Large speculators and traders increased their bullish net positions in the gold futures markets last week following two weeks of sharp declines, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.
The non-commercial futures contracts of Comex gold futures, traded by large speculators and hedge funds, totaled a net position of 116,252 contracts in the data reported through March 21st. This was a weekly rise of 10,214 contracts from the previous week which had a total of 106,038 net contracts.
Gold speculative positions have remained in a rather tight range mostly between the +100,000 and the +130,000 contract levels since the beginning of the year (a jump to +163,000 contracts on Feb 28th being the exception).
Gold Commercial Positions:
The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -128,997 contracts last week. This is a weekly change of -5,710 contracts from the total net of -123,287 contracts reported the previous week.
Gold ETF:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the GLD ETF, which tracks the price of gold, closed at approximately $118.54 which was a gain of $4.42 from the previous close of $114.12, according to ETF financial market data.
*COT Report: The COT data, released weekly to the public each Friday, is updated through the previous Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).
Large speculators increased their net positions in the S&P500 stock futures markets last week for a sixth consecutive week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.
The non-commercial futures contracts of S&P500 futures, traded by large speculators and hedge funds, totaled a net position of 9,943 contracts in the data reported through March 21st. This was a weekly gain of 1,593 contracts from the previous week which had a total of 8,350 net contracts.
Speculators have now raised their bullish net position to the highest level since December 13th when net positions totaled 15,031 contracts.
S&P500 Commercial Positions:
Meanwhile, the commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -16,363 contracts last week. This is a weekly change of -122 contracts from the total net of -16,241 contracts reported the previous week.
S&P500 Stock Market Index:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the S&P500 index closed at approximately 2344.02 which was a fall of -21.43 from the previous close of 2365.45, according to market data.
*COT Report: The COT data, released weekly to the public each Friday, is updated through the previous Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).
Large speculators and traders decreased their bullish net positions in the silver futures markets last week for the third consecutive week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.
The non-commercial futures contracts of Comex silver futures, traded by large speculators and hedge funds, totaled a net position of 79,112 contracts in the data reported through March 21st. This was a weekly decline of -3,766 contracts from the previous week which had a total of 82,878 net contracts.
Silver speculative positions have fallen under the +80,000 contract level for the first time in the last six weeks after three weeks of decline.
Silver Commercial Positions:
The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -93,734 contracts last week. This is a weekly change of 4,265 contracts from the total net of -97,999 contracts reported the previous week.
Silver ETF:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the SLV ishares ETF, which tracks the price of silver, closed at approximately $16.61 which was an increase of $0.62 from the previous close of $15.99, according to ETF financial market data.
*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).
Large speculators and traders slightly decreased their net positions in the copper futures markets last week and brought net positions lower for the seventh straight week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.
The non-commercial futures contracts of copper futures, traded by large speculators and hedge funds, totaled a net position of 21,670 contracts in the data reported through March 21st. This was a weekly shortfall of -769 contracts from the previous week which had a total of 22,439 net contracts.
Speculative copper positions, after seven weeks of declines, have reached a new low since November 1st when net positions totaled 11,298 contracts.
Copper Commercial Positions:
The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -25,857 contracts last week. This is a weekly change of 761 contracts from the total net of -26,618 contracts reported the previous week.
Copper ETN:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the JJC iPath Bloomber Copper ETN, which tracks the price of copper, closed at approximately $29.82 which was a decline of $-0.46 from the previous close of $30.28, according to financial market data.
*COT Report: The COT data, released weekly to the public each Friday, is updated through the previous Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).
At the H4 chart of EUR USD, bullish Hammer pattern indicates an ascending movement. Three Line Break chart shows a bearish direction; Heiken Ashi candlesticks confirm the ascending movement.
At the H1 chart of EUR USD, bullish Tweezers pattern indicated that the correction completed and the ascending tendency continues. Three Line Break chart and Heiken Ashi candlesticks confirm a bullish direction.
USD JPY, “US Dollar vs. Japanese Yen”
At the H4 chart of USD JPY, Engulfing Bearish and Harami patterns indicate a descending movement. Three Line Break chart and Heiken Ashi candlesticks confirm a bearish direction.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
On Friday, the USD/JPY pair is trading to the upside after ten consecutive trading sessions of decline.
The Japanese Yen is starting a correction after strengthening against the USD for ten trading sessions in a row. The current quote for the instrument is 111.30. Yesterday, the pair fell into the area of lows reached on November 22nd2016.
