FX Position Updates and Ideas

It's been quite a while since I took the time to update this so I think it's about time that I share my thoughts.

The past few months have been favorable for most long term strategy FX investors (myself included) with events and momentum largely favoring macro fundamentals.  I'm sure the BoJ QE increase came as a shock to many, but to me it is just the beginning of a long awaited move that I believe will stretch much further.  I still hold long USD/JPY and have held that position for most of the year. With a Positive roll, the largest QE scheme in history (of developed countries....), and a BoJ lineup that would make Keynes look Austrian, there is no reason to be anything but short yen, even at the current cocaine-induced rates hitting 115.00.  Pick your buying opportunities but in the long term I think this is still going much higher. The only real decision is choosing the most favorable pair to invest in: usd/jpy, eur/jpy, gbp/jpy, aud/jpy ect. I like USD now, but the fed will see increasing pressure to bring back limited QE going into early 2015, and I see it as an almost near certainty by the end of 2015.

On other trade setups and ideas, short EUR/GBP has been in an almost perfect technical decline since May. I expect the euro to continue seeing downward pressure and it is largely one of the front runners in the great "Race to the Bottom" most major currency pairs are tangled up in.

As an alternate trade idea, EUR/CHF is approaching the key 1.20 mark. We know the SNB has the button are ready to buy at 1.20 to sustain this minimum rate. They have confirmed it in comments in recent weeks and have not wavered from this position for years, so is a buy EUR/CHF in order? Monetary policy is a dangerous thing to mess with, but if you want to play with fire it could be a good bet. The question is how far are they willing to go to maintain the rate, since the euro is clearly dropping like a stone.

Algos in Action

Algorithmic trading/flash trading/whatever you want to call it has been a topic i've been posting news on for nearly 2 years now.  Thanks to Zerohedge, we finally have a very good explained example of exactly whats happening:

http://www.zerohedge.com/news/2014-07-15/market-rigging-explained

enjoy

Just a repost of some classics

Money as debt, one of the best explanations I've found of the underlying issues with running a fractional reserve lending system they way that we do:

https://www.youtube.com/watch?v=jqvKjsIxT_8


and the age old classic the remains relevant decades after its publishing:

http://freedom-school.com/money/how-an-economy-grows.pdf

Collection of minimum wage links

khan academy
http://www.youtube.com/watch?v=j0c2vmFGbtk

Edgar the worker
http://www.youtube.com/watch?v=rQj1qlsjVoM

Milton Friedman 1
http://www.youtube.com/watch?v=ca8Z__o52sk

Milton Friedman 2
http://www.youtube.com/watch?v=Rls8H6MktrA

Milton Friedman 3
http://www.youtube.com/watch?v=XMo0taZnPN4

Milton Friedman 4
http://www.youtube.com/watch?v=x-BGi4NIFww

Schiff
http://www.youtube.com/watch?v=I_IMuxMXd3E

Happy late new year....

Getting back into the swing of things, regular posting to resume shortly.  After all, 2014 looks promising to be one of the most volatile years in the last decade. For the first time in history, central banks will (try to) begin winding down the "great experiment", bottomless mess of quantitative easing and near 0% interest rates.  Domestic industry doesn't have quite the economic potential it did during the post WW2 era.... and even if it did, I doubt it could pull us out of the slums.  The hole is too deep.  Most schools of thought blame the great depression on debt deflation, or more specifically, a debt/GDP ratio of 300% and the necessity of dealing with that debt.  While it's accurate to note that our current debt/GDP ratio is also over 300%... I think it think its more appropriate to note the debt per capita for the time period, because it also indicates a sense of economic equality.  The inflation adjusted, debt per capita during the great depression was about $5,900.  The current debt per capita is roughly $54,200.  Keep in mind this IS inflation adjusted. My points:

* Things are not better, they are much, much worse.
* Unwinding QE will lead to chaos.
* More accommodative monetary policy only make the problems worse.