Article / 09 August 2011 at 7:34 GMT

Hope, apparently, remains ahead of the FOMC

Ken Veksler Ken Veksler
Director / Accumen Management
United Kingdom

It was a tough night for your scribe folks - clients calling at all hours, panic and fear well and truly setting in, so if this comment is a little haphazard blame it on the 4hrs of sleep I had.

Well I wrote about it a few days ago and sure enough here we are. Punters still have 2008 on their minds and last night’s price action simply served to confirm. Levels are all over the shop as soundbites, and Obama’s unwillingness to come to terms with the downgrade, continue to rule the airwaves. Below are a couple of quotes from Trichet and Obama;

ECB’s Trichet: “We have observed that our decisions on interest rates were not transmitted correctly to the euro area. Therefore we have decided on these non-standard measures to help restore the transmission of monetary policy”. He also commented that the ECB’s bond purchases were “undoubtedly significant”.

President Obama: “No matter what some agency may say, we’ve always been and always will be a AAA country”.

That about says it all really, 3 years of living in denial and fighting it the last to maintain some semblance of “control”. Too late fellas, too late.

The US equity market led the bloodshed last night, giving up over 6% on the move, with other high beta crosses and asset classes following suit. The AUDUSD had perhaps the most tumultuous night of all, trading below parity to come back over 300 points this morning. The EURUSD and Cable relatively unchanged, while Gold prints new highs almost every 5 minutes. The JPY strengthened as did the CHF and of course in accompaniment we heard chatter of coordinated intervention and other such nonsense.

Walking in this morning everyone is betting on QE3 or an allusion to it in tonight’s FOMC delivery, explaining much (if not all) of this dead cat bounce in US equities, with a sharp rally also seen now on the European indices. Don’t hold your breath people, this is just another sign of people looking for anything to hang their hat on and when all else fails, hope apparently remains…

I don’t believe it nor am I playing this market from that angle. Rhetoric tonight will no doubt include the continuation of extraordinary measure for an extended period, but after the last round of QE, some lessons should by now have been learned, at least the ineffectiveness of this policy should be burning bright in the eyes of our man Ben.

The only thing I will highlight for punters is Silver, which up until this mess began was the poor man’s Gold. But as Gold has rallied almost unstoppably, Silver (rightly so) has struggled and in my view is now poised for a correction somewhere in the vicinity of 8/10% to the downside. My suggestion, buy some PUTS!

Follow me on Twitter for more musings throughout the day…


The Saxo Bank Group provides an execution-only service and all information provided on is solely for general information. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. Saxo Bank Group will not be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available as part of the or as a result of the use of the Any information which could be construed as investment research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such should be considered as a marketing communication. Furthermore it is not subject to any prohibition on dealing ahead of the dissemination of investment research. Please read our disclaimers:
- Notification on Non-Independent Investment Research
- Full disclaimer

Show latest activity
Sorry, there was a problem communicating with the servers. We are working hard to solve this. Please try again later.
Oops! There was a problem communicating with the OpenAPI Portfolio service.
Oops! There was a problem communicating with the OpenAPI History service.
Oops! There was a problem communicating with the OpenAPI Reference service.
Oops! There was a problem communicating with the OpenAPI Root service.
Oops! There was a problem communicating with the OpenAPI Trading service.
Sorry, there was a problem communicating with the Financial Calender servers. We are working hard to solve this. Please try again later.
Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail