Archive for Opinions – Page 3

11 Apr

Target Thursdays: Bitcoin, US400, RUS2000, and EURGBP

By ForexTime 

  • Bitcoin still climbing this CPI week; up over 2%/$1,600 since Sunday
  • US400 and RUS2000 stock indices showed larger-CPI reactions, as predicted
  • FXTM Trading Signals: EURGBP reaches all 4 Targets

 

The monthly US CPI release has come and gone.

The highly-anticipated set of US economic data exceeded market expectations by 0.1 percentage points each:

  • Headline CPI in March 2024 vs. March 2023 (year-on-year): 3.5%
    Higher than the forecasted 3.4%; higher than February’s 3.2% year-on-year figure
  • Headline CPI in March 2024 vs. February 2024 (month-on-month): 0.4%
    Higher than the forecasted 0.3%; higher than February’s 0.4% month-on-month figure
  • Core CPI (excluding food and energy prices) year-on-year: 3.8%
    Higher than the forecasted 3.7%; matching February’s 3.8% year-on-year figure
  • Core CPI month-on-month: 0.4%
    Higher than the forecasted 0.3%; matching February’s 0.4% month-on-month figure

The higher-than-expected CPI numbers pushed back bets that the Fed can cut US interest rates as soon as June 2024.

 

As we’d written about extensively, this CPI numbers certainly jolted various asset classes on Wednesday, April 10th.

Now, we look back at a couple of instruments that performed as per outlined in our recently published Daily Market Analysis articles:

 

 

1) Bitcoin still rising so far this CPI week

What we wrote:

So far in 2024, cryptos have risen every week that the highly-anticipated US inflation data is released!

(Trade of the Week: Cryptos to rise again this CPI week?; published Monday, April 8th)

 

What’s happened since?

At the time of writing, Bitcoin has risen by over 2% (or about $1600) so far this week since Sunday’s closing price of $69,315.13.

Even though other risk assets (such as stocks) fell after the hotter-than-expected US CPI, Bitcoin managed to rebound after its own initial post-CPI selloff.

If Bitcoin can continue shrugging off the US CPI’s impact and adhere to this trend of posting a weekly advance for each week so far in 2024 that has featured a US CPI announcement, that could translate into further gains for Bitcoin bulls for the rest of this week.

Still, the astute trader would note the stubborn resistance region around $71,400 which has capped Bitcoin’s upside since week of March 25th.

The world’s oldest crypto has to vanquish the $71,400 resistance in order to have another shot at posting a new record high.

 

 

 

2) US400 and RUS2000 indices saw massive post-CPI moves

What we wrote:

“On CPI days, the US400 typically sees a 39% larger-than-average move, which translates into 13 index points higher than average (average: 34 index points).”
“On CPI days, the RUS2000 typically sees a 27.8% larger-than-average move, which translates into 7 index points higher than average (average: 25 index points).”
” … stock markets may be pulled back lower if US inflation is proving stubborn, …”

(“Smaller” US stock indexes, bigger CPI reactions?; published Tuesday, April 9th)

 

What’s happened since?

  • US400

This mid-sized US stock index posted a 93.8 index point difference between its highest and lowest traded prices in the 1 hour immediately following the US CPI release.

Those 93.8 index points are almost 3x the average daily intraday difference (highest price – lowest price) of 34 index points over the past 12 months.

 

  • RUS2000

This “small” US stock index posted a 86 index point difference between its highest and lowest traded prices in the 1 hour immediately following the US CPI release.

Those 86 index points are MORE THAN TRIPLE the average daily intraday difference (highest price – lowest price) of 25 index points over the past 12 months.

 

Given that massive post-CPI move downwards for US stock indices, as was expected in light of the hotter-than-expected US inflation data …

This would’ve been a major payoff for those who had “short” positions (bet that prices would go down) on either the US400 or RUS2000 stock indices!

 

 

 

3) FXTM Trading Signals: EURGBP bags over 100 points

Every week day, we publish the FXTM Trading Signals twice daily:

  • EU session: 6:00AM GMT
  • US session: 12:30PM GMT

This EURGBP signal, published just today (Thursday EU session), has already reached all 4 Targets!

NOTE: FXTM Trading Signals are available for clients under the MyFXTM portal (published within the Trading Services section)

 

FXTM Signal: EURGBP M15 – how it started …

 

FXTM Signal: EURGBP M15 – how it ended …

 

But wait, there could be more volatility ahead for EURGBP!

The European Central Bank (ECB) is due to announce its policy decision at 12:15PM GMT later today (Thursday, April 11th)

To be clear, markets roundly expect the ECB to leave its benchmark rates unchanged at its record high of 4%.

However, markets will be keen to find out if the ECB is now more certain about CUTTING its benchmark rates by 25-basis points in June 2024.

Such clues may be derived out of ECB President Christine Lagarde’s press conference due at 12:45PM GMT, which is 30 minutes after the ECB’s policy announcement.

 

EURGBP: Potential Post-ECB Scenarios

  • If President Lagarde lends further credence to the thought of a June rate cut by the ECB, that could prompt EURGBP to revisit the 0.8550 level.
  • However, if President Lagarde unexpectedly pushes back against bets for a June rate cut, that should trigger a greater rebound for EURGBP back above the 0.8570 line.

 

 

Feel like you missed out on these profits?

You can keep following our “Daily Market Analysis” for fresh trading ideas and opportunities across global financial markets.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Opinions
11 Apr

Brain scans of Philly jazz musicians reveal secrets to reaching creative flow

By John Kounios, Drexel University and Yvette Kounios, Widener University 

Flow, or being “in the zone,” is a state of amped-up creativity, enhanced productivity and blissful consciousness that, some psychologists believe, is also the secret to happiness. It’s considered the brain’s fast track to success in business, the arts or any other field.

But in order to achieve flow, a person must first develop a strong foundation of expertise in their craft. That’s according to a new neuroimaging study from Drexel University’s Creativity Research Lab, which recruited Philly-area jazz guitarists to better understand the key brain processes that underlie flow. Once expertise is attained, the study found, this knowledge must be unleashed and not overthought in order for flow to be reached.

As a cognitive neuroscientist who is senior author of this study, and a university writing instructor, we are a husband-and-wife team who collaborated on a book about the science of creative insight. We believe that this new neuroscience research reveals practical strategies for enhancing, as well as elucidating, innovative thinking.

Jazz musicians in flow

The concept of flow has fascinated creative people ever since pioneering psychological scientist Mihály Csíkszentmihályi began investigating the phenomenon in the 1970s.

Yet, a half-century of behavioral research has not answered many basic questions about the brain mechanisms associated with the feeling of effortless attention that exemplifies flow.

The Drexel experiment pitted two conflicting theories of flow against each other to see which better reflects what happens in people’s brains when they generate ideas. One theory proposes that flow is a state of intensive hyperfocus on a task. The other theory hypothesizes that flow involves relaxing one’s focus or conscious control.

The team recruited 32 jazz guitarists from the Philadelphia area. Their level of experience ranged from novice to veteran, as quantified by the number of public performances they had given. The researchers placed electrode caps on their heads to record their EEG brain waves while they improvised to chord sequences and rhythms that were provided to them.

Young man plays guitar while wearing helmet covered in electrodes that measure brain activity
Postdoctoral researcher Yongtaek Oh plays guitar while his EEG is recorded in Drexel University’s Creativity Research Lab.
John Kounios/Creativity Research Lab/Drexel University, CC BY-ND

Jazz improvisation is a favorite vehicle for cognitive psychologists and neuroscientists who study creativity because it is a measurable real-world task that allows for divergent thinking – the generation of multiple ideas over time.

