The Curious Case Of Correlations

Did Facebook led to Greece default ? ... Interesting take on correlations.

Gold Correction

Gold, on charts is making a symmetrical triangle pattern. The pattern suggest a big price movement in near future or a break out on either side. Gold has an equal probability of moving on the higher side as well as the lower prices Case for higher prices - The bull market in gold is still intact. Gold is still trading on the higher side of all its long term movie averages. All the dips in Gold were bought into , which does reminds us bull phase of gold markets. Crisis in Europe deepens and flight to quality ensures higher prices for gold. QE 3 arrives pushing USD to lower values, fueling gold rally. Case for lower Prices. Europe Crisis resolved would push gold prices down. Low growth and low inflation makes gold unattractive as inflation hedge

The Great Euro Escape Plan

Markets were very volatile last week, featuring European Central bankers, the EU summit, potential credit rating downgrades, falling demand for eurozone government bonds and downward revisions of economic growth, all related to the on‐going sovereign debt crisis. After the downgrades of Belgium, Hungary and Portugal two weeks ago Standard and Poor did not beat around the bush. They placed 15 out of 17 of the eurozone bloc on watch for possible downgrade. On Friday, Moody's downgraded the three biggest French banks SocGen, Credit Agricole, and BNP Paribas by one notch. On global growth the IMF warned that it could lower estimates in January, just as the OECD did two weeks ago, lowering 2012 to 3.4% from earlier estimates of 4.6%, then 3.8%. The ECB, in cutting its interest rate to 1%, also cut its eurozone GDP growth for 2012 to 0.3% from 1.3% in September. The attempts to solve the eurozone problems and save the common currency continue to struggle. Last week's summit ended up with 23 out of the 27 EU members agreeing to treaty changes, with three more ‐ Hungary, Sweden and the Czech Republic ‐ expected to join once their parliaments approve. Britain was left as the odd one out, but David Cameron had no choice after he was unable to persuade his EU colleagues to drop the Financial Transaction Tax that they believe is essential. Presumably we will now see financial firms moving to the UK, or Switzerland now that the tax is destined to be implemented just about everywhere else in Europe. The European Stability Mechanism ceiling will be 500 billion euros, but because of German opposition, the facility will not receive banking licence, and therefore will not be able to borrow from the ECB to lend to troubled EU states. However, the EU did manage to find an additional 200 billion euros from individual central banks to lend to the IMF for onward lending. Serious efforts are being made but the progress is slow and the markets do not seem to be convinced yet

S&P Downgrades

Ratings of Euro zone countries and their possible downgrades

Inter Market correlations

US Dollar

US has fallen back to its previous range. USD was stuck in the range of 73.50 to 76.50 for 6 longs months. and then it broke the range to enter the another higher range of 77.50 to 81. thought i feel that USD should remain in the upper range of 77.5 - 81 as it US economy is slowly showing some signs of prospect and right now its much better placed than europe. USD might only remain in the lower range or breach the lower range if QE 3 is around. right now there is a lesser probability or possibility of QE3 in next 3 months

Capitalism