BarroMetrics Views: Challenges

Over the weekend, I had planned to write a piece on the challenges facing us as traders – placing the AUDUSD piece on hold. As at Friday, the AUDUSD was close to, but had not, triggered a sell signal.

I awoke to the news that Larry Summers had withdrawn. His withdrawal adds another layer of complexity, especially to S&P traders.

Before his news, we were looking at:

  • A fight on the Hill on the debit ceiling and budget. Main stream media have finally realized that there is a crisis brewing. The Tea Party Republicans are standing firm against raising the debt ceiling unless there is a reduction in deficit spending. The President was apparently just as firm on refusing to negotiate. Unless someone blinked, the US could default. I have no idea what effect that would have on the markets I trade. 
  • The Syrian crisis. This is draining the energy away from other areas. I’d surmise that Larry’s withdrawal was in part due to this as Obama expended political capital on Syria that he needed for Larry. The question is whether it will detract the White House from focusing on the debt ceiling. 
  • “Tapering” – this now is bigger than ever. It appears that the FED is seeking to at least slow down QE. With Summers at the head, we’d see someone strong enough to take the necessary action – much like Volker in the 80s. The question is whether the new FED chief will emulate Burns or Volker. The answer will set the stage for the US for years to come.

The issues will provide for volatile trading. Let’s see what the FED says on Wed, 2:00 PM EST

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