The musicians themselves rated the degree of flow that they experienced during each performance, and those recordings were later played for expert judges who rated them for creativity.

Train intensively, then surrender

As jazz great Charlie Parker is said to have advised, “You’ve got to learn your instrument, then, you practice, practice, practice. And then, when you finally get up there on the bandstand, forget all that and just wail.”

This sentiment aligns with the Drexel study findings. The performances that the musicians self-rated as high in flow were also judged by the outside experts as more creative. Furthermore, the most experienced musicians rated themselves as being in flow more than the novices, suggesting that experience is a precondition for flow. Their brain activity revealed why.

The musicians who were experiencing flow while performing showed reduced activity in parts of their frontal lobes known to be involved in executive function or cognitive control. In other words, flow was associated with relaxing conscious control or supervision over other parts of the brain.

And when the most experienced musicians performed while in a state of flow, their brains showed greater activity in areas known to be involved in hearing and vision, which makes sense given that they were improvising while reading the chord progressions and listening to rhythms provided to them.

In contrast, the least experienced musicians showed very little flow-related brain activity.

Flow vs. nonflow creativity

We were surprised to learn that flow-state creativity is very different from nonflow creativity.

Previous neuroimaging studies suggested that ideas are usually produced by the default-mode network, a group of brain areas involved in introspection, daydreaming and imagining the future. The default-mode network spews ideas like an unattended garden hose spouts water, without direction. The aim is provided by the executive-control network, residing primarily in the brain’s frontal lobe, which acts like a gardener who points the hose to direct the water where it is needed.

Slide showing views of brain with different areas lit
Views of left and right sides of the brain showing reduced brain activity when experienced musicians were in a state of high flow. These areas include key nodes of the brain’s default-mode network.
John Kounios/Creativity Research Lab/Drexel University, CC BY-ND

Creative flow is different: no hose, no gardener. The default-mode and executive-control networks are tamped down so that they cannot interfere with the separate brain network that highly experienced people have built up for producing ideas in their field of expertise.

For example, knowledgeable but relatively inexperienced computer programmers may have to reason their way through every line of code. Veteran coders, however, tapping their specialized brain network for computer programming, may just start writing code fluently without overthinking it until they complete – perhaps in one sitting – a first-draft program.

Coaching can be a help or hindrance

The findings that expertise and the ability to surrender cognitive control are key to reaching flow are supported by a 2019 study from the Creativity Research Lab. For that study, jazz musicians were asked to play “more creatively.” Given that direction, the nonexpert musicians were indeed able to improvise more creatively. That is apparently because their improvisation was largely under conscious control and could therefore be adjusted to meet the demand. For example, during debriefing, one of the novice performers said, “I wouldn’t use these techniques instinctively, so I had to actively choose to play more creatively.”

On the other hand, the expert musicians, whose creative process was baked in through decades of experience, were not able to perform more creatively after being asked to do so. As one of the experts put it, “I felt boxed-in, and trying to think more creatively was a hindrance.”

The takeaway for musicians, writers, designers, inventors and other creatives who want to tap into flow is that training should involve intensive practice followed by learning to step back and let one’s skill take over. Future research may develop possible methods for releasing control once sufficient expertise has been achieved.The Conversation

About the Author:

John Kounios, Professor of Psychological and Brain Sciences, Drexel University and Yvette Kounios, Adjunct Instructor of English and Professional Writing, Widener University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions
10 Apr

Boeing: what the next CEO needs to do to ensure quality and turn things around

By Bart MacCarthy, University of Nottingham 

The woes of Boeing show no sign of abating. CEO Dave Calhoun has announced he will step down at the end of the year. Board chair, Larry Kellner and the firm’s head of commercial planes, Stan Deal, are also quitting the aviation giant.

This follows an array of technical failures with Boeing aircraft, including the mid-air blowout of a door plug on an Alaska Airlines Boeing 737 Max 9 in January. It was recently confirmed that the manufacturer has paid US$160 million (£127 million) to the airline in compensation.

