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My July of 2008 Monthly Investment Pick

Discussion in 'Felix Long Term Investment Pick Archive' started by Felix Homogratus, Jul 10, 2008.

  1. Felix Homogratus

    Felix Homogratus Commander in Chief

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    Mid Year Update
    By Rob Grespi

    Greetings fellows forex traders,

    It has been well over 7 months since my last long-term outlook, I did not plan of writing anything until the end of the year but since a lot of things have taken place the last 7 months I felt it might not be a bad idea to write a little update.

    Euro

    The Euro is overvalued in relationship to the Eurozone economic fundamentals.

    Mr. Trichet and his team of bean counters just do not know it yet (it actually always makes me wonder where these guys live), since by the time they get the economic data it will be 3 to 6 month old. But all they have to do is actually get out of their golden tower offices and look around them.

    Of course most analyst (which are more worried to follow the consensus so that they don't sound stupid and keep there "jobs") will disagree with me. Also most of these analyst don’t even live in Europe.

    However I live in Europe. I am sure lots of my Europeans friends can vouch for this: The Euro economy is slowing fast.

    Banks are not loaning money, at least to the ones that need it. I’m pretty sure they camp at the doorstep of Elf Aquitaine though. These guys, a major Euro "Oil crime cartel", never made so much money in their history.

    With the price of Gas squeezing people dry, (over 1.50 euro per liter) more and more of their dispensable income is going to Elf Aquitaine, (which has the best gauging system even better than Exxon and the many other American "oil pigs" counterparts in general). Get this… They buy the barrel of oil in Dollars, and retail it back in gas to European stations in Euros. Therefore they get to pocket, without doing anything, the 55 to 59% exchange rate differential. Not bad hein!!! And not 1 European journalist or EU political leader says one word about it. That should tell you where their interest lays.

    In general, I see people squeezing their belts more and more and cutting down their expenses where ever they can.

    The key trigger to look for is when Mr. Trichet will signal the start of his rate cut cycle, only then will the Euro start a sustainable decline. To that, just a few days ago Mr. Trichet did deliver his promised 25bp rate hike. However, he pretty much told the "market" that's it... so now we will see when a rate cut cycle will begin, and to be candid, I don't have a clue.

    Something important that most don't understand is that the ECB "numero UNO" mandate is to fight inflation. And inflation we have in Europe. The problem for Trichet is that inflation is Global this time, and soon the chief of the ECB will be faced with the reality of a sluggish Euro economy as well.

    Long term levels to look for: Offer 1.59 bow 1.60s . Bids 1.53s bow 1.50s, bow 1.43s, bow 1.35s

    GU

    The sound of inevitability is upon the pound. From where I am sitting it will only be a matter of time before the pounds falls apart, which could take it to 1.70s

    The key levels to look for are Offers 2, bow 2.05 and 2.020s Bids 1.96s bow 1.93s , bow 1.80s and 1.70s

    GY

    The GY is benefiting from calmer financial market and the reloading of Carry trades for now.

    A decisive crack of 207s, will expose 205s bow 200s, and 195/190s ( 193/192s has already been seen btw early on this year) on the upside a decisive pop of 214s and 217s. with 230s long term.

    Gold

    With offers at $1000/oz from our friend the IMF, it is still in a bullish mode, with demand at 800 and 500. However it is taking a breather right now, but any geopolitical excitements and the yellow metal will rush to $1500 and 2k. Also, since the core fundamental of all paper assets is deteriorating in the US, the gold bullish trend is likely to remain.

    On a historical view, keep this in mind. Over the last 3 thousand years, Gold has seen the rise and fall of Empires, regimes of all kind, leaders of all sort race breed and mental stability along with all there respective "monkey ass currencies" of the time. They all are gone and pretty much forgotten. Gold is still here today. Gold will see the death of Dollar and Euro among other **** ass paper currencies "backed by the good faith of these respective Governments." Gold will still be present.

    US economy

    Well, I know I took lots of criticism back in Nov 2007, when I call for a severe recession, borderline depression. However, in January we were in a borderline financial debacle. No we are not in a severe recession or depression, but we are in a recession whether the current "oil Gov" and their pom pom girls (the US media) like it or not. The economic picture is likely to continue to deteriorate, especially with the "lying Oil pigs" running the ship. They can try to" violin serenade" the suffering US tax payers (Titanic style) all they want, but the ship has taken a lot of water. and "that captain" won't go down with the ship. He and the rest of his crooked "oil monkeys" are more like Bruce Ismay actually.