Today’s statistics showed that the Flash Manufacturing PMI in Japan fell from 53.3 point in February to 52.6 points in March, although it was expected to increase up to 53.5 points. The decline is rather uncomfortable, but not critical: the indicator is way above 50 points, psychologically-crucial level, which separates the decline for the growth.
Consequently, the manufacturing sector continues to expand, but a bit slower than earlier. The components of the report indicate that almost all readings are improving, but not as fast as before. Japanese authorities can be pretty enthusiastic when it comes to New Orders, because the indicator has been increasing.
Quite significant strengthening of the Yen recently may later affect basic macroeconomic indicators, but the national currency is unlikely to get stronger steadily.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The euro closed slightly down after Wednesday’s trading. Trader activity was low during the US session as market participants waited on the vote in Congress to dismantle Obamacare. The vote has now been pushed back to Friday after the instigators of the motion failed to enlist the support of the requisite number of congressmen. Before closing, the euro/dollar was hovering around the 1.0783 mark.
Market expectations:
On the hourly chart, a symmetrical triangle at formed at 1.0783 level. During trading in Asia, the price came out of this triangle downwards. The euro fell against the dollar to 1.0760.
Given that the euro has broken through the trend line on the daily timeframe, and that the dollar index has rebounded from the support, today I’m expecting the single currency to continue its slide against the greenback to around the 1.0747 mark. Additional support for the dollar will come from growing US bond yields.
My predictions for the euro yesterday didn’t come off. The single currency came under pressure before the session closed from the falling EUR/GBP cross (after the release of retail sales figures in the UK) and growing US bond yields.
The euro index and US 10Y bond yields have both broken through the trend line. Since trading opened in Asia, the exchange rate has come out of the symmetrical triangle on the hourly timeframe downwards. As such, I can only see the euro weakening further against the US dollar.
Cyclical analysis and patterns are giving a mixed picture. Cycles indicate that the euro will strengthen before the end of the day, while patterns point to a sharp slide (60-80 pips). When the cycles and patterns contradict one another, one can expect to see sideways movement on the currency pair with fluctuations in both directions. It’s still not clear which way the vote in Congress on Obamacare will go.
The potential for a slide will disappear if the trend line is broken though at the maximum 1.0824. Given the current situation, as well as that of the previous trading day, I’m sitting on the fence.
Positives for the euro (+):
Fundamental:
(+) US president Donald Trump favours a weaker dollar;
(+) The threshold for acceptable US government debt of 20.1 trillion USD may be reached by March this year. This will create headaches for new US president Donald Trump. A new law on the debt ceiling came into force on the 16th of March 2017;
(+) The Greek government has made some progress in its talks with international creditors on the second stage of their reform program;
(+) Head of the ECB, Mario Draghi, has hinted that the central bank may not need to provide any further stimulus to revitalise Europe’s economy. From April to December 2017, the ECB will reduce their monthly assets purchases to 80 to 60 billion EUR;
(+) ECB bosses have discussed the possibility of raising interest rates before the QE program comes to an end;
(+) Ewald Nowotny, a member of the ECB’s governing council, has said that the bank could raise the deposit rate before the main refinancing rate;
Technical (short-term):
(+) According to data from 14/03/17, small and large speculators on the Chicago Exchange have increased their long and short positions. Long positions have grown by 11,151 to 148,509 contracts, while short positions have grown by 8,909 to 187,216 contracts. Net short positions have fallen from 58,766 to 38,707 contracts. Small speculators have reduced their short positions by 11,095 to 58,313 contracts. Net long positions have risen by 3,158 contracts.
