Its scary out there! ALL the nations are at war! Don’t think so? I tell you it is true. We have discussed before the trillions of dollars of capital in search of gains and a return. Buy and Hold is dead! These trillions are constantly on the move. Trillions. Hedge funds, Private capital, Institutions, Exporters, Governments, Central Banks. etc… All at war in this giant zero sum game, trying to kill the other guy and take his money. Read all the interesting chapters in the market wizards and see those great traders trying to out think their competition in psychological warfare when 50 million was on the line. As small time players ( we deal in well under “twenty” (twenty million) don’t we? I mean, putting on 10 lots scares me! LOL. As small time players we lose sight of how violent this trading can be. Many know that most brokers are not your friend and will take the other side of your trade (never putting out to the market) just like the bucket shops of the early 1900’s. They want your money. Well, the Governments are no different.
Folks the heads of Governments put their minds together and come up with a plan. A strategy. Then they WORK IT, for all it is worth. Trying to make a ton in the process. Why? Why to increase their reserves of course. So they can have MORE bullets to fire (ever play the board game “Risk”?)
The Japanese Gov. put out lots of “talk” , lots of “jawboning” about the threat of intervention. Then, they did NOTHING for days. The yen strengthened again as some lost hope that it was going to come. Then when hopes were dashed they “poured it on.” Right as they started doing this, a rival decided to engage in battle to thwart them. Who is this rival? China. China starts buying up Japanese Government bonds and debt securities putting a bid on the yen when the BOJ was trying to weaken it. In fact Japans Finance minister was quite verbal about this and made some rather harsh comments regarding this. Why? He’s mad at them. Their is a long standing animosity between these two countries and their rulers. And well, that just wasn’t nice(!) Read: we are busy trying to weaken our currency so “back off!”
Now we know that their is a war. You see its an export war. China wants to be the top dog of this export business, so they can continue to gain more of the wealth of the world selling their cheaply made stuff that breaks quickly. Not just to us Americans but the whole world. They don’t want competition! Japan’s trying to step on their toes and get a bigger slice of the pie. They WANT and truly NEED a weaker currency in order to compete on the global markets. you see, this is economic war. We all want MORE so we can stockpile MORE OIL reserves, More weapons, more whatever it is that they want. It really doesn’t matter.
Next case: SNB. They saw what the BOJ did, watched how they waged this war. Did something similar. They did NOT raise rates (oh, yeah, there was another side in this war. Someone had “leaked” that the SNB WOULD raise rates… but that was a lie.) Just as I said in the room yesterday, that would be financial suicide. Instead they got all “dovish” and talked down their inflation forecasts and their growth. “Oh, we REALLY are not doing that good. Really. You can trust us. And we see the result of this VERBAL warfare. Hey look, all is acceptable here. It can be verbal warfare or real bullets of dumping currency on the market. Whatever works. And work it did! Swissy dove against all other currencies. Everyone has an agenda.
Which brings me to my main point. DON”T YOU BELIEVE IT! yep. that’s my point. Propaganda, lies and manipulation abounds in this war. Strategies are formed. Strategies with BILLIONS of dollars on the line. They are not like us, just trying to make a hundred pips in a day on a standard lot or so. Oh no. This is really much bigger than that. Strategies are formed and then Executed. I am increasing becoming convinced that as a pro trader (10 years under my belt), that I need to pay far more attention to the macro side. The geopolitical side. I need to focus on the AGENDA. So, in the weeks that come ahead…. Ask yourself who has the Agenda? What are they trying to do? What could this strategy be? Who stands to gain? Who stands to lose? Lets ask some questions folks! Put our brains to good use and learn to think outside what they are disseminating to the masses.
Alright. I am done. bulk of this message is out. I leave you with this last thought: A certain party of market makers, you know the group, “Goldie” (you know, the ones “that do God’s work”) has come out and said that the Fed is going to buy one trillion dollars of treasury securities (the much talked about QE II). Now, I ask you, does this make sense? Absolutely not! The fed does not want to do this. There are to many reasons this is most likely NOT so. I think in a few days, weeks, whatever. We will see the reason for these comments. The next time commentators comment, or “news” is released, ask yourself what is the agenda, what is the plan. As for me, I am ready to take the other side! Thanks for reading and till next time. CAREFUL, THOUGHTFUL trading. Robinhood.
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