Hi everyone

Today’s BoE and ECB Live Coverage touched a new all-time high of 2,000 traders.

The event attracted 1,926 traders and was hosted by Valeria Bednarik, covering the Interest Rates decision of two of the most important World Central banks, the ECB and BoE, for more than two hours live from FXstreet.com Homepage and Calendar.
Yesterday’s FED Live Coverage was followed by more than 1,100 traders and we expect to reach great numbers in tomorrow’s NFP Live Coverage.

Francesc

Transcripts

FED Live Coverage: http://transcripts.fxstreet.com/2009/11/live-coverage-fed-interest-rate-decision-.html
ECB & BoE Live Coverage: http://transcripts.fxstreet.com/2009/11/boe-and-ecb-live-coverage-.html

Scary future for Spain…..

Francesc

Spain: The Hole In Europe’s Balance Sheet
By Variant Perception

Dives sum, si non reddo eis quibus debeo.
I am a rich man as long as I don’t pay my creditors.
Titus Maccius Plautus (c. 254-184 BCE), “Curculio”

Themes

• Spain = Japan 2.0? - We argue that 1) the real estate crash in Spain is worse than is widely believed, 2) Spanish banks are hiding their losses, and 3) investors are smoking crack if they believe that Spanish banks are among the strongest in Europe, (see Forbes latest Spanish Banks In Top Form). If all these are true, Spain will soon have zombie banks like Japan.
• Banks are hiding losses - We believe that Spanish banks are not marking their real estate loans to market and are extending credit to zombie construction companies. They do this by 1) Getting a boost from accounting changes, 2) Not marking loans to market, 3) Continued lending to zombie companies, 4) Extending 40 year and 100% loan-to-value loans, and other bubble-like lending practices. We look at each of these in turn.
• Spain is in deflation - In a deflationary environment, servicing debt becomes even harder. Even when rates go to zero the real burden of debt goes up. That is why deflation is such a terrible thing. Eastern Europe, Spain and Ireland are now all experiencing the beginning of deflation. We believe that we will see much more deflation to come, which will have broad ramifications across the European banking sector.
• Who’s holding the bag? - The periphery countries are net debtors, and the rest of Europe is the net creditor. When a debtor can’t pay, the creditor suffers. Germany, France and others will need to cope with recapitalizing the periphery and Spain.
  Full Story

Arguments for ECB to hike in 2010 by Danske Bank
* The focus of the ECB now appears to be shifting from whether to implement more stimulus measures to when to begin withdrawing them.
* We believe that the euro area next summer will have recovered so much that the ECB will consider interest rates at historical lows as being inappropriate and will start hiking.
* When the ECB starts hiking it will probably deliver about 0.5 percentage points each quarter, which was the average hiking speed seen in the 2000-01 hiking cycle.
* The exit strategy is likely to begin with alterations of the conditions for the long-term refinancing operations.
Full Story

• After a small break in June, Global PMI had another strong increase in July. The global new orders index rose from 49.1 to 53.3, which is above the long-term average of 52.6. OECD’s leading indicators also rose strongly to even higher levels, pointing to very strong growth and a further rise in PMI during Q3 and Q4.
• The order-inventory balance from PMI data also rose a bit further, painting a similar picture of very strong global growth in H2 09.
• In the US most leading indicators continued higher. The ISM new orders index made another move higher from 49.2 to 55.3 and the order-inventory balance rose further. The ISM model points to a further rise above 55 by year-end.
• In Euroland OECD’s leading indicator, the PMI order-inventory balance, and ZEW all point to a significant rebound in H2 growth. In Scandi a sharp further rise in Swedish PMI stands out. Other countries and surveys also point to improvement, albeit at a slower pace.
• Asia continues to look strong. In particular, the sharp rebound in industrial production in Japan, Taiwan and South Korea is striking. CEE shows further a rise in PMI. Russian PMI increased strongly again in July.
• Outlook: We look for further improvement in PMI data in the coming months whereas some of the leading indicators that have risen the most are likely to level off soon from the very high levels. Global GDP growth looks set for a strong H2 recovery.
  Full Story

Hi everyone

Yesterday, the U.S Commodity Futures Trading Commission (CFTC) released financial data for Futures Commission Merchants (FCM) for the month of May 2009.

http://www.cftc.gov/marketreports/financialdataforfcms/index.htm

Easy Forex US, Ikon Global Markets, MB Trading and Advanced Markets jumped above minimum required capital of $20 mio in May, so now the list of companies above required capital is as follows:

Above $20 million net capital
Advanced Markets $20,722,551 (previously $19,796,273)
Easy Forex US $20,928,968 (previously $15,549,565)
Ikon Global Markets $21,247,886 (previously $16,355,818)
MB Trading $21,360,551 (previously $17,100,859)
Alpari US $22,312,195 (previously $20,975,556)
Forex Club Financial Company $25,427,601 (previously $21,795,577)
Capital Market Services LLC - CMS Forex $29,788,506 (previously $29,6678)
Peregrine Financial Group Inc - PFG $36,465,727 (previously $36,843,820)
InterbankFX $35,611,164 (previously $36,507,727)
FX Solutions $48,262,204 (previously $41,546,274)
Forex Capital Markets LLC - FXCM $63,999,806 (previously $60,472,142)
Global Futures & Forex Ltd - GFT Forex $79,368,858 (previously $80,693,021)
Gain Capital Group LLC $98,125,651 (previously $90,801,214)
Oanda Corporation $159,062,073 (previously $159,739,419)

Francesc

* The last thing the euro zone needs is an appreciating currency. As a result of the reversal of the safe-haven effect on the greenback begun a few months back, the euro remains over-valued in trade-weighted terms.

