Recently i started reading a biography of Former Fed Chairman Alan Greenspan -"MAESTRO - Greenspan's Fed and the American Boom" (published in 2000-2001). This book was given to me by a professor during my MBA at Birminham Biz School. I didnt took this book seriously until recently when I put my hands on it. Since I started, I have completed reading approx 25% of the book and interestingly, I found striking similarities in Financial Mkt situation during and after appointment of both Greenspan and Bernanke.
*As per the book, within few weeks of Greenspan's appointment, the Fed Chairman just witnessed history being made with a record fall and rise of US equity markets and crisis situation..... similar to what just Bernanke saw in past couple of months.
*During late 80s, US faced problems of high bankrucpties of Saving and Loan (S&L)institutions due to their investments in so called Junk Bonds and Latin American bonds and exposure to real estate, which led to confidence crisis between banks and liquidity problems....... similar to what we are going through currently, but this time it is mortgage backed securities. However, the common thing between both situations are the real estate industry.
*Book mentions that during the THRIFT (S&L) crisis, Citigroup was on verge of a collapse due to the confidence crisis, foreign loans and S&L exposure. Fed Res rescued Citigroup and then CEO of Citigroup Mr. John Reed similar to what we saw recent rescue of Citigroup by Fed under CEO Mr. Vikram Pandit.
*Due to liquidity crisis, Greenspan infused lot of liquidity in market and convinced mkts thts Fed Res is there to supply enough liquidity in mkt. Bernanke is doing the same. The end result of this....... a huge deficit faced by both chairmans.
*Only a few years into his chairmanship, Greenspan saw the Kuwait invasion of Iraq with retaliation from US, slowdown in the economy and quick cut in interest rates. Bernanks has already felt the slowodown and cut interest rate quickly, only thing he has not seen is the war..... With India and Pakistan at loggerheads with recent attacks in Mumbai and support from US.... I might not be surprised it India attacks Pak occupied Kashmir (PoK) or Pakistan itself... just to divert market from economic scenario to geo-political scenario.
*The difference this time is that US already has a "HUGE" deficit while during Greenspan era... the war itself lead to some increase in US deficit and then the US govt (under Bush in 1990) decided to cut down its deficit (after Iraq war) with legislations being passedin US Congress. During election campaign, the then President Bush promised no increase in tax rates (similar statements by Obama) but was forced to do so due to commitment of reducing deficit. We might see this being repeated under Obama administration. This time, US might not use its own troops to that extent it did during Iraq war.
*Greenspan was lucky to have high interest rates (arounf 9%) when he joined the Fed so he had more to go on the downside.... which is not in the case of Bernanke with current fed funds rate already @ 1% and expected to be reduced to 0.5% on Dec 16 2008 FOMC meeting.
So these were the similarities and a few difference I spotted out reading this book. My only aim to writing this article was to spot out the main similarities Greenspan and Bernanke faced and share the knowledge I got with this book and the recent experience. I know, things have change since then with globalisation but I still feel history has been repeated and going forward, I feel it will repeat itself.
I have only completed 25% of the book so far and I have already learnt so much.... so keep in touch with this blog for more info from the book and my experience.
Happy Trading week!!!
Sunday, December 7, 2008
Saturday, September 20, 2008
Turmoil... Turmoil and More Turmoil.......Keep Guessing whos next?????
What a week it was..........no words to describe it........
On the weekend (i.e. 13 and 14th Sep) , ppl were just thinking about Hurricane IKE and ******booom****** there came in Lehman Brother's bankruptcy. The weekend started with ppl expecting some solution for Lehman Brothers however talks with BankAm and Barclays failed and surprisingly Merill L was bought and ppl were guessing what will happen to the citibank of insurance sector - AIG.
With this $ started on a weak note for the week and commidities surged higher. Insititutions all over the globe were reluctant in lending to each other.... taking overnite $ lending rates higher........ and high volaitility in currency and commodity markets.... Markets were surrounded by high uncertainity and high volatility.
Dowjones dropped heavily as investors sold stocks & $, while investors preferred safe havens........ this led to gold making its highest one day gain ever and curde surging higher.......
Looking at this situtation central banks all over the world (esp. G7 Nations) stepped in to ensure that there is no panic in market. AIG was provided $ 85bn loan by Fed for 2 years in exchange for it 79.9% stake. On the other hand liquidity was provided, short selling was banned and market was ensured that Central banks will be there no matter what may come. Co-ordinated efforts were made by G7 central banks to proived ample liquidity. Fed came up with a rescue plan- to create a fund to absorb all illquid assets with financial institutions in US..... it also guaranteed money mkt funds........
These steps ensured confidence in markets and financial insititutions..... the result commdities were sold and $ bought.
However in the end, $ ended on a weak note and commodities and equity markets on the +ve side.....
