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The Big Guys are talking

Written by A Forex View From Afar on Wednesday, May 28, 2008

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The financial markets have a unique characteristic, when the Big Guys say something about prices, the markets react in the short-term; when they predict an event (e.g. Inflation) they usually fail. Sometimes, with between 200-300 predictions, they get one right, and the whole word finds out about it, glorifying them.

Well, the Big Guys have spoken; let us do a little analysis.
Morgan Stanley said Oil prices could easily reach $150 per barrel, and soon Oil recovered every single penny that was lost in previous trade. From my weak memory, didn’t someone say last week Oil will reach the $200 barrier, to start the upward move? Quite interesting that Morgan Stanley said this when the Oil Market had plunged. Are they long on Oil?

Michael Feroli an economist at J.P. Morgan Chase predicted Inflation will reach 5.1% in August. I really don’t doubt inflation will rise in the short to medium term, but I don’t expect to see it in the CPI read, by no means. Probably they are shorting the Bonds and Treasuries right now

UBS had told former private-banking employees not to travel to US, due to charges of evading taxes. Furthermore, UBS had hired lawyers for more then 50 current and former employees. I don’t know what this Bank does except of write-down after the sub-prime fiasco. I can’t tell what positions they have, but I bet the US Attorney is short on UBS.

Bloomberg: Oil Rises After Morgan Stanley Says Brent Oil May Reach $150
FT: UBS tells unit staff to avoid US visits
WSJ: J.P. Morgan: Inflation to Hit 5%

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Fundies and Trading
There is a constant question from some traders as to why anybody would ever need to consider the ‘F’ word when trading. Fundamentals: what is so damaging at looking at both Technical charts and having a Fundamental filter to gauge how many Lots to put on? Why is it that accepting that Technicals give us price points to trade, but Fundamentals determine the direction that we travel is so difficult for some traders to accept? Without a Fundamental Filter very few pure Technical traders would have seen this Dollar move coming today.

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