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Forex: Trump Effect and Reasonable Trading Caution for All

Forex: Trump Effect and Reasonable Trading Caution for All

The Forex market the past two months has created a profoundly stronger USD against many major currencies. The combination of late September intrigue regarding U.S Federal Reserve outlook, then nervousness about the approaching U.S election, followed by the subsequent results have been a dumpster fire for many speculators looking for a sustained return to USD centric weakness. Hopefully risk taking tactics have included a solid dose of caution.

This week’s Non-Farm Employment Change numbers scheduled for Friday may give financial institutions a moment to focus on economic data instead of President-elect Donald Trump’s loud pronouncements, but the effect may prove to only be momentary. It isn’t data that is driving Forex for the moment it is nervousness and fear of the unknown.

USD/BRL Three Month Chart as of 3rd December 2024

While many financial institutions and speculators trade only the major currency pairs, taking a look at the less obvious and more infrequently transacted major currencies may provide retail traders additional perspectives regarding the fragile nature of Forex. Many nations and large institutions are demonstrating concerns about possible sea changes to U.S foreign economic policy. Yes, the EUR/USD, GBP/USD and USD/JPY have all seen volatility via USD strength the past two months, but price velocity in the USD/BRL, USD/RUB, and USD/INR may be equally intriguing. And prove that mid-term forecasts (or lack of them) are causing bedlam for all.

USD/RUB Three Month Chart as of 3rd December 2024

While it is more than probable calmer heads will start to be seen in Forex and weakness eventually will return to the USD, trying to pick the exact moment this is going to happen remains a guessing game. Financial institutions via evidence in current Forex pricing remains rather cautious regarding their cash forward commercial enterprise. President-elect Donald Trump has certainly been dealt with before and his negotiation style is that of a businessman, it is not a coincidence that some global leaders who do not exactly see eye to eye with Trump are giving him respect because they understand he will act upon threats if not dealt with fairly.

Trump’s recent brief rhetoric regarding BRICS and the organization’s public consideration of creating a new currency to compete with the USD did not go unnoticed this weekend. Critics may want to proclaim Trump’s threats as belligerent, but BRICS is free to create a new currency still if they wish. While Trump cannot stop the birth of a BRICS currency, he can certainly try to initiate actions (via sanctions) against nations that attempt to create a new unified currency which tries to curtail the dominance of the USD. It would certainly help Trump’s bargaining position and the USD also, if better fiscal policy is practiced by the U.S Treasury and government.

USD/INR Three Month Chart as of 3rd December 2024

It needs to be pointed out that Trump’s warning to BRICS may not be needed. Even though the organization may be able to create a currency based on a commodities backbone, the lack of trust many financial institutions and nations would feel towards a non-transparent fiat currency powered by the fiscal monetary policies from the likes of Russia, China, Brazil and South Africa remains a difficult sell. Until many changes happen domestically within these nations via governance, creation of a BRICS currency remains wishful thinking.

Getting back to the big picture and the volatility recently seen in Forex. While the major currencies teamed against the USD have certainly faced hectic conditions, the fluctuations have not been unexpected. Day traders need to understand the month of December is likely going to remain choppy and see a test of technical support and resistance levels that are wide and full of fast reversals.

The question for the EUR, GBP, and JPY is if most of the negative inputs into these currencies has been factored into value. The suspicion may be yes, and that strength may rightfully appear in these big three sooner rather than later. However, the approaching holiday season and potential bluster from President-elect Trump will not make this a comfortable or easily wagered avenue.

Short-term retail traders looking to take advantage of the bloodbath created in Forex the past two months who seek opportunities should focus on perceived targets which aren’t overly ambitious. The coming U.S jobs data this Friday may allow the U.S Federal Reserve room to cut the Federal Funds rate on the 18th of December by another quarter of a point. As a point of attention, the European Central Bank will announce their Main Refinancing Rate on the 12th of December. The ECB’S actions may be a solid clue regarding the Fed’s approach to upcoming policy.

However, even if an interest rate cut were to take place via the Federal Reserve, it is likely the cut has already been factored into Forex. Which also highlights the high degree of nervousness that exists because of fears which permeate due to Donald Trump’s tough negotiation stances which have been made public. Meaning those who are looking for USD centric weakness to emerge still need to rely on a shift within behavioral sentiment to occur that is not generated because of the Federal Reserve. Nations need to show a willingness to amend existing trading agreements with the U.S, allowing for changes to internal policies regarding exuberant price duties they place on U.S goods in their own countries.

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Impolite Opinion: BRICS Long-Term Plans & Implications Part 1

Impolite Opinion: BRICS Long-Term Plans & Implications Part 1

The global Forex market is spastic and many major currencies are traversing within weaker whipsaw value ranges against the USD. The currency pairs are trading in price bands seen before the Fed cut its Federal Funds Rate by 0.50 basis points on the 18th of September. And there is still one and a half weeks of assured volatility that will be demonstrated. Crucial U.S data is on the schedule in the coming days via the Advance GDP and Non-Farm Employment Change statistics, and the U.S Presidential election is edging closer. Israel and Iran continue to play a game of cat and mouse in the Middle East, which thus far has led to a controlled chaos and not worldwide bedlam. Financial institutions have plenty of reasons to be apprehensive.

Expansion of BRICS Feels Inevitable

Now let’s turn our attention to a tectonic foundational shift building in global trade and geopolitics. Attention on short-term behavioral sentiment which is fragile and has a less than clear mid-term perspective, needs long-term considerations too. Investors are required to contemplate possible dangers that are hiding in open sight and will pose a problem in the future.

The BRICS 2024 Summit was conducted this week in Kazan, Russia. This included the new member nations of Egypt, Ethiopia, Iran and the United Arab Emirates. I am not here to give you a major recap on what took place behind closed doors. I wasn’t invited. But we should look at some of the results and statements made and what they imply strategically.

The BRICS attendees to this year’s conference included powerful dignitaries from approximately 36 nations. One major result of this BRICS conference was to award Partner State status to 13 countries including Algeria, Turkey, Malaysia, Indonesia, Vietnam, Thailand, Nigeria, Uganda, Kazakhstan, Uzbekistan, Belarus, Cuba and Bolivia. Saudi Arabia was invited last year and has not made their full participation official yet, but they attended this year’s conference as an invited guest. The trend appears clear, we are entering a new paradigm in which long-term thinking by the BRICS nations could out maneuver the short-term nonchalance of the West and this has implications for the USD long-term.

There were high level meetings between leaders of BRICS countries including China, India and Russia. Perhaps, more importantly was Vladimir Putin’s bold statement about BRICS desire to start its own grain exchange. Putin also advocated for the creation of a BRICS cartel in other commodities such as metals, including gold. Gemstones such as diamonds and emeralds could develop into a sizeable entity too. This needs to be taken seriously by the West.

Credence must be given because the BRICS nations already are among the largest producers of grains, legumes and oilseeds. The scope of commodity production and supply capabilities by BRICS could certainly turn into a painful thorn in the side of existing large trading companies. And a potentially coordinated energy sector via Iran, Saudi Arabia, Nigeria, Russia and others must be taken into account.

Russia and China as Friends of the Underdogs

Historical entanglements put Western nations like France and others in a vulnerable spot diplomatically as they try to maintain alliances with many BRICS nations. France serves as a good example of diminishing Western influence. France remains on the ground overtly in Africa while dealing with vestiges of a colonial past. But France’s influence in Africa is under stress and their ability to use the continent as a source of power and financial gain is being confronted. France still maintains the Presidential Council for Africa, but France is likely perceived by many of the participants as a wolf dressed in sheep’s clothing. Coups in French influenced African nations have a bloody and present history when political diplomacy does not go well.

Exploiters of the past in many African nations are looked upon with derision and scorn. Russia and China are often viewed as friendly countries who helped fight along the side of certain African nations who sought and achieved independence. The ability to create ascendancy in Africa by Russia and China needs to be looked at within a prism that suggests additional spheres of power will develop in BRICS. Many nations that dealt with colonial statuses in the past are rightfully intent on shaking off the notion of being considered laggards.