The diversity of issues indicates systemic failures in the management of quality in Boeing and its supply base. The Alaska Airlines incident represented a quality tipping point – the point at which fundamental changes in Boeing’s management of quality became imperative and unavoidable.

There were no serious injuries in the Alaska Airlines blowout incident – unlike the two crashes of Boeing’s 737 Max in 2018 and 2019, which killed a total of 346 people. But the aircraft was forced to make an emergency landing.

Among previous failures in design, manufacture and assembly were problems with an automated stabilising system on a new Southwest Airlines Boeing 737 Max in February 2023; a mid-air engine failure on a United 737 Max in November 2023; and Boeing having to ask all operators of the 737-Max a few weeks later to examine installation of a rudder following a loose bolt being reported on one aircraft.

In recent days a Southwest Airlines Boeing 737-800 needed to do an emergency landing shortly after takeoff from Denver because an engine cover came off. The blame here appears to lie with either the engine manufacturers or the airline rather than Boeing.

But the January failure has had severe, if not existential, consequences for Boeing. It has affected the company’s share price, harmed its competitive position with Airbus, and put the firm under intense scrutiny by media, regulators and airlines. Passengers are publicly wondering whether they should avoid flying on a 737 (or indeed any Boeing aircraft), while major airlines including Ryanair and United Airlines are facing uncertainty from delayed aircraft orders that were supposed to be due in time for summer.

The problem for Ryanair

The civil aircraft market in Europe is effectively a duopoly between Airbus and Boeing. For airlines, the costs of switching to another manufacturer are high and lead times from order to delivery are long. As such, there is mutual lock-in in the relationship between Boeing and Ryanair, one of the manufacturer’s largest customers.

Ryanair uses the 737 class across its extensive European fleet. This strategy brings many benefits in the lean business model Ryanair favours: operational flexibility, reduced maintenance costs and faster airport turnarounds. It gives Ryanair substantial leverage with Boeing, though as in many buyer-supplier relationships, there is strong interdependence.

Ryanair’s very vocal CEO, Michael O’Leary, has been outspoken in reporting increased quality issues in the airline’s inspections of Boeing aircraft delivered since the pandemic, including finding spanners under floor panels and missing seat handles. He has still expressed confidence in Boeing, but says it has to get quality right in future.

Reliable aircraft supply from Boeing is critical for Ryanair to take advantage of a resurgent post-pandemic passenger market. Delays to the 737 Max were already hampering Ryanair’s growth, to the extent that the airline offered back in January to take aircraft cancelled by other airlines. O’Leary warned in February that passengers could see a 10% hike in fares in 2024 due to gaps in the Ryanair fleet. Meanwhile, Chicago-based United Airlines has also reportedly asked pilots to take unpaid leave because of delayed aircraft deliveries from Boeing.

So why might ensuring quality be so challenging for an industrial giant such as Boeing?

Ensuring quality

A commercial aircraft is massively complex, with almost infinite potential for variations in component parts. Boeing has the resources and capabilities to tackle these issues. But the reported issue with the January blowout of missing bolts points to a basic quality failure that should never have occurred in a quality-focused organisation.

Many techniques can be deployed to improve quality in manufacturing and assembly operations. For instance, a well proven and commonly used approach is known as “six sigma”. This statistics-based methodology provides a set of steps to identify, investigate and resolve sources of variation to ensure a product or process conforms to specification. It strives for almost zero defects and can be applied with contemporary data science methods to identify root causes, target improvements, and ensure such an issue never recurs.

But viewing quality as just a set of technical, statistical problems misses the major challenges confronting Boeing. As statistician and pioneering business theorist W Edwards Deming argued, quality management has behavioural, organisational and cultural dimensions. Deming laid the responsibility for quality squarely in the hands of top management.

