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October 31, 2010

The CFTC obtained judgment against defendants operating Ponzi scheme

Filed under: Central Banks — Tags: , , , , , , , — admin @ 5:32 pm

The U.S. Commodity Futures Trading Commission (CFTC) obtained more than $16.2 million in restitution and civil monetary penalties in a federal court order against defendants Scott P. Kear, Sr., Jeffery L. Lyon and entities controlled by them, M25 Investments, Inc. (M25) and M37 Investments, LLC (M37).   All defendants are based in Waxahachie, Texas.    The order was entered on October 25, 2010, by Judge Barbara M. G. Lynn of the U.S. District Court of the Northern District of Texas.   

In summary, in September 2009 the CFTC filed an anti-fraud enforcement action that charged the defendants with fraudulently soliciting approximately $8 million from approximately 213 individuals to trade off-exchange leveraged foreign currency (forex), forex options and commodity futures contracts.

The CFTC argued that from December 2007 to September 2009, the defendants and their representatives fraudulently solicited individuals in West Virginia, Texas, Mississippi, Maryland and other states to trade forex and forex options.  

According to the order, the defendants often targeted elderly individuals through their churches promising guaranteed interest payments on investments of 2 percent monthly and 24 percent annually, as well as an additional 2 percent renewal bonus if customers reinvested.

The defendants also represented to customers that their returns would come from profitable trading.  Instead, the majority of customers’ funds were not used for trading, and funds that actually were traded sustained significant losses.

The few funds paid to customers by M25 and M37 were funds received from other customers and were not trading profits.   The defendants concealed their fraud by issuing monthly account statements that falsely assured customers that they were earning 2 percent monthly interest.  Therefore, the CFTC order finds that M25 and M37 operated a Ponzi scheme.

The CFTC ordered the defendants jointly and severally to pay $7,404,036.56 in restitution.  The order also requires M25 and M37 jointly and severally to pay a $7.1 million civil monetary penalty and Kear and Lyon to pay civil monetary penalties of $1.4 million and $375,000, respectively.  The order permanently prohibits the defendants from engaging in any commodity-related activity and from registering with the CFTC in any capacity.

US Dollar Trading At An All-time Low Against the Japanese Yen!

Filed under: Forex News — Tags: , , , , — admin @ 3:10 am

usdjpy 2010, usd, jpy, us dollar, japanese yen, ron acoba, fx, fx market, fx trading, forex, forex market, forex trading, trading forex, currency trading, daily forex picks, forex forecast, forex analysis

Happy Halloween FX fiends, I mean friends! Indeed, it is very scary at least for the USD as it is now trading at a new historical low versus the Japanese yen. To end the week, the USDJPY surpassed its former all-time low at 80.43 which it set way back in April 1995 and closed at 80.38. As you can see from its weekly chart, the pair has been on a long term downtrend since the latter part of 2007. Based on the Elliot Wave Principle, where prices move in a 5-wave cycle before correcting, the USDJPY pair could be on the final leg of its wave B. If my wave counting is correct, then the pair could rebound for awhile in the coming week or so, marking its wave C, before heading back south to start a new down wave. Given its oversold condition, it could, however, rally until it encounters some resistance at 85.00. Still, the pair would more likely be on track for some more losses because present trend. In any case, a close below its former low at 80.43 at the end of the month would place some more selling pressure on the greenback.

To end the month of October, the US market closed flat with the Dow ending with a mere 0.04% gain and the broader S&P 500 with a 0.04% loss. The US’s third quarter GDP missed its 2.1% target by a hair with a 2.0% growth. Despite the 2.6% increase in household spending, the country’s overall expansion remains subdued and it expected to be the same at least in the near term which brings the country at the realm of another non-traditional monetary easing by the Federal Reserve.

Speaking of the Fed, it will have its monetary easing meeting this coming Wednesday (November 3). The Fed is widely expected to pump more money in the country’s financial system to support consumer spending. Traders will also be on the look out for the US’s non-farm employment report (NFP) on November 5. US firms are expected to have added about 65,000 jobs during the recent month after cutting 95,000 during the previous period. Both expected results from the upcoming two major economic would be bearish for the greenback. An additional easing by the Fed would dilute the USD while the latter would spark some risk taking among investors. Risk taking, as we have been observing during these periods, would go against the dollar given its low interest rate. Nonetheless, expect some fireworks both in the financial market for the coming week. Stay on your toes!