The West certainly knows in no uncertain terms it cannot return to colonialism. However, African governments should make sure they are not replacing old masters for new. While some might say it is wishful thinking – and I am still on the fence contemplating the notion – on the part of Russia and China to create powerful commodity cartels, if achieved this actually could prove to be an emphatic first step in attempting to secure a new and powerful currency by backing it with a foundation of intrinsic value. Brazil and South Africa would be a big part of this underpinning too. Russia and China’s foray into Africa via their military and money lending excursions, and the already created organizational and trade structures which exists within BRICS opens the door for the perceived underdogs to battle together against the power of Western riches.

A competition is certainly underway between the West and BRICS. What exactly is the U.S doing in Angola? The planed visit of Joe Biden in the first week of December, which was supposed to take place in mid-October was postponed due to the recent hurricanes. Will the U.S presidential visit be anything more than a sideshow, particularly if the Democrats do not win the election on November the 5th? Angola has a massive amount of Crude Oil and is an OPEC member. American energy companies and other Western corporations are active commercial participants in the African nation. However, China has a firm financial stake in Angola via infrastructure projects too. The political and financial implications between BRICS and the West is a growing dynamic, one that will be further discussed in Part 2.

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Make Common Sense Great Again: On Moving Away from Nuance

Make Common Sense Great Again: On Moving Away from Nuance

Opinion: The following article is commentary and its views are solely those of the author. This article was first published the 23rd of July 2024 via The Angry Demagogue.

Has there been a total breakdown of readiness in the West? When we look at seemingly unrelated events we see that people in responsible positions in governments around the Western world have missed signs that are obvious – and not only after the fact. The attempted Trump assassination just got me thinking how no one seems to react to the obvious anymore. It seems that both the local police and the Secret Service knew that this young man was on a roof with a rifle and no one took the most elementary actions of delaying Trump’s appearance or trying to stop the shooter or even ascertain his motives all of which was obvious to everyone else. We are not talking about someone missing a shot at him or even forgetting to check a specific place, but an active decision was made – to do nothing.

On October 6 and 7 the IDF Chief of Staff and his senior advisors on the General Staff heard of possible Hamas plans to attack, knew of previous intelligence that detailed the exact attack that happened and even refused a request of the head of the Southern Command to move 4 helicopters closer to Gaza. Instead of doing even the minimum, they just did nothing. They ignored the obvious and ruled purposely against common sense and in favor of their own preconceived notions.

As Russia was massing troops on the border and as Putin’s talk was becoming more and more belligerent the US administration did nothing that might have at least hinted to Putin that this could only lead to disaster. Putting US troops on a higher alert, inviting the Ukrainian ambassador to the White House as a show of support – anything really, might have given Putin food for thought. As Iran moves closer and closer to attaining a nuclear weapon and taking control of the middle east, the West just does nothing. Destroying Houthi assets (as the Israelis have just done), sending B52’s into the sky for training missions to destroy Islamic Republic assets – all that might have made the Iranian rulers wonder what was in store for them and limiting the war to Gaza. But again, against common sense, nothing was done because …. Wishful thinking.

If those responsible were acting like boys in the school playground (are boys still allowed to play in the playground?) they would have done more than they did in all these cases. 

Since the end of the Cold War we have seen the abandonment of common sense in favor of sophisticated analyses where nuance trumps simplicity and bias dominates the analysis of data and where cliches overtake serious policy. In classical Jewish biblical exegesis, there is one rule which nearly all (non-mystical) commentators hold and that is that the exegesis cannot contradict the simple meaning of the words of the Bible.  True enough, that is stretched to points of wonder sometimes – but they still cling to the rule. 

Common sense is underrated in policy analysis and often in business, but those who ignore it now will be challenged later. Common sense means the acceptance of what people say and looking at data without bias. Common sense means that you have to understand the person you are talking to and don’t assume they think like you. 

Back in my university days I read a lot of Hannah Arendt, who, in spite of the banality of her banality of evil theory had a lot to say. In her book “The Human Condition” she speaks of common sense – or as she often puts it “the sense of the common”.

I would like to quote her here, even though I tend to think she would not have thought that it was the rulers, the policy makers and the writers who are ignoring common sense:

“The only character of the world by which to gauge its reality is its being common to us all, and common sense occupies such a high rank in the hierarchy of political qualities because it is the one sense that fits into reality as a whole our five strictly individual senses and the strictly particular data they perceive.  It is by virtue of common sense that the other sense perceptions are known to disclose reality …. A noticeable decrease in common sense in any given community and a noticeable increase in superstition and gullibility are therefore almost infallible signs of alienation from the world.”

Arendt of course assumed that the lower or working classes were susceptible to superstition and gullibility but in these times it is the ruling classes that have abandoned common sense in favor of superstition and gullibility. It is they who are alienated from the world. Preconceived notions that contradict the plain meaning of the world is today’s superstition – and it is no less dangerous and irrational than the superstitions of times past.

Let’s take a brief look at these policy decisions by nearly all western countries, regardless of their geographical location or economic outlooks, their demographic trends or the overall culture of their people and their neighbors resulting directly or indirectly of the perilous situation the free world is now in.

Defense Spending and Force Size

The post-cold war “peace dividend” became an idol of western policy makers.  Massive cuts in defense spending even in things that were very necessary to the maintenance of said “peace dividend” – like naval power – was the preferred way of dealing with the end of the Soviet Union. The “End of History” was read simplistically instead of realizing that other ideologies and other powers might very soon challenge the victorious west. Some thinkers, I think of a professor of mine (Elie Krakowski) who back in 1979-80, before the collapse of the Soviet Union, spoke of Islam as the third force which will challenge the West and the East. I studied in a small university and if we were discussing it back then how are policy makers in Washington, London, Tel Aviv and Paris not speaking of it today?

While Edward Said’s “Orientalism” was the talk of the town, Bernard Lewis and Fouad Ajami were, despite their posts at Princeton and Johns Hopkins, not taken seriously enough. If they were, the US Navy would not have gone from 594 ships in 1987 to 275 in 2016. The British Navy  went from about 170 ships in 1970 to well under 50 in 2017. The rest of Western Europe we all know about. But at least countries like Netherlands, Belgium and Denmark don’t face hostile neighbors and were never meant to have forces that would do more than assist in minor operations.

Israel on the other hand has always faced neighbors who have desired to destroy it.  Even the countries with which it signed peace treaters, Jordan and Egypt, have never been able to translate these treaties into popular support and are always a coup away from belligerence. The history of dictatorships in general and of the Middle East in particular ought to have given the Israeli high command at least a hint as to what they might be facing. With the advent of Iran as a major regional power with the means and desire to spread its theo-revolutionary ideology, Israel ought to have realized that the era of wars was not over. Yet, since 2000 Israel has cut 6 divisions and decommissioned 2,000 tanks from its forces. It has cut military service for men from 36 to 32 months, even as it has not increased the mandatory service for woman from 24 months even though it has increased the amount of women in combat and combat support roles. The ultra-orthodox still don’t serve (they are about 16% of the draft class) zero even after October 7 and the number of youth who have received exemptions due to “psychological” reasons has skyrocketed to nearly 13% of the draft class. I don’t mean to belittle those with true psychological issues but rather the high numbers signify that many if not most are of a class that allows them to afford to pay psychologists for convenient diagnoses.

In other words – the IDF, the Finance Ministry and the political class all found it convenient to reduce the size of the army – both manpower and equipment – and used the excuse that there will be no more ground wars to justify the move.

The Ukraine conflict revealed to the world that US arms production of even the most basic arms is not enough for the US itself to maintain minimal levels during wartime.   The current Middle East conflict has magnified this disaster.

Common sense readiness has been ignored throughout the Western world due to sophisticated thinking more wishful than realistic. This is nothing less than a messianic and superstitious belief in the end of wars.

Immigration and Assimilation

If there is one issue that common sense has missed it is immigration. The reactions of average citizens to unlimited immigration in Western democratic countries has been uniform – NO! In some countries the yelling is louder but in all western countries there is significant opposition, on common sense grounds often, to the establishment immigration policies.

