GnosTICK Trader

Eric Janszen: We Are Witnessing The Death of the Dollar

Edward Preston — Mon, 31 Oct 2011 03:46:05 +0000

What do you get when the producer of the world’s reserve currency takes on too much debt? Nothing less than the end of the US Treasury-based monetary system.

So says Eric Jansen, economic and financial market analyst and proprietor of iTulip.com. In chronicling the decline of the global economy over the past decade, Eric has formulated a framework called the “Ka-POOM” theory, which endeavors to understand how the immense run-up in global debt will be resolved.

In short, it looks at the credit bubble that began in the early 1980′s, started accelerating in 1995, and has now reached epic proportions. The amounts are so staggering at this stage that Eric believes it is too politically undesirable to let natural market adjustments clear them away — the magnitude of the deflationary pain this would create is simply unacceptable for politicians looking to get re-elected. The only other available option is to service these debts via a dramatically devalued currency. Hence the key role the Fed is playing today.

The Fed is at the epicenter of this process, intervening heavily to keep the natural corrective market forces at bay. In this, it has a dual strategy. The first is to keep asset prices high (i.e., fight asset deflation), which it is doing by keeping interest rates historically low. The second is to keep wage and commodity costs under control, which it primarily does via devaluing the currency (maintaining a “weak dollar”).

And, of course, through its intervention, the Fed is doing all it can to keep the current financial system in place to perpetuate the process for as long as possible. The end result is a fundamental shift in risk from Wall Street to the taxpayer.

So the big question is: How long can this last? Is there a point at which confidence in the system breaks and market forces finally overwhelm the intervention?

Eric’s answers: “Much longer than most people expect.” And “Yes.”

First off, as the most important central bank in the world, the Fed has supernormal powers. In theory, it can expand its balance sheet infinitely. Its ability to absorb massive amounts of new liabilities is theoretically limitless, much of which can be easily concealed from an accounting standpoint.

And since the US is both the world’s largest economy, as well as the provider of its reserve currency, other countries are compelled to support the current regime. A mortal crack-up in the US economy would deliver undue pain to all its trading partners, so they continue to buy Treasuries in sufficient amount to fund US economic activity.

But that’s not to say they’re happy about it. And here’s where attention should be paid (and where the importance of gold comes in).

For much of the past century, the United States comprised approximately 54-58% of the global economy. Today, its share has shrunk down to about 18%, meaning its relative importance to the global system has diminished.

Issuing the world’s reserve currency is a privilege that must be continually earned through transparency and sound stewardship — qualities the US has flagrantly lacked in the past several decades as it has been blowing asset bubbles and running trillion-dollar deficits, via incurring massive debts and increasing its money supply tremendously. So, even as they continue to support the current Treasury-backed monetary regime, the world’s central banks have begun hedging their exposure.

EP’s Trade of the Day: South bound train for the eMini Nasdaq

Edward Preston — Wed, 26 Oct 2011 16:54:29 +0000

Market: NQ

Strategy: GnosTICK

CLICK HERE to see the VIDEO: http://www.screenr.com/o74s

Trade the Mini Crude to reduce the risk

Edward Preston — Mon, 24 Oct 2011 15:39:20 +0000

EP’s Trade of the Day: See the Aussie Roar in London

Edward Preston — Fri, 21 Oct 2011 23:04:20 +0000

Market: AUD/USD

Strategy: GnosTICK

CLICK HERE for the VIDEO: http://www.screenr.com/REns

Afternoon “T-Time” for the eMini Russell

Edward Preston — Thu, 26 May 2011 20:15:09 +0000

Triple Threat in Crude Oil

Edward Preston — Wed, 06 Apr 2011 21:36:29 +0000

GnosTICK experienced three clear and distinct “Q-Bars” in both the Euro and U.S. trading sessions today.

This chart represents multiple profit targets on three individual trades… all of which were Trend Followers.

Quant today = 4

CLICK TO ENLARGE

Triple Threat in Crude Oil

Hot Currency Market Offers More Opportunity Than Ever For Savvy Investors

Edward Preston — Wed, 06 Apr 2011 03:55:26 +0000

CNBC.com Article: Hot Currency Market Offers More Opportunity Than Ever For Savvy Investors

It’s looking like an especially dynamic year for the currency market, so you might want to check out a new generation of low-cost, online foreign exchange trading platforms.

Full Story:
http://www.cnbc.com/id/42071929

Morning Brew

Edward Preston — Tue, 22 Mar 2011 12:36:50 +0000

Quant Report for 2011-03-22

Updated 6:45 – EQUITIES – Asian stock markets closed higher and European stocks gained as Japan made progress in avoiding a nuclear meltdown and as European finance ministers announced new steps to fight the debt crisis. U.S. index futures trading slightly higher, pointing to a higher opening bell. COMMODITIES – Crude Oil retreated from its highest price in almost two weeks amid speculation that supply disruptions from political unrest in North African and the Middle East may be confined to Libya. Corn fell for the first time in four days on concern that U.S. farmers may boost planting this year. CURRENCIES – The Euro reached a five-month high amid speculation the European Central Bank will raise interest rates next month. Canadian Dollar gained the most in almost seven weeks versus the U.S. Dollar as crude oil, the nation’s biggest export gained. The British Pound jumped to the highest level in more than a year after U.K. inflation data surprised to the upside. ECONOMIC DATA – Canadian Core Retail Sales and Treasury Sec. Geithner speaks at 8:30. Richmond Manufacturing Index due at 10:00 est.

