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Mario Draghi Must Act Now

Lior Alkalay - INO.com Contributor - Forex

The coming weeks could be pivotal ones for the Euro. This time, it isn’t because of a threat to its existence or a member state’s bankruptcy. No, this time, it will be because of the actions of Mario Draghi and the European Central Bank. The ECB chief has the power to ignite the momentum desperately needed to awaken the Eurozone from its economic stupor. Simply put, Mario Draghi must push the Euro below 1 Dollar.

The Eurozone Lately

When we examine the latest trends in the Eurozone, we do see some positive signs. Exports have recovered, and industrial production has increased, as well. On the consumer front, retail sales have also been accelerating nicely. On top of that, the Eurozone’s GDP growth rate has been inching up, albeit at a very moderate pace. [Read more...]

Are All Yen Bets Off?

Lior Alkalay - INO.com Contributor - Forex

Is the short bet on the Yen over? Well, maybe not when it comes to trade vs. the Dollar. But as far as other weaker currencies, that's a different story. As it relates to the Euro, then indeed, the long bet on the EUR/JPY might be over. And here's the reason why.

Inflation might be coming back

That's a rather straightforward statement, but the Bank of Japan believes that inflation is inching higher. And while it's not as clear-cut a case a, let's say in the US, still there is a basis for it. When calculating Japan's inflation, excluding volatile prices such as food and energy, inflation gained 0.6%. Now, while that's still low, it's a move in the positive direction.

Moreover, a quick look at the inflation figures per segments and you can see most segments have experienced price increases. That is a mildly hawkish sign. It must be pointed out that the BOJ is about to change the way it measures core inflation. Going forward, the BOJ will publish core inflation figures, calculated both with and without energy prices. However, the BOJ will focus on core inflation excluding energy prices. Previously, by including them, it distorted the inflation figures into the downside. [Read more...]

Year Of Shocks: Which Of The Safe Havens Saved The Most?

Aibek Burabayev - INO.com Contributor - Metals

It's only the middle of the year, but we've already seen quite a lot, even for the seasoned investor.

The Swiss National Bank (SNB) kicked off the ball in January for what has proven to be a nightmare year thus far. It's caused a lot of tears and fears among investors, some of them went bankrupt in one day after it let the franc go.

Greece and it's possible leave of the single currency zone has been dubbed the "Grexit." It's added turmoil to the markets over the last month with currencies crosses opening with gaps on the last two consecutive Mondays. The single currency zone has never been so vulnerable from the day of its launch, as Greek precedent can find followers and bring Germany a lot of headaches furthermore.

The United Kingdom also played its role with the Queen's speech this May containing words of possible divorce with the European Union in 2017, which was named "Brexit" (Britain's exit) a la Grexit.

All of the cases mentioned above are episodes of the world currency war and the first prey of it is the European single currency that has been damaged a lot. [Read more...]

Grexit: Hope For The Worst?

Lior Alkalay - INO.com Contributor - Forex

Are we experiencing the beginning of the end for the euro? For roughly three years, it seems as though politicians have been kicking the can down the road, putting off the apocalypse right at the last minute. And investors in the currency have had their patience stretched to the limit, vacillating between no hope and naivety that the Greek problem had gone away.

After Greece came Spain, Portugal, Italy and Ireland, but while the rest have been able to curb the risk and get a grip on things, the Greek problem has kept coming back. Now it seems that we've reached the end, the moment of truth, what investors have been dreading for the last three years – that Greece will eventually default and leave the Eurozone, and that it will spell the end of the euro. But now that the end has come, it seems as though investors have not only learned to live with the idea of a Grexit but to actually want it. The saying goes that you have to hope for the best and prepare for the worst, and more and more voices are indicating that some institutional investors are now hoping for the worst, for Greece to leave the euro. But why? [Read more...]

Greece Is Not A Black Swan Event

It seems like this never-ending, ongoing Greek tragedy is like an Energizer battery as it just keeps going and going and going.

In order for something to qualify as a "black swan event", it has to come out of the blue and be a total surprise to the market. Certainly, Greece cannot claim to have just happened or come out of the blue. It seems like this train wreck of a country has been going on forever without a resolution. The fact that the markets are only down a bit as of this writing and have the potential to close unchanged indicates that most of the US equity markets have already discounted the "Greek Effect".

