Dax in the Evening

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Charlie B shows his account, cant be having that can we.
CD sales must be poor this week.
He is also using SAXO markets least I'm not the only one.

 
The ASX is not moving in house hours.

All the moves are happening in the outer hours.

Bit sad sitting watching this.(n)
 

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Just Buy It.

AUD in 2016 is facing a perfect storm scenario and was ripe for a long call for the following reasons.

The perfect storm factors

Carry trade – AAA sovereign rating, a budget in relatively good shape compared to global peers, and bond yields over 200 basis points ahead of global peers.
Commodity bounces – iron ore is clearly a public and private firm positive, the oil price bounce is a risk on positive seeing risk currencies returning, and also industrial metals, with copper particularly positive for a China-trade-story which brings the quasi-China currency in the AUD to the fore.
Reserve Bank of Australia (RBA) rates – the cash rate is likely to be rooted to 2% despite calls to see it lowered. The fact that the RBA itself wants the AUD at around US$0.65 suggests this rate could be lowered. However, the heat that the rate cut could put into the domestic market is a risk too far for the RBA in these current conditions. Plus economic data is showing green shoots and the run in the AUD after the Australian GDP figures is evidence enough that the bear call around the Australian economy may have been overdone.

There is now a fourth variable that is turning the long call even more bullish and creating a thunderstorm: China’s economic targets released at the National People’s Conference will back stop Chinese growth and will back stop against a possible hard landing which adds to the positive pressure on the AUD.

Key points for the AUD

GDP has become China’s ‘whatever it takes’ line – a 6.5% to be defending the baseline is a lot of infrastructure spending. China will not take its foot off the growth accelerator.
M2 money supply growth is set at about 13%. They’re increasing the debt ceiling to a record level and will continue to pump money in even if growth remains sluggish – ie, stimulus.
Interest rates to ‘maintain appropriate levels from 2016 to 2020’ – lowering them is the most like scenario to ‘maintain appropriate levels’.
Budget deficit raised to 3% of GDP. Expectations are it will rise to 4% of GDP.

The AUD has added over 8.5% against the GBP, EUR and JPY and we therefore see some upcoming weakness in the AUD as profit is locked in and the carry trade slows. We see this as a good chance to look for long positions.

Today’s China trade balance may be one such scenario. The figures (as expected) were terrible. Its February trade surplus of US$32.59 billion was 36% below estimates as exports collapsed down to 25.4% year-on-year. Chinese Lunar New Year always skews the February numbers; however, the figure is much lower than expected and such a big miss has created some angst.

The effect against the AUD during the Asian session was strong, with the three currencies EUR, GBP and JPY being the biggest gainers versus the AUD on the back of the trade balance release.

We actually want to see weakness here as it gives us a better position for our long call. We understand the risk in the AUD; however, with the European Central Bank likely to cut rates on Thursday and the Fed likely to hold off next week, risk currencies will benefit. The fact that China is now looking to stimulate over the coming months and years means the perfect storm in the AUD is going to become a thunderstorm.
 
Good post Oscar.
Australia is known as the "lucky country" - that is not meant as a compliment.
Some interesting scenarios are playing out in Oz at the moment - with huge household debt, unsustainable welfare spending, a tax system badly in need of reform, pollies unable to grasp the nettle due to 3yr election system and constant fear not to "upset" the voters - who need to be weaned off the tax breaks/"entitlements". Also need to cut huge amounts of red tape that prevents inward investment and reform xenophobic policies.
Still the weather is nice, the beaches are beautiful and the beer is cold - what could possibly go wrong!
 
Size Up When Required - Grow a Pair

My chat posts from this AM as the rhythm continues. As I tweeted last week, we HAVE to press when in rhythm and while the window of opportunity is open. Note the adds to size up once confirmation appears which I feel remains an art lost to most traders. Average WITH the move … NOT against!

