Dresden-exhibition 2013

The following text is a summary of the presentation I held at the "Börsentag" in Dresden (a-one-day-exhibition in the capital of Saxony/Germany). The presentation from Friczewsky Financial Markets was held for the broker "ActivTrades PLC, London". I may on top directly inform you about the risk disclaimer. You should be aware, that all the information provided is for educational purposes only. Therefore ActivTrades and the presenter are not financial advisors and do not recommend any securities of any kind. Any securities that are mentioned are cited only for illustrative and educational purposes. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

2012 - a short review

In 2012 we had the US-presidential elections. Barack Obama now is in duty again to find a sustainable solution for the mounting US-debt. 2012 also brought a new chinese leadership, elections in Japan with the new Premier Shinzo Abe now trying to weaken the japanese Yen as much as possible and we had the french presidential elections, where Francois Hollande took over from Sarkozy. Besides that we had a lot of regional crises like Syria for example and wars going on. On top of that we had hurricane "Sandy". Looking back 2012 gave us the impression, that the european currency "EURO" is almost dead or close to death. Every newspaper we have seen, have opened or have read, told us the worst to come. The media wrote and spoke about a "Euro crisis" most of the time, but in fact it should have been named "European sovereign debt crisis"
or better "Eurozone crisis" just to be correct. In fact we all should be aware of the global debt-crisis. If you compare the fiscal deficit (% of
GDP) of the Euro Area with the United States or Japan you may have another opinion how stories are told in global media. Looking at the government debt (% of GDP) of Japan, the U.S. and the Euro Area look like kids from the kindergarden. Japan is skyrocketing into 250 percent!
Everywhere we were informed about the mounting debt in the southern european states, about their high unemployment and the lack of ability to save or to take themselves out of the economical draw-down. EFSF, ESM and further financial turmoil told us how difficult it is to manage a crisis like this and to convince the leaders of the Eurozone-member-states. Often observers had the impression and feeling that for example 15 states lead to 55 different opinions talking about how to solve the crisis. In September we had the german constitutional court with an important ruling on the topic "ESM" - the financial markets once more looked at Germany that time. Finally 2012 - a year full of crises and the european currency over the cliff? Stunning for all the bears out there 2012 bulls had a run. Performance across the board with a DAX30 soaring almost 30 percent, a NIKKEI225 with nearly 16 percent, a EURO STOXX50 with 14 percent, a DOW JONES with small 7 percent and who ever dreamed about it an EUR/USD-rate performing around
2.4 percent into the green. Obviously a choice between the Euro or the Greenback in 2012 was like a choice between a rock and a hard place.

2013 - currency-markets in a change

In the following paragraphs you may get an overview and outlook on the most important currency-pairs, precious metals, bonds and stock-markets-indices. As an introduction into the global foreign exchange markets and further markets and an outlook for 2013, investors and traders should know more about the possible facts, numbers, statistics in connection with global growth and more. All the predictions are not worth a penny without a solution for the U.S.-"fiscal cliff".

The prediction of the World Bank from Washington/USA for global growth (estimated) in 2013 is at 2.4 percent. Most relevant regions like the Eurozone are seen contracting 0.1 percent. For Japan the Worldbank sees economic growth at 0.8 percent. The U.S. will grow at 1.9 percent. The source here: The World Bank 2013, Global Economic Prospects, Volume 6, January 2013, Washington, DC.

Morgan Stanley, London/UK-branch gave a global-growth-projection with an estimated 3.1 percent. The Eurozone is seen contracting 0.5 percent, Japan will grow with 0.4 percent, the U.S. with 1.4 percent and the U.K. with 0.8 percent. The source here: Morgan Stanley Research, November 19, 2012.

The estimated global-growth-rate forecasted with the help of Conference Board New York/USA is at 3.0 percent. Conference Board sees the Eurozone growing with 0.2 percent, Japan will grow with 1.6 percent and the U.S. will grow with a rate of 1.8 percent. The source here: Conference Board New York, USA, November 2012.

The United Nations (UN) gave another prognosis for 2013 global-growth.
The estimated growth-rate is at 2.4 percent. The Eurozone could grow at 0.3 percent, Japan with 1.6 percent and the U.S. with a rate of 1.7 percent. The source here: World Economic Situation and Prospects 2013 - Global outlook, United Nations, New York, 2013.

Deutsche Bank should not be missing here. The outlook of Deutsche Bank Research, Frankfurt/Germany for 2013 tells us about an annual estimated global-growth-rate of 3.8 percent (very optimistic one). The Eurozone will grow with 1.0 percent, Japan with 0.5 percent, the U.S. with 3.1 percent and the U.K. with 1.8 percent. The source here: Deutsche Bank Research, November 2012.