    I still believe the US economic picture, will slowly continue to deteriorate and we will see a severe recession at least.

    Also keep in mind that there is another major economic problem will have to face in the next 2 to 5 years: The social security debacle, which is running already a major deficit and increasing every year. But as most political leaders, which have a foresight that look no further than the next election, they will ignore the issue until the **** hits the fan. This problem is like a economic nuclear bomb with a timer. But it is something I will write about later, when I do more research.

    The US real estate will continue to slowly bleed for the next 3 to 5 years punctuated by "dead cat bounces”, which will be celebrated every time as "the bottom" by the "pom pom girls".

    That’s it folks, good luck and god bless you all.
    Rob
     
    #1 Felix Homogratus, Jul 10, 2008
    Last edited: Jul 10, 2008
  2. AsstModerator

    AsstModerator FPA Forums and Reviews Admin

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  3. educatedwarrior

    educatedwarrior Private

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    Could someone explain what Rob means by ?

    Long term levels to look for: Offer 1.59 bow 1.60s . Bids 1.53s bow 1.50s, bow 1.43s, bow 1.35s


    What is "bow"? I guess I'm too much of a newbie to understand the terms. Thanks in advance.
     
  4. frazerd

    frazerd Recruit

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    I also do not understand "bow" and I'm sure there are many others who don't.
     
  5. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    bow = break of which... he means the next level if that one breaks.
     
  6. Jason XXX

    Jason XXX Private, 1st Class

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    Wow, EU1.50 / Litter of gasoline is about $8.96 / gallon. You guys are getting @#*&ed in the ass big time. Gas is expensive here too. Maybe it is time to tell the greens to @j%^& off!
     
  7. Hanno

    Hanno Recruit

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    Hmmm....Rob I feel you hit the nail on the head!!! Love your outlook on Gold - no paper trail, robust, indestructible, always tradable and very importantly as you say in bullish mode. Viva $ 2000 - roll on :)
    Thanks Rob stay safe in Champagne land!
     
  8. damonl

    damonl Private

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    thanks for sharing your thoughts with us
     
  9. rpaco

    rpaco Sergeant

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    So at last the bow secret is out!!!!


    One must not get confused between the Imperial gallon and the US gallon. The imperial gallon is more aloof, wears ermine, sneers at peasants and is bigger than the US gallon except of course in Texas. :)

    About 85% of our fuel price in the UK (petrol or gasoline and diesel) is duty or tax (both are applied)

    The cheapest current price for 4star is £ 1.159 and Diesel at £ 1.289 both per litre. These are from supermarket chains. The national average is about 2p higher and in some remote parts a lot higher.

    US Gallon = 3.785 Lit
    Imperial (original more substantial proper) Gallon = 4.546 Lit

    Re the Cable price (GBPUSD or GU) which Rob thinks will deteriorate to 1.70 this is based upon two economies vying to fall the fastest. Were the US in better shape then there would be no question, the UK is going down the toilet with Gordon Brown seemingly smiling and pulling the handle at every opportunity. However the US must be in an equally perilous situation. A pound of feathers falls with the same acceleration as a pound of lead thus the ratio between the two is varied only by the coefficient of drag. If the US falls far enough the Cable rate will rise again. The US usually falls further faster so may well pass us (the UK) on the way down.

    The European system of the ECB can never satisfy the greatly diverse economic requirements of all the different countries, so whatever Trichet does it will be a killer blow in several countries. There will always be economic turmoil in Europe because a CEB system simply cannot work. Suppose the US, Canada, Mexico, Panama etc etc all had the same interlocked basic bank rate. I've lost count how many countries in Europe now suffer the single rate I think it's eleven. Some here would add the UK to that list too. But the Brown government will fall soon hopefully, so we can have other idiots in charge.
     
  10. deanz

    deanz Private

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    Thanks Rob for your upfront outlook.

    I think you may find this movie interesting... it is about

    Religion........ September 11th ......... and The Federal Reserve !!

    Zeitgeist - The Movie
     

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