More on LaidTrades.com …

World Series blackout ends for N.Y. cable customers

Filed under: Business — Tags: , , , , , , — admin @ 12:22 am

NEW YORK (CNNMoney.com) — Cablevision Systems Corp. said Saturday it has agreed to pay higher fees to carry Fox Networks’ programming, ending a dispute that caused millions of New Yorkers to miss the first two games of the 2010 World Series.

The cable operator said channels that had been off its system since Oct. 16 were restored in time for the start of the third game of the series between the San Francisco Giants and the Texas Rangers. In addition to local Fox channels in the New York and Philadelphia markets, channels off the air included Fox Business Channel, National Geographic Wild and Fox Deportes.

Fox, in a statement on a website dedicated to the dispute, did not disclose terms of the agreement.

Cablevision (CVC, Fortune 500) took a swipe at the Federal Communications Commission, from which it had sought help in resolving the dispute, in announcing the agreement.

“In the absence of any meaningful action from the FCC, Cablevision has agreed to pay Fox an unfair price for multiple channels of its programming including many in which our customers have little or no interest.,” The company said. “Cablevision conceded because it does not think its customers should any longer be denied the Fox programs they wish to see.”

Cablevision, on its website, says it serves more than 5 million households and businesses in the New York metropolitan area. In its statement, Fox said the agreement in principle returns its programming to 3 million Cablevision customers.

The dispute is the second involving retransmission rights reached by Fox, a unit of News Corp. (NWS, Fortune 500), in the past two days. On Friday, Fox reached agreement with satellite operator DISH Network (DISH, Fortune 500) on rights to programming on Fox Network, the network’s local channels. FX, National Geographic and 19 regional sports networks. To top of page

Auction-Rate Holders Worry, Wait or Take Loss

Filed under: Investing — Tags: , , , , , — admin @ 12:01 am

October 30, 2010

USD/JPY threatening to close at all-time low

Filed under: Central Banks — Tags: , , , — admin @ 5:28 pm

USD/JPY trades just pips above its lows for this trend and heads into the weekend slightly below its all-time low closing level at 80.65.

The BOJ’s JPY index was at the highest level since we started paying attention after the last bout of intervention, so that should keep traders somewhat on guard for another round of BOJ buying. Another deterrent to USD/JPY sellers near-term is protection of 80.00 barriers, which is said to be considerable.

Below 80.00 (and 79.75 all-time intraday lows), it likely gets very, very ugly.

If they BOJ/MOF is gonna spend any ammo, they’d be smarter to do it now than to try and catch a falling knife below 80.00.

boj indx

Why is the Japanese Yen Still Rising?

Filed under: Japanese Yen — Tags: , , — admin @ 4:03 pm

Most of today’s headlines regarding the Japanese Yen focus on one thing: Central Bank intervention. Basically, reporters have become focused on the likelihood of additional intervention in the currency markets by the Bank of Japan. However, this obsession has caused them to overlook the larger issue: Why is the Yen still rising?

JPY Versus USD Chart 1970 - 2010

I was prompted to ask this question after coming across the above chart, which tracks the historical performance of the Japanese Yen against the US Dollar. You can see that since 1970, the Yen has risen by a whopping 350% against the Dollar. It has doubled in value since 1990 and risen 14% since the start of the year, en route to a 15-year high. Over the same period (actually since 1980; I couldn’t find data from the 1970), Japan’s economy has expanded by an average annualized growth rate of 2.2%. Over the last 10 years, the average is a paltry .9%. The contradiction between fundamentals and reality could not be more stark!

In addition, investor risk appetite has been reinvigorated. During most of the last decade, carry trading caused the Yen to decline to 120 USD/JPY as investors borrowed Yen in bulk in order to purchase high-yielding assets. The credit crisis spurred a short squeeze (i.e. rapid unwinding of carry trade positions) in early 2007, and caused the Yen to rocket upward. If anything, we would expect the Yen to mirror its performance of a few years ago, as investors take advantage of low Japanese interest rates and rebuild carry trade positions in the Yen.

