year so far, beaten only by March with +2,756 pips. If I whinge too much about how difficult it was to trade, it will probably fall on deaf ears in any case.
I can best reflect on May as follows: -
My longer-term core position trades performed as designed to do, but this is purely and simply down to wider stops and multiple small position trades and me not being afraid to add back trades with velocity holding my initial trade conviction high.
In recent months, EUR/NZD and EUR/CAD core positions were closed with either a minimal return or over a 1,000 pip loss. So, trading long-term requires patience and the correct mindset.
All core position trades contributed to the +2,410 pips from my position trade set ups. It is really hard to pick out the best return. The individual trades that generated +2,410 pips are listed in section 1.3 below.
My Radar trades were a different result. 7 trades completed, 4 profitable and 3 loss making. A different result with 37 pips generated. I made pips being long two JPY and AUD pairs and lost pips on EUR/USD and GBP/USD shorts together with an annoying 110 pip loss on a short USD/NOK.
Overall, as mentioned in last weekends DRIVE THRU (ZOOM) and revisiting a similar subject this week in the soapbox (section 3), we are in a strange place in the markets. “BUY the DIP” or don’t “BUY the DIP”, the rotation continues and without wanting to sound like a Monty Python sketch we are rotating the rotation and then rotating once again just to make sure. There appears to be more rotations in the markets than what happens on a 100,000-acre crop farm in a year!
I still believe that the FED will disappoint with the number of interest rate hikes as the fears of STAGFLATION and RECESSION bite. I do NOT know of any accountant who would knowingly want to raise interest rates into a recessionary environment. The writing is on the wall vis-à-vis consumer confidence and the fact that there are comments bouncing around the financial markets claiming that the FED will sacrifice the US economy (Economic Growth) in favour of fixing inflation, I think requires huge clarification. To date, moving forward, we know that for June and July two 0.50% interest rate hikes are planned and to coin a phrase should already be baked in to current pricing. After these, we stop in my opinion. More on this subject later in the blog.
Moving on and looking at the monthly performance once again...
My pips generated for completed Position trades were:
35 completed trades
+2,410 pips generated
= +68.86 pips per completed trade
Overall including Flash and Radar trades the pips per completed drops lower, and reflects a stark difference in performance:
7 completed trades
= +5.28 pips per completed trade
My objective is 40 pips per completed trade.
The performance ratio on positive / negative trades was 93% / 7%, which is above my objective of 80% / 20%.
1.3: MONTHLY TRADE BY TRADE REVIEW:
2: THE WEEKLY FX PREMIUM – YEAR TO DATE 2022 PERFORMANCE:
2.1: YEAR TO DATE TRADE STYLE PERFORMANCE
Basically, referring to the spreadsheet above, this reports on potential income for single-lot trades and for simplicity I have valued Micro lots at USD$0.10 per trade, Micro lots at USD$1.00 per trade and finally Standard lots at USD$10.00 per trade.
Obviously, RISK MANAGEMENT is crucial to trading success, you trade your position size to the levels you can comfortably trade your broker account without creating margin calls etc.
Referring to the year-to-date spreadsheet above and using the highlighted reference points: -
D: - The gross year to date income from all trade styles is USD$9,236. This is based upon single Mini lot trades valued at USD$1.00 which, correlates with my reporting of net pips year to date of +9,236 pips.
E: - Costs to trade reflects the fact that 228 Mini lot trades in total have completed so far this year at a cost of 228 x USD1.00 = USD$228.00.
F: - When subtracting B from A this gives a net income total based on single Mini lot trades of USD$9,008.00.
G: - An annual WEEKLY FX PREMIUM subscription costs CAD$1,500.00, which is approximately USD$1,200.00.
H: - After the annual subscription cost is deducted, the net income after all costs = USD$7,808.00 based off trading just one single Mini lot trade for all of my suggested trades.
With regards to my other objectives: -
Overall pips per completed trade:
228 completed trades
= +40.50 pips per completed trade
My objective is 40 pips per completed trade.
The performance ratio on positive / negative trades was 88% / 12%, which is above my objective of 80% / 20%.
There is a huge amount of additional monthly and year to date trading information and reports available on my website https://www.weeklyfxdrivethru.com This can be found on my home / landing page under the tab at the top of the page titled HISTORY / PERFORMANCE, scroll down to “This year’s Performance”.