09:56:21 From Don : fwiw ES opening on major 60 min trend support
10:02:48 From Don : L ES on the 60 min 88
10:03:00 From Don : lod stop
10:04:13 From Don : adding
10:06:31 From Don : heavy on pos
10:13:01 From Don : heavy off 91 from 88 will wait for ib break now
10:14:50 From Don : bak L 91
10:14:52 From Don : heavy
10:15:29 From Don : will trust 60 min w/triggers until she stops working
10:16:33 From Don : reentry actually ;-)
10:16:47 From Don : 60 min looks huge to me
10:16:53 From Don : sizing accordingly
10:17:20 From Don : 95-96 tgt for heavy off
10:18:10 From Don : took partial 94
10:18:12 From Don : jic
10:18:13 From Don : just in case
10:18:46 From Don : rest looking for onh poke
10:22:11 From Don : conflicts seem to abound on timeframes and instruments, so TMAR for now biased w/60
10:30:43 From Don : 90 stop on my ES now
10:34:28 From Don : added 94 for onh probe
10:36:12 From Don : vix down tick
10:36:17 From Don : delta shift green
10:36:53 From Don : added 95
10:36:56 From Don : pushing this
10:37:06 From Don : scaling out into 98-00
10:37:55 From Don : correction 96-00; some off 96 jic
10:38:29 From Don : holding most for 00 approach off 91
10:38:53 From Don : heavy off 97
10:39:42 From Don : offering 98-00 on final
10:40:24 From Don : 98 filled; 91′s now flat
10:41:17 From Don : back to I-don’t-care size now
10:42:40 From Don : shorter-term than np and size comments should reflect conviction
10:42:47 From Don : but hopefully aligned most of the time :)
10:43:45 From Don : NW (now what)
got what I wanted, FOD with tiny pos now
10:44:52 From Don : essentially, that was longs off the 60 min support, using 1 min price and 3 min Delta triggers to target ibh probe, catching carry-over wind from Friday … now I have no clue
10:45:49 From Don : plus averaging up w/colnfirmation which I feel more traders should learn … but it’s a diff than np’s single on … all good though
10:46:27 From Don : and if I ever post without an advance premise comment, feel free to slap me
 
ECB YES or NO - Who knows and Who Cares.

1. The rate decision
No rate cut would be a major disappointment for markets. Most analysts expect the ECB to cut the deposit rate by 10 basis points to take it further into negative territory, to minus 0.4%. The refinancing rate is expected to stay at 0.05%.

2. Two-tiered deposit system and/or cheap loans
Negative interest rates means banks have to effectively pay to hold cash on their balance sheets, while at the same time making less money on their loans. To mitigate the effect from (probably) yanking rates further into negative territory, the ECB is expected to introduce a two-tier deposit facility. This means some of the excess liquidity banks would deposit at the ECB will be placed at a rate above the deposit rate.

“This reduces the costs to the banking sector of a lower deposit rate and hence opens the way for additional deposit rate cuts,” analysts at Danske Bank said in a note.

Another possibility is for the ECB to offer banks generous long-term loans, such as the long-term refinancing operation (LTRO) introduced in 2012 and the targeted LTROs launched in 2014.

3. Changes to QE
One of the big disappointments at the December policy meeting was the absence of an expansion of the €60 billion-a-month ($66 billion) asset-purchases program. This time around, analysts are again optimistic, speculating that the central bank will increase its QE purchases by €10 billion to €20 billion to take the monthly buys to as much as €80 billion.

Analysts at HSBC, however, said a QE expansion is unlikely this month, as the ECB still battles with technical constraints surrounding the program, such as simply finding enough bonds to buy.


4. New staff projections
The ECB will be in no shortage of reasons to act on Thursday. The updated staff projections are expected to be lowered significantly to reflect the weaker inflation and growth outlook that have resurfaced over the past months.

Holger Schmieding, chief economist at Berenberg, forecasts at least a 0.2 percentage point cut in 2016 growth projections to 1.5% and at least a 0.3 percentage point cut in 2016 inflation forecasts to 0.7%.

The ECB has an inflation target of close to, but below, 2%


5. Once bitten, twice shy - will meeting be another disappointment?
The ECB destroyed a hoped-for Santa rally in stock markets in December, when its rate cut and QE extension massively disappointed investors.

With traders again seeming to bank on a substantial round of easing measures, several analysts have warned that we could see a repeat of the December carnage.

“Although we do believe that a larger cut or a drastic change in the QE-package is possible, we have to bear in mind that this week’s policy easing package is unlikely to be the last one and that the ECB will need to keep some measures on the back burner,” analysts at Rabobank said in a note.

“This is especially so considering that the effect of all these policy measures is limited at best,” said Rabobank.

:sleep::sleep::sleep::sleep:
 
The Leftovers

Running out of grenades isn’t a bad thing

The tentative conclusion most commentators have drawn from the European Central Bank (ECB) press conference overnight is that Draghi has run out of easing ammunition, and that this is a bad thing.



