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Hi,
Thanks for the following excellent post! This is the high quality reply
that I have been waiting for.
I dare not short any European or Japanese equity markets when interest
rates are cut and money supply increases. My belief that capital flows
from Europe and Japan to the US does not mean that there is a shortage
of liquidity in Europe and Japan BECAUSE ECB's rate cut and Japanese
loose monetary policy are creating more money and credit. I am poor at
gathering data so I don't have current data on the amount of capital
flow. Does any RT know any good site on internet that contains
international economic data? (US data is easy to find. Other nations'
are difficult. )
Mervin
BOTTrader@xxxxxxx wrote:
>
> Your FFEE of the last few months does not appear to be correct. You say that
> "money will be driven OUT of Europe and Japan during the period from March
> thru present..... and INTO THE US"..... implying that you switched your
> trades out of Europe and Asia and Into the U.S. Markets..... WELL, lets
> see.....
>
> 1) In Stock markets: The FTSE has equally performed vs. the SPX, The DAX
> has at least equalled the SPX since April 1, The EAFE index as a whole has
> equalled the SPX, The Eurotop 100 has equalled or bettered the SPX, and the
> Nikkei and most of the rest of Asia have been substantially stronger than the
> SPX..... SO, I hope you didn't short those markets to take a position in the
> U.S. !
>
> 2) In Bond Markets: Gilts and Bunds have equally performed vs. US 30 Yrs,
> and the Japanese Govt. Bond has been about the strongest major developed
> nation bond during the period of your trading.
>
> >From a fundamental standpoint, I would analyze the period since mid-March a
> little differently: The rest of the world needed a bond rally more than we
> did.... There was a little confusion when Japan announced it's policy of
> accomodation in March, but after that cleared, bond markets around the globe
> rallied (with Japan LEADING).... this major world bond rally I feel is a big
> part of the ensuing stock rallies globally (including the SPX). But it was
> not, I don't believe, a case of money LEAVING Europe, Asia, and elsewhere and
> flowing here, as your post seems to forecast (though at the time your
> forecast was as good as any since even the best forecast has only slightly
> more than 50% likelihood).
>
> By the way, I don't knock fundamental trading, but IMHO, it still has to be
> applied with some consistency..... i.e. in a systematic fashion, using the
> same basic framework of analysis, and is a tremendous adjunct to technical
> systems.
>
> one persons viewpoint.
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