Central banks and the poker game

Looking at a process of printing money, central banks are playing a big poker game. Who is about to catch the jack on the river? Who is about to flop? However the whole game of quantitive easing-processes worldwide with a competition of lowering the rates down almost to zero gives us some questions. Questions we will have to respond rather sooner than later. For example: How will the Federal Reserve (FED) be able to unwind its balance one day? Other central banks like the Bank of England (BoE) don´t name it QE, but APP (asset purchase programme). The Bank of Japan
(BoJ) is flooding the market with another 10-trillion-Yen-stimulus and for example the ECB has its OMT-programme (outright monetary transactions). The ECB can buy spanish or italian bonds for instance on the secondary market. They all do it in favor to get out of the vicious circle with the low-growth-trap, which usually leads to high unemployment caused by a deleveraging-process by firms and households and leads to consequences like a fragility of the financial sector and an ongoing fiscal austerity and souvereign debt risk.

2013 - ongoing search for yield

There will be no major change in the big picture. Investors, traders, funds - however you may name them. They all are on a desperate search for yield. As long as bonds from core-markets like the U.S., U.K., Germany or other safer places for international and institutional capital are performing like 2012, we may see further gains in stocks and several commodities. Low interest rates usually avoids putting money on your account. You don´t earn the right interest, you don´t even beat inflation. So investing in german Bunds, U.S.-T-Bills, U.K.-Gilts is like burning money, because you earn a negative interest. Right now and experts say even until 2014/2015 rates may stay low just because of lower economic growth. The outlook for some important regions like the Eurozone remain weak.

2013 - preservation of capital goes first

Before taking the second step in working on a certain yield investors and traders should think about how to protect and preserve their capital in a first step. So first of all: beat inflation! After that you may think about more yield to come on your capital-flows. Sometimes it is simply a tragedy in realizing what will happen to your capital just with the phenomenon called inflation. Today you are a lucky man waving with a note of 500 Euros. In 30 years you may wave with 371 Euros (only 1 percent of Inflation), 206 Euros (2 percent of inflation) or only 116 Euros (5 percent of inflation). Here you go now! First rule: Preserve your whole capital!

2013 - where should we heading to?

So where should we put the money in? How can we really beat inflation?
Where are the markets to invest in? Bonds? Fixed deposits?
Day-to-day-money? Material values? Real estate? All of that kind of selection is not very flexible (day-to-day-money only). Bonds from more secure core-markets like the U.S. with T-Bills, T-Notes or T-Bonds will give you a small return only. Same game in british "Gilts" or german "Bunds" or "Schatz". The real interest yield will make you cry. German "Bunds" for example still have a negative real interest of -0,5 to -0,7 right now (example for a 10-year-runner). Conclusion: Investing in bonds like these, you simply burn cash! You almost pay a premium just to have the feeling of parking your money safely. A joke! Other options? Well, you could buy Gold and other precious metals on dips - same with a lot of soft commodities like rice, corn or wheat (sugar and rice could be a
pick) or industrial metals (we skip Oil like WTI/Brent here). You may on top buy real estate or smaller real estate like apartments. One more spot to diversify your investments is the asset class of foreign currencies. So where are the safe havens? ...more to come!

The second part of the presentation will be published the next days!

ATTENTION: Derivates work in both directions of the market!!!

Please be aware that derivatives and other financial instruments work in both directions of the market. Please don´t trade with to high leverage and don´t be too greedy. Better take small winners steadily than taking huge losses once. It is a tough game and task to recover from a huge draw-down and often impossible to recover after you had the big shredding of your account. Patience and diversification, risk-management, money-management are your first duty. Not obaying rules like these may make you lose your panties in a minute or even faster.
Think about it! You are not trading against kids and dummies, you are trading against kings and masters and often enough against systems.
Finally you are trading against yourself - each day and with every order you have placed.

The best wishes, greets to all traders, readers, investors and clients.
Have the perfect and sunny weekend and the perfect start into the next week loaded with fantastic opportunities!

Dirk Friczewsky
Friczewsky Financial Markets



Dirk Friczewsky ist Trader und Analyst bei Friczewsky Financial Markets.
Aktien, Anleihen, Devisen, Indizes und Rohstoffe werden einem Marktscreening mittels der Technischen Analyse unterzogen und daraus nachhaltige Tradingstrategien entwickelt.
Je nach Marktlage sind die Trading-Setups für Daytrading oder für mittelfristige bis langfristige Investitionen geeignet.

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