UK & Europe Archives - Page 51 of 88

October 2, 2012

Europe: Still positive

Germany’s DAX found support at 7200. Respect would indicate another attempt at long-term resistance at 7500/7600. Rising troughs above zero on 13-week Twiggs Money Flow indicate strong buying pressure. Breakout would signal a long-term advance to 8400*.

DAX Index

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

Madrid General Index similarly found support at 770. A 63-day Twiggs Momentum trough above zero would indicate a primary up-trend. Respect of support would indicate a test of resistance at 900, while failure would retrace to 720.

Madrid General Index

France’s CAC-40 retraced to 3350. Respect would mean another test of 3600, while breach of the rising trendline would warn of a down-swing to test primary support at 2900. A 63-day Twiggs Momentum trough above zero would suggest a primary up-trend. Breakout above 3600 would confirm, offering a target of the 2011 high at 4100.

CAC-40 Index

* Target calculation: 3600 + ( 3600 – 3000 ) = 4200

A daily chart of the FTSE 100 shows medium-term support at 5740. Follow-through above 5880 would indicate an attempt at primary resistance at 6000/6100. Rising 21-day Twiggs Money Flow troughs above zero indicate buying pressure, but the last (marginal) breakout above 5880 warns of strong resistance at 6000. Breakout above 6100 would offer a long-term target of 6750*.

FTSE 100 Index

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

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.

September 27, 2012

There's No Solving Europe's Debt Crisis Without Solving the Jobs Crisis – Bloomberg

From the outside it looks like these [Eurozone] countries are faced with a debt crisis. From the inside it looks a lot more like a jobs crisis. Check out the chart below…….

via There’s No Solving Europe’s Debt Crisis Without Solving the Jobs Crisis – Bloomberg.

Hat tip to @10yearBonds

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.

September 26, 2012

If You Want to “Soak the Rich,” Keep Tax Rates Low « International Liberty

by Dan Mitchell

I’ve pulled evidence from IRS publications to show that rich people paid a lot more to Uncle Sam after Reagan reduced the top tax rate from 70 percent to 28 percent…….. The United Kingdom saw similar dramatic results when Margaret Thatcher lowered the top tax rate from 83 percent to 40 percent. Allister Heath explains.

During the 1970s, when the tax system specialised in inflicting pain, the top one per cent of earners contributed 11pc of income tax. By 1986-87, with the top rate down to 60pc, that had increased to 14pc. After the top rate fell to 40pc in 1988, the top 1pc’s share jumped, reaching 21.3pc by 1999-2000, 24.4pc in 2007-08 and 26.5pc in 2009-10. Lower taxes fuelled a hard-work culture and an entrepreneurial revolution. Combined with globalisation and the much greater rewards available for skilled workers, Britain’s most successful individuals earned a lot and paid a lot in tax.

via Evidence from England Shows that If You Want to “Soak the Rich,” Keep Tax Rates Low « International Liberty.

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.

September 25, 2012

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

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.

September 24, 2012

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

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.

September 21, 2012

Ray Dalio: Market Insights | CNBC

Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, discusses his biggest worry — social disruption due to mismanagement of the de-leveraging by governments — and other market insights.

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Also PIMCO’s Mohammed El-Erian on the benefits and risks of ECB intervention in the eurozone debt crisis.

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.

September 19, 2012

Forex Update

The Euro is testing resistance at $1.32 and its descending trendline. Upward breakout would warn the primary down-trend is ending. Recovery of 63-day Twiggs Momentum above zero indicates a primary up-trend. Breakout above the 2012 high of $1.35* would strengthen the signal, but only a higher trough of several weeks would confirm.

Euro/USD

* Target calculation: 1.275 + ( 1.275 – 1.20 ) = 1.35

Pound Sterling is correcting to support around €1.22 against the Euro. Breach of the rising trendline would warn the primary up-trend is ending, while retreat of 63-day Twiggs Momentum below zero would suggest a primary down-trend.

Pound Sterling/Euro

Canada’s Loonie is testing the new support level against the greenback at $1.02. Respect of support would confirm the primary up-trend indicated by long-term bullish divergence on 63-day Twiggs Momentum. Target for the advance is $1.08* but expect resistance at the 2011 highs of $1.06.