3: THE SOAPBOX:
IS BIDEN ON A SUICIDE MISSION?
Before getting “stuck in” here, I want preface my thoughts below by saying, over the next two/three months, I believe the FED playbook is already written barring a BLACK SWAN event. I fully expect that the two 0.50% interest rate hikes scheduled and priced in for June and July will go ahead.
It is post H1; mid Q3 and Q4 that I am looking at.
Now, let’s lean into the SOAPBOX...
IS BIDEN ON A SUICIDE MISSION, may be seen by many as a strange title but so many pieces of the jigsaw that make up BIDENS route for re-election as President are just NOT fitting from my perspective.
Markets do NOT like uncertainty. This runs two ways, either via Central Bank Monetary Policy or via Government Policies. For now, TV is focused on commentary for June and July, which in Europe we call the short to medium term, (The US does NOT recognize a medium-term outlook), September onwards after the summer that interests me, and I believe once the anticipated and bought in July 0.50% interest rate hike is announced we have potential uncertainty to consider.
You may ask why?
Two things; BIDEN (see later) and the US Economy.
Look, despite all the rhetoric, even Brainard who said last Thursday that she sees no reason to pause commentary, the FED is NOT 100% independent. If you believe that they are, you also probably believe that Politicians are not corrupt in one way or another.
US politics is a strange one. My background of studies in Government, Politics and Commerce are for the most part thrown out of the window when I look at how Washington DC operates. Cross-Party US politicians working together for the good of the American people is total bollocks, virtually a 100% no-no. DC is so partisan it re-defines its definition as a word.
Domestically, BIDEN is a lame duck. He has NO power, the power domestically in the US effectively lies with the State Governors. Look back over recent events such a Covid-19. No national policy on masks could be implemented, in fact a worldwide pandemic was politized in the US and views were encouraged to polarize.
Have you ever heard such bloody nonsense?
Hell yes... but it could only happen in the US.
BIDEN is a lame duck because domestically he suffers. Below is an immediate list I think BIDEN for one reason or another has NOT managed effectively at all or are issues facing him that he is trying to muddle through.
- DONALD TRUMP the next election
- JOE MANSION
- RACIAL SEGREGATION
- GUN CONTROL “Prayers and Thoughts”
- GAS PRICES
- ENERGY INFLATION
- FOOD INFLATION
- WAGE INFLATION
- BLAME THE RUSSIANS
- SUPPLY CHAIN ISSUES
- ECONOMIC GROWTH
- STAGFLATION / RECESSION
Now, I am NOT American but the BIDEN scorecard on the above issues does not read so good. Washington DC is so fecked up; Polarized, dysfunctional law makers thrive in DC and I do not think that even with a President who had control of both houses on the hill would be able to tackle the points I have raised so far.
Without doubt the US voter deserves so much more. The political system is weak, the process of election weak, the whole is flawed and open to abuse. It is managed by self-serving dysfunctional politicians. The voters deserve more, but at the end of the day, the failed political system that is Washington DC is just stuck, a non-yielding system highlighting its failures as a democracy, and if truth be told, it has been for some time.
So, if you are a President looking for growth in popularity you really must focus internationally. Therefore, this is why many outside of the US view American administrations as interfering feckers, who cannot manage at home and have a poor political system and yet Americans still have a bloody nerve believing that they can improve other countries that may not be 100% functional. The phrase “those in glass houses should NOT throw stones!” comes to mind.
Looking internationally for popularity is always hard, and it’s harder with a dysfunctional backdrop being carried like a dead weight although most US politicians believe guns and money can buy everything, for this unfortunately they are possibly correct.
Internationally, BIDEN has his work cut out on the following...
- UKRAINE WAR
- RELATIONSHIP WITH RUSSIA
- REALITIONSHIP WITH CHINA
- RELATIONSHIP WITH NORTH KOREA
- RETAIL PRICES AND OIL PRODUCTION
- RELATIONSHIP WITH THE SAUDIS
(Previously named by BIDEN as the Pariah’s)
No US President of the modern era has ever boosted his domestic popularity by what he has done internationally. Domestically BIDEN is fecked and internationally it’s always a worst-case scenario avoided approach in my opinion.
So, why do I think that BIDEN IS ON A SUICIDE MISSION?
Here are just three domestic points, I feel he did / has not managed well enough.
- BIDEN failed to manage JOE MANSION (Democrat Senator, West Virginia). MANSION single handedly boosted his own notoriety by holding up all of BIDEN’s infrastructure and post covid initiatives.Just one Senator allegedly on the same side as BIDEN.
- BIDEN has failed 100% to capitalize on the failings that the previous White House incumbent DONALD TRUMP was party to.In my opinion he needed to be proactive here to give him additional support in the mid-terms. Huge failure as it looks like the Republicans are in line for gains at BIDEN’S expense.
- Following BIDEN’S meeting FED Chair Powell, he threw the full weight of the administration behind “The Independent FED”.Coupled with comments made by Janet Yellen, Treasury Secretary (see insert below) earlier in the week, it all seems rather staged managed. BUT, if truthful... holy smokes!
I must admit, when I first heard of the BIDEN / POWELL White House meeting my first thought was it would be a “WTF” meeting.
If BIDEN believes what he has told the markets, he is politically ON A SUICIDE MISSION.
In my opinion, domestically, BIDEN is being far too beige.
My answer is I just don’t know. If a second term is the goal of the administration, and it should always be in my opinion, I am therefore lost on the way BIDEN is moving forward.
- BIDEN if he does NOT course correct is going to be in office as the FED raise rates into a slowing economy creating a recession.
- Believing Powell and his forecasts is just crazy.
- Look, no Central Banker is going to forecast failure.
- BIDEN’s Treasury Secretary admitted she got inflation wrong.
- TRANSITORY was a myth.
- Yellen was a previous FED Chair.
- BIDEN has surrounded himself with people who are supposed to be clever and have their finger on the pulse.
- It is clear now that YELLEN and POWELL have gotten their predictions and evaluations wrong in the past.
Here is what I think...
BIDEN has given Powell until September to report back for a coordinated approach, this would seem logical to me and would still be long enough to correct ahead of a spiraling move to the downside as the US data is changing.
If BIDEN does NOT hold the FED 100% accountable for the interest rate policy and in addition, publicly talks about the path forward as rates increase, bringing hardship to thousands of Americans on a tight budget, he is on a SUICIDE mission. He needs Fiscal and well as monetary policy working in tandem. Whilst I already believe a second term is 75%- 25% against him already, to sit and do nothing and remain beige would be the nail in the coffin.
As a Forex Trader the longer time goes forward and as rates increase, with FED rhetoric remaining hawkish on rate increases, I believe that the markets will expect more, and uncertainty will creep in. From a trading perspective this means as far as I am concerned a weaker USD.
Whilst you may think that I am hard on BIDEN, his bark is stronger than his bite but, for a second term he needs to be more congruent in my opinion. Being a nice guy, which BIDEN appears to be, and being in politics is NOT a good mix for political success.
4: WHAT’S ON MY RADAR THIS WEEK:
(This section is for WEEKLY FX PREMIUM subscribers only)
4.1: NEWS EVENTS (FOREX FACTORY):
4.2: PRESSURE MOUNTING ON THE ECB:
4.3: BANK OF CANADA (BOC):
5: CLOSING THOUGHTS:
5.1: THE WEEKLY FX PREMIUM – SUBSCRIPTION INFORMATION
If you like my approach to the market and are wondering what my trades are like from, a live perspective and what is the WEEKLY FX PREMIUM all about, check out my website https://wwww.weeklyfxdrivethru.com
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 via Twitter, TwitLonger and ZOOM.
Further information about how to subscribe to the WEEKLY FX PREMIUM is also located at the top of my welcome page at https://www.weeklyfxdrivethru.com under the “SUBSCRIBE” tab.
5.2: THE LAST DROP
Always remember longevity in Forex trading can only be achieved through trading with a good MINDSET, RISK, TRADE and HEAD MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility. Trade with a TRADE PLAN, basically, plan your trades and Trade your Plan.
Finally, be GRATEFUL for your wins and COUNT THEM. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions
The Pip Accumulator
(Restricted feed FX PREMIUM subscribers only - FX PREMIUM Trade Information)
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BLOG VERSION: #457 FREE NEWSLETTER
DATE: 5th June 2022