Reported issues in Boeing’s assembly operations include failure to follow procedures, workarounds and inexperienced staff recruited post-pandemic. Flaws in fuselages delivered from a major supplier were tolerated, to be corrected later, in order to maintain a production schedule. This all speaks to deep-seated organisational and cultural issues at Boeing.

Targeted improvement initiatives will help, but are not a panacea. Instilling a culture of quality excellence will need root-and-branch rethinking across the organisation and its massively complex supply base.

Crucially, Boeing needs to ensure that quality procedures are followed every time. In line with one of Deming’s key principles, this will require transformational quality leadership across the organisation, starting from the very top.

Organisations, whether product or service-based, ignore persistent quality issues at their peril. As Boeing demonstrates, if not addressed, they can have severe impacts at every level of an organisation.

A Boeing spokesperson said:

We are squarely focused on implementing changes to strengthen quality across our production system and taking the necessary time to deliver high quality airplanes that meet all regulatory requirements. We continue to stay in close contact with our customers about these issues and our actions to address them.The Conversation

 

About the Author:

Bart MacCarthy, Professor of Operations Management, University of Nottingham

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Stock Market News
08 Apr

Trade of the Week: Cryptos to rise again this CPI week?

By ForexTime

  • Bitcoin back to within 2% of record high!
  • All 11 FXTM Crypto CFDs climbing in tandem with Bitcoin
  • Cryptos often rise the same week that US inflation data is released
  • Cryptos’ weekly advance is tampered with 2 days of declines
  • Solana offered “strongest hedge” against Gold on CPI days so far this year

 

Cryptos are skyrocketing today (Monday, April 8th)!

At the time of writing, Bitcoin is surging over 4% and sliced well beyond the $70k psychological level.

The “OG” crypto is now trading at its highest levels since mid-March when it posted a record high of $73,850.

Perhaps more importantly for bulls (those hoping that prices will go higher), Bitcoin appears to have conquered the stubborn $71,400 resistance region which had capped prices in late March.

 

Bitcoin’s advance has lifted up many other cryptocurrencies along with it.

Within the 11 different crypto CFDs offered by FXTM:

  • At the time of writing, Ethereum is the best-performer so far today, surging over 6%
  • Besides Bitcoin, there are also one-day gains of more than 4% so far for Litecoin, Chainlink, Cardano, Dogecoin, and Bitcoin Cash respectively
  • Solana, Ripple, Avalanch, and Polygon are each rising over 2%

 

Potential breakout for Ripple and Litecoin?

Today’s surge is also translating into a couple of cryptos testing key resistance levels:

  • Ripple is now testing its 50-day simple moving average (SMA)

 

 

  • Litecoin is threatening to break above its upper downward trendline, which has supressed its prices since that April 1st intraday high.

 

The above-listed price movements come at the onset of a massive week for global financial markets.

The latest US inflation data is due this Wednesday, April 10th.

NOTE: CPI = consumer price index, is used to measure inflation

This monthly inflation data release out of the world’s largest economy often causes trillions of dollars to move across global financial markets.

Traders and investors decipher what the latest CPI figures would mean for the Fed’s interest rates outlook – arguably the primary focus of markets worldwide.

 

 

How do cryptos tend to behave on CPI weeks?

 

1) Cryptos have risen every week that the highly-anticipated US inflation data is released so far in 2024!

Here’s how cryptos have generally fared, as measured by the Bloomberg Galaxy Crypto Index, the same week as the US CPI announcement:

 

  • Week ending March 15th = +0.9%
    (US CPI released on March 12th, 2024)

 

  • Week ending February 16th = +9%
    (US CPI released on February 13th, 2024)

 

  • Week ending January 12th = +5.6%
    (US CPI released on January 11th, 2024)

 

NOTE: The Bloomberg Galaxy Crypto Index measures the performance of some of the largest cryptocurrencies traded in USD, 8 of which are offered by FXTM as Crypto CFDs namely Bitcoin, Ethereum, Cardano, Solana, Avalanche, Polygon, Litecoin, and Chainlink.
These 8 cryptos account for 92.4% of the Bloomberg Galaxy Crypto Index.

