For some time rumors have been circulating about certain banks’ reluctance or even opposition to participating in TARP. Government documents released yesterday confirmed just that. Judicial Watch, a nonpartisan educational foundation, the documents revealed “talking points” used by former Treasury Secretary Henry Paulson during the October 13 meeting between federal officials and the executives, that stressed the investments would be required “in any circumstance,” whether the banks found them appealing or not. It had been vaguely known that executives of 9 large banks had been strongly encouraged to take the funds. But the documents revealed just strong government arguments were. Paulson wanted healthy institutions that did not necessarily need capital from the government to participate in the program first to remove any stigma that might be associated with a bailout. So he strong armed them. This resulted in government taking direct stakes in the banks through $125 billion in preferred stock purchases. One could argue, that this was a partial nationalization of financial sector with, yet unknown, long term consequences. Statement from Judicial Watch President, Tom Fitton, read:
“These documents show our government exercising unrestrained power over the private sector.”
I’ll leave at that.
Talks about speedy recovery took another blow today. Number of new jobless claims rose to a seasonally adjusted 637,000, from a revised 605,000 the previous week. That’s above analysts’ expectations of 610,000. But, this is a good one, some economists said the jumps, were not cause for great concern. Jobless claims should ease after layoffs in the automobile industry are complete, while inflation remains under control. Not a cause for concern? Twisted logic here. Of course the lay offs will ease eventually. If this situation lasts long enough, everybody will be given a pink slip. At that point numbers will improve dramatically- ZERO new claims! Time to party! Seriously, I don’t know who these quoted economists are, but I think they would be more concerned if it was them filing for benefits.
None of this had much effect on currencies today. No dramatic moves, some crosses painting possible reversals. I have been following EUR-NZD for a few days now. It reached the target I sought while writing yesterday’s post. Managed to squeeze it in the last sentence there. Here is the chart.
I expected it to last one more day, but this was a nice surprise. Price made one more run and it seems to be retracing now. After a suitable pause (1-2 days?) it should resume up trend. For now, though, Kiwi is showing some teeth.
This blog was strangely devoted to NZD this week, with other cross I followed being NZD-JPY. As suggested yesterday, price is trying turn up again.
I have intentions of testing this zone. One buy order is placed at 56.20, if the price gets down to it. This has a small risk of about 50 pips. Second order will placed above the high. Notice the word “will”- the high is not formed yet. I want to see price pull back on hourly chart, and a well defined minor high. Most likely somewhere within 57.00-57.25 band. Target is 58.00 or so for this move. If current uptrend continues to 57.45 or higher, this trade is scrapped, because would not present rewarding objective. Pull back must come first before any of this is valid.
Mike K.
People are loosing jobs left and right. In my place 120 people were let go this week. Maybe another 200 in June and July if things don’t improve. You made a good comment- it is all some remote numbers unless it touches you. Not funny at all.
I agree- not at least funny. Hope you are OK.
I used to think my position was absolutely safe. I’m still fine by recent events shook my confidence. Even more reasons to get this trading thing rolling.
Mike, you often post trades where the price will break out over a multi-day high like the EUR/NZD trade here. How do you determine the target?
Also, on this post you have two long trades, one below the 100SMA and one above. How do you feel about the reliability of either? Or does the position of the SMA not play into the decision much?
Both trades for NZD-JPY are under 100 SMA. Target for the second one would be in the neighborhood of MA, which is always secondary. It becomes important when it lines up with highs/lows or main Fib numbers.
NZD-JPY continued to go up for a while longer than I thought it would. 100 SMA kept creeping down. If the price returns to 57.35 (latest high), MA might be right there by that time. This would make breakout more important and change target. Thing is, as the price develops, situation changes and these kind of strategies must adopt, too. Lower buy trade is valid, but now it has higher target of 57.20, before potential breakout. Does it make sense?
That was a kick ass trade in EUR/NZD. Congrats!
[...] loan guarantees are being discussed. In effect, that would create something similar to what in US is the TARP fund, which would be comparable in size to its American counterpart. For all practical purposes this [...]