Paul Krugman, an economist who was awarded a Nobel Prize in his field, stated that world avoided second great depression. His comments were issued during an engagement in Malaysia. According to him, the worst is over, thanks to the huge stimulus packages many governments put together. As a proof he points out to the better than expected jobless data from latest NFP report. He predicts that Asia is likely to see a faster rebound, than the U.S. and Europe, partly driven by the recovery in manufacturing exports.
I hope he is right. After all, he has credentials for that. However, one must recall that many people with similar background, and pedigree, have made many mistakes. Some of them were of staggering proportions. Anybody remembers LTCM fiasco? Two Nobel prize winners were involved there. What I find peculiar, is his claim about additional room for spending by US government to boost growth. Well, room for spending always exists, but where will the money come from? More long term debt? He wouldn’t elaborate.
Currencies are showing some corrections after Friday’s oversized moves. I call them “corrections” because at the moment don’t think these are reversals. It has been a dull day for me, with a few very short term trades and nothing at all to brag about. One of those “nothing” days. Charts are still not building the kind of buy/sell set ups I’m looking for, especially on hourly time frames, so I’m largely inactive, but with a buy order to place.
Kiwi has been getting stronger against most currencies for a few days now, including Aussie. Their cross AUD-NZD, fell about 300 pips, which is a relatively large move for hourly chart of this pair. At the moment sell off is stalling and bounce is very possible. I want to buy it 1.2485, with a target of no more than 100 pips, probably a little less. This is a fairly short term play, if it happens. Longer term charts are unclear to me at this point.
Something I haven’t posted here in a long time are my short term trades in GBP-JPY. Tomorrow I’ll try to include some 5M or 15M buy breakouts which happen between now and than. Should they happen, that is. One never knows. Today, for example, only one took place, and it didn’t reach the objective. I closed it at break even. Next 24H should be different.
Mike K.
Mike, I used to follow Krugman in the New York Times editorials. He is as much a political operator as an economist, in my opinion. He is also waiting for a call from Benake, if he is reappointed. Their offices were down the hall in Princeton. Krugman is not an unbiased observer.
Oh, yeah. I don’t take economists seriously, not for trading, anyways. What caught my attention here is the fact that he called for even more government stimulus. Besides, the economy is still not out of the woods. This call about “avoiding” second depression is premature. If there is no another collapse within next 2 years, than I’ll agree.
I read you post about NFP again. Did you used to trade it? You seem to know a bit how it is done.
God, Forex trading is difficult. And I started to think I had figured out.
No, Michelle, I never traded NFP specifically, but I’m familiar with the approach. We use it for general trading, systems are built around this premise. Besides, one of the e-books floating around was written by somebody I know. I was involved in development of his method.