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Mon, 05th December 2016

Anirudh Sethi Report

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Archives of “moment of truth” Tag

Today’s Jobs Report Is Key For Two Reasons

Tomorrow, we get the first look at how the labor market is progressing in the second half of 2013 with the release of the July jobs report at 8:30 AM ET.

 The July data are notable for two reasons.

First, many economists across Wall Street see the second half of 2013 (starting with July) as something of a “moment of truth” for the economy, so it will be important to see what the all-important nonfarm payrolls report has to say about the sort of second-half start the labor market is getting off to.

Second, and perhaps more applicable to financial markets, is the proximity of the July jobs report to the September FOMC meeting, upon conclusion of which Wall Street expects the Federal Reserve to announce a reduction in the pace of monthly bond purchases it makes under its quantitative easing (QE) program.

If the numbers come in better than expected tomorrow, the bond market could be in for another rough day, as traders price in heightened chances that the Fed will actually begin to taper QE in September.

So, what’s expected tomorrow?

Market economists surveyed by Bloomberg predict…

  • 185,000 nonfarm payrolls were created in the U.S. economy in July, down from 185,000 in June.
  • Private payrolls created were 195,000, down from 202,000.
  • Manufacturing payrolls rose by 2,000 after decreasing by 6,000.
  • The unemployment rate edged down to 7.5% from 7.6%.

Earlier this week, ADP’s monthly employment report estimated that 200,000 private payrolls were created in the American economy in July. The number beat the consensus estimate of 180,000, and represented a slight increase from June’s upward-revised 198,000.

Below are excerpts from various previews of tomorrow’s jobs report. Read More 

German Foreign Minister: “I Don’t Want A German Europe… I Want A European Germany”

With nothing but mute silence out of Germany in the aftermath of last night’s “historic” Greek vote, the EURUSD is getting nervous trading down to just above 1.3200 minutes ago, well below the level reached last night following the passage in the Greek parliament of the vote with 199 out of 300 votes. As such, everyone is starved for some clues of what Merkel and Germany thinks at this point – will they simply leave Greece to flounder by demanding even more “reality” and implementation of measures from the first bailout – something Greece obviously can not do? Or will Germany relent for at least one more payment (of €210 billion). We don’t know, at least not yet. But the following Spiegel interview with German Foreign Minister Guido Westerwelle may provide some insight. The key part: “Q. The second aid package will presumably be more expensive than anticipated, partly because the Greeks haven’t kept their promises. How much longer will the German public put up with this?…Westerwelle: It’s undoubtedly a moment of truth for Greece. If a sustainable and correct course is set in Athens now, Greece can expect our support — but only then. There will be no more advance payments. Only actions count now.” Like we said, hardly the ringing endorsement people expect. Then there’s this: ” I am more than dissatisfied with the political impasse in Greece in recent weeks. I’m also addressing the German opposition when I say this: You can’t solve a debt crisis by constantly incurring new debts.” And yet that is precisely what Bailout 2 is doing as we have patiently explained over and over.

Yet Guido said something else which may be of interest to everyone else in Europe: “I don’t want a German Europe. Q. What do you want? A. A European Germany.” Aaaand, enter lost in translation interpretations.

What, however, certainly can not be misinterpreted is the following: “There is a tendency toward re-nationalization throughout Europe, which I oppose. Germany occasionally shows a tendency to boast, which concerns me. I don’t think it’s smart for us to shift the differences among German parties to the French election campaign.” Did Guido just slap down Angela Merkel for her decision to be Sarkozy’s running mate in the French presidential elections in April? Because, as we asked before, what happens to Die Frau’s credibility if the current polls leader – Hollande – who has promised to undo all European contracts and agreements, ends up winning?

Key selection from Spiegel interview (in English, so Google Translate can not be blamed for translation losses)

Westerwelle: You know, I wonder why my predecessor Joschka Fischer, who doesn’t exactly have a small ego, agreed to that curtailment of his authority at the time. I’ll ask him about it the next time I see him. Read More 

German Foreign Minister: "I Don't Want A German Europe… I Want A European Germany"

With nothing but mute silence out of Germany in the aftermath of last night’s “historic” Greek vote, the EURUSD is getting nervous trading down to just above 1.3200 minutes ago, well below the level reached last night following the passage in the Greek parliament of the vote with 199 out of 300 votes. As such, everyone is starved for some clues of what Merkel and Germany thinks at this point – will they simply leave Greece to flounder by demanding even more “reality” and implementation of measures from the first bailout – something Greece obviously can not do? Or will Germany relent for at least one more payment (of €210 billion). We don’t know, at least not yet. But the following Spiegel interview with German Foreign Minister Guido Westerwelle may provide some insight. The key part: “Q. The second aid package will presumably be more expensive than anticipated, partly because the Greeks haven’t kept their promises. How much longer will the German public put up with this?…Westerwelle: It’s undoubtedly a moment of truth for Greece. If a sustainable and correct course is set in Athens now, Greece can expect our support — but only then. There will be no more advance payments. Only actions count now.” Like we said, hardly the ringing endorsement people expect. Then there’s this: ” I am more than dissatisfied with the political impasse in Greece in recent weeks. I’m also addressing the German opposition when I say this: You can’t solve a debt crisis by constantly incurring new debts.” And yet that is precisely what Bailout 2 is doing as we have patiently explained over and over.