I am an immigrant to Israel and my grandparents were immigrants to the United States. Immigration, the movement of peoples from place to place has been going on since people left Africa – and before. But there is no separating immigration from assimilation unless your immigration is due to imperialism and conquest.  The Romans, Greeks, Chinese and Persians of ancient times, the Arabs of late antiquity were all imperialists. There was of course the age of imperialism that ended in WWI. But 21st century immigration is not of national conquest but of individual movement of people and families. One by definition must adapt to the local cultures – in the widest sense of the word. If a cotton farmer from Arizona wants to move to Iowa, he better adapt to the climate and figure out how to grow wheat or soybeans instead of cotton. If an aristocrat from England decides to move to the United States, he needs to know that his family heritage and titles won’t get him much. If a Spanish or Chinese speaker moves to Germany, the expectation is that he will learn to speak German.

An immigrant who does not respect the local culture in all its manifestations needs to get permission in order to stay in the new country. That is the way of the nation-state that has protected freedom in the western world so well (if not always so well). We can’t compare the 21st century to the pre-WWI world where borders were porous and people that survived the trip across a continent or an ocean could settle in that new land. Some more successfully than others. 

Common sense dictates that an immigrant that does not respect the laws of his new home has no right to live there. Yet, time and again, immigration policy has been separated from the law and being law abiding has no bearing on future citizenship.  Therefore, there is no demand from the immigrant and no opportunity for the immigrant to assimilate and be part of the social fabric of his new country. That being said, the mass Islamic immigration into Europe could be said to be imperialistic as the leaders of these communities have discouraged any type of rapprochement with Western values and law. That, along with the demographic collapse of indigenous Europe has put Europe on the brink of either a civil war or a peaceful surrender to Islamic imperial forces.  

Free Trade and Social Peace

There is no doubting that free trade brings prosperity and that economic growth better than any other global trading system. Free trade  is also the best way to lift the global poor out of poverty. The U.S constitution understood the importance of free trade, as states were prohibited from starting trade wars with each other.   This has also been the “good” in the E.U and has produced much prosperity in that Union.

Yet, free trade with allies needs to be differentiated between free trade with enemies  – meaning those that oppose our system. Free trade that allows your enemies to defeat you militarily is not free trade but suicide. So too, trade policies need to have social issues taken into consideration. This is not a call for tariffs or against free trade pacts, especially with neighbors, but rather they need to be adjusted with common sense solutions to employment and other problems that will arise from any economic change. 

Social peace is the second half of this section because, besides immigration, the erosion, not to say destruction of physically intensive jobs can and often does lead to social violence for reasons obvious to those with common sense.

Energy and Food Supply

For the most part, you would think that after national defense, it is a government’s first responsibility to its citizens to guarantee the food and energy supply of its citizens. Before we get to luxury and access to travel, the ready supply of food and energy seems to be the minimum that a government ought to do. And yet, when we speak of issues related to climate change (and lets not get into the “is it or isn’t it real” argument) the solutions first mandated to the problem have to do with limiting both of these items without which we cannot live. In California, farmer’s access to water is limited even after the drought due to concerns about some fish and climate, and in the Netherlands they want to pay farmers to stop producing food so that the Earth will not suffer. 

What is the plan here? Regarding energy supply, one would think that shoring up access to alternative energy would take priority over banning current ways of producing energy. In California, they have been having rolling blackouts in the summer for years and they are looking to ban gas stoves and ovens and gasoline powered cars. Private jets and yachts though are off limits for obvious reasons. What is the plan there? Is there any real preparation?

As for food supply, is the  plan to reduce population or to reduce calory intake? To what levels? Is there an expectation that people will starve themselves to “save the planet”? Again – I am not arguing for or against human causes of climate change but rather, for the common sense understanding that securing the world’s food supply takes priority over closing farms or turning them into organic utopias.

A perfect example is Sri Lanka where those in power bought into the organic farming ideology of Western aristocrats and they ended all non-organic farming causing a famine and a depression. People who worked hard their whole lives lost all their savings as they were unwilling participants in a cruel experiment to see if organic farming can feed a small island nation.  

In sum – a bit less nuance and a bit more common sense – a bit more sensing what is “common to us all” would be welcome in political and policy matters. Maybe if we pursued more common sense policies and a lot less superstition and bias there would be less yelling and screaming in the public square. 

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/ 

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Middle East is Proving to be a New Playground for the Axis

Middle East is Proving to be a New Playground for the Axis

Opinion: The following article is commentary and its views are solely those of the author. This article was first published the 4th of July with an addendum on the 5th via The Angry Demagogue.

Blinken Gets Pushed to the Back of the Line

While the Biden-Blinken Administration is obsessing on “non-escalation” and telling allies they are on their own if they attack an Axis member that attacks the ally,  or that they will help the ally “defend itself” but not take the offensive (how you do that is a mystery) the Axis itself is establishing itself all over the Middle East.

Let’s start with a statement, quoted in Israel, by Alexander Dugin who is Putin’s ideological advisor advising the Russian leadership to arm Hezbollah and the Houthis in their fight against Israel. Earlier this week, Newsweek reported that Russia is considering arming the Houthis with cruise missiles. These could be used against Israel and against Saudi Arabia – or maybe U.S bases in the area. As Russia seeks to cement its ties with anti-Western countries and forces around the world, it seems to be partnering with Iran so as to increase the potency of Iran’s proxies and press their goal to rid the region of U.S forces. Toward this goal Iran and even Russia are manufacturing tanks together in Iran.

The Houthis themselves, under with the guidance of Iran, are attempting to expand their sea blockade from Bab al Mandab straits connecting the Gulf of Aden with the Red Sea, to the east African coast by cooperating with the Sunni and al-Qaeda based Somali terrorist group al-Shabaab al-Mujahadin. Reports in Israel quoting U.S intelligence sources claim that the two groups are cooperating and that the Houthis will supply weapons to al-Shabaab in order to interdict global shipping off the Somali coast and in order to harass U.S forces stationed in the area.

The anti-U.S alliance seem to be able to cross religious and ideological boundaries in ways that western intelligence thought impossible. That is because western (and Israeli) intelligence mis-categorize all of these groups and countries. The issue is not who is Sunni and who is Shiite, who is Russian Orthodox and who is Communist, but rather, who is for keeping the international status-quo and who’s for, to use a phrase meant for different times – a “new global order”.  

The Houthis, feeling confident in having defeated the U.S Navy in the Red Sea are now threatening Saudi Arabia for saying no to a Russian negotiated deal (under the auspices of the U.N and opposed by the U.S) which would bring an end to the embargo against the Houthis including their export of oil as well as Saudi financing of the Houthi civil government in the part of Yemen they occupy (they learned from Hamas and Qatar/PA/Israel that you really can have your enemies pay your salaries) amongst other goodies. They blame Saudi Arabia for allowing U.S jets to bomb Houthi sites from airbases inside Saudi Arabia – with no U.S carriers in the Red Sea that certainly could be true. In their threat they included videos of their bombing of Saudi oil fields in 2019 just in case the Saudis forgot. 

The Houthis, with their experience stopping shipping, have, according to a JCPA report been the point men for Iran’s plan to extend the sea embargo against Israel to the Mediterranean. This would not only hurt Israeli shipping but also the ability of its Air Force to operate properly. We wrote recently about Iran’s possible plans for Cyprus, including Hezbollah’s open threat to them, and this fits nicely with their plan to ring Israel with fire on all sides. We already know that Russian intelligence vessels are in the Mediterranean tracking Israeli submarines and that the Russian naval base in Syria is a safe haven for Iranian shipping. 

Just this week an Iranian vessel filled with arms for Hezbollah anchored in the Syrian port of Latakia (why did Israel not sink this??!!) which is 100kms (60 miles) north of the Russian naval base in Tartus, Syria – was it escorted in by the Russian Navy? Is that why?  

The U.S now has three main allies in the Middle East – Israel, Saudi Arabia and UAE, and with the exception that the UAE administration has a habit of criticizing and threatening these allies. 

It boggles the mind that Blinken does not see what the entire world sees – a so far successful effort rid the Middle East of the U.S and its allies. For Israel that means annihilation and for Saudi Arabia it means probably surrender to the Iranians while its royal family is allowed to enjoy their money (best case scenario). For the UAE it means it will be used even more than it currently is as an Axis financial center. For the U.S it means a withdrawal, not to the Western Hemisphere – but to the northern half of it. 

The Middle East is slowly becoming the playground of the Axis and it is just a matter of time before the West won’t be able to get a turn on the swings.

