?I did this interview 18 months ago. And it resonated with Mike TODAY. • “The older I get, I realize my 10+ years in this business has been a roller coaster ride that many other people can, in fact, learn from.” (http://bit.ly/2yG8YNH) •
This made me think about legacy. I did this interview during a very rough season in my life. I never thought to cancel. Work was therapeutic, not a distraction, for me in that storm. The storm focused me on building a business that would support myself and my family. And this interview turned out to be a real pleasure.
On today’s observance of Rev. Martin Luther King, Jr, I like to point out Rev King’s work for economic equality. America focuses so intently on his work for social justice. The protests and non-violent marches he led against racisim to gain equality for Black people in America are hugely important. But we cannot forget that Rev King’s message quickly evolved into one for economic justice. Rev King began calling for fair wages, fair working conditions and better distribution of wealth to all people. This call for economic justice included all poor people, regardless of ethnicity or race.
Money is a very powerful unifier. And his enemies knew it. Not long after this speech, he was assassinated. So when we remember Rev. King, let’s remember him right. He wanted ECONOMIC justice in America beyond his desire for social justice.
At FM Capital Group and Bay Street Capital Holdings, we work with clients who otherwise would not receive investment services. We look for investment opportunities that enable wealth creation in communities that capital flows have largely ignored. We endeavor to make Rev. King’s dream for economic equality a real one.
I had the pleasure of speaking with the guys at Yahoo! Finance this past Friday. It was my first in studio appearance! Even though it was simply a live feed into the NYC HQ studio, it was very cool to visit the Yahoo! campus and record from a legit television studio.
As I mentioned on the show, I do believe the U.S. dollar can fall more from here as risk appetite continues to run through the U.S. equity markets. The $SPX continues to make all-time highs, making any downturn simply a correction at this point. Brexit continues to dominate sterling news despite the Parliament-majority outcome from this month’s general election in the UK. As such, watch the GBP continue to sell-off as the market has new concerns with HOW the UK leaves the EU in 2020. I also opined on how China and the U.S. election cycle could play out in markets and what traders and market participants need to watch for.
I had a good time at Yahoo. I got to take my eldest with me as my social media assistant and my producer treated us to a campus tour and lunch at the amazing Yahoo cafeteria. I look forward to speaking with the guys at The Final Round again in 2020.
Watch my full interview below. Enjoy!
Highlight: "A lot of what we're seeing with the dollar has been first interest rate expectations from the Fed," @FMCapitalGrp CIO @faithmight says. "Now what we're seeing is risk." Also talks about Brexit's impact on the global economy. pic.twitter.com/328vssmqtu
More than ever, since I have been trading the forex markets, elections matter. The GBP has been stuck in ranges versus every major currency for months. Months! It’s been maddening. You can see these large ranges especially in the $GBPUSD, $GBPJPY, and $GBPAUD.
But during the last week of November, the GBP started to break these ranges. The culprit was the early polls in the UK showing that the PM’s political party, the Conservatives, would likely win a majority in Parliament. Months (years!) of British government gridlock, that prevented the UK and EU from coming to an agreement, looked to be over. And the markets began to get euphoric with increasing buying momentum building in the GBP across the board. The GBP exploded higher when exit polls confirmed the early poll results: Tories won an overwhelming majority in Parliament.
With such strong moves to the upside, it seems that the election has set the midterm direction in the GBP. However, this trading week has seen all of the post-election euphoria completely undone.
So now what? Well, the Bank of England (BoE) is slated to announce its last monetary policy decision of 2019 this Thursday morning. The BoE has been surprisingly hawkish all this year as they have allowed the economic data persuade them that the British economy has remained much more robust than they expected after the 2016 Brexit vote. I expect them to remain hawkish with the Brexit uncertainly largely assuaged with this general election. A hawkish BoE will see the GBP gain some support after the week’s corrective selloff. However, if the BoE suddenly changes its tune, the GBP correction lower will turn into rapid selloff.
Looking at the charts, the GBP is clearly waiting on the BoE. Trade what you see!