The recent run-up in emerging market currencies, global equities, commodities, and other risky assets would certainly seem to support a carry trade strategy. For its part, the Bank of Japan is also doing its best to create a healthy environment for carry trading by printing currency, easing monetary policy, and fighting to keep the Yen from rising. And yet, if indeed there are still carry traders (and there certainly are!), the current trend in forex markets suggests that they are very much outnumbered by those betting on the Yen’s rise.

It’s difficult to understand this phenomenon. Those that hold Yen earn a nominal return of near 0%. Long-term interest rates (proxied by 10-year government bonds) are only slightly higher – at 1% – and certainly too low to attract any foreign institutional interest. Besides, it’s well-known that 90% of Japanese government debt is held by domestic savers. Meanwhile, the Japanese stock market has stagnated for more than 2 decades, and the Nikkei average is lower than at any point since 1985 (except for a brief period following the dot-com bust. Japanese real estate is equally unattractive.

As a result, there are only two conceivable reasons for the Yen’s continued upward push. The first is fundamental/structural and is connected to Japan’s trade surplus. In spite of an appreciating currency, the Japanese export sector continues to be the lone bright spot in an economy with otherwise limited sources of growth. Compared to 2009, the trade surplus is up 83%, helped by a rise of 50% in September. It is on pace to top $100 Billion for the year. In this regard, foreigners that buy Japanese Yen do so because they must- for purposes of trade.

Japan inflation rate chart 1970 - 2010

The second source of demand for Japanese Yen is so-called safe haven flows. While the Japanese Yen is not a high-yielding currency, it is actually an excellent store of value. [This is one of the three primary functions that a currency should fulfill. The other two are medium of exchange and unit of account]. That’s because inflation in Japan is the lowest in the world, often to the point of being nil. Since 1970, the inflation rate has averaged only 3%, compared to 4.5% in the US. Over the last 15 years, inflation has been 0%. In other words, even if they are invested in low-yielding savings accounts, Japanese savers can ensure that 1 Yen today will probably still be worth 1 Yen 5 years from now. Foreign investors can take advantage of the same phenomenon, when they bet that the exchange value of the Yen will be equally stable.

On the one hand, it is somewhat surprising that the Yen has been able to thrive in the current “risk-on” investing climate. On the other hand, there is a parallel thread of risk-aversion that will always exist and gravitate towards safe-haven currencies, such as the Yen. In fact, it can be argued that this contingent of investors is as large as the risk-taking contingent, as evidenced by the inexorable appreciation of gold (if not also by the Yen). Insofar as inflation in Japan remains nil and the Japanese export sector proves it can be competitive regardless of exchange rates, demand for Yen will continue to confound the gloomy forecasts and rebuff the best efforts of the Bank of Japan.

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The Fed and “Plunge Protection Team”: Are They Manipulating Stocks?

Filed under: Forex News — Tags: , , , , , — admin @ 3:24 am

Rumors are, the U.S. government “is propping up the stock market.”

By Elliott Wave International

Out of thousands of questions recently submitted to us at Elliott Wave International, the most frequent one received is: “Can the Fed manipulate the stock market?” Read our expert’s answer on this and other misleading “investment wisdom.” Read more.

You will find many intriguing Q&As at EWI’s Message Board. We offer it as a free way for our Club EWI members and subscribers to interact with EWI and the Socionomics Institute’s experts. We strive to answer every Message Board reader, and publicly post the best Q&As.
By far, the most frequent question we’ve been asked recently is:

“What is your take on the persistent internet chatter that the Federal Reserve is holding up the stock market via QE2, POMO, etc.? How can stocks ever decline again if the Fed is in control?”

We have several active Message Board posts that touch on “market manipulation.” But here is an eye-opening chart that will help shed more light on this issue.

EWI President Robert Prechter published this chart in his October 2008 Elliott Wave Theorist. Review this chart carefully. For too many investors, the crash of 2007-2009 is becoming a hazy memory. And almost no one in the mainstream financial media talks about the utter panic in the markets in September-October 2008, the worst part of the crash.