 

If the upward momentum currently evident across the crypto complex can persist …

that would only extend this trend of cryptos posting weekly advances when US inflation data is released.

 

 

 

2) Weekly advance, but with 2 days of declines

To be clear, it’s not a straight path upwards for cryptos towards a weekly advance. 

Each of those CPI weeks so far this year has seen 2 different days of declines for the Bloomberg Galaxy Crypto Index.

Such volatility ensures that crypto CFDs traders still have opportunities this week to potentially benefit from both rising and falling prices.

 

 

3) Solana has so far acted as “perfect” hedge against Gold

In trading, “hedging” means protecting against potential losses by making offsetting investments.

It’s like buying insurance for your investments to minimize risks from price changes.

And we know that Gold is a popularly-traded product on CPI release days.

The precious metal tends to post a larger-than-usual move on the days that the US consumer price index (CPI) is released.

Bullion has, on average, seen a $25 move between its highest prices and its lowest price on any given trading day so far in 2024.

This chart below shows the larger-than-average moves (white bars that extend above the red line) for gold on the 3 days that has seen CPI announcements so far this year.

 

 

However, the official CPI number can and do surprise markets, and may go against the trader’s position.

In order to potentially offset such losses,

Solana has been shown to offer a strong hedge against gold on CPI days.

 

Note how Solana has fared in comparison to Gold on US CPI release days so far this year:

 

  • US CPI release on March 12th, 2024

    Gold = -1.12%

    Solana = +1.46%

 

  • US CPI release on February 13th, 2024

    Gold = -1.33%

    Solana = +0.67%

 

  • US CPI released on January 11th, 2024

    Gold = +0.22%

    Solana = -2.09%

 

In other words … Solana and Gold have moved in OPPOSITE directions on every single US CPI release days so far in 2024.

Of the 11 crypto CFDs offered by FXTM, this “inverse relationship” (when asset A goes up, asset B goes down, and vice versa) is strongest between Solana and Gold on US CPI announcement days.

This perhaps sets up Solana as a suitable “hedge” against Gold for this upcoming CPI release due Wednesday, April 10th, provided this “inverse relationship” holds strong once more this week.

 

 

Remember, past performance is not a guarantee of future results.

And trading is risky at all times!

Thus, it remains to be seen whether the 3 above-listed behaviours exhibited by Crypto CFDs will prove true once again this week.

Regardless, CPI announcements tend to inject massive bouts of volatility across global financial markets.

And that in turn may result in outsized trading opportunities in Crypto CFDs.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Cryptocurrencies Opinions
06 Apr

Speculators drop Swiss Franc bets for 9th week to most bearish since 2019

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday April 2nd and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Bets led by British Pound & Australian Dollar

The COT currency market speculator bets were lower this week as four out of the eleven currency markets we cover had higher positioning while the other seven markets had lower speculator contracts.

Leading the gains for the currency markets was the British Pound Sterling (8,244 contracts) with the Australian Dollar (2,767 contracts), the Mexican Peso (1,662 contracts) and Bitcoin (1,235 contracts) also seeing positive a week.

The currencies seeing declines in speculator bets on the week were the EuroFX (-14,400 contracts), the Japanese Yen (-14,124 contracts), the Brazilian Real (-11,948 contracts), the New Zealand Dollar (-1,504 contracts), the US Dollar Index (-1,267 contracts), the Canadian Dollar (-933 contracts) and with the Swiss Franc (-402 contracts) also having lower bets on the week.

Speculators drop Swiss Franc bets for 9th week to most bearish since 2019

Highlighting the COT currency’s data this week is the decline in the speculator’s positioning for the Swiss franc. Large speculative Swiss franc (CHF) currency positions fell this week by a modest -402 net contracts but have now dropped for a ninth consecutive week. The speculator bets have also fallen for the tenth time out of the past eleven weeks as well – for a total 11-week decrease of -18,632 contracts.