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I think the Federal Reserve, once again, may have started a trend. When they cut interest rates a few weeks ago, they also signaled that rates would be on hold going forward from here. The market has since priced in a hold on interest rates for the new year 2020. But even more interestingly, central banks around the world have also followed suit with hawkish rhetoric and no-moves on rates.
Today, I was back on the air with Ben Lichtenstein talking currencies on his FUTURES show with the TD Ameritrade Network. We discussed the central banks, what the impending general election in the UK could mean for the GBP and what’s going on with the Canadian and U.S. dollars.
On Monday, October 14, 2019, I joined Dale Pinkert on the Forex Analytix Community Experience to speak about the rally in the GBP at the end of the last trading week. I spoke about how the GBP had much more room to run given how the new turn of events in Brexit has changed the fundamental landscape for the GBP.
Unbelievably, all of my calls made on Monday have already been hit and this trading week hasn’t even ended yet. Better yet is news that hit the wires this morning that the EU has accepted the UK’s deal. Now, it is in the hands of the UK Parliament. Keep eyes on how this plays out. It will most certainly drive market flows in the short term for the GBP.
Check out also my levels and technical analysis during my segment and enjoy the show! Make sure you watch to the end to hear my commentary on the S&P 500 and equity markets.
Well not completely… But we are very excited to announce that I did a mini merger last week. FM Capital Group has merged its investment advisory services with Bay Street Capital Holdings, a Black-owned RIA based in Palo Alto. I am now Senior Investment Advisor at Bay Street Capital Holdings and Executive Director of FM Capital Group. FM Capital Group maintains its services for angel investors and educational services for traders.
I’ve actually been approached twice before about selling my firm. The reason I chose Bay Street is that 1) the firm is owned by a Black man, William Huston (who also went to GT and Vandy like me!) with 2) a mission to serve minority-owned (non-profit) organizations and family offices; 3) I get to maintain FM Capital Group; and 4) I’m going to learn A TON. This is an area of the market I’ve really wanted to break into – serving institutional clients – and the fact that Bay Street seeks out orgs that are run by minorities just really resonates with me.
2020 is already different! I’m excited about this next chapter for me and FM Capital Group!
Check out the positioning in the forex market as we were headed into today’s FOMC meeting. Though Walle Smith points out here the crowding into GBP shorts, look at the USD positioning last week as reported by the CFTC. In light of today’s 25bps rate cut, 2 dissenting FOMC members who wanted to hold on interest rates, and verbal confirmation during the press conference from Federal Reserve Governor Powell that there will be no cycle of interest rate cuts, the positioning in the market is not at all stretched. With all of that just happening, there was still room in the long USD trade. Which is very interesting when you look at the trends against the other major world currencies. The market has significant room before it even is considered crowded with long USD positions.
My take is that the Fed has pretty much given markets the green light with no real reason to sell the USD. And it is likely that the USD continues to move higher still.
The USD has been relentless in its rally this year, particularly against the EUR, GBP, AUD, and NZD. WHY?
In case you missed it, the United States has the highest interest rates in the G7. Remember when, the top spot was held by Australia and New Zealand?
The Federal Reserve has not delivered an interest rate cut in over 10 years.
The United States is in its longest economic expansion on record. While we seem to witness blips of weakness in the data this year, economic releases from durable goods order to consumer confidence to inflation and GDP all point to a still robust American economy.
Nothing but USD dollar strength in response
Yeah, I don’t see any reason to sell the dollar either.
When the Federal Reserve finally delivers on all of the dovish rhetoric it has graced us all with since early 2018, the market will most certainly react by selling USD. The larger the cut, the larger the selloff because the market will be shocked at anything larger than a 50 basis points cut. But USD weakness won’t last without a strong statement from the Fed that signals more cuts to come. I’m not so sure that the fundamentals supports a cycle of rate cuts. Even this anticipated rate cut is debatable. Plus, the Fed has been unsuccessful at talking down the USD for over 2 years now. I doubt tomorrow’s meeting changes the market’s mind very much.
The $GBPUSD has had a great run this year and is now starting to probe the post-Brexit levels in 2016/17. Monday’s dumping of the $GBPUSD hit some major Fibonacci extension levels on the latest leg down. Now markets gear up for tomorrow’s announcement.