Canadian Loonie/Aussie Dollar

* Target calculation: 1.02 +( 1.02 – 0.96 ) = 1.08

The Aussie Dollar respected resistance at $1.06 against the greenback, retreating to test support at $1.04 on the daily chart. Respect of support is likely and follow-through above $1.05 would indicate another test of $1.06. The 63-day Twiggs Momentum trough above zero signals a primary up-trend. Breakout above $1.06 would confirm. Expect resistance at $1.075/$1.08, but target for an advance is $1.10*.

Aussie Dollar/USD

* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10

The Aussie Dollar is testing resistance at ¥83.50 against the Japanese Yen. Recovery of 63-Day Twiggs Momentum above zero indicates a primary up-trend. Breakout would signal an advance to ¥88*. Reversal below ¥79.50 is unlikely but would re-test primary support at ¥74.

Aussie Dollar/Japanese Yen

* Target calculation: 84 + ( 84 – 80 ) = 88

A few readers objected to my view that the RBA should intervene to prevent further appreciation of the Australian Dollar. One reason cited is that the RBA is not strong enough to stand up to global capital markets and would eventually be forced to capitulate. I disagree. If you are printing your own money you can take on all-comers. The SNB demonstrated this by preventing depreciation of the euro against the Swiss Franc, pegging the rate at 1.20 CHF for the last year.

Euro/Swiss Franc

The second argument was that “the market knows best” and any interference would cause more problems than it solves. My answer to that is that capital markets are subject to huge ebbs and flows, some determined by trade fluctuations but primarily caused by speculative flows and deliberate strategies by other central banks. If the RBA fails to act, local industry exposed to international competition may be irreparably damaged by loss of international markets and being under-cut in local markets by cheap imports. When the tide eventually turns, and the dollar weakens, it would be difficult to restore those industries if key capital equipment and skilled jobs have been lost.

The US is a perfect example: China and Japan hold more than $2 trillion in US treasury investments which helped to suppress appreciation of their currencies against the greenback, maintaining a trade advantage which cost the US millions of manufacturing jobs. It will be difficult to restore those industries lost even if the imbalance is corrected.

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.

September 18, 2012

Europe’s Balance of Payments account shows sizeable portfolio inflow

By Marc Chandler

Look at the turn around in the current account. In the 12-months through July, the euro area recorded a seasonally adjusted cumulative current account surplus of almost 63 bln euros, which is about 0.7% of the region’s GDP. The comparable figure in the 12-months through July 2011 was a deficit of a little more than 22 bln euros….

The weakness of the euro area economies has slowed imports and several countries, including some in the periphery, have seen a pick up in exports. Growth differentials probably is the more significant explanation, but we do recognize that from last November through July, the euro had declined about 10% on a trade-weighted basis……

While the current account is intuitively clear, the financial account is surprising. As the euro was falling in July to multi-year lows, talk circulated of capital flight. Yet, the financial account showed a net inflow of 18 bln euros of combined portfolio and direct investment.

via Europe’s Balance of Payments account shows sizeable portfolio inflow.

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.

September 18, 2012

Europe strengthening

The FTSE 100 is headed for a test of primary resistance at 6000/6100. Rising 13-week Twiggs Money Flow indicates buying pressure. Expect strong selling at resistance, 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

Europe is recovering strongly, with Dow Jones Europe Index testing primary resistance at 260/265. Rising 13-week Twiggs Money Flow indicates buying pressure. Breakout above 265 would signal an advance to 310*.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310

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.

September 17, 2012

EU Commission Considering Splitting Up Banks to Avoid Future Bailouts – SPIEGEL ONLINE

By Martin Hesse and Christoph Pauly

EU Commissioner Michel Barnier has asked experts to examine the possibility of splitting up major European banks to avoid future bailouts at taxpayers’ expense. But even less radical intervention in the banking sector could have drastic consequences for the industry, and its powerful lobby is resisting any such change……

[Daniel Zimmer, head of the German Monopolies Commission] notes that Germany has already taken steps in the right direction. Under the new German restructuring law, when a bank is in trouble the most critical parts of the institution can be transferred to a bridge bank, allowing the remainder to be liquidated. In such cases, the shareholders and most of the bank’s creditors would not be compensated. A fund made up of contributions from banks would cover restructuring costs.

But there is a problem with the new system. “In a worst-case scenario, a bank has to be split up into vital and other parts within a single weekend,” says Zimmer. “This is only possible if there is already a clear separation between the two parts beforehand.” This is why Zimmer believes it makes sense to establish the dividing line in advance, in a manner similar to what Britain’s Vickers Commission envisions.

via EU Commission Considering Splitting Up Banks to Avoid Future Bailouts – SPIEGEL ONLINE.

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.