If you think back to that time, you may remember that the Federal Reserve and U.S. government took many aggressive steps to help stop the collapse. Every time they would announce a new intervention, the market would cheer. Result? Prechter’s chart gives an unequivocal answer:

Buying on Bullish News in a Bear Market

[+] CLICK TO ENLARGE

As you can see, announcements of bailouts, unlimited credit, bans on short sales, etc., were powerless against the biggest stock market collapse in 76 years. The DJIA kept sliding. It didn’t stop until March 6, 2009 — after it had slipped below 6,500.

So: Is the Fed and the “Plunge Protection Team” engaged in market manipulation? You can browse EWI’s Message Board for some answers, but one thing is clear: When stocks were crashing two years ago, few dared to suggest that the Fed was in the saddle. Bob Prechter puts it best:

“When markets go up, the Fed seems to be in control; when they go down, it seems out of control. But the control aspect is an illusion.”

Get the 33-page Market Myths Exposed eBook for FREE
Learn why you should think independently rather than relying on misleading investment commentary and advice that passes as common wisdom. Just like the myth that government intervention can stop a stock market crash, Market Myths Exposed uncovers other important myths about diversifying your portfolio, the safety of your bank deposits, earnings reports, inflation and deflation, and more! Protect your financial future and change the way you view your investments forever! Learn more, and get your free eBook here.

This article was syndicated by Elliott Wave International and was originally published under the headline The Fed and “Plunge Protection Team”: Are They Manipulating Stocks?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

dollar weaker ahead of GDP

Filed under: Technical Analysis — Tags: , , — admin @ 3:24 am


Quote of the day: There are no facts, only interpretations. – Friedrich Nietzsche

EURUSD

Trading strategy: standing aside

Another week is almost over and the euro remains into the 4-week range, near same levels where it was trading last Friday. Yesterday’s recovery was capped by 1.3950 and current pullback from 1.3950 to 1.3880 (at the time of writing) looks corrective. If it really is corrective – then upside will be favored and the 1.3950-1.400 region will be tested later today. Although I doubt it will close above the 1.400 handle today, dollar weakness in near-term will likely continue. 1.3800 is today’s key support while upside barriers are formed around 1.3950 then higher, at 1.400 and 1.4050. Today’s notable event in the economic calendar is the U.S. GDP release, at 12:30 GMT. Current exchange rate is 1.3880 @05:55 GMT

Support: 1.3800, 1.3700, 1.3650 and 1.3600
Resistance: 1.3950/70, 1.400, 1.4050 and 1.4150/60
Market sentiment: long term – mixed, medium term – bullish, short term – mixed, intra-day – slightly bullish

EURUSD 4hrs chart 10-29-2010
EURUSD 4hrs chart 10-29-2010

More trading setups

GBPUSD

GBPUSD 4hrs chart 10-29-2010
GBPUSD 4hrs chart 10-29-2010

EURCHF

EURCHF 4hrs chart 10-29-2010
EURCHF 4hrs chart 10-29-2010

USDJPY

USDJPY 4hrs chart 10-29-2010
USDJPY 4hrs chart 10-29-2010

EURCAD

EURCAD 4hrs chart 10-29-2010
EURCAD 4hrs chart 10-29-2010

Gold

XAUUSD 4hrs chart 10-29-2010
XAUUSD 4hrs chart 10-29-2010

Have a nice weekend!


© liviu for innerfx.com, a Forex Analysis blog, 2010. |
Article Source | Post tags: eurcad, eurchf, eurusd, gbpusd, gold, usdjpy

Dollar disappears! Every self-important guru worth his salt knows that.

Filed under: Currency — Tags: , , , , , , , , — admin @ 2:44 am

FX Trading – Dollar disappears! Every self-important guru worth his salt knows that.

We loved this headline from the Bloomberg.com website today:

“Gold Will Outlive Dollar Once Slaughter Comes”

We don’t disagree gold will be left standing when paper currencies finally take the celestial dirt nap. But the headline begs the question: just when will said top-dog paper currency take that dirt nap?