* In addition to Ireland having its credit rating downgraded recently by Standard & Poor’s, the ECB’s firepower is petering out again: Money-supply growth in Europe has just reached a 12-year low.

* Given that the U.S. leading economic indicator is back in positive territory for the first time in 22 months and some forecasters expect real GDP to begin growing again in the third quarter, the chances of seeing a repeat of the 2004 scenario are good. Accordingly, the dollar should begin to realign with the euro when the Fed starts hiking rates again.

* May’s bionic loonie has finally dipped a couple of notches to more reasonable levels. The recent cooldown in commodity prices should keep the Canadian dollar in check over the coming months. On the assumption that oil prices will hover around US$60 a barrel, the loonie should hold closer to $0.85 than to $0.90 in the months ahead.

* Canadian exporters can therefore heave a sigh of relief and should seize the opportunity to do some currency hedging for their international transactions before the eventual global recovery sets the loonie on a sustainable uptrend.

Hi everyone

Recently I had a nice talk with a top executive of the U.S. Retail Forex Industry. We were talking about the impact that the latest ruling is having on the Forex business.

Under his view, 4 new rules have vast potential to change things in the United States:

1. NFA rule on limiting leverage to 100 to 1 will be enacted very soon

2. NFA rule that mandates that customers receive price improvements on limit orders.  It potentially has very wide implications for all firms as it may mean best execution standards.  If the NFA reads a typical order in FX which is “hitting a price” as a limit order as well it will mean best execution applies to all orders and that will be very problematic for market makers.
Time isn’t certain on this, but its this year.

3. NFA rule mandating that if firms re-quote negatively they must re-quote positively continuing the theme above of giving customers the absolute best price available at the time.  Same time line as above.

4. CFTC is months away from passing IB registration requirements.  Although this is one year over due they did just get their new chairman so now he will need to “prove” himself as a tough policeman in the financial arena.  The new rules will mandate that all IBs and money managers for US clients have to register with CFTC/NFA.
The specifics of what exact capital requirements and fees will be is unsure but its likely to mirror the futures industry’s.

What’s your opinion about this?

Francesc

Note: Follow this theme at FXstreet’s Forum:

http://www.fxstreet.com/forum/showthread.php?t=52237

Hi everyone

Surfing FXstreet.com I came across UniCredit’s Euro Thoughts report, today talking about the need to go further in rate cuts by the ECB.

Do you agree their view?

Euro Thoughts - Unconventional debate, conventional response by UniCredit Group

Francesc

Please, do not confuse GLOBEFX CLUB Inc. NFA ID:0402957 with FOREX CLUB FINANCIAL COMPANY with NFA ID:0358265

Francesc

GLOBEFX CLUB INC
NFA ID:0402957

NOTICE OF MEMBER RESPONSIBILITY ACTION:
On March 24, 2009, NFA issued a Member Responsibility Action (”MRA”) against GlobeFX Club, Inc. (”Globe FX Club”) whereby:

1. GlobeFX Club is suspended from NFA membership, until further notice;

2. GlobeFX Club is prohibited from soliciting or accepting any customer or pool participant funds or placing trades for any pools that it operates or any customer accounts that it holds;

3. GlobeFX Club and any person acting on its behalf are prohibited from disbursing or transferring any funds from any accounts (bank, trading, or any other types of accounts) which it owns or controls (including customer accounts) or which are held in its name, without prior approval from NFA; and

4. GlobeFX Club is required to provide copies of this MRA via overnight courier to all pool participants in any pools which it operates or over which it exercises control and to all customer account holders.
View Full Case Summary

NFA takes an emergency enforcement action against GlobeFX Club, Inc.
March 24, Chicago - National Futures Association (NFA) announced today that it has taken an emergency enforcement action against GlobeFX Club, Inc. (GlobeFX Club), a Commodity Pool Operator located in Homestead, Florida. Effective immediately, the Member Responsibility Action (MRA) is deemed necessary to protect pool participants, customers and other NFA Members because GlobeFX Club has provided contradictory information in regards to whether it is conducting business, has customer accounts and is operating a pool. NFA has been unable to determine the nature of GlobeFX Club’s business, the identities of its customers, the treatment of customer funds and the identity of two individuals who purportedly loaned money to the firm. The firm has also failed to produce books and records requested by NFA and answer questions concerning its operations.
View Full News Release

When you have some spare time, give it a look… It is always wise to have fundamentals in mind when trading…

Economic and Financial Outlook, 2009 Q2 by Danske Bank

Francesc