(+) Short/long ratio according to myfxbook as of 07:38 EET: 75%/24%, lots: 29272/9309 (previous day: 31371/7227), positions: 68276/31988 (previous day: 73834/28068);
(+) German 10-year bond yields: 0.431% (up 5.89% from 23/03/17);
(+) EURGBP (W): the CCI (20), AO, AC and the Stochastic (5,3,3) are up. The trend line has been broken through;
(+) EURUSD (M): the Stochastic (5,3,3) is up;
(+) EURUSD (W): The Stochastic (5,3,3), AO, AC, and CCI (20) are up;
(+) EURUSD (D): the AO indicator is up;
Negatives for the euro (-):
Fundamental:
(-) According to CME Group’s FedWatch Tool on Wednesday the 22nd of March, the probability of a rate hike in May remains 6.4%. The probability in June has grown from 49.6% to 54% and in July from 57.1% to 60.8%;
(-) Political uncertainty in Europe (French elections and Brexit);
(-) Fed member Evans is expecting 2-3 rate hikes in 2017. The Federal Reserve will make a decision about the next hike in June;
(-) President of the Philadelphia Fed, Harker, announced that the Federal Reserve will continue to gradually increase interest rates throughout 2017;
Technical factors (short-term):
(-) US 10-year bond yields: 2.419% (up 0.37% from 23/03/17); In Asia, US 10Y bond yields have risen by 0.66% to 2.434%;
(-) EURUSD (M): the AO and AC indicators are down;
(-) EURUSD (D): the AC Stochastic (5,3,3) and CCI (20) are down;
(-) EURGBP (D): the AO, AC, CCI (20), and Stochastic (5,3,3) indicators are down;
Built into the price:
(-) The Ex-Prime Minister of France, Alain Juppe, has ruled himself out of participating in the presidential election;
(+) François Bayrou, leader of the “Democratic Movement” party, has ruled out running for the presidency and thrown his weight behind independent candidate Emmanuel Macron;
(+) Marine Le Pen has had her EU parliamentary immunity from prosecution lifted for political reasons.
There is a deep chasm between America’s historical rebuff of G20 efforts, which seek to re-ignite trade, and markets, which remain at record heights. This rift is untenable.
Historically, Baden-Baden’s spas are famous for their healing waters, which have healed ancient Romans’ arthritic aches, Prussian queens’ rheumatism and European aristocrats’ paralyses. Nevertheless, the G20 Summit is fresh evidence that even Baden-Baden cannot do miracles.
As US Treasury Secretary Mnuchin rebuffed the push by the masters of the global finance to renounce protectionism, concerns are mounting that the Trump administration will execute its “America First” policy, even at the risk of unleashing waves of retaliation worldwide.
As world trade is frozen but markets remain close to record-heights, contraction is looming in the horizon.
(Bad) History in Baden-Baden
History was made in Baden-Baden, but not the kind of history that the world economy needs. For the first time since the global crisis year of 2008, the world’s leading finance ministers, dropped the commitment to free trade. It amounts to the most consequential shift of the international trading community since World War II.
Following pushback from Treasury Secretary Steve Mnuchin, the G20 Summit backtracked from a joint position that would have explicitly renewed the long-standing pledge to free trade.
The timing could not have been worse. Before the global crisis, world investment soared to almost $2 trillion. Today – almost a decade later – it remains below that level. The state of world trade is even worse. World export volumes reached a plateau already two years ago. World trade has stopped growing.
In turn, the third leg of globalization, global migration, is plunging or stagnating, while refugee crises escalate. In the past year, more than 65 million people – more than ever since 1945 – were displaced from their homes by conflict and persecution.
To foster global recovery, finance ministers should have hammered a compromise in Baden-Baden. Instead, the White House tied their hands, which reinforced concerns about new US protectionism and increased trade friction in the coming months.
But if that’s the case, why are markets smiling?
Bubbling markets
At the peak of globalization in May 2008, the Baltic Dry Index (BDI) – a barometer of international commodity trade – soared to a record high of 11,793 points. Today, even before trade friction, the Index remains 90 percent lower than a decade ago.
That’s not the case with US equity markets, however. Since March 2009, the broad Dow Jones Industrial Average (DJIA) has more than tripled to soaring to more than
20,900. The blue-chip S&P 500 Index (SPX) has kept its gain at close to 2,380. And the tech sector’s Nasdaq Composite Index (COMP) exceeds 5,900.
According to the cyclically-adjusted price-earnings ratio (CAPE), the average now exceeds 29, which is about the same as amid the Wall Street crash in 1929 that heralded the Great Depression.
Historically, the CAPE average has been higher only once – in December 1999 – when the technology bubble finally burst and markets crashed. Of course, history does not always repeat itself in the markets, but it does rhyme. If the century-long CAPE median is about 16 and the current figure is 50 percent higher, markets appear to be substantially overvalued.
Looming contraction
What makes the huge discrepancy between fundamentals and markets extraordinary is that valuations have ignored the negatives of the Trump administration’s measures, while touting the positive consequences of Trump’s executive decisions and signs of accelerated deregulation, privatization and liberalization. Also, as the Fed will continue to tighten, it will conflict with the administration’s infrastructure plan but also subdue growth prospects.
In the long term, markets penalize investors for such discrepancies. After all, the leading movers of those markets feature America’s largest companies from financials (American Express, Goldman Sachs, Visa) to industry giants (Caterpillar, Disney, McDonald’s) and tech leaders (Apple, Cisco, Microsoft).
