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EFT FXTraderMagApril June2011 FX The New Anti Class

EFT FXTraderMagApril June2011 FX The New Anti Class

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Published by eliteforextraining
FX - The new anti asset class
FX - The new anti asset class

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categoriesBusiness/Law, Finance
Published by: eliteforextraining on Nov 01, 2011
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07/28/2012

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22
FX TRADER MAGAZINE
April - June 2011
Look at the recent eample withPortgal. Tis is what DetscheBank’s Mike Reid had to sa abotthe sitation:
“Tis is probably the  rst time we’e seen ECB interention  or reasons as much due to the rising  yield environment as much because o  weak spread sentiment. It shows why keeping core bond yields downis so important across thedeeloped world gien theexcessie debt burden that still lingers eerywhere. It’s not just  a European issue as it was alsointeresting to see yesterday that  Freddie Mac’s aerage 30-year   xed rate US mortgage rate aeraged 5.05% or the week ending 10th Feb (om 4.81% in the preiousweek) and now at its highest leel  since April 2010. When Bernankeintroduced QEII, keeping yields downto help housing was one o the goals. Sothis is another thing to keep an eye on.
1
” 
It seems the crrent trend in solving theglobal crisis is to print more crrenc.Beore the crisis, this was a niqel Japanese strateg. Ten the ed beganQantitative Easing, and fnall E2.Te SNB has joined the devalation part, and broke records b prchasing  pts o 78 billion CH in one month.
“We would need to check my records alittle more careul but we suspect the SNBhas set a new world record with its FX interention in May. Data released bythe Swiss Statistics Oce and conrmed to us by the SNB puts interention at CHF 78.8bn in May (yes, that is thechange o reseres, not their leel). o put this into perspectie, this is nearlythree times the preiouslargest monthly interention and amounts to 15% o GDP in just one month. Current reseres are now CHF 232bnor 43% o GDP.” (Extract   rom “JPM RidiculesSNB Interention” 
 ).
Other markets, sch as Astralia,and emerging markets sch as India,are not mch dierent. See a charto another twist that man investorsdo not nderstand, while the
fx, THE NEW ANTI ASSET-CLASS
 What do devalationsand increasing ood prices mean orinvestors?he world economis o on a corseo radical crrencdevalations.
FX
MONETaRy POLICIES
As the global economic climate deteriorates, x is becoming more and more rel-evant. Investors are becoming aware that while the ma have positive retrns inthe markets, those retrns are being eaten awa b a combination o inlation andcompetitive devalation o crrencies.
It seems the crrent trendin solving the global crisisis to print more crrenc
 
Mone Sppl o some crrenciesma not be epanding as ast as theuSD, man o those crrencies are‘backed’ b the uSD in the orm o uSD reserves. So their vales arebeing deteriorated not onl directlb their own printing, bt b thedeterioration o their reserve vale.Since Crrencies are valed onl interms o prchasing power and whentraded with other crrencies, theonl real measre o this can be seenin the appreciation o commoditiesand other hard assets, and ination.here is a growing ood Crisis inthe world.
“But last month, global   ood prices actually broke the record, according to the experts at the UN’s Food and Agriculture Organisation.Oer the past year the price o cornhas risen 52 per cent, wheat 49 per cent and soybeans 28 per cent. Rising   ood prices hae pushed an extra 44 million people into poerty in the past seen months, according to theWorld Bank. It’s een being elt inthe rich world. In Australia, theopposition hopes to capitalise on it:“Te year will begin and end with Australian amilies acing an eer-rising cost o liing,” the Liberal  Party’s Joe Hockey said in a speechlast week. Alarmed at spiking ood  prices, a score o countries, including big ood suppliers such as Russia and Ukraine, hae banned ood exportsto make sure they can eed their own people irst. his has prooked   urther alarm. Britain’s environment minister, Caroline Spelman, argued last month that it should be illegal or countries to halt ood exports, eenin an emergency. At the same time, the British goernment’s chie scientiic ocer, Sir John Beddington, declared that “the case or urgent action in the global ood system is now compelling”.
5
FX TRADER MAGAZINE
April - June 2011 2
FX
MONETaRy POLICIES
he SNB has joined the devalation part, and broke records b prchasing  pts o 78 billion CH in one month
 
FX
MONETaRy
I
t means that i o have anelectronic assets, their vale isbeing deteriorated b the world’scentral banks throgh the creationo new crrenc. yo don’t needan economics degree to nderstandthat when there is more crrenc incirclation (althogh electronic) itis less valable. It is no coincidencethat Gold is trading at record levels,along with other commodities andbsiness ventres.So i all crrencies are being devaled, where shold investors place their mone? Recentl releasedeconomic data sas or the frst time,uS debt now eqals the total uSeconom.
“President Obama projectsthat the gross ederal debt will top $15trillion this year, ocially equaling the size o the entire U.S. economy, and will jump to nearly $21 trillion in e years’ time. Amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt standsout — both because Congress will need to vote to raise the debt limit later this year, and because the numbers are solarge. Mr. Obama‘s budget said 2011will see the biggest one-year jump indebt in history, or nearly $2 trillion in a single year. And the administration says it will reach $15.476 trillion bySept. 30, the end o the scal year, toreach 102.6 percent o gross domestic  product (GDP) — the rst time sinceWorld War II that dubious gure hasbeen reached. In one ofen-cited study,two economists hae argued that when gross debt passes 90 percent it hindersoerall economic growth.
Tis indicates that there will beincreasing pressre onthe ed to monetizethe debt b bing reasries and printing more crrenc, driving down the vale o theuS Dollar ever more.So i all crrencies arebearish, then where toinvest? Here are a ewthings investors sholdnderstand.
WHAT DOES ALL THIS
MEAN FOR INVESTORS?
24
FX TRADER MAGAZINE
April - June 2011
 FAO Food Price Index 

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