Addendum: A short follow regarding the Houthi ultimatum to Saudi Arabia

The Houthi’s gave the Saudis 72 hours to respond and respond they did. The Saudis have agreed to all the demands of the Houthis as they realized that the United States will not defend them from attack and are unwilling or unable to deter, let alone to destroy the Houthis offensive capabilities.

Amongst the Houthi demands that the Saudis agreed to are:

1. The re-opening of the airport in Sana’a, Yemen.  They will allow direct flights to bring pilgrims to Mecca, flights to Jordan and soon flights to everywhere. This will allow the Houthis to be re-armed by the Iranians via air transport.

2. Payment, by Saudi Arabia of Houthi government employees.

3. Allowing the Houthis to sell oil – ending the embargo.

This is a plan, as stated, sponsored by Russia and not opposed by the United States. It is a further move by the Axis into pushing the U.S out of the region. It is not clear if part of this agreement is for the Saudis to disallow U.S use of the Prince Sultan Ari Base for attacks on the Houthis.  

As an aside, the UAE has suggested that the U.S setup a base in Somaliland – a breakaway country in the horn of Africa on the coast of the Gulf of Aden and bordered by Djibouti and Ethiopia (and of course Somalia). This seems to be an attempt to rid the Gulf States of the responsibility to host U.S forces that attack Iranian proxies.  Could Biden’s “you are on your own if you attack Iran” (back in April after the 300 projectile attack on Israel) have influenced their decision?

Russia and Iran are on the rise in the region as the U.S administration preaches de-escalation and appeasement. 

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/

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AMT Top Ten Miscellaneous Punches for the 28th of June 2024

AMT Top Ten Miscellaneous Punches for the 28th of June 2024

10. Cricket: The ICC T20 World Cup Championship will feature South Africa vs. India. The two teams are familiar with each other competitively and the final match will be held at the Kensington Oval in Bridgetown, Barbados on Saturday.

9. Selling Pressure: Lows are being challenged in Bitcoin as it hovers above 61,000.00 USD. Cocoa has stumbled dramatically this week and is below 8,000.00 per metric ton. Who will be courageous and wager on reversals higher? Speculators should remain cautious and understand price velocity that looks tantalizing can also prove costly to trading accounts.

8. Grounded: Boeing’s Starliner remains docked to the International Space Station. Problems have plagued The Boeing Company the past handful of months, and their ambitions of becoming a power within NASA’s explorations are also underachieving. SpaceX and Airbus are certainly paying attention to Boeing’s ineffectiveness.

7. Teetering: The African National Congress and Democratic Alliance political parties in South Africa are feuding about how coalition power will be shared within the National Unity Government. The USD/ZAR has become volatile and is near 18.21000 as tensions mount and reversals hit. Financial institutions are waiting for an optimistic resolution, while also fearing the possibility of an abandonment to positive visions.

6. Inflation: Core Personal Consumer Expenditures Price Index statistics will be released today from the U.S. Yesterday’s GDP Price Index came in slightly higher than anticipated which kept USD centric bullish positions relatively strong. However, other American statistics have weakened significantly and the mid-term looks troubling for the U.S economically. Stagflation remains a concern. The Federal Reserve is likely hoping to see today’s PCE numbers come in weaker than expected, which would allow the central bank to hint towards Federal Fund Rate cuts later this year.

5. Ennui: President Macron could find his political power further eclipsed after France’s first round voting results this coming Sunday. French voters appear ready to deliver a resounding message of dissatisfaction to the listless ruling government. Election turnout statistics should be watched. The second round of voting will be on the 7th of July. Financial institutions have braced for a shift of power already, but the EUR/USD will still produce volatility in the days ahead.

4. Geopolitical Risks: Russia, China and their allies are likely considering how they will prepare for a potential change in the U.S White House. Foreign policy following last night’s debate between Biden and Trump must be planned. The fact that Trump is viewed as a rather flamboyant personality and not bound by cautious diplomatic attitudes creates a calculus that U.S adversaries will have to consider. While the potential exists that some nations may try to be more aggressive now, they also know that a Trump victory in November would change the international political landscape long-term.

3. Bank of Japan: The Core Tokyo Consumer Price Index produced a gain of 2.1%, which was above the forecasted amount of 2.0% earlier today. The BoJ continues to remain far too dovish regarding interest rate policy and financial institutions are buying the USD/JPY in massive waves. The USD/JPY is around 160.750 as of this writing and did traverse above 161.000 earlier, these are Forex levels not seen since the late 1980’s for the USD/JPY. Japan’s attempt to stimulate the economy with a weaker Japanese Yen may work, but the U.S and others may start to look at the BoJ’s soft devaluation in a very negative light. Speculators of the currency pair need to be extremely careful, because the BoJ has the ability to intervene violently and cause momentary spikes which could prove deadly for day traders trying to take advantage of the outlandish bullish trend.

2. Behavioral Sentiment: Markets will be a looking glass into the future today, this as trading houses react to the realization that Donald Trump is likely going to be the next U.S President. While there are no guarantees regarding the U.S election outcome yet, the broad markets will certainly feel a shift of momentum in the coming days as large players adjust from a cautious approach to more aggressive postures regarding a Trump presidency. U.S equity indices remain near record highs, and the potential of a more business friendly White House which doesn’t threaten tax hikes on U.S corporations will likely affect speculative outlooks.

1. Power: The resounding defeat of Joe Biden last night in the Presidential debate will spark a heated battle among Democratic power brokers. Biden will certainly be asked to step aside after last night’s poor performance. However, Biden is stubborn, and Dem leaders like Nancy Pelosi and Barak Obama among others will have a difficult task to try and convince Biden for the sake of the nation that he must do the honorable thing and release his political delegates at the August Democratic National Convention in Chicago. If this doesn’t happen, the Republicans may be able to achieve a landslide victory by taking control of not only the White House but the Senate too, along with maintaining power in the House of Representatives. All the camouflage in the world last night, including the liberal media, couldn’t mask the inability of Joe Biden to be coherent.

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AMT Top Ten Miscellaneous Intrigues for the 17th of May 2024

AMT Top Ten Miscellaneous Intrigues for the 17th of May 2024

10. Georgia and Slovakia: It would we wise to pay attention to Tbilisi demonstrations, and also cast an eye on Bratislava after the assassination attempt of Prime Minister Fico. Russia is certainly paying attention.

9. Superconductivity: Origin Quantum Computing Technology of China is making solid advancements and has announced they are ready to domestically produce a 72 qubit capable microwave module known as ‘Origin Wukong’. The battle to create efficient quantum components and operating systems between China, the U.S and others is real.

8. Secretary of Music: Anthony Blinken’s naive decision to play guitar in a Kiev nightclub this week is comparable to Nero playing music while Rome burned. U.S foreign policy continues to raise concerned eyebrows from friends and foes alike.

7. South African Election: The coming vote on the 29th of May is less than two weeks away. USD/ZAR as of this writing is near 18.22000, where will it be on the 30th of May?

6. Biden and Trump: The potential for debates between the two presidential candidates is growing. One question observers may be wondering is if there is adequate supply of caffeine to keep Joe energetic and ample enough hairspray for Donald to look under control?

5. GameStop: Yet another market manipulation of GME is causing massive losses for day traders. The price for the stock finished near $27.67 yesterday, this after touching a high above $56.00 on the 14th of May. GME was close to $10.00 on the 15th of April. Buyers that get in too late to these betting schemes created by frenzied crowds tend to go bust as the early manipulators cash out their profits.

4. Commodities: Cocoa is near 7560.0 USD per metric ton, and Coffee Arabica is traversing slightly below 200.00 USD. Speculative forces remain powerful in both and while they are likely still overpriced, risk management is imperative for those pursuing lower values.

3. Federal Reserve: After the weaker than anticipated CPI numbers printed this Wednesday, and last week’s eroding GDP growth statistics, financial institutions are increasing their risk appetite as they watch U.S Treasury yields decline and consider a mid-term outlook which is allowing for the contemplation of actual Federal Funds Rate cuts.

2. Forex: The EUR/USD is back above the 1.08000 level comfortably, and the GBP/USD has found sustainable trading beyond the 1.26000 ratio. While the major currencies versus the USD have pulled back slightly from near-term highs, large commercial traders are exhibiting risk appetite. A weaker USD centric notion is coming into vogue again.

