Colin Twiggs, Author at the patient investor

June 21, 2012

A tilt in Australian liberalism | MacroBusiness

Houses and Holes: As I have noted in the past that, for the most part, Australian political economy is divided pretty simply into two teams. On one side you have a kind of bastardised social liberalism in which trade union thugs wield power via the Labor Party and are supported by a cultural community of Irish-Catholic derived “battlers”. On the other side, you have an equally bastardised neo-liberalism in which corporations wield power via the Liberal Party and are supported by a cultural community of English-Protestant derived “bludgers”. Whether the members of either team are from Vietnam, Israel, Lebanon or Lapland, rich or poor is irrelevant. This is our tribal political culture……

via A tilt in Australian liberalism | | MacroBusiness.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

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.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

June 21, 2012

Forex: Europe, Australia, Canada, South Africa and Japan

The Euro is testing its new resistance level at $1.26. Respect would offer a target of $1.17*. Bullish divergence on 63-day Twiggs Momentum, however, warns that the down-trend is weakening; recovery above zero would suggest reversal to a primary up-trend. Breach of the descending trendline would strengthen the signal.

EUR/USD

* Target calculation: 1.26 – ( 1.35 – 1.26 ) = 1.17

Pound Sterling displays a strong up-trend against the euro, again testing resistance at €1.25. Breakout would signal an advance to €1.30*. 63-Day Twiggs Momentum oscillating high above zero indicates trend strength.

GBP/USD

* Target calculation: 1.26 + ( 1.26 – 1.22 ) = 1.30

The Greenback has corrected sharply against the Japanese Yen before finding medium-term support at ¥78. Recovery above ¥80 (and the descending trendline) would indicate that the correction is over, while breach of support would test primary support at ¥75.50/76.50. The long-term bullish divergence on 63-Day Twiggs Momentum continues to warn of reversal to an up-trend.

USD/JPY

* Target calculation: 84 + ( 84 – 78 ) = 90

Sharply falling crude oil prices have weakened Canada’s Loonie relative to the Aussie Dollar. Against the greenback, the Loonie bounced of short-term support at $0.96 but this is unlikely to last and we should expect a test of primary support at $0.94/0.95. A 63-day Twiggs Momentum peak below zero would warn of a primary down-trend.

Canadian Dollar

* Target calculation: 0.96 – ( 0.98 – 0.96 ) = 0.94

The Aussie Dollar lifted along with commodity prices and is headed for a test of $1.02 (USD). Upward breakout would signal an advance to $1.08, while respect of resistance (and the descending trendline) would warn of a decline to $0.90*. A 63-day Twiggs Momentum peak below zero would strengthen the bear signal.

Aussie Dollar

* Target calculation: 0.96 – ( 1.02 – 0.96 ) = 0.90

The Aussie Dollar is headed for a test of resistance at R8.50 (South African Rand). Breakout would offer a target of R9.00*. Reversal of 63-Day Twiggs Momentum below zero, however, would warn of a primary down-trend.

Aussie Dollar/South African Rand

* Target calculation: 8.50 + ( 8.50 – 8.00 ) = 9.00

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 20, 2012

Rising Dollar suggests lower gold and commodities

The Dollar Index is testing medium-term support at 81.00/81.50. Respect would confirm a healthy primary up-trend. Reversal below the rising trendline is unlikely, but would indicate trend weakness. Another trough above zero on 63-day Twiggs Momentum would strengthen the bull signal.

Dollar Index

* Target calculation: 81 + ( 81 – 78 ) = 84

Gold displays strong buying support above $1500 with four long tails on the weekly chart. Recovery above $1700/ounce would suggest a new primary up-trend, but the rising dollar warns of weakness. Reversal below $1600 would strengthen the bear signal from 63-day Twiggs Momentum declining below zero.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Brent crude is consolidating after breaking support at $100/barrel. Respect of the new resistance level would warn of another decline, while reversal would test $110.

IPE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

The Nymex WTI Light Crude is similarly consolidating below $85/barrel. Respect of the new resistance level would indicate a decline to $75/76 per barrel.

Nymex WTI Light Crude

The broader CRB Commodities Index found short-term support at 265 as the dollar weakened, but is likely to follow through to long-term support at 250 as the greenback strengthens. 63-Day Twiggs Momentum oscillating below zero warns of a strong down-trend.