On personal front..... i ve not seen such volatility in commodities in my 8 years of fin mkts experience...... but I can easily conclude..... that with elections this year in US..... the US fed govt will ensure that their markets dont weaken any further and same for the $..... remember its and election year and the US govt will goto any extent to stabilise the market no matter WHAT MAY COME........
Technically speaking.... I feel gold and more upside to come rather than downside and currencies like eur and gbp are in a corrective mood. Max Downside for gold seems to be @ 825 and thn 736......both imptnt lvls for gold........ as said eur is in corrective mode and except some weakness in $ for cumin week.....crude should touch 110/112$ per barrel....... Eur should reach 1.4700 for the next week. One thing is for sure.......... MARKETS WILL REMAIN HIGHLY HIGHLY VOLATILE....... so be aware of either side movements in fin mkts.....
So have a Safe trading week......
Hitesh Bafna
On the weekend (i.e. 13 and 14th Sep) , ppl were just thinking about Hurricane IKE and ******booom****** there came in Lehman Brother's bankruptcy. The weekend started with ppl expecting some solution for Lehman Brothers however talks with BankAm and Barclays failed and surprisingly Merill L was bought and ppl were guessing what will happen to the citibank of insurance sector - AIG.
With this $ started on a weak note for the week and commidities surged higher. Insititutions all over the globe were reluctant in lending to each other.... taking overnite $ lending rates higher........ and high volaitility in currency and commodity markets.... Markets were surrounded by high uncertainity and high volatility.
Dowjones dropped heavily as investors sold stocks & $, while investors preferred safe havens........ this led to gold making its highest one day gain ever and curde surging higher.......
Looking at this situtation central banks all over the world (esp. G7 Nations) stepped in to ensure that there is no panic in market. AIG was provided $ 85bn loan by Fed for 2 years in exchange for it 79.9% stake. On the other hand liquidity was provided, short selling was banned and market was ensured that Central banks will be there no matter what may come. Co-ordinated efforts were made by G7 central banks to proived ample liquidity. Fed came up with a rescue plan- to create a fund to absorb all illquid assets with financial institutions in US..... it also guaranteed money mkt funds........
These steps ensured confidence in markets and financial insititutions..... the result commdities were sold and $ bought.
However in the end, $ ended on a weak note and commodities and equity markets on the +ve side.....
On personal front..... i ve not seen such volatility in commodities in my 8 years of fin mkts experience...... but I can easily conclude..... that with elections this year in US..... the US fed govt will ensure that their markets dont weaken any further and same for the $..... remember its and election year and the US govt will goto any extent to stabilise the market no matter WHAT MAY COME........
Technically speaking.... I feel gold and more upside to come rather than downside and currencies like eur and gbp are in a corrective mood. Max Downside for gold seems to be @ 825 and thn 736......both imptnt lvls for gold........ as said eur is in corrective mode and except some weakness in $ for cumin week.....crude should touch 110/112$ per barrel....... Eur should reach 1.4700 for the next week. One thing is for sure.......... MARKETS WILL REMAIN HIGHLY HIGHLY VOLATILE....... so be aware of either side movements in fin mkts.....
So have a Safe trading week......
Hitesh Bafna
Wednesday, July 9, 2008
Daily FX Technicals - 10.07.08
Daily Fx Views
Eur still holding the range of 1.5750 and 1.5640...... still very rangish.
However, holding to our weekly views (see below) I recommend selling arnd 1.5730/50 stop 1.5790 with target of 1.5670/40
French and Italian IP due today
Gbp/Usd....... once again breaked into previous range of 1.9850 and 1.9700. I dont see it going above 19850/75 hence i recommend selling arnd 1.9830/50 stop 1.9880 with target of 1.9750/25....cld buy arnd these lvls......
Bank of England Int Rate decision today...... need to watch out for their focus on Inflation and/or Growth..... no change expected on interest rates....
Usd Jpy ..... again holding... onto the lower end of the channel arnd 106.65/75...... I recommend buying around 106.80/90 stop 106.50 tgt of 107.40..... however convincing break of 106.50 would change our intra day views
Eur/Gbp again piercing back into previous range (flag) of 0.7950 and 0.7885 hence recommend selling arnd 0.7945 with stop of 0.7965
Note :Eur/Gbp very close to the last half of triangle formation........ hence my view that we could see euro/gbp breaking the range........
Have a good trading day!!!!
Eur still holding the range of 1.5750 and 1.5640...... still very rangish.
However, holding to our weekly views (see below) I recommend selling arnd 1.5730/50 stop 1.5790 with target of 1.5670/40
French and Italian IP due today
Gbp/Usd....... once again breaked into previous range of 1.9850 and 1.9700. I dont see it going above 19850/75 hence i recommend selling arnd 1.9830/50 stop 1.9880 with target of 1.9750/25....cld buy arnd these lvls......
