Publications and analysis of economic events during the coming week; FOREX analysis; equity markets; economic news; consensus sentiment index.

1. Vision Capital M Weekly Newsletter
I. New Publications
II. The Week Ahead
I. New Publications
Be Humble. You Could Be Wrong.
Be Humble. You Could Be Wrong. Unfortunately or not, trading in the financial markets, including the FOREX one, involves much more emotions
than many of the players and analysts are inclined to admit...
U.S. Stock Markets At New Highs
During the last week both of the U.S. Main indices, S&P500 and DJIA, made their new and fresh highs. As a Reuters article suggests, the main
reason for this was that “last week’s batch of U.S. data left investors less sure the Federal Reserve would start to scale back its stimulus next
month.” The data in mind most probably includes the NFP, released on Friday...
© Vision Capital M, 2013; Contact Person: Emil Emilov, Research Analyst 1 info@visioncapitalm.com | www.visioncapitalm.com

2. EURUSD: A retracement pullback?
This is a technical analysis (as of GMT 16:30 on Monday) of the recent EURUSD exchange rate movement. Last week the EURUSD exchange
rate finished with a pullback to the $1.3340/50 area, after going close to $1.34 on Thursday. This was in line with our view that...
Mortgage-Backed Securities And Government Guarantees
In a recent poll of the CFA Institute on the topic, the vast majority of the responders answered that explicit or implicit government guarantees on
the mortgage based securities would do more harm than help the house market. The reason for this is that all kind of government guarantees...
II. The Week Ahead
EUR/USD
Although the EUR/USD closing value on Friday last week ($1.3332) was almost the same as where it started on Monday ($1.3339), the week
itself was very volatile and presented many opportunities on both directions of the market. Initially the U.S. dollar gained strength during the first
three days of the week with the EUR/USD rate going to as low as $1,3238 on Wednesday but on Thursday the euro advanced significantly
gaining about 160 pips agains the U.S. dollar.
The Thursday trade is a typical example of what drives the EUR/USD market these days – the expectations about the FED tightening its
monetary policy. Those expectations depend on the economic data that is released. A positive data (on both sides of the Atlantic but
predominantly in the U.S.) increases the probability of a rather sooner than later tightening (September, October?), thus provoking an increase in
the value of the U.S. dollar against the euro. Negative data does the contrary. Hence, when on Thursday the data showed the U.S. jobless claims
were at their lowest level for the last six years, the USD sharply increased against the euro, doing to $1.3204. The next data showed a significant
decline in the Philadelphia FED manufacturing survey (9.3 vs. 15.0 exp. and 19.8 prev.) and the euro increased fast to $1.3350/60, making up all
the losses for the week till far.
Technically speaking, the EUR/USD rate is still in a vulnerable territory. The advance of the euro which started on Thursday, may continue for a
while and a coming test of $1.34 level could not be completely ruled out. The bearish MACD divergences on the daily graph however, suggest
that the euro longs may be close to exhaustion.
The coming week is shy of economic events until Wednesday when the FOMC minutes will be released (GMT 18:00). This is the main risk event
of the week with a potential to direct the EUR/USD exchange rate for the next several weeks because it may give more details about the
© Vision Capital M, 2013; Contact Person: Emil Emilov, Research Analyst 2 info@visioncapitalm.com | www.visioncapitalm.com

3. intentions of the FOMC members regarding the FED policy together with their expectations on the development of the U.S. and world economy. It
will be followed on Thursday and Friday by the Jackson Hole symposium which could reveal further details on the expected policy and timing of
the U.S. officials. The U.S. jobless data on Thursday (GMT 12:30) might also present some volatility.
S&P500
During the last week that prominent indicator of the U.S. stock market took its expected decline. It came exactly to the 38.2 Fibonacci
retracement level (1550/52) of the whole movement from 1560 to 1710. Reaching this level, there could be some bounce back to be expected
but generally the short term technical perspectives in front of the U.S. stocks remain negative. Witnessing a repetition of the May-June situation
in which period the U.S. equity market was in a down trend would not come as a big surprise. The difference this time is that on the weekly graph
there is a slight bearish MACD divergence which on theory would make it harder for the market to recoup in short term.
Table 1. Daily Treasury Yield Curve Rates; source: www.treasury.gov
Besides the negative expected effects of the FED's tapering in
means of reducing the money supply, the equity markets may
hurt from rising interest rates. For the current month there is
an increase in the rates on all U.S. treasuries in the long end of
the yield curve, i.e. from 3Y to 30Y, with the increase in the 3Y
being about 12% and declining to about 2.4% for the 30Y. The
increase in the yields happened during the last week. Given
these rates provide a meaningful estimate of future expected
interest rates, such a rate increase would mean more
expensive money for the companies, thus reducing their ability
to take advantage of a cheap credit and eventually affecting
their bottom line, especially in debt intensive industries.
Until recently the notion was that the money which is leaving the bond market is doing it in a search for a better yield which was then provided by
the equities. Last week the stock market fell despite the higher yield of treasuries. This may signal a change in the sentiment of the bond market
participants and could show expectations that a FED tapering is rather sure than not. The situation deserves further examination and should be
watched closely.
© Vision Capital M, 2013; Contact Person: Emil Emilov, Research Analyst 3 info@visioncapitalm.com | www.visioncapitalm.com
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
08/01/13 0,02 0,04 0,08 0,13 0,35 0,65 1,49 2,15 2,74 3,48 3,77
08/02/13 0,02 0,04 0,07 0,11 0,3 0,59 1,36 2,01 2,63 3,39 3,69
08/05/13 0,03 0,05 0,08 0,12 0,32 0,61 1,39 2,04 2,67 3,42 3,73
08/06/13 0,05 0,04 0,08 0,12 0,32 0,62 1,39 2,04 2,67 3,42 3,73
08/07/13 0,05 0,05 0,08 0,12 0,32 0,61 1,38 2 2,61 3,37 3,68
08/08/13 0,05 0,05 0,07 0,12 0,3 0,61 1,36 1,98 2,58 3,37 3,65
08/09/13 0,05 0,05 0,07 0,11 0,32 0,61 1,36 1,98 2,57 3,36 3,63
08/12/13 0,05 0,06 0,08 0,12 0,32 0,62 1,39 2,01 2,61 3,39 3,67
08/13/13 0,06 0,06 0,08 0,12 0,34 0,68 1,49 2,13 2,71 3,48 3,75
08/14/13 0,06 0,05 0,07 0,12 0,34 0,67 1,48 2,12 2,71 3,48 3,75
08/15/13 0,05 0,05 0,08 0,13 0,36 0,7 1,54 2,18 2,77 3,54 3,81
08/16/13 0,05 0,05 0,08 0,13 0,36 0,73 1,6 2,25 2,84 3,61 3,86

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© Vision Capital M, 2013; Contact Person: Emil Emilov, Research Analyst 4 info@visioncapitalm.com | www.visioncapitalm.com