Yet Guido said something else which may be of interest to everyone else in Europe: “I don’t want a German Europe. Q. What do you want? A. A European Germany.” Aaaand, enter lost in translation interpretations.

What, however, certainly can not be misinterpreted is the following: “There is a tendency toward re-nationalization throughout Europe, which I oppose. Germany occasionally shows a tendency to boast, which concerns me. I don’t think it’s smart for us to shift the differences among German parties to the French election campaign.” Did Guido just slap down Angela Merkel for her decision to be Sarkozy’s running mate in the French presidential elections in April? Because, as we asked before, what happens to Die Frau’s credibility if the current polls leader – Hollande – who has promised to undo all European contracts and agreements, ends up winning?

Key selection from Spiegel interview (in English, so Google Translate can not be blamed for translation losses)

Westerwelle: You know, I wonder why my predecessor Joschka Fischer, who doesn’t exactly have a small ego, agreed to that curtailment of his authority at the time. I’ll ask him about it the next time I see him. Read More 

El-Erian : Greece Default is now Inevitable

Mohamed El Erian, CEO of PIMCO, discusses with aljazeera English the Eurozone crisis; and the global economy ,If the Euro does not survive it is going to be terribly bad news not only for Europe but for virtually every country in the world which will cause a global depression El-Erian says….the Europeans have not been kicking the can down the road they have been rolling a snow ball down the hill …this is Europe’s moment of truth…..

7 Signs that Endgame Nears in Greece‎

The Euro is still defying gravity and staying above 1.40. But there are heavy doubts that this will last. Here are 7 fresh signs that Greece is about to default sooner than later, that it won’t be good and when this crisis can come to a climax.

Europe getting tough: Politicians from rich European countries begin feeling where the wind is blowing and finally threaten not to throw more good money after bad money. Putting it simply: Greece didn’t fulfill its obligations, so it will not get the next tranche of the bailout.
Moody’s is blowing up the jargon: All the creative semantics provided Jean-Claude Junker and his friends regarding soft restructuring / re-profiling / re-scheduling were very interesting. Moody’s clarifies that almost any such move would be a default.
ECB Playing Down Exposure: ECB Italian member Bini Smaghi said that the exposure of the ECB to Greece isn’t too big. Of course, he opposed restructuring and think that it will be a disaster. But playing down the ECB exposure shows that the ECB, the last bastion against restructuring, is acknowledging the inevitable.
Greek bank faces the truth: In a presentation to investors, the Greek Alpha Bank published its Q1 results, and this contains very worrying signs of the exposure to government debt, and the high dependency in the ECB. A rare moment of truth/
Greek scramble: In a last moment effort, the Greek government provided a hasty and ambitious privatization plan in order to pay its debt. Is this serious? The opposition doesn’t think so and prefers to distant itself from the sinking ship.
The market says so: Yet again, Greek CDS spreads rise to new records. The chance of a default is now 71% according to these spreads.
No time left: The results of the EU / IMF checkup for Greece have been delayed over and over again, while we all know the results: Greece missed again. Juncker said it will be next week. Some kind of solution will better appear next week, before Greece goes on a general strike on June 4th. Given the unrest in Spain and recent violent protests in Greece, this is quite worrying.

Merkel already understood that she has no better options, especially as the public turned against her in regional elections in Bremen. All the warnings about the consequences could materialize: we already see warnings for Italy and Belgium, as well as rising Spanish yields. Protests in Spain continue also after the elections.

The Euro already got a blow a few weeks ago and lost its highs at almost 1.50. But it is still holding well. Will we see a collapse in the next 10 days?

Patience & Confidence

The market, as much as anything in life, has a way of transforming us from cool, calm, collected individuals into irrational, impulsive, disoriented speculators. Clearly it’s in our best interest in terms of long-term profitability to spend the majority of our time in the former group rather than the latter.

Acknowledging when things aren’t going our way is the first step to becoming a more patient trader, but it’s having the patience to wait things out until we find a more harmonic rhythm that contributes immeasurably to our success.

It’s the losing positions that invariably do traders in. A number of the bigger losers many traders experience come as a result of not being patient and waiting on the right opportunity. Many of us tend to press when things aren’t working out, or we’ve just had a losing trade.

Traders can begin to play catch-up and go on an emotional tilt. It’s the paradox of trading in many ways. The same competitive drive we use to achieve our success has components that can hasten our failure.

When going through my daily checklist, I send out to members of my mentoring program, I always emphasize that the markets provide a multitude of chances to trade. One need not force action when the setups aren’t right. Traders who get into positions with “the best of it” or “an edge” significantly increase their chances for success in the long run.

Confidence comes from a number of sources and is developed through successful implementation of a strategy. It is also a byproduct of the unwavering belief that what you are doing will be successful. This is critical because, at the moment of truth, when you are in a position, self-doubt has a way of creeping in. It’s tempting to deviate from your plan at these times.

While I’m not suggesting that you be inflexible in your position management, I am saying that having belief in what you are doing goes a long way toward your success. In fact, it’s the confidence in your trading skill set that can give you the ability to make a decision to get out of a position, knowing that things aren’t working out. This conviction is a hallmark of great leaders and inspires others.