1. Apex Equities: The three major U.S indices are all near record territories as solid earnings reports from corporations, amidst hopes the Federal Reserve will be able to cut rates a couple of times this year has combined to allow optimism to grow in the S&P 500, Dow 30 and Nasdaq 100. While the U.S public is starting to show they are losing confidence because of escalating consumer prices, financial institutions are wagering on solid returns via economic outlooks. Day traders looking to join the indices parade should make sure they limit their exposure, particularly if they are using CFDs and relying on short-term climbs which can suffer from sudden reversals lower.

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AMT Top Ten Miscellaneous Observations for 3rd of May 2024

AMT Top Ten Miscellaneous Observations for 3rd of May 2024

10. Formula One: The Miami Grand Prix race will be held on Sunday. Whispers have been heard that Red Bull driver Max Verstappen has been approached by Mercedes bidding an annual contract over 150 million USD, but that he has not accepted the offer. However, Adrian Newey, engineer and CTO of Red Bull Racing, has confirmed he is leaving the team after 19 years of leadership. F1 certainly needs more competitive racing, a shake up at Red Bull could deliver this for the sport.

9. De-movements: Desire for decolonization, decarbonization, depopulation, turned into delusion and dehydration for Columbia University protestors and the need for a glass of water per the request of a student leader. Perhaps de-escalation is next.

8. Geopolitics: The nation of Georgia is dealing with demonstrations as some citizens show disdain regarding feared political influence from Russia. Georgia has an approximate population of 3.7 million. The East European and West Asian country has seen civil disobedience on the streets of Tbilisi increase this week.

7. Lower Values: Cocoa is near 7,658.00 USD per metric ton as of this morning, on the 19th of April it traded above 12,000.00 briefly. BTC/USD is around 59,250 after having faced headwinds this week.

6. Gold: The precious metal has sold off this week and is hovering near 2,300.00 per ounce as concerns build about USD outlook remaining strong over the mid-term. A low of nearly 2,282.00 was seen on Wednesday. Today’s publication of U.S economic data will push the price of Gold around.

5. Mixed Trading: Equity indices have produced uneven results this week as investors try to find equilibrium. Optimism almost always is the eventual emotion long-term institutional market participants lean towards. The S&P 500, Dow 30, and Nasdaq Composite all gained yesterday, but remain below highs from earlier in the week. Behavioral sentiment appears fragile and many Fed observers are disgruntled.

4. Uncertainty: The Federal Reserve has admitted it is unsure about future economic progress this calendar year. When questioned about the potential of stagflation Fed Chairman Jerome Powell said he see no signs of this – while forgetting to add that politically saying such a thing would likely cost him his job. And lets remember, the Fed claimed they thought inflation was transitory in July of 2021.

3. Bank of Japan: A battle is underway with the USD/JPY as the BoJ has staged two interventions this week. Intent on trying to create economic growth via stronger exports, while allowing import inflation to be seen, the BoJ interest rate policy remains dovish. The USD/JPY is near 153.230 now, but it is unlikely to go into the weekend with this price. An apex on the 29th of April approached the 159.610 ratio. Financial institutions and Japanese Yen traders must remain alert.

2. High Anxiety: Day traders in Forex, equity indices and commodities have certainly seen heightened volatility and the choppiness is going to persist. Retail brokers will welcome speculators with open arms and point to opportunities, but traders need to understand the ‘casino’ often is making money via losses incurred because of leveraged wagers which turn into losing bets when price velocity hits.

1. Jobs Data: Yet another opportunity for inflation to be seen today via the Average Hourly Earnings numbers. A cautionary road sign was seen this Tuesday when the U.S Employment Cost Index came in with a stronger than anticipated quarterly gain of 1.2%. The USD will remain a lynchpin in many financial assets, and Treasury yields should be watched after the employment statistics have been printed.

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Speculative Notions: Gold and the USD as the Casino Lives

Speculative Notions: Gold and the USD as the Casino Lives

Notes on speculation via the prism of Gold and the USD, with questions about value as short-term wagers versus long-term investment are considered.

Speculative forces eventually run out of power, leaving investors and businesses to conduct their affairs via the assets they are using to proceed with enterprise as they judge fair market price.

Assets like Gold (commodities) the USD (Forex) and equities (corporate shares) are a battleground for those who are trying to make short term profits from price action movement (sometimes – volatility) versus those who are holders of the assets in order to run their lives (corporations, private businesses, finance).

Perhaps the speculative forces are not a Las Vegas environment completely, but it is a strange mix of risk management and gambling. And because of the price changes in these assets as supply and demand are transacted – the realization that the potential of hedging against sudden gyrations in price is used as insurance, but also as a dangerous speculative tool needs to be considered.

Futures, options and cash markets combine and are mixed like a stew consisting of trillions of USD value as global enterprise and financial casinos flourish.

Let’s take a look at Gold as an example. There is only so much physical Gold on the planet earth – a finite amount. There is only so much that can be taken out of the ground in a year. There is only so much Gold an individual can safely store in their home, before they have to use other secure venues. Central banks may have backed away from the ‘gold standard’ but they understand the importance of the precious metal as proven and tested by thousand of years of commerce. Gold can be used as the exchange of value for a good and this will likely remain the case for long time.

Gold One Year Chart as of 23rd April 2024

The price of Gold serves as a hedge against inflation. The value of Gold today roughly buys you the same things it bought you a thousand years ago, when compared to monetary units which fluctuate like the wind. Because cash in many cases throughout history becomes weakened, losing its value because of bad government policy which causes the people holding the ‘paper’ to lose confidence; and then creates the desire for the precious metal which has almost entered our conscious DNA as a source of value which doesn’t change.

We can speculate on what the Gold price will be today, tomorrow, next year, but we know the fluctuations will roughly equate into what our consciousness – logic – tells us what the main reserve currency that rules the land will be worth – in this case the USD.

For the time being, the USD acts as the reserve currency of the world and is weighed against the value of Gold – literally – remember Gold is valued per ounce in USD.

The ability of Gold to climb to record highs recently was put into question, because at the same time the USD was getting strong. This signaled to traders that a known speculative force in Gold was at play; yes, it could be said a speculative force was at play in the USD too, because of Forex and the Federal Reserve, but Gold rose the past month and a half dramatically while the USD also was gaining value.

USD Cash Index One Year Chart as of 23rd April 2024

Thus, suddenly the inverse correlation of Gold and the USD which are literally weighed against one another was suddenly off balance. The USD was gaining and gold was rising, and one of them was likely ‘full of hot air’ – an imbalance.

Meaning Gold had become inflated in value perhaps, because of speculative forces. While folks could point to geopolitics, and central banks such as China and Russia and maybe Iran wanting Gold because they are ‘angry’ at the U.S and want to signal they do not believe in the USD. There is only so much money these speculative forces have, and they hold the USD as a store of value too, which means if they bet too much on Gold they can find their positions – weight – imbalanced.

The USD remains the world’s reserve currency, and the value of the greenback particularly as the Fed has come under pressure, via the weight of inflation, and had to admit they cannot cut interest rates until inflation erodes has made the reserve currency stronger again. The use of the USD is easier than using Gold. There is not enough Gold in the world to transact business to business, person to person physical exchange everyday. Thus Gold becomes a ‘store of value’ via inventories not only in secure facilities but our minds too.

The past couple of days have seen Gold perhaps lose value again as the counterweights have come back into focus. It was bound to happen as long as the USD remains the world’s reserve currency in which value can be distinguished versus the commodity.

Speculative forces do run out of power, and now after Gold flirted with the 2,400.00 plus level recently, maybe Gold should return to its values which were seen in late 2023, which is where the USD Cash Index is essentially standing technically. Lets also remember where U.S Treasury yields were during this time, long-term bonds are a measure of interest rates and outlook via the Federal Reserve – used as an insurance and investment vehicle by those looking to lock in ‘returns’. Yes, Treasuries can be speculated on too, but their values coincide with USD legitimacy and the Federal Funds Rate.

It is a thought, a speculative notion, let’s see what happens. What should the speculative price of Gold be now compared to the USD? Should it be lower, closer to the 2200.00 to 2100.00 USD levels? The casino will give us the answers.

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Iran Front and Center: 60 Tons of Explosives Sent Towards Israel

Iran Front and Center: 60 Tons of Explosives Sent Towards Israel

The Israel-Iran War is soon to enter its 7th month even though last night was the first face to face confrontation between the two countries.