Quant Rankings: ES: -1, TY: 3, GC: 5 , CL: 3, EUR/USD: 6, GBP/USD: 5, USD/CHF:-5

ES Levels R2: 1304.25, R1b: 1297.75 R1: 1296.25 Bull Break: 1289.75 Bear Break: 1288.00 S1: 1282.25 S1b: 1280.50 S2: 1273.25

ICSC-Goldman Store Sales
7:45 AM ET

Susan Pianalto Speaks
8:00 AM ET

Redbook
8:55 AM ET

FHFA House Price Index
10:00 AM ET

Richmond Fed Manufacturing Index
10:00 AM ET

4-Week Bill Auction
11:30 AM ET

Futures and Forex trading involves risk and is not suitable for all investors.

Morning Brew

Edward Preston — Mon, 21 Mar 2011 12:20:42 +0000

Quant Report for 2011-03-21

Updated 7:30 EST – EQUITIES – Asian stock markets closed higher for a second day as Japan made progress in tackling the nuclear crisis. European bourses trading higher with US stock futures pointing to a higher Wall Street open. COMMODITIES – Crude Oil is trading higher as allied air strikes in Libya threatened to prolong a supply outage in Africa’s third-biggest producer. The Standard & Poor’s GSCI Spot Index of 24 commodity futures increased as much as 1.5 percent during the overnight trading session. Gold and Silver breaking out of recent short term downward trend and heading to retest bullish resistance levels. CURRENCIES – Relatively quite trading on the first day of trade for the week in the FX market. The Japanese Yen weakened for a second day against all of its major counterparts on speculation G7 nations will keep selling the currency to curb its appreciation and help support Japan’s economy. FIXED INCOME – German and US government bonds are trading lower as Japan’s atomic crisis eased, curbing demand for the relative safety of fixed-income assets. ECONOMIC DATA – ECB President Trichet speaks and US Existing Home Sales due at 10:00 est.

Quant Rankings: ES: -1, TY: 3, GC: 5 , CL: 3, EUR/USD: 6, GBP/USD: 5, USD/CHF:-5

ES Levels R2: 1316.50, R1b: 1305.50 R1: 1303.75 Bull Break: 1297.00 Bear Break: 1295.00 S1: 1285.00 S1b: 1283.25 S2: 1275.50

Chicago Fed National Activity Index
8:30 AM ET

Existing Home Sales
10:00 AM ET

4-Week Bill Announcement
11:00 AM ET

3-Month Bill Auction
11:30 AM ET

6-Month Bill Auction
11:30 AM ET

Futures and Forex trading involves risk and is not suitable for all investors.

Morning Brew

Edward Preston — Fri, 11 Mar 2011 13:18:53 +0000

Quant Report for 2011-03-11

Updated – 7:00 EQUITIES – Japan’s Nikkei Stock Average tumbled 1.7 percent in Tokyo, extending declines after an 8.9 magnitude earthquake struck northeast of the capital. Asian stock markets and European bourses also followed lower with US stock futures pointing to a lower Wall Street open on the last day of trade for the week. COMMODITIES – Crude Oil fell below $100 a barrel for the first time in more than a week after Japan’s earthquake forced refiners to shut processing plants. Gold and Silver are trading lower in London and heading for the first weekly retreat since January as some investors sell the metal to raise cash as other assets drop. Soy and Corn also trading lower and heading for a lower weekly close. CURRENCIES – EUR/USD broke below 1.3800 while British Pound broke under the key psychological level of 1.6000 as disappointing data and fears of inaction from the EU summit sent risk FX tumbling across the board. FIXED INCOME – US Ten Year Note testing bullish resistance after weeks of consolidation in response to new risk aversion flows. ECONOMIC DATA – US Core Retail Sales due at 8:30. UoM Consumer Sentiment due at 9:55 est. Have a great weekend.

Quant Rankings: ES: 2, TY: 4, GC: 3 , CL: 3, EUR/USD: 3, USD/CAD:-4

ES Levels R2: 1316.50, R1b: 1305.50 R1: 1303.75 Bull Break: 1297.00 Bear Break: 1295.00 S1: 1285.00 S1b: 1283.25 S2: 1275.50

Retail Sales
8:30 AM ET

William Dudley Speaks
8:30 AM ET

Consumer Sentiment
9:55 AM ET

Business Inventories
10:00 AM ET

Futures and Forex trading involves risk and is not suitable for all investors.