Indeed, these are corporate titans, which earn an increasing share of their revenues in foreign markets – especially in those country markets that the White House is about to challenge.
About the Author:
Dr Steinbock is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/
The original commentary was published by Shanghai Daily on March 22, 2017
In France, President Hollande’s utter failure to foster broad consensus for structural reforms has paved the way for a contested election. While public debate focuses on Emmanuel Macron as the savior of France, the real story is that Marine Le Pen’s agenda has shifted the French political landscape.
Before TV debates, the French presidential election featured 3-4 viable candidates, which together accounted for 85-90 percent of the total vote. Until recently, the leader of the Front National, Marine Le Pen, and the centrist Emmanuel Macron, have garnered about 25 percent in the polls, followed by the center-right François Fillon (20%), and the socialist Benoît Hamon (15%).
After merciless campaigns, scandals and mud-slinging, Macron has a very slight lead among first-round voters (27%), ahead of Marine Le Pen (26%) and Fillon (17%), while socialist Hamon has lost ground for far-left Jean-Luc Melenchon (12% each). French voters go the polls on April 23 and May 7 in the two-round election. Since no candidate can garner absolute majority in the first round, it is the second round that really matters. And in that race, Macron (64%) seems to have overwhelming lead against Le Pen (36%).
Even if Le Pen would win the first round, she would face great odds in the second. Yet, in one sense, she has already won. In France, the political future belongs to her agenda (see Box: Elysee Palace’s New Agenda).
Macron’s stance – and funders
Emmanuel Macron’s (40) current tie with or slight lead against Le Pen in polls is not based on his perceived success. His stint in Hollande’s government as a business-friendly economy minister alienated most socialists while failing to win over most conservatives, not to speak of the French majority. However, as Fillon has been swept by an embezzlement debacle and socialists have failed to put up a fight, Macron is pretty much all that’s left from the old French center-right elite.
Politically, Macron is a proponent of a “third way.” To him, political right and political left have less importance in the contemporary world. What matters is economic pragmatism. Like his heroes, Tony Blair in the UK and Bill and Hillary Clinton in the US, Macron advocates whatever is expedient, from Rotschild’s neoliberal profits to Hollande’s bureaucratic socialism. Over time, he may share the ultimate fate of Blair and the Clintons: initial excitement followed by disillusion and resentment.
In reality, Macron is a typical product of the elitist École nationale d’administration (ENA). After a stint as an investment banker at Rotschild & Cie Banque, he served in Hollande’s socialist governments, where he advocated business-friendly reforms that undermined Hollande’s support among the government’s socialist constituencies, while fostering Macron’s clout among the socialist opposition and big business.
Married with his 24 year older high school teacher he first met at 15, Macron’s personal life and policy stances remain equally ambiguous. Last November, he declared that he would launch a social liberal bid under the banner of his new
movement En Marche!. By design, the name of the party shares Macron’s initials. He likes to portray it as a “social liberal party” to attract the center-right movement, and a “progressive movement” to court Le Pen’s supporters and socialist dissidents.
In reality, En Marche! is a one-man façade. It is registered at the address of Laurent Bigorgne, director of Institut Montaigne director. It was launched with people representing corporate giants, such as the commercial real estate titan Unibail-Rodamco, the international banking behemoth BNP Paribas, and the aerospace mammoth Safran. The Paris-based Institut Montaigne promotes competitiveness and social cohesion. It was founded by millionaire Claude Bébéar, former CEO of AXA, the French multinational insurance, investment and financial colossus, which is funded by the likes of Allianz, Bank of America Merrill Lynch, BNP Paribas, Capgemini, IBM France, McKinsey & Company, Microsoft France, and, of course, Macron’s former employer, Rothschild & Cie Banque.
Macron needed a new platform because he had alienated socialists while failing to gain enough support among conservatives. He is the ultimate Europhile and federalist. He supports integration and structural reforms. In controversies about immigration, secularism, security and terrorism, Macron has favored a balancing act – one that is well-aligned with the ideological position of Institut Montaigne.
His real political success has been the ability to pick up endorsements from both center-right and –left, including from François Bayrou of the Democratic Movement, EU parliament member Daniel Cohn-Bendit, the leftist ecologist candidate François de Rugy, and Socialist parliament member Richard Ferrand.