There was much less panic in the air on the “Israeli street” than one would expect after Iranian threats over the last week. I was clearly wrong in my assessment that Iran would not want to start something big with Israel and risk having a chunk of their strategic power degraded but it is hard predicting what fanatics will do. The question is if the utter failure of the attack will bring Iran shame in the Muslim world or if the fact that they sent missiles and drones will be counted as a “victory” even if no damage was done to Israel. Or it could be that Iran was counting on Biden-Blinken holding back Israel from responding and sure enough, NBC is reporting exactly that:

President Joe Biden has privately expressed concern that Israeli Prime Minister Benjamin Netanyahu is trying to drag the U.S. more deeply into a broader conflict, according to three people familiar with his comments.

Last night at about 8:15pm IDF Homefront Command announced that all schools and all educational activity would be cancelled until further notice, angering parents everywhere. A few minutes later they announced that 10’s or hundreds of drones were launched from Iran and on their way to Israel. The news reported that it would take 8-10 hours to arrive, sparking this to make its round on the Whatsapp groups in this very interconnected country:

Google maps also cooperated:

Friends and family in Jerusalem and surrounding areas were awakened by alarms and scurried to the bomb shelters, children in their arms. There were alarms also in the West Bank, the Golan Heights and the Northern Negev dessert. Apparently, the main targets were two air force bases. One was hit by one missile and minor damage was done and the other was untouched. One 7 year old Bedouin girl was critically injured from pieces of a rocket that was shot down. The headline ought to read: Shiite Missile Critically Injures 7 year old Sunni Girl. 

The effectiveness of Israel’s air defense system seems to have surprised even the Israeli Air Force and special thanks has to be given to President Ronald Reagan for ignoring the comics and media (but I repeat myself) and many scientists and engineers (the experts!) as they made fun of his Strategic Defense Initiative and called it “Star Wars” – claiming that it was something undo-able and dangerous even to talk about.

Then Senator Joe Biden, using his favorite word, “provoke”, is quoted in this 1985 NY Times article:

Senator Joseph R. Biden Jr., Democrat of Delaware, pressed hard for reassurance about whether the proposed defensive weapons might be fired by mistake, thus provoking the Soviet Union to launch a real attack.
 

The Biden foreign policy theory for the last 40 years or more is based on not “provoking” your enemy, no matter the cost and appeasing your enemy at any cost.

Special thanks to the U.S armed forces who shot down numerous drones as did the U.K’s air force as well as Jordan’s. There might have been other Middle Eastern countries involved as there is an unofficial regional air defense system set up with Abraham Accord countries and others not part of the Accords. 100% of the suicide drones and 100% of the cruise missiles and 92% of the ballistic missiles were shot down by Israel’s layered “star wars” system. 

If the IRG is honest with themselves, they will understand that they have been defeated. A combination of 300 drones, cruise missiles and ballistic missiles were shot at Israel at once and no drones and no cruise missiles got through. Of the 110 ballistic missiles shot at Israel, 101 were intercepted and only one reached its target. Israeli defense firms closed higher in Tel Aviv Stock Exchange trading today. I imagine Iran’s potential clients are having second thoughts. China too, must be wondering about their own offensive and defensive systems.  

So where does this leave us now?

The War Cabinet assigned to Netanyahu, Gantz and Defense Minister Gallant needs to decide on an Israeli response. I am not sure that Israel has the firepower to destroy Iran’s nuclear sites on its own and there is almost no chance we will see U.S B52’s involved.

So the most obvious target is probably off the table.  It seems that the U.S Administration is pressuring Israel not to respond at all and to leave things as they are. This should not surprise anyone who has been awake for the last six months.

Israel and Iran have been at war for the last 6 months – one could say for the last two decades. This was clear to everyone except Biden-Blinken who could have shortened the war and the suffering by punishing Iran for their attacks on US sailors and soldiers.  Instead, they appeased Iran and released $10 billion to them essentially letting Iran hit Israel with this money.   

 The Scroll is reporting that:

We are now waiting to see how Israel responds. Although an unnamed “senior Israeli official” has been quoted promising a “significant response” to the attacks, Iran appears to have pre-cleared the attacks with the United States via the Oman diplomatic backchannel. And according to Roi Kais of Israel’s Kan News, a U.S. official told Saudi Arabia’s Al-Arabiya on Friday, “the United States will take part in the response to the Iranian response if Tehran escalates the situation inappropriately”—which means that the United States tacitly approved an appropriate level of Iranian escalation, such as, we don’t know, a “symbolic” drone-and-missile attack.

The United States has also, as Barack Ravid reported Friday, demanded to “have a say before decisions are made about any retaliation by Israel.”

If true, that is cynicism taken to the ‘Nth degree’. True enough, the United States needs to watch after its own national interests, but is it possible that the U.S government considers Iran its equal and Israel its vassal? Were Israel faced with a missile attack from China an argument could be made that U.S interests take precedence over Israel’s – but Iran? The Iranian economy is in shambles, the Rial is at record lows, its only economic lifeline comes from China, bankrupt Russia, the $10 billion Biden gave them and illegal activities. As Israel just showed– Iran’s vaunted missile force is worth less than advertised. We have not even spoken about the way it treats women and gays and how it treats opponents to its theocracy, how it spreads terror throughout the Middle East and Africa, how it helps Russia destroy Ukraine, how it is a key player in the global drug trade and money laundering.  

We have also not spoken about its foothold in the Western hemisphere and its attempts to infiltrate the United States itself via the porous southern border. 

Worst of all, if the Scroll story is correct, it shows how Biden-Blinken don’t understand what the office of the Presidency of the United States is. It is not just another head of state or head of government, but rather the President’s warnings ought always to be backed up with actions. Biden’s “Don’t Speech 2.0” was laughed at by Iran in public, for all to see. And the Biden-Blinken response is to tell Israel, “don’t”.

Ignoring Biden-Blinken for the moment, Israel must think deeply about its response. It is clear that any response will be followed by more of the same from Iran. Israel must think a few moves ahead and not just attack for the sake of attacking or it will be in the middle of yet another war of attrition. The end of the multiple rounds of attacks must leave Israel in better strategic shape than it is now and must leave Iran substantially weaker.

Whatever Israel decides to do, it must degrade Iran’s military capability by destroying its weapons and bases and killing as many IRG officers as possible. Israel should not bomb the power stations in Tehran or do other non-military strikes. Air force bases, missile silos and Iran’s navy should be targeted in such a way that degrades capabilities. They could start by sinking the Iranian spy ship that is helping the Houthis in the Red Sea.

Israelis seem to think that by “allowing” Iran to attack them it gives them many diplomatic credits, but we already know that these “credits” do not last long.  Whatever Israel does, it ought not to play the “message” game. Its attacks ought to provide tactical advantages in the coming months and not just “warnings to Iran” and “messages to Hezbollah”.

But let’s not ignore Biden-Blinken for a moment.  What if they decide to threaten Israel that if Israel retaliates the US will sit on their hands? 

This would be the time for Israel to do a little threatening of itself. The worst thing for a sitting President running for re-election is a summer gasoline price spike. Israel could certainly threaten to destroy Iran’s oil facilities and help push the price of oil. High gallon gasoline prices this summer will lose Biden more votes than he can gain in Dearborn, Michigan. In exchange for leaving Iran untouched, Israel can demand a free hand in Gaza, including Rafah as well as in Lebanon.  

Would that be worth letting Iran off the hook? It might. Iran was defeated in this battle, but it still believes it will win the war. Giving Israel free reign to destroy Hamas and then Hezbollah means that Iran will lose the war, too. Without Hezbollah, Iran will lose its most important asset in its overall goal of destroying Israel, chasing the US from the Middle East and establishing Shiite dominance in the region. It would turn October 7th into the day that Iran started on its road to defeat.

Israel needs to be opportunistic and aggressive in its dealings with its allies and its enemies. It has to let its allies know that it too is playing the long game and that it will not only hurt those who hurt it – as Netanyahu loves saying – but that it will destroy all who even try to harm it.

More importantly it needs to show its enemies with actions and not with words that threatening Israel means you will be destroyed. 

