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So, six months into the year, how are you doing? Yesterday I closed the last of my FTSE short positions and once again await an opportunity to sell this market short. I have also now begun selling the S&P500 short here too and sold some SPX at 1931. The trend is clearly up so I must remain nimble here but I will employ a hedging strategy should be start to trade above 1956.
Today and tomorrow all eyes will turn to the Fed Open Market Committee meeting, rate decision and press conference Wednesday evening GMT.

To summarise their respective comments so far this year, baring a disaster tapering will continue right up to the October meeting which will eliminate tapering entirely by the final $15bn. Janet Yellen ‘s comments are the most dovish of all however even she would seem to have subscribed to this policy. Then depending on whom you listen to interest rates will rise next year, “the second half” of 2015 according to John Williams. Ester L George would like to see “short-term interest rates move higher in response of improving economic conditions shortly after completion of the taper”.

Of course even Fed board members don’t know what they will be thinking in 2015 but assuming that we don’t have a disaster then how will this process impact us? For one I don’t see the S&P making all-time highs anytime close to the first rate rise. I am looking for a pullback before the final October taper and as I’ve said above, I’ve started selling SPX short. I see the Greenback strengthening both in response to the rate rise prospects and the very economic growth underpinning it. Therefore I will be looking for further opportunities to sell AUDUSD and EURUSD and yes NZDUSD too. I will be looking for opportunities to buy USDCAD and USDJPY.

If we re-read this email in December some of it will have happened smoothly and some of it will not. There will have been many moments of doubt and some things will have simply not worked. Needless to say I don’t have a crystal ball and cannot foresee what shape this process will have taken by year end as it is a loose framework. Like the rest of life it is a world view within which I will try to make the best guess I can with the market I am given in each moment.

The former US Secretary of State Donald Rumsfeld was derided world-wide in 2002 for uttering at a press conference””¦.as we know, there are known knowns; there are things that we know that we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns, the ones we don’t know we don’t know”. In spite of the criticism he got for talking gibberish it always made perfect sense to me. However I can admit that the French philosopher Rousseau put it more eloquently; “The ability to foresee that some things cannot be foreseen is a very important quality”.

Guest post by Gary Corney –