A terrific target in the game of Euro/$ = US bank equity valuation.
Is there another large US bank that is so susceptible to an effective straddle?
This bank will be worthless - or - might be a fair gainer. But there is NO in between.
Perfect opportunity to straddle.
A good straddle (not a simple options straddle) is very low risk and high reward.
Tuesday, October 25, 2011
there IS a euro financial plan and it's been in place for two years
The plan is to delay until there might be a way to get a super-power like the US or China to "help" - that is obvious.
Our opinion is that the "plan" will not work.
Unless there is massive worldwide currency deflation, as we have said.
Watch your forex positions wisely. Nothing else matters except forex and gold.
PS We expect an "up" nasdaq after a well-spoken excuse from the EU on Wed. in Europe. We don't recommend another short until a day or so.
Our opinion is that the "plan" will not work.
Unless there is massive worldwide currency deflation, as we have said.
Watch your forex positions wisely. Nothing else matters except forex and gold.
PS We expect an "up" nasdaq after a well-spoken excuse from the EU on Wed. in Europe. We don't recommend another short until a day or so.
Euro/US$ Push-Out to G20 but to no Avail
Now that Tues. is over in the Euro zone, and now that there was great news followed by another... a... well another delay, the financial people aren't meeting on Wed. anymore; instead, only politicians will meet. (We thought this was a financial crisis?)
The Euro zone mentality is at its worst ever, i.e. no one wants to win anything, it's simply a competition to see who will be the absolute worst loser. Nothing else matters. (Not a very productive environment.)
In fact, the politics matter so much, that NO ONE will do anything until the G20. Why? Because then, the EU can just say "oh, those horrible international citizens made us go down!" That's called politics. In that way, no one specifically gets blamed and that's what EU politics is all about. Politics is not about productivity, it's all about blame.
Mind your investments and capital wisely.
The US will not save anybody in an election year with the take-over candidates salivating to blast out the incumbant. This time, there is no cavalry coming to the rescue.
The Euro zone mentality is at its worst ever, i.e. no one wants to win anything, it's simply a competition to see who will be the absolute worst loser. Nothing else matters. (Not a very productive environment.)
In fact, the politics matter so much, that NO ONE will do anything until the G20. Why? Because then, the EU can just say "oh, those horrible international citizens made us go down!" That's called politics. In that way, no one specifically gets blamed and that's what EU politics is all about. Politics is not about productivity, it's all about blame.
Mind your investments and capital wisely.
The US will not save anybody in an election year with the take-over candidates salivating to blast out the incumbant. This time, there is no cavalry coming to the rescue.
Monday, October 24, 2011
For our German Friends and Consults - Euro Negotiations - Das Brille
You are a vote or two away from funding the entire world with no help from anyone. Seems fair to you? Not to us.
Of course, your poor folks can simply work harder.
The more wealthy folks can have their wealth dissolved by currency deflation. Meanwhile, So. Europe can be used for vacations.
Oh well, you are nice folks so please carry the rest of Europe on your backs as usual.
Thanks much. We honor your philanthropy to Europe!
Natuurlich, dem blinden hilft keina brille...
Of course, your poor folks can simply work harder.
The more wealthy folks can have their wealth dissolved by currency deflation. Meanwhile, So. Europe can be used for vacations.
Oh well, you are nice folks so please carry the rest of Europe on your backs as usual.
Thanks much. We honor your philanthropy to Europe!
Natuurlich, dem blinden hilft keina brille...
US Equity Volume is Small on the Exchanges
At first approximation, nearly all US$ fund activity has been transformed into Euros as we have long said. Risk but much more earnings. Until...
Of course, these US funds intake US$ and are required to pay in US$, so there needs to be a small US$ fund available to make weekly payments and to hedge anything in the near future not already covered by put purchases. But the US fund money is almost 100% in Euros.
And without a put-purchase, those Euros are held up, just as if you or we were to purchase a bank CD (not recommended!) until a certain date by contract; therefore, the US$ mini-fund is necessary for the money market, pension, hedge, big bank, and all other US$ funds.
It follows that the Euro/US$ ratio, easily controlled by supercomputers (in this case, even ancient-Intel processor-based computers) exactly duplicates any and all US$-based equities (even oil! although that is a special case.)
If the Euro goes up by whatever means, then the world is fat, dumb, and happy. If the Euro goes down, then the funds need to purchase puts; otherwise, they are forced to play the US-equity vs. Euro computer game to keep from losing your money.
US equity volume?
Please check for yourselves. Tiny. Why? Because when the Euro/US$ goes up, then fat-dumb-and-happy means that a fund doesn't need to do anything right then.
If it goes down, then most of the funds have already purchased puts (please check out the volume for yourselves) so they don't even need to trade anymore!
Simple as pie.
The only loser? YOU if you do not understand this ahead of time...
Of course, these US funds intake US$ and are required to pay in US$, so there needs to be a small US$ fund available to make weekly payments and to hedge anything in the near future not already covered by put purchases. But the US fund money is almost 100% in Euros.
And without a put-purchase, those Euros are held up, just as if you or we were to purchase a bank CD (not recommended!) until a certain date by contract; therefore, the US$ mini-fund is necessary for the money market, pension, hedge, big bank, and all other US$ funds.
It follows that the Euro/US$ ratio, easily controlled by supercomputers (in this case, even ancient-Intel processor-based computers) exactly duplicates any and all US$-based equities (even oil! although that is a special case.)
If the Euro goes up by whatever means, then the world is fat, dumb, and happy. If the Euro goes down, then the funds need to purchase puts; otherwise, they are forced to play the US-equity vs. Euro computer game to keep from losing your money.
US equity volume?
Please check for yourselves. Tiny. Why? Because when the Euro/US$ goes up, then fat-dumb-and-happy means that a fund doesn't need to do anything right then.
If it goes down, then most of the funds have already purchased puts (please check out the volume for yourselves) so they don't even need to trade anymore!
Simple as pie.
The only loser? YOU if you do not understand this ahead of time...
Gold as a Currency Replacement when Currencies Deflate
Gold is relatively high as a hedge for worthless currencies, e.g. the Euro will likely be printed at a high rate as part of the failure to get out of the Euro-Zone mess.
Our "guess" is that political pressure in an election year will prohibit Uncle Ben from any further US$ printing press activity while the Euro gets printed like monopoly money. Pay attention Forex friends!
Once the dollar stopped getting printed with nothing to back it up, the dollar has rissen hugely. At that point, gold has lost some of its luster.
The Euro is trash. Enough said. The slightest hint the US will print more $, gold will be well over $2000. One of the Fibonacci retracements is well over 60% and that is our anticipated range for the US$ price of gold in that case.
Our "guess" is that political pressure in an election year will prohibit Uncle Ben from any further US$ printing press activity while the Euro gets printed like monopoly money. Pay attention Forex friends!
Once the dollar stopped getting printed with nothing to back it up, the dollar has rissen hugely. At that point, gold has lost some of its luster.
The Euro is trash. Enough said. The slightest hint the US will print more $, gold will be well over $2000. One of the Fibonacci retracements is well over 60% and that is our anticipated range for the US$ price of gold in that case.
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