Bank of England Int Rate decision today...... need to watch out for their focus on Inflation and/or Growth..... no change expected on interest rates....
Usd Jpy ..... again holding... onto the lower end of the channel arnd 106.65/75...... I recommend buying around 106.80/90 stop 106.50 tgt of 107.40..... however convincing break of 106.50 would change our intra day views
Eur/Gbp again piercing back into previous range (flag) of 0.7950 and 0.7885 hence recommend selling arnd 0.7945 with stop of 0.7965
Note :Eur/Gbp very close to the last half of triangle formation........ hence my view that we could see euro/gbp breaking the range........
Have a good trading day!!!!
Tuesday, July 8, 2008
Daily Fx Views 09.07.08
Daily Fx Views:
Eur sell arnd 1.5680/90 stop 1.5725
Gbp buy arnd 1.9675/95 stop 1.9640
Jpy buy arnd 107.25/107.00 stop 106.75
Chf buy arnd 1.0300/1.0310 stop 1.0260
Have a gr8 trading day!!!!
Hitesh Bafna
Eur sell arnd 1.5680/90 stop 1.5725
Gbp buy arnd 1.9675/95 stop 1.9640
Jpy buy arnd 107.25/107.00 stop 106.75
Chf buy arnd 1.0300/1.0310 stop 1.0260
Have a gr8 trading day!!!!
Hitesh Bafna
Friday, July 4, 2008
Technical Fx (MAJORS) views for week - 7 July to 11 July 08
Eur/Usd
Eur/Usd was sold after not so hawkish comments by Trichet after the ECB rate hike on Thrus.
For this week I recommend selling Eur/Usd on any strength towards 1.5700/ 15730 with a stop of 1.5785/15800.
Eur/Usd seems to be in corrective leg of rally from 1.5340 - 1.5915 with retracement lvls of:
1.5695 (38.2%)
1.5626 (50%)
1.5560 (61.8%)
However any daily close below 1.5680 could lead the Eur penetrating into previous flag formation of 1.5680 and 1.5335.
NOTE: One important observation I made on quarterly Eur/Usd charts is a DOJI formation, that so after a rally of previous quarters. This mite signal a reversal in rally of Eur/Usd. Hence I have a long term bearish view on Eur/Usd unless it convincingly closes above 1.6000.
GBP/USD
A shooting star and bearish piercing pattern on Weekly charts.... making me bearish on this pair.
It has pierced into the previous flag formation of 1.9850 and 1.9700 thus i recommend sell on strengthning of the pair arnd 1.9850/1.9900 with stop of 1.9965. Only a convincing close above 2.0000 would make my view bullish
USD/JPY
Fail to make a reversal pattern of three blak crows on weekly charts. Also, was unable to close below importan support of 105.40 thus recommend buying of the pair around 105.70/106.00 with stop of 105.
I welcome your views and comments
Have a good trading week
Eur/Usd was sold after not so hawkish comments by Trichet after the ECB rate hike on Thrus.
For this week I recommend selling Eur/Usd on any strength towards 1.5700/ 15730 with a stop of 1.5785/15800.
Eur/Usd seems to be in corrective leg of rally from 1.5340 - 1.5915 with retracement lvls of:
1.5695 (38.2%)
1.5626 (50%)
1.5560 (61.8%)
However any daily close below 1.5680 could lead the Eur penetrating into previous flag formation of 1.5680 and 1.5335.
NOTE: One important observation I made on quarterly Eur/Usd charts is a DOJI formation, that so after a rally of previous quarters. This mite signal a reversal in rally of Eur/Usd. Hence I have a long term bearish view on Eur/Usd unless it convincingly closes above 1.6000.
GBP/USD
A shooting star and bearish piercing pattern on Weekly charts.... making me bearish on this pair.
It has pierced into the previous flag formation of 1.9850 and 1.9700 thus i recommend sell on strengthning of the pair arnd 1.9850/1.9900 with stop of 1.9965. Only a convincing close above 2.0000 would make my view bullish
USD/JPY
Fail to make a reversal pattern of three blak crows on weekly charts. Also, was unable to close below importan support of 105.40 thus recommend buying of the pair around 105.70/106.00 with stop of 105.
I welcome your views and comments
Have a good trading week
Saturday, April 26, 2008
A Few Quotes from my Life
A Few Quotes from my life:
Today we use people and love things which what actually has to be done is love ppl and use things.
Old shld be honour for the simple fact tht they have gone thru every phase of life and still survive.
Every misfortune carries with it a seed of an equivalent or greater benefit.
An Active mind is never afraid of new ideas or new condition.
The act of giving precedes to the act of receiving.
Those who can see the invisible can do the impossible.
Life, Love and Frienship are the greatest assets of our lives.
Treat ppl in such a way and live amngst thm in such a manner
tht whn u die, the weep over you and whn u are alive they crave for your company.