Today I will be looking at all the major indices and commenting on what has taken place. [Read more...]

Fed Disappoints, Gold And Euro Squeeze Higher

Todd Gordon of TradingAnalysis.com takes you through his thoughts and potential option trades for Gold and the Euro based on the Fed's decision and Greece's impending disaster.

Learn more about TradingAnalysis.com here.

Plan Your Trade, and Trade Your Plan,
Todd Gordon

Dollar Correction Not Over

Lior Alkalay - INO.com Contributor - Forex

It was back on 13 April that I highlighted the breaking point for the dollar, which could lead to a dollar correction after a prolonged rally. What was that breaking point? If inflation gauges showed that the strong dollar weighed on the inflation outlook, then the dollar would begin its correction. And so indeed, shortly after, the dollar began to plunge against its European peer, the euro, as investors switched into euro longs and dollar shorts. The reason? Data suggested that the US economy wasn't growing as quickly as expected, and most inflation gauges suggested that inflation still wasn't returning.

And then, two weeks ago, the tide turned once again and investors began dollar buying once more as core inflation nudged up and the Eurozone, with the looming Greek crisis, seemed weak again. But is the dollar correction really over? Don't count on it… [Read more...]

Surprise, Greece Has No Money

It just seems to this observer that the Greek kabuki dance is never ending. How can banks keep lending money to a country that is insolvent? That seems a little backward and just stupid to me. What do you think of the situation in Greece?

Here's the reality of the situation, Greece is going to default, the bankers may as well get ready to write off those loans as the money is not coming back. The next question is, whose next, Portugal, Spain or Italy? The next buzzword that is going to come out of all this is contagion. I think when Greece exits the eurozone it will be good for the euro longer-term. Think of it like when a company announces bad earnings and fires the CEO. The stock price has anticipated and discounted all the bad news and for the most part things get better over time for that company. The euro is the same way as pretty much all the bad news is out, except the actual exit of Greece from the euro.

Sooner or later it's going to come to crunch time and time is getting short. Angela Merkel and Germany are going to have to swallow their pride and make some important decisions very soon.

So onto the only economy that seems to be working and that is the US. Today I'm are going to be looking at the major indices to see if they are beginning to tire or getting ready for another upward push.

I'm also going to be looking at three stocks today. [Read more...]

Buy Gold For Euros, Sell Copper For Dollars

Aibek Burabayev - INO.com Contributor - Metals

Gold/EUR Is A Buy

Chart courtesy of Tradingview.com

In my January post, I gave the recommendation to buy Gold versus the EUR at 1022 EUR, with a target for inverse Head and Shoulders pattern at 1208 EUR. As seen in the above monthly Gold/EUR chart, the target hasn't been reached so far, but the maximum advance of 138 EUR (14% between 1160 and 1022 EUR) was significant. Today I will update you on that idea with a new pattern that I found on the chart.

For 10 years, the Gold/EUR has been in a long-running uptrend (highlighted in green). The price had been elevating all the way up from 2005 charting clear zigzags and peaked only in 2012 at 1384 EUR level. Then we saw almost a 40% sharp fall from 1384 down to 856 EUR minimum. At the end of 2013, Gold touched the downside of the trend and one month later, at the start of 2014, the market rebounded from the support and found resistance at the magic 1000 EUR level where the price bounced off into a sideways consolidation between 900 and 1000 EUR. [Read more...]

Greece, Nazis And 3 Strong Sectors

It's hard for me to believe that the newly installed Greek government is now calling for Germany to make reparations of some $250 billion because of what the Nazis did 75 years ago to Greece. Such is the world we live in.

Make no mistake about it, Greece is the Achilles' heel of the euro and just this morning Alan Greenspan, former head of the U.S. Fed, came out and indicated that it was just a matter of time before Greece exits the euro. I couldn't agree more with him, Greece is just an accident waiting to happen.

Unlike the United States, which is one nation with one currency and laws, the euro has been cobbled together with a number of countries that have nothing in common with each other. They don't speak the language, they don't have the same customs and traditions, and they certainly don't share the same discipline for work. [Read more...]

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