We know of one guru who actually believes, or I should said believes it enough to peddle the consistent garbage he funnels onto people who know no better or want to believe such tripe, the US dollar will virtually disappear by 2012. Another major newsletter guru is much more bullish, he too touts the dollar will indeed disappear, but not until his kids get into college—no clue as to age of kids or whether they wish to attend college so that forecast still a bit vague.

Of course, the favorite fiat of the major newsletter gurus for the replacement to the US dollar emanates from seemingly everyone’s hegemonic hermit kingdom—the Chinese yuan. If you want to read some excellent reasons why China is a VERY long way from making this happen, we recommend this piece by Mr. Michael Pettis—don’t take our word for it. And please don’t take the words of our illustrious guru “friends.”

Two points here:
1) This type of talk—the yuan taking the place of the dollar is part and parcel to the huge negative sentiment towards the buck right now. No surprise really. When helicopters are on a mission to air drop as many pallets of greenbacks as fast as they can, it can shake one’s confidence in the future of the currency. But as we all know, maximum bearishness is usually a great time to buy an asset, not sell it.
2) China will be quite happy to exit global rebalancing fully intact; worrying about currency hegemony is likely not on the agenda. Heck, they have rare earth materials to stockpile and are still too busy trying to remove words from their official language, which might lead to more “incidents,” such as: democracy, Chart 08, and riots. It would be a perfect job for Winston Smith, a clerk in the Records Department of the Ministry of Truth, as described in Orwell’s classic 1984. Winston was good, very good, and he didn’t even have the top Western internet software to work with in his days.

Now, the two items above if true, doesn’t mean the dollar jumps for joy in a massive
new trend. But it does mean this: the dollar will more than likely remain at the center of
global finance during our lifetimes and will move up or down during that time as it
always has, based on the buying and selling by real people reacting on the truth or falsehood of their expectations as the light of real events plays out.

In an effort to share my guru tendencies with you, and not having the benefit of the “kids going to college someday forecast,” as three of my four kids are done college and
the last crumb cruncher is already matriculating. Plus, I think it highly unlikely even
Uncle Sam, imbued in his infinite wisdom and resources, has enough left over census
works to go door to door collecting all those greenbacks in time to make it disappear by
2012. So I did the next best thing and developed an equation. Now I can say, “on the
other hand,” just like real economists do.

US$↓ = ∫(GC)≈ + QE2↑=+ EM ∞↑

GC = Global Cooperation
QE = Quantitative Easing
EM = Emerging Markets

It says: The dollar goes lower if global cooperation on the currency front doesn’t get any
better, or much worse, and if QE2 is more than or equal to what is expected, and EM
markets continue to grow without concern of bubble trouble.

Thus, the dollar goes higher if:

US$↑ = ∫(GC)↑or↓ » QE2 ≤+ EM∞ ↓

Of course this is just one of many iterations of our equation. That is what is so great
about equations; you can play with the variables with impunity. It is why economists
love them so. The iteration above says:

The dollar goes higher if global cooperation improves, i.e. implicit deal between the US
and China, which assumes lower than now anticipated QE2; or if global cooperation
gets worse, i.e. trade tariffs materialize, the dollar goes higher on a risk bid; and the
dollar goes higher on any emerging market accident a la the risk bid.

Bottom line: If the US continues to muddle-through, and everyone is happy with the
dollar as global fuel to prop up risky asset prices, the buck looks like it will be heading to
dirt nap territory and all the news of its disappearance will be re-emphasized in the
usual full confidence, as expected. But if price really does lead fundamentals, as we
believe they do, and the dollar for some strange reason doesn’t soon retest the weekly
trend, just maybe the sentiment extreme is in for a while no matter how many
helicopters are in the air.

US dollar index weekly:

  • Currently 4.8/5
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  • 3
  • 4
  • 5

Rating: 4.8/5 (6 votes cast)

Trick Or Treat?

Filed under: Business — Tags: , — admin @ 12:28 am

This morning’s US GDP figures came in as expected, giving the market no reason to think that QE2 may be either at the larger or smaller end of the range of speculation.  Earlier in the morning, the Dollar was strong as the expectation may have been that the GDP figure would beat expectations as had happened in the UK.  No such luck.