This rapid decline in sentiment has taken the CHF speculative position to the most bearish level in the past two hundred and fifty-one weeks, dating all the way back to June 11th of 2019 when the net position totaled -24,788 contracts.

Helping to dent the Swiss franc’s appeal was a recent surprise interest rate cut by the the Swiss National Bank (SNB) in late March. This rate reduction took the interest rate down by 25 basis points to 1.5 percent and marked the SNB as the first major central bank to start a rate cutting cycle after global inflation pushed most central banks to raise rates in the past two years. As a major export country, the interest rate decrease and a falling franc is desirable for Switzerland businesses which will help exports become more competitive.

The CHF exchange rate versus the US Dollar has been on the decline after a strong uptrend from the 4th quarter of 2022 to late-2023 that saw the franc reach the highest exchange rate since 2015 at 1.2099 (CHF futures or CHFUSD). Since that high-point in December, the franc has been on the downtrend and closed out this week at the 1.1172 exchange rate to the Dollar and about 8 percent off that December high.

Currencies Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Mexican Peso & British Pound

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Mexican Peso (100 percent) and the British Pound (82 percent) lead the currency markets this week. Bitcoin (69 percent) comes in as the next highest in the weekly strength scores.

On the downside, the Swiss Franc (0 percent), the Japanese Yen (0 percent), the US Dollar Index (1 percent), the Australian Dollar (4 percent) and the Canadian Dollar (16 percent) come in at the lowest strength levels currently and are all in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
US Dollar Index (0.9 percent) vs US Dollar Index previous week (3.5 percent)
EuroFX (27.5 percent) vs EuroFX previous week (33.6 percent)
British Pound Sterling (82.1 percent) vs British Pound Sterling previous week (76.6 percent)
Japanese Yen (0.0 percent) vs Japanese Yen previous week (11.5 percent)
Swiss Franc (0.0 percent) vs Swiss Franc previous week (1.1 percent)
Canadian Dollar (16.1 percent) vs Canadian Dollar previous week (16.9 percent)
Australian Dollar (4.4 percent) vs Australian Dollar previous week (1.9 percent)
New Zealand Dollar (39.0 percent) vs New Zealand Dollar previous week (43.3 percent)
Mexican Peso (100.0 percent) vs Mexican Peso previous week (99.2 percent)
Brazilian Real (30.3 percent) vs Brazilian Real previous week (45.8 percent)
Bitcoin (68.8 percent) vs Bitcoin previous week (50.2 percent)

Bitcoin & Mexican Peso top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Bitcoin (34 percent) and the Mexican Peso (19 percent) lead the past six weeks trends and are the only positive movers for the currencies.

The Canadian Dollar (-42 percent) leads the downside trend scores currently with the New Zealand Dollar (-40 percent), Swiss Franc (-35 percent) and the Brazilian Real (-26 percent) following next with lower trend scores.

Strength Trend Statistics:
US Dollar Index (-7.3 percent) vs US Dollar Index previous week (-5.6 percent)
EuroFX (-21.8 percent) vs EuroFX previous week (-9.2 percent)
British Pound Sterling (-1.9 percent) vs British Pound Sterling previous week (-10.1 percent)
Japanese Yen (-18.2 percent) vs Japanese Yen previous week (-14.3 percent)
Swiss Franc (-34.7 percent) vs Swiss Franc previous week (-44.4 percent)
Canadian Dollar (-42.3 percent) vs Canadian Dollar previous week (-37.6 percent)
Australian Dollar (-18.7 percent) vs Australian Dollar previous week (-23.8 percent)
New Zealand Dollar (-40.2 percent) vs New Zealand Dollar previous week (-26.8 percent)
Mexican Peso (19.1 percent) vs Mