Author: Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients. Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter. Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit. Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
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FX Horizons: Danish Businessman Quietly Seeks FX Revolution – WSJ.com

By Michael J. Casey

Under [Jesper Toft’s Global Currency Union] plan, the two parties in a cross-border transaction will still do business in their home currencies but their contract will be denominated in “global currency units” whose value is determined by a unique index key based upon a weighted basket of currencies. Because of the counterbalancing and risk-spreading qualities in the currency relationships within that basket, the index key sharply lowers the prospective exchange rate volatility for the two parties to the contract. In other words, it allows firms to forget about the risk of big currency losses and focus on doing business with each other………

via FX Horizons: Danish Businessman Quietly Seeks FX Revolution – WSJ.com.

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ROSS GITTINS: We need a more balanced approach to progress

Ross Gittins:

A lot of the problems the nation struggles with and argues over boil down to the considerable potential for conflict between what economists summarise as “equity” and “efficiency”. We act as though one is right and the other wrong but, in truth, sensible people want a mix of both. So, though we don’t always realise it, the hard part is finding the best trade-off between the two……..

via ROSS GITTINS: We need a more balanced approach to progress.

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EU: Trades Must Live for Second | Securities Technology Monitor

By Laton McCartney

Members of the European Parliament tightened up the EU’s proposal on high-frequency algorithmic trading, voting that all high-frequency trading orders should be valid for one half second. The rule means orders cannot be cancelled or modified for at least five hundred milliseconds………All firms and trading venues also would have to ensure that trading systems are resilient and prepared to deal with sudden increases in order flows or market stresses. These could include Europe’s own “circuit breakers” to suspend trading………

via EU: Trades Must Live for Second | Securities Technology Monitor.

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Tim Harford — Don’t take growth for granted

By Tim Harford

Economic growth is a modern invention: 20th-century growth rates were far higher than those in the 19th century, and pre-1750 growth rates were almost imperceptible by modern standards. Many have seen this as an encouraging trend, but [economist Robert Gordon] draws a different lesson: growth is a recent phenomenon, so why assume that it will last?

……Demographics and debt accumulation have both speeded up growth in the past and, as the pendulum swings back, demographics and debt repayment will reduce it in the future…….

via Tim Harford — Don’t take growth for granted.

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Czech foreign minister: The West is losing to Putin | The Cable

By Josh Rogin

“We are not going back to Stalin, we are going back to Nicholas I,” said Karel Schwarzenberg, the Czech minister of foreign affairs, in an exclusive interview with The Cable. “It was under Nicholas that the great part of Central Asia was conquered by the Russians and Putin is quite successfully getting them under the control of Russia again, and the West is losing.”

…..”The Pacific basin is now more important [to the US] than Europe, it’s perfectly understandable,” he said. “I think in Europe we have to learn that we have to care much more ourselves, for our own security.”

via Czech foreign minister: The West is losing to Putin | The Cable.

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Fiscal consolidation in Sweden: A role model? | vox

By Martin Flodén, Associate Professor at Stockholm University

Fiscal austerity was effective during the Swedish economic crisis, but that insight is not particularly helpful today. Austerity would have been more complicated both economically and politically if it had not been supported by currency depreciation and strong external demand, and crisis countries today do not benefit from such developments. Attempts to consolidate before growth had resumed failed in Sweden. One possible interpretation of these observations is that prospects to consolidate are bleak until competitiveness has been restored in crisis economies…….

via Fiscal consolidation in Sweden: A role model? | vox.

Hat tip to Delusional Economics

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Caterpillar Cuts Outlook on Weak End Demand | PRAGMATIC CAPITALISM

Caterpillar outlook on the worldwide economy:

“MODEST GROWTH LIKELY, BUT RECESSION REMAINS POSSIBLE.

Much of Europe already mired in recession.”

via Caterpillar Cuts Outlook on Weak End Demand…. | PRAGMATIC CAPITALISM.

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Down with politics | WashingtonExaminer.com

By Gene Healy

Politics makes us worse because “politics is the mindkiller,” as intelligence theorist Eliezer Yudkowsky puts it……. we indulge our tribal hard-wiring by picking a political “team” and denouncing the “enemy.”

But our atavistic Red/Blue tribalism plays to the interests of “individual politicians in getting you to identify with them instead of judging them.”

……..We’ll get more of the same, Yudkowsky argues, until “Republifans and Demofans … stop enthusiastically cheering for rich lawyers because they wear certain colors, and begin judging them as employees severely derelict in their duties.”

via Down with politics | WashingtonExaminer.com.

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Australia: ASX 200 resistance

Last week’s short candle on strong volume indicates the ASX 200 is running into resistance at 4400/4450. Reversal below the rising trendline would suggest another correction.

ASX 200 Index

The hourly chart broke through its rising trendline, and first line of support at 4395/4400, on Monday morning. Retracement that respects resistance at 4400 would  warn of a down-swing to 4250.

ASX 200 Index Hourly

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Europe rising

Madrid General Index continues to indicate strong buying pressure, with 13-week Twiggs Money Flow rising steeply. Expect a test of resistance at 900.

Madrid General Index

* Target calculation: 725 + ( 725 – 600 ) = 850

Germany’s DAX is testing long-term resistance at 7500/7600. Troughs above zero on 13-week Twiggs Money Flow indicate strong buying pressure. Breakout would signal an advance to 8400*.

DAX Index

* Target calculation: 7200 + ( 7200 – 6000 ) = 8400

The FTSE 100 tests short-term support at 5860 on the daily chart. Shallow retracement suggests an advance to primary resistance at 6000/6100. Recovery above 5900 would strengthen the signal. 21-Day Twiggs Money Flow troughs above zero indicate buying pressure. Expect strong resistance at 6000, because of the number of previous peaks at this level, but breakout would offer a long-term target of 6750*.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5250 ) = 6750

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