The rise of Marine Le Pen
Marine Le Pen (49) is the youngest daughter of the veteran FN leader Jean-Marie Le Pen, a French far-right politician who supported euro-skepticism, opposed immigration and pushed for law and order, traditional culture and values. As long as he led the FN, it was a marginal far-right, anti-Semitic party with politically incorrect neo-Nazi associations. In the past decade, Marine Le Pen has successfully “mainstreamed” FN away from the margins and extremism. Nevertheless, since major French banks oppose her political platform, she has had difficulties funding her campaign.
In her campaign, Le Pen has supported traditional values, law and order, while opposing immigration and the EU. As her campaign kicked off, she reaffirmed the FN’s anti-immigration, protectionist and anti-EU stance. “The divide is not between the left and right anymore, but between patriots and globalists,” she said. “Financial globalization and Islamist globalization are supporting each other. Those two ideologies want to bring France to its knees.”
Le Pen wants to pull out of the Euro and a return to French franc, a referendum on EU membership within 6 months, and taxes on imports and the employment of foreigners in France. Building on Gaullist legacies, she is a critic of and wants to pull France out of the NATO. She would like to revise French relations with the U.S. and has denounced French bandwagoning toward Washington. Her France would be more independent in the international arena. She would rely on neo-gaullist geopolitics in the new multipolar world.
In the coming weeks, Macron will portray her as a threat to France, and chaos to the European Union, with support by center-right and conservative media in France and US-based international business media. Indirectly, this portrayal will be fostered by Hamon and Melenchon who will paint her in far darker colors since socialists and far-left share blue-collar worker constituencies with the Front National.
Fillon’s fall, socialists’ margins
Born into privilege, François Fillon (63) became nationally known as President Sarkozy’s Prime Minister. He represents conservative Republicans (Sarkozy’s former Union for a Popular Movement, UPM). Years ago – a long time before Macron’s failed attempts – Fillon undertook controversial reforms of the labor code and the retirement system.
Unlike the “Europhile” Macron, Fillon is the ultimate “Anglophile,” a French Thatcherite who would like to balance the budget and abolish the wealth tax. He would raise retirement age to 65 and reduce the public sector by cutting half a million civil-service jobs. He is the man the socialists love to hate and that is too sincere for Macron’s financiers. They need somebody who shares Fillon’s economic policy tenets but could implement them without public opposition and street fights.
In foreign affairs, Fillon is tough about immigration, Islamic radicalism and terrorism. But like Thatcher, he is also a great believer in realpolitik and has called for dialogue with al-Assad’s Syria and Putin. While Fillon stands for the West, he sees the expansion of NATO to Russia’s borders in the 1990s as a provocation that was bound to alienate Moscow and foster redundant friction. These stances have made him unpopular in neoconservative Washington.
Last fall, Fillon still appealed to the conservative “silent majority” but that was before a widening investigation following charges that he had paid his wife and children almost 1 million euros from the public payroll for no work. While he attributed blame to a “political assassination,” magistrates recently him under formal investigation for embezzling state funds. As a result, his polls are fizzling.
Until recently, the third viable candidate was Benoît Hamon (49), a French socialist (PS) who defeated the centrist and business-friendly Manuel Valls in the party primaries. While Harmon is portrayed as a new figure, a sort of “Youtube Guevara,” he is actually a veteran party bureaucrat and has served in the European Parliament (2004-9), and as Hollande’s Junior Minister for the Social Economy (2012-4) and Minister of National Education (2014). He supports a basic income to all French citizens, a 35-hour workweek, legalization of cannabis and euthanasia, and huge investments in renewable energy.
Hamon is critical of neoliberal economic policies and the NATO. He represents the left wing of the PS and is an admirer of US Democrat Bernie Sanders. That’s not enough for the French old left, which sees him as too malleable. The far-left Jean-Luc Mélenchon, who heads the new “Unsubmissive France,” would like France to leave both the euro and NATO. As Hamon’s ratings have slightly eroded, those of Mélenchon have slightly increased.
Together, the two could battle either Macron or Le Pen, or both. But that would require a unified left and viable appeal in center-right.
Economic erosion
The nerve-racking French election is the direct result of half a decade of policy failures, which climaxed last summer in a failed effort to reform the French labor code. It was not the first time. Years ago, huge strikes forced President Chirac to back down from proposed changes in the pension system. Similar strikes led to fierce union opposition when President Sarkozy raised the retirement age. But under Hollande, a socialist government was pitted against unions and the far-left, which fostered apprehension, disappointment and fragmentation in the left.