What he delivered:

Deposit rate to -40 basis points (bps) cutting by a further 10bps
Refinancing rate to 0%, a 5bp cut
Margin lending rate to 0.25%, a 5bp cut
Quantitative easing expanded by €20 billion a month to €80 billion
New series of longer-term refinancing operations

This delivers on expectations, (and a little more with the additional targeted longer-term refinancing operations) however the issues came with this line during the press conference:

‘Rates will stay low, very low for a long period of time and well past the horizon of our purchases. From today's perspective and taking into account the support of our measures to growth and inflation, we don't anticipate that it will be necessary to reduce rates further.’

Which may explain why the Street is using this line to really describe where the ECB is at in its monetary policy cycle:

‘If you fire a bazooka all you are left with is an empty tube.’

Interesting conclusion as these comments are in the main from currency commentators who had to watch EUR/USD move through a 3+% range as the conference progressed.

This will have made a lot of people very unhappy and will have most concluding Draghi has disappointed.

However, as an index and equities strategist, I see Draghi’s empty grenade box as a good thing. I would argue monetary policy is starting to become counterproductive. What I hear and see is a positive for European equities.

European banks have long been calling on negative rates to either be scrapped or mitigated as negative rates impact earnings and the banks’ ability to operate credit books.

But, with today’s announcements, the conclusion is ultimately there are benefits for the bigger banks.

Those banks that are wholesale funded and geographically diversified will be cushioned from the deposit rate and the general uptake of corporate debt as a secondary effect of monetary policy are a net positive for banks.

Core European nations with exposure to manufacturing are, in the long term, also likely to be positively impacted as the shear amount of credit in Europe flows into consumer spending.

BMW just announced a record profit and the ECB actions will make high-end manufacturing all the more attractive. High-end manufacturing is also benefiting from lower primary costs and despite the last three to four weeks of rises in industrial metals and oil, prime costs are down – an added benefit to core manufacturing European nations.

These two stats from previous ECB meetings still hold true:

In the past 15 ECB meetings, only two have seen the equity markets down in the preceding month.
Four of the past 15 ECB meeting saw over 6% rises in equity markets the preceding month – not surprising since these four months were after the big stimulus releases – which makes tonight very interesting.

I can’t see what happened last night as not being a net positive for European equities. The EUR curve ball has certainly clouded the very short term outlook, but Draghi mainly met expectations and has publically stated that rates are now going to be rooted to these level for years. Equities will ultimately win out with policy that accommodative.
 
trade war...currency war.....real war
just a matter of time. These financial weapons of mass destruction is the worst thing since central banks were created.
 
Took a couple of shorts from the open.
Hard part was waiting 40 min's for the second b*****d to drop.

Would upload my 17k winner from that trade but can't :LOL:

Automatic DAX for the rest of the day

 
Not automatic at all.
Bloody murder out there.
Tight stops killed.
To quick for market orders, only limit orders at a smaller size for me.
Don't think I will be able to play myself in today.
 
I got one at 9875 area, small size and not that worried.
The close at the end of the week a lot of time can be over done.
The China data over the weekend was mixed with a slight negative feel.
Hong Kong and Australia are hitting resistance, so will need to push higher take US and Euro futures higher. Still be buying the dips and not shorting at this stage.

Have attached my buy orders for the DAX will adjust if we get big change in lead from Asia.
But always start small play myself into the game and increase size.
Get a better feel with some skin in the game.

All the best
Oscar
 

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swissy said:
Good post Oscar.
Australia is known as the "lucky country" - that is not meant as a compliment.
Some interesting scenarios are playing out in Oz at the moment - with huge household debt, unsustainable welfare spending, a tax system badly in need of reform, pollies unable to grasp the nettle due to 3yr election system and constant fear not to "upset" the voters - who need to be weaned off the tax breaks/"entitlements". Also need to cut huge amounts of red tape that prevents inward investment and reform xenophobic policies.
Still the weather is nice, the beaches are beautiful and the beer is cold - what could possibly go wrong!
Click to expand...

Hi @swissy

Geographic location is a big advantage for Australia.
So close to Asia and possible customers.

I'm based in the Gold Coast.
We have the Commonwealth Games in 2018 , so there is a lot spending going on here at the moment.
Not sure what will happen after the games.
Mainly a holiday location.
At the moment it's cheaper to buy rather rent.
We have a friend trying to rent on the coast and you getting 20 to 30 people turning up to rent the same place. Some will pay 12 months rent up front just to get the place.

And what I here it is the same in Sydney, Melbourne and Canberra.
I think the house market got more legs in yet, just on the supply and demand issue.

Been to China 3 times in the last 2 years and still lots of building going on there.
And lot more TV and phone shops.
With the government trying to lift people from lower class to middle.

Have a good weekend
Oscar
 
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