CRB Commodities Index

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 20, 2012

U.K. Reveals New 'Say on Pay' Laws – WSJ.com

CASSELL BRYAN-LOW: The British government unveiled legislation Wednesday to give investors more say on the pay packages of senior corporate executives, a milestone in a shareholder rebellion that has been rippling through the U.K. in recent months.

The measures include giving shareholders a binding vote on how much executive directors are paid and requiring companies to annually publish a simple figure totaling how much they received. The binding vote on pay doesn’t apply to executives who aren’t board members.

via U.K. Reveals New ‘Say on Pay’ Laws – WSJ.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 20, 2012

Samaras Is Sworn In as Greek Premier – WSJ.com

Greek conservative leader Antonis Samaras was sworn in as prime minister Wednesday at the head of a three-party coalition that is tasked with carrying out the country’s harsh European-led bailout.

…..Although New Democracy won the most votes in the elections, it didn’t control enough seats to govern on its own and had to seek coalition partners to control a majority in Greece’s 300-member Parliament. Combined with the forces of the Socialist and the small Democratic Left parties, the coalition will hold 179 seats.

via Samaras Is Sworn In as Greek Premier – WSJ.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 20, 2012

Fed Extends Operation Twist – WSJ.com

U.S. Federal Reserve officials extended through the end of the year a program meant to drive down long-term interest rates and signaled that they were “prepared to take further action” if needed amid heightened worry about the economy’s performance.

By continuing the program, known as “Operation Twist,” the Fed will buy $267 billion in long-term Treasury bonds and notes while it sells short-term Treasurys. The program had been set to expire this month.

via Fed Extends Operation Twist – WSJ.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 20, 2012

Westpac: China credit supply outstrips demand

Phat Dragon is placing the most value on new information regarding credit demand and supply. It is credit growth that tells us more about the shape of activity later this year than any other macro indicator……the supply side of the credit equation is moving decisively higher (greater policy emphasis, increased willingness to lend) but ……sluggish demand for loans is holding the system back. Indeed, the June quarter observation for “loan demand” (bankers’ assessment) fell to 12% below average, lower even than the Dec-2008 reading, even as the “lending attitude of banks” (corporate assessment) rose for a second straight quarter and the ‘easiness’ of the monetary policy stance (bankers’ assessment) rose to 21% above average.

via Westpac: Phat Dragon – a weekly chronicle of the Chinese economy.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 20, 2012

Econbrowser: Europe in 1931

What happened in 1931 to turn a bad economic downturn into the Great Depression? Dramatic events in Europe included failure of Credit-Anstalt, Austria’s biggest bank, in May of 1931. That was followed by bank runs in Hungary, Czechoslovakia, Romania, Poland, and Germany. As is often the case historically, the financial problems were a combination of a banking crisis….and a currency crisis…..

In 1931, countries faced doubts about whether they would stay on the gold standard, and had a choice of either to abandon gold or else to inflict further domestic economic damage in the form of monetary contraction and price deflation. Those doubts and their damage ended up bouncing across countries like a ping pong ball.

via Econbrowser: Europe in 1931.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 20, 2012

"Which Eurobonds?" by Jeffrey Frankel | Project Syndicate

Jeffrey Frankel: Ever since 1841, the market requires that US states running up questionable levels of debt pay an interest-rate premium to compensate for the default risk. By contrast, Greece and the eurozone’s other heavy borrowers were able to borrow at interest rates that had fallen to virtually the same level as German Bunds. Had the ECB operated from the outset under a rule prohibiting it from accepting SGP-noncompliant countries’ debt as collateral, the entire eurozone sovereign-debt problem might have been avoided….

The version of Eurobonds that might work as the missing long-term enforcement mechanism is almost the reverse of the Germans’ ERF proposal: the “blue bonds” proposed two years ago by Jacques Delpla and Jakob von Weizsäcker. Under this plan, only debt issued by national authorities below the 60%-of-GDP threshold could receive eurozone backing and seniority. When a country issued debt above the threshold, the resulting “red bonds” would lose this status……market interest rates would provide the discipline that bureaucrats in Brussels cannot.

via "Which Eurobonds?" by Jeffrey Frankel | Project Syndicate.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 20, 2012

History of the Gold Standard in the 20th Century – James Rickards

James Rickards, senior managing director of Tanget Capital Partners and author of “Currency Wars: The Making of the Next Global Crisis,” talks about inflation and the gold standard in the 20th century.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.