When Hollande replaced the conservative Sarkozy as the French president in May 2012, his popularity hovered at around 58 percent. By late 2016, Hollande’s ratings had plunged to less than 5 percent. While France cannot avoid the overhaul of its labor legislation in the future, a socialist president cannot drive a neoliberal labor agenda. That’s the lesson of Hollande’s fall.
After half a decade of near-stagnation, French economy has been benefiting from a cyclical rebound, thanks to a more accommodative external environment, especially lower oil prices, a depreciated euro, record low interest rates and the European Central Bank’s quantitative easing. However, these shifts cannot compensate for France’s longstanding internal rigidities, which overshadow the economy’s medium-term potential
n the 1980s and 90s, French growth still exceeded 2.2 percent; in the 2000s, it hovered around 1.8 percent; now it is around 1.1 percent and likely to decelerate to less than 1 percent by early 2020s. In the past decade, French competitiveness, as reflected by the country’s share in world export markets, has declined significantly as well. What’s worse, French real wage growth has been solid, despite declining productivity growth. The equation is unsustainable. The implication is that French economy is penalizing future generations for its current distortions.
If the external environment grows still more adverse, while reform progress is hardly evident, French banks, given their size and interconnectedness, could generate adverse effects not just domestically but through spillovers, especially in Italy and emerging Europe.
France remains the world’s sixth largest economy. If it begins to shake, Italy cannot avoid a quake and ailing Eastern European economies could take multiple hits. That, in turn, would have adverse implications across the Eurozone and globally.
About the Author
Dr. Dan Steinbock is an internationally recognized expert of the nascent multipolar world. In 2010, he predicted that Brussels opted for misguided policies to overcome the European sovereign debt crisis, which would prolong rather than resolve the challenges. In spring 2016, he forecast the UK Brexit and the outcome of the Italian referendum.
Dr Steinbock is the founder of DifferenceGroup. He has served as Research Director of International Business at India China and America Institute (USA) and Visiting
Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see www.differencegroup.net
The original commentary was published by The World Financial Review on March 21, 2017
Back in early February 2017, we posted an article to all our members about how our analysis showed a very strong potential for larger price swings with the potential for a massive explosion in the VIX indicator based on a price cycle pattern we had been studying. Many of you may remember this article, if not Click Here to review the original.
As of right now, only 10 days into our proposed “VIX Spike Window” (from March 12th to April 15th), we thought it would be a good idea to review some of our analysis before we enter the heart of the VIX expansion window (March 25th to April 8th).
Vix Spike Calendar
As you may recall, we expect a, roughly, five month cycle of expanding VIX volatility to continue within the time-frames mentioned above. The peak of this volatility will likely happen between March 25th and April 8th – what we are calling the “heart of the window”. This will likely be a very tumultuous and volatile period where massive rotations in price could occur. Additionally, new or reversal trends would also be key components of this type of expanded volatility. This means active traders have an opportunity to generate some fantastic returns from these moves.
Based on my original analysis from early February, lets summarize how things are expected to play out over the next few weeks for a few key symbols.
As you review our earlier analysis, pay attention to the details we laid out for each symbol. We expected “key top” levels to be reached at the time of the original article followed by price rotation/retracements, followed by more price trending. Pay special attention to the details we discussed for each of these symbols in the first article.
DIA pulled back near 6% (Min Volatility target reached) from recent highs and we are expecting more volatility before any future moves
QQQ pulled back 2.6% and we are expecting a deeper pullback as the volatility explodes in the near future.
XOI has fallen an additional 4.33% and we are expecting this move to continue to near $1075 (an additional -$81.50) before attempting to find a bottom.
GOLD retraced just over 5% from near $1265 and is currently in a solid uptrend. Our current projection is for a move above $1310, followed by a pullback below $1280 (where we want to try to buy), followed by further upside moves to above $1350.
SILVER has retraced nearly 9% (Min Volatility Target Reached) from recent highs and is setting up potential move back above $18.00 or higher.
DIA Chart
Gold Chart
Silver Chart
At this point, we should be very cautious to consider only highly probable trading signals because the expected volatility in the global markets should become more violent and unpredictable. This makes for great short term Momentum Reversal trades though.
Our recent Momentum Reversal Trades have shown fantastic results like UGAZ 74% and NUGT 112%. The possibility of seeing exploding volatility over the next few weeks in combination with massive potential rotation in prices will allow us to find some incredible opportunities for followers of our work and trades.
Remember, the Heart of the volatility window should be from March 25, 2017 to April 8, 2017. You can take advantage of this by follow us at: www.ActiveTradingPartners.com
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