One of the secrets of happy life is continous small treats.
Find yourself and be your self.
Turn your egoism into kindness.
What lies behind us and wht lies ahead of us are tiny matter compared to wht lies within us.
The one thing we can never get enough is LOVE and the one thing we never give enough is LOVE.
AND LIFE IS WHAT WE MAKE IT, ALWAYS HAS BEEN, ALWAYS WILL BE.
Today we use people and love things which what actually has to be done is love ppl and use things.
Old shld be honour for the simple fact tht they have gone thru every phase of life and still survive.
Every misfortune carries with it a seed of an equivalent or greater benefit.
An Active mind is never afraid of new ideas or new condition.
The act of giving precedes to the act of receiving.
Those who can see the invisible can do the impossible.
Life, Love and Frienship are the greatest assets of our lives.
Treat ppl in such a way and live amngst thm in such a manner
tht whn u die, the weep over you and whn u are alive they crave for your company.
One of the secrets of happy life is continous small treats.
Find yourself and be your self.
Turn your egoism into kindness.
What lies behind us and wht lies ahead of us are tiny matter compared to wht lies within us.
The one thing we can never get enough is LOVE and the one thing we never give enough is LOVE.
AND LIFE IS WHAT WE MAKE IT, ALWAYS HAS BEEN, ALWAYS WILL BE.
Friday, April 18, 2008
I have learned that..........
I have learned that...........
what people say and do are different,
loving and caring is more beautiful than being loved and cared,
everybody in ourselves have atleast a small inspiration for others,
love your enemies; it makes them damn mad,
forgiveness is the best way to forgive,
prayer is a very powerful asset in our life,
keeping ppl together is a difficult task,
spreading love, laughter and care is the best way to make this world a better place to live in,
to be happy evryday is not to be happy at all,
there is always an exception,
dont grumble over a relationship,
truth and defeats are hard to digest,
by making more frnds you are spreading humanhood,
you should not repeat your mistakes,
you and only you have to face your problems,
ppl understand better with an example,
sitting lonely doesnt mean sitting idle,
you shld be a perfectionist,
all prayers shld nt be answered,
3 is a good number,
tears and sharing are the best way to relief ourselves from our problems,
what goes along wid you throughout your life is your shadow and your shadow over other ppl,
adjustment and sacrifices is a must in life,
gossips are never out of fashion,
u must have preservence in life,
life is a learning process.
I would like to take this opportunity to thank a lot of ppl in my life esp my wife PREEYA who has been a wonderful partner for whatever years we have spent together. I would like to thank my family for being a wonderful wonderful support because whatever im today..... im becoz of them...
I would like to thank Nitesh (my bro cum frnd) for being an excellent support to me......... sry for not being in touch wid him...... but ur just wonderful Nitesh.....
Moreover.... I wld like to thank my frnds Cherry, Vimlesh, Dilip, Hitesh takla, Mansi, Mayuri, Neha....... for all u have done..... miss u all and luv u all. Miss al the ol days..... :)
I miss my grandmom....... i luv u a lot grandma...........i miss u a lot :(---------
Thank u all and god bless u all
what people say and do are different,
loving and caring is more beautiful than being loved and cared,
everybody in ourselves have atleast a small inspiration for others,
love your enemies; it makes them damn mad,
forgiveness is the best way to forgive,
prayer is a very powerful asset in our life,
keeping ppl together is a difficult task,
spreading love, laughter and care is the best way to make this world a better place to live in,
to be happy evryday is not to be happy at all,
there is always an exception,
dont grumble over a relationship,
truth and defeats are hard to digest,
by making more frnds you are spreading humanhood,
you should not repeat your mistakes,
you and only you have to face your problems,
ppl understand better with an example,
sitting lonely doesnt mean sitting idle,
you shld be a perfectionist,
all prayers shld nt be answered,
3 is a good number,
tears and sharing are the best way to relief ourselves from our problems,
what goes along wid you throughout your life is your shadow and your shadow over other ppl,
adjustment and sacrifices is a must in life,
gossips are never out of fashion,
u must have preservence in life,
life is a learning process.
I would like to take this opportunity to thank a lot of ppl in my life esp my wife PREEYA who has been a wonderful partner for whatever years we have spent together. I would like to thank my family for being a wonderful wonderful support because whatever im today..... im becoz of them...
I would like to thank Nitesh (my bro cum frnd) for being an excellent support to me......... sry for not being in touch wid him...... but ur just wonderful Nitesh.....
Moreover.... I wld like to thank my frnds Cherry, Vimlesh, Dilip, Hitesh takla, Mansi, Mayuri, Neha....... for all u have done..... miss u all and luv u all. Miss al the ol days..... :)
I miss my grandmom....... i luv u a lot grandma...........i miss u a lot :(---------
Thank u all and god bless u all
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