So for now, it looks like it’s full steam ahead, as the Dollar has been giving back earlier gains and is about to go negative.  Contributing to Dollar strength and risk aversion in the market was the overnight news that deflation in Japan is still rampant, and household spending figures came in much worse than expected.  This will mostly likely be attributed to a stronger Yen that has derailed exports, and several companies missed earnings estimates sending the Nikkei down 1.75% overnight.

In the EU, a summit in Brussels produced a mechanism to permanently deal with debt crises, which contributed to higher yields for Greek debt.  In addition, German retail sales figures came in much lower than expected, declining 2.3% vs. the expectation of a .5% rise.

In the UK, mortgage approvals rose faster than expected, as did consumer credit figures.

In the forex market:

Aussie (AUD):  The Aussie is lower on risk aversion and the interest rate outlook which is expected to keep rates steady at next week’s rate policy meeting.  In addition, lower Asian equities have reduced demand for Aussie carry trades.

Kiwi (NZD):   The Kiwi is actually higher as the Aussie’s loss is the Kiwi’s gain.  Overnight, NZ reported better than expected exports, and even though the trade balance figures were less than expected, they still bested last month’s readings.

Loonie (CAD):  The Loonie is holding up surprisingly well as their monthly GDP figures came in as expected at .3%.  Even though risk aversion and lower stock index futures and commodities are driving markets lower, the Loonie is benefiting from weaker fundamentals everywhere else.

Euro (EUR):   The Euro is weaker as the Euro zone unemployment rate came in at 10.1% as expected, but at a 12-year high.  In addition, European CPI estimates came in hotter than expected at 1.9%.  If both inflation and unemployment are rising in the EU, the ECB could be in a pickle as to what to do about rate policy.

Pound (GBP):   Unlike the Euro zone, things appear to be just jolly in the UK—at least for now.   Overnight, consumer confidence figures came in better than expected, as both mortgage approvals and consumer credit expanded at a better than expected pace.  (Click chart to enlarge)

gbpusd1029.JPG

Dollar (USD):   The Dollar is mixed this morning as risk aversion and individual currency fundamentals are battling for market supremacy.  Aussie and Euro weakness are trumping risk themes, even though stocks are set to open lower.   GDP figures came in as expected at 2%, and personal consumption figures came in better than expected which could be a positive for the economy.

Yen (JPY):   The Yen is showing strength again and the market is testing the resolve of the BOJ as to whether or not they will intervene in the currency again.  Industrial production figures came in lower than expected, as did household spending figures.  CPI data showed deflation slightly higher than expected, and the recent strength of the Yen is most likely to be blamed for said data.  I think the BOJ is trying to hold on until the FOMC meeting next week, but a test of 80 vs. USD is likely to invoke some sort of action.  (Click chart to enlarge)

usdjpy1029.JPG

So today is a total mixed bag, with Kiwi, Pound, and Yen strength, followed by Aussie and Euro weakness.  Today the Dollar is taking a backseat to its counterparts, as the risk picture is unclear at this moment.

However, the US GDP figures provided neither relief nor concern regarding next week’s FOMC and the launch of QE2.  The question is still unclear as to the size of it.  Nevertheless, Central banks stand ready to act to attempt to counteract the negative effects of QE2, especially if it causes the Dollar to weaken considerable.

Right now, the Dollar is near recent extremes against many currencies, with USD/JPY near 80, AUD/USD and USD/CAD near parity, GBP/USD approaching 1.60, and EUR/USD just below 1.40.  Just from a psychological perspective, it seems as though these levels have become areas of support and resistance which has painted a technical picture of the markets.

When I look at these levels I want to believe that the Dollar will not go below some of them, yet I’m having a hard time believing that the Fed might act responsibly.  Meanwhile, the markets are setting up as if hyperinflation is just around the corner.

The Fed needs to become aware of the unintended consequences of its actions, and this is most likely going to go down as one of the all-time blunders.

If this doesn’t scare you before Halloween, I don’t what will!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here!  Don’t miss out on the world’s fastest growing market!

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