The Biden-Blinken team must be told in no uncertain terms that Israel is not a vassal.  The end result of this war cannot only be the destruction of Hamas, it must also be the destruction of the Islamic Republic of Iran as a regional power. By sending over nearly 60 tons of explosives to Israel, they have put themselves front and center.

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/ 

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AMT’s Dubious Dozen Forex March 2024 Sentiment Outlook

AMT's Dubious Dozen Forex March 2024 Sentiment Outlook

The Dubious Dozen is comprised of nations who are wealthy or should be, and face criticism because of domestic and sometimes international policies. As the reader you are free to differ from the AMT opinions, which are admittedly subjective. The ratings and outlooks are not delivered as trading advice, but as a viewpoint to inform. The work presented is a living document. The nations and currencies listed, and data and critiques shall change monthly according to points deemed important.

AMT Dubious Dozen March 2024 Forex Sentiment Outlook

AMT’s Dubious Dozen Monthly Forex Sentiment Outlook has a scaled ratings table, listing nations and currencies that are judged to have concerns regarding outlooks due to behavioral sentiment factors within financial institutions and among citizens, based on economics, transparency, and risk concerns about government fiscal policy, and ‘leanings’ toward autocracy. Metrics like inflation, gross domestic product, direct foreign investment information, debts and budgets, and foreign currency holdings which are gathered from various public sources will sometimes be presented.

AMT also tries to judge the trust level the citizens of the nations have in their domestic currencies via exchange rates, black market FX factors, and alternative assets held to guard against potential risks – like digital assets, cryptocurrencies, and gold.

A lack of credibility in a ‘fiat’ currency is dangerous and often leads to black markets for Forex in search of safe-haven currencies like the USD. The lack of a credible domestic currency also leads to price inflation because people selling goods fear the value of the domestic currency is losing value rapidly. Rampant inflation also leads to a desire to sidestep taxation on occasion.

Problematic inflation and inability to collect taxes may open the door for certain countries to contemplate and potentially initiate Central Bank Digital Currencies in order to control domestic economic activity. It is not a coincidence that China, Iran, among others are considering implementation of CBDC’s. The potential of CBDC’s by governments could allow for draconian laws for citizens of certain nations. The ability for a government to check on how all money is used via a centralized blockchain could lead to a more authoritarian landscape.

Quick Insights of the Dubious Dozen Nations Listed:

Argentine Peso (ARS): The election of President Javier Milei has started to ignite changes within fiscal policy and has created hope among international observers of a less corrupt Argentina. However, many obstacles still must be overcome by the newly elected leader and the government, and many economic issues will take patience from the public to improve. Patience has not been a classic virtue in Argentina, unless one considers the ability to accept massive corruption and go on with everyday life as a supreme power.

Brazilian Real (BRL):  Concerns regarding potential fiscal policy changes hover over the existing government which leans towards a socialistic bent and has shown a tendency to align itself with some of the most autocratic governments. Some businesses and investors are anxious about the potential of government mismanagement to develop under President Lula da Silva. The listing of Brazil will create catcalls from some, but the fear in some circles is what might happen if fiscal policy which is led by a socialistic government becomes too populist. For the moment the BRL appears to be under control, which is a good thing. However, the Brazilian Real should be kept in sight for any signs of nervousness.

Chinese Yuan (CNY): The domestic economy remains troubling and fragile. Deflation abounds. Manufacturing, electrical usage, real estate, export numbers should be monitored by observers. Government policy, and transparency reliability due to political control by the Communist Party is problematic. Concerns are causing a backlash among many foreign investors who are looking elsewhere for long-term business endeavors, when they have the ability to divest. Stats: IMF expected GDP for China in 2024 is 4.6% for 2024. China is suffering from current monthly deflation around minus – 0.80%.

Egyptian Pound (EGP): Corruption is problematic within national institutions, bureaucracy issues plague businesses due to interference. Central bank independence is in question as the government faces a litany of fiscal problems. Worries persist about a devaluation for the EGP in order to try and get inflation under control which is currently near 26.5%. The Egyptian Pound is viewed as highly vulnerable.

Iranian Rial (IRR): The nation remains mired under international sanctions. The government practices a heavy hand regarding domestic policies which carry the threat of prison and worse because of the ability to oppress the general population. The Iranian Revolutionary Guard which has several branches of ‘service’ helps the ruling government dominate and benefits monetarily, which makes the Iranian leadership and its ability to rule comparable to a mafia. The current inflation rate in Iran is estimated to be around 32.5%. Unemployment in Iran is estimated to be above 10% and 60% of the total economy is believed to be centralized by the government.

Nigerian Naira (NGN): Corruption remains a troubling part of Nigeria. Although it is a massive exporter of commodities including ‘energy’, and has a dynamic demographic, government policy is highly questionable. Nigeria’s GDP is estimated to be around 3.46% as of December 2023. A problem for Nigeria is its shadow/informal market economy, which is estimated to be nearly 58.2%. Corruption and an inability to legitimately collect taxes hurts the government’s finances and its citizens. The Nigerian Naira is weak and is losing credibility.

Pakistani Rupee (PKR): Economic concerns regarding export and import disparities are a major factor in the lack of foreign currency reserves. A new government has been elected in Pakistan which has been able to form a ruling coalition. Issues regarding corruption remain troubling. Pakistan has also formed a stronger relationship with China, particularly as they search for strong economic partnerships, but this may leave them vulnerable politically. The IMF is a large factor in the current valuation of the PKR. The currency has been stable for a handful of months but needs monitoring.

Russian Ruble (RUB): Although the war with the Ukraine battles on, Russia has found a way to continue to create growth within its economy even in the midst of sanctions. The nation has found other ways to trade and acquire products from abroad via ‘new’ trading channels largely coming from Central and Eastern Asian routes. Russia’s government is seen as highly one dimensional and rules with an iron fist.  Russia’s economy appears to have grown at a remarkable rate of 3.6% during 2023. Core Consumer Prices were about 7.15% higher as of January 2024 per annum. Vladimir Putin has played a rather impressive game of economic poker with the ‘West’ in light of the Ukrainian war, much to the chagrin of his critics.

South African Rand (ZAR): The African National Congress has been in power nearly 30 years. Concerns about mismanagement and corruption abound which are believed to influence questionable fiscal policy. The South African economic outlook is weak due to problems regarding reliable electrical supply, logistical problems at ports, and bureaucratic interference led by government policy which leans towards central controls.  A large amount of immigrants from other African nations are still coming to South Africa as a cheap labor source, but professionally trained people are still unfortunately leaving South Africa via emigration in large numbers. The South African Rand has been within the grips a long-term trend of losing value, and while not entirely vulnerable its credibility is becoming shakier.

Turkish Lira (TRY): A thriving business and manufacturing base exists in the nation. However, inflation due to fiscal policy in Turkey remains an impediment for corporations which are forced to deal with a currency that many within the nation are worried about because of its incrementally weaker outlook which has been noteworthy for a handful of years. There are concerns about current government leadership regarding transparency and a tendency to interfere in Turkish Central Bank decisions. Financial institutions and their corporate clients have a difficult path as they try to mitigate the constant threat of high inflation in Turkey due to questionable fiscal policy.

Venezuelan Boliver Soberano (VES): The failed socialistic nightmare continues to cause squalor in Venezuela. If you want to see the potential of where the VES is headed look to Zimbabwe and the years that a combination of despotic rule under the guise of socialism has delivered. Venezuela should be a rich and successful country due to its natural resources, but it is led by a band of thieves. The black market rate of exchange if it can be found in cities like Caracas is much higher than the ‘official’ listed rate of the government. The VES has little to no credibility.

Zimbabwean Dollar (ZWD/ZWL): The nation is still trying to fix the problems caused by government mismanagement under the authoritarian leadership of Robert Mugabe which led to hyper-inflation and the destruction of the economy. Zimbabwe has a long way to go and issues to overcome to achieve the reintroduction of a domestic currency which does not suffer from a lack of faith from its citizens, which have led to a wide abandonment of the Zimbabwean Dollar and demonetization.

A national currency that is tradable internationally does not exist, the government is aiming for another attempt at monetization in 2025 if economic stability is created. The Botswana Pula (BWP), USD, and ZAR are among other currencies that are used and accepted by the population to transact business. The government tries to monitor all FX exchanges after years of misrule, but this does not stop a vigorous black market. There is an accepted perception the current leadership is trying to fix the massive problems which have created havoc in the nation for a few decades, but the road back to normality is still perilous.  

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An India-Israel Alliance: Prospects to Serve Global Freedom

An India-Israel Alliance: Prospects to Serve Global Freedom

Opinion: The following article is commentary and its views are solely those of the author.

We wrote a few weeks ago in response to Nassim Taleb’s claim that Israel was fragile due to its over-dependence on the United States, and we came to the conclusion that in general he was correct although not in every aspect Is Israel a Fragile Country?.

Also, we compared Israel’s fragility with that of other free or status-quo countries (as opposed to revolutionary countries like Russia, Iran and China) and thought that Israel was certainly not more fragile than other free countries in difficult neighborhoods.  We then gave a general outline of how the free-status-quo world might look should we actually see the end of America’s commitment to global freedom The Day After Pax Americana.  

I would like to examine in a more detailed way about Israel and India and how their potential relationship could be a model for this world. With the U.S reluctantly and belatedly responding to attacks from Iranian backed groups in Syria, Iraq and Yemen and their stubborn resistance to attacking Iran itself each free or status-quo country needs to look into its own defense. The U.S also needs to see how it can help midwife these alliances so as to guarantee a free world after their voluntary end to the Pax Americana.

Israel will need  to expand its reach and move towards a more anti-fragile existence without damaging the all important U.S relationship. We can’t underestimate the importance of the U.S relationship to Israel and how important it is to maintain and even expand it – but as the U.S political landscape is changing and as the elite part of the younger generation is, for some reason, excusing violence against Jews in general and Israel in particular, Israel needs new strategic partners if it is to thrive and move at least part of the way towards anti-fragility.

Israel’s relationships with the Arab world, the Abraham Accords along with its older peace treaties with Jordan and Egypt are dependent upon dictators remaining in power. The most vocal and belligerent voice against Israel by a government in the (non-Iranian influenced) Arab comes from Jordan and the most vocal and belligerent non-governmental voice in the (non-Iranian influenced) Arab world probably comes from Egypt. These treaties are all important and they are based upon the self interest of the current rulers of the countries (which is a good thing), but no one can know how long they can last and how firm they really are.

Israel also has a strong and growing relationship with Greece and Cyprus in the eastern Mediterranean and have joint military exercises together. Their navies and air forces train together and even their ground forces have joint exercises but neither of those two countries have the economic, military or diplomatic heft that Israel needs.

If Israel is looking for a second strong ally but one that itself lives in a dangerous neighborhood then the place to turn to is India. With the largest population in the world, a democratic government and a growing economy, India is the ideal strategic ally for Israel. Both are countries that live in dangerous neighborhoods, are working democracies and have experience dealing with terrorism. India, under with the premiership of Narendra Modi already has a strong relationship with the Israeli military. Israel has sold more than $600 million worth of military equipment to India (second only to Russia) and the two militaries have cooperated on anti-terror policy. The Israeli navy also reportedly has close ties to the Indian navy including submarine exercises in the Indian Ocean. Israel already has nearly $5 billion in trade with India (import and export) and it is time for Israel to start purchasing basic military supplies from India. India has five domestic manufacturers of the standard 155 mm artillery shells and it has large small arms industry – this should be an alternative to total dependence on the U.S for this standard equipment.

There is now a consensus in the country that Israel needs to broaden its military manufacturing and acquisition and the best way to do this would be to expand its relations with India. In order for this to make sense the time has come for Israel to say a very big “thank you very much” to the United States for the $3.9 billion in military aide it gets annually and instead purchase directly from the U.S and other sources.   India could also help in building factories in Israel – which could even be operated by Indian nationals through Israel’s guest worker program.

The military cooperation should be expanded to the air-force as well as ground forces.  There ought to be joint officer training, just as there is now with the U.S and some European countries. There should be a process in place that will eventually lead to a freedom of the seas treaty in the waters between India and Israel’s Gulf of Eilat. This should include cooperation between naval, air and anti-missile forces. 

The foreign worker program should also be expanded. Israel is trying to free itself from dependence upon Palestinian labor – from both Gaza and the West Bank – and India and Israel have been talking about an expanded guest worker program. Currently there are Indian citizens working as aides to the elderly and disabled and that needs to be expanded to construction and agriculture. 

Israel is a small country with around 10 million people and due to its large birthrate and legal immigration there is a lack of new housing construction in the country. The guest worker program in place with countries like Philippines, Thailand, Sri Lanka and others allows workers to work for up to five years and earn much more than they can earn in their home countries. They are provided with the same health care as Israeli citizens (paid for by their employers) and are even given pension benefits which they take with them when they return to their home countries. Israel could probably host up to 100,000 Indian workers a year.  

Scientific and student cooperation should be increased. This will not only help both countries develop important technology in areas such as healthcare and biotech, but will help India and Israel retain some of the scientists that would otherwise emigrate to the U.S and U.K. The exchange programs at university science and technology departments could lead to the creation of world class companies in the respective fields. 

Finally, cooperation regarding the capital markets could help both countries develop world class markets. India has the potential to be a global financial center in the coming decades and Israel, while far from being a financial powerhouse could be a link to European markets and investors with the time zone 1-2 hours ahead and close connections with those markets. 

The United States will be Israel’s main ally for the next few decades but it will be healthy for both countries if Israel was able to share interests – political, diplomatic, cultural and military with another major country. While France was that country until 1967 no European power has the position or the disposition to ally with Israel. India is democratic and attained its independence at the same period Israel did and from the same (then) major colonial power.  Also, both countries have overcome their socialist beginnings to thrive on the global economic stage. 

Now is the time for Israel and India to take the next step on the road to a true alliance. If we have truly reached the end of the Pax Americana, then this can be an example to the rest of the free-Status-quo world on how to manage without the vast power that is the United States. If somehow America shows the will to continue to lead the free world an Israel-India alliance will only contribute to the freedom that a continued Pax Americana protects. It would be helpful in any future conflict in the Pacific and the alliance could expand to the Gulf countries, East Africa and maybe even Egypt. 

Economically and technologically the obvious expansion would be towards South Korea and Japan. Militarily, it could aide and potentially replace the U.S naval presence in the Persian Gulf and allow it to concentrate its forces more in the Pacific. We are not talking here of a relationship that will replace the U.S military tomorrow or even next year. 

This is a long term process and requires the governments, corporations and individuals in both countries to be aggressive in turning a relationship into an alliance.  And it will require the cooperation and encouragement of the United States which will have to agree to support this and similar alliances even if it does not agree with all the tactics used in a moment of crisis.     

It is time to start looking forward and to stop depending on the goodwill of the American people as America, too faces major fiscal, strategic and military challenges of its own. 

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/ 

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AMT Top Ten Miscellaneous Morsels for 5th of January 2024

AMT Top Ten Miscellaneous Morsels for 5th of January 2024

10. Book: Truth to Power – My Three Years Inside Eskom by Andre de Ruyter, an insider’s account about South Africa’s public energy company amidst corruption, mismanagement and scandal.

9. NBA: Last night’s Milwaukee and San Antonio game was the first ‘match’ of Giannis Antetokounmpo and Victor Wembanyama. Basketball is global and spectacular.

8. Noise: Clickbait media headlines about nervous results in financial markets this week have been exaggerated.

7. Horn of Africa: Ethiopia and Somalia are arguing about a port passage through ‘Somaliland’, astute eyes should be kept on the region and Egypt.

6. Diplomacy: U.S foreign policy has delivered poor statesmanship with India recently, allowing Russia to reinitiate its longstanding relationship with the nation.

5. Taiwan: Presidential election is on the 13th of January. President Tsai Ing-wen is not eligible to run again because she has now served two terms.

4. USD/JPY has ebbed higher and next week’s results promise to be rather insightful regarding the outlooks of financial institutions. Reversals coming?

3. China: Economic concerns in the Asian giant continue to mount as deflation threatens to become intractable and investors fret.

2. Data: U.S jobs numbers coming today, the results are anticipated to be slightly weaker. A reaction in the broad markets is certain, but it is full market volume next week which will set the tone.

1. Outlook: Anxious short-term trading results from the past two weeks are likely going to be confronted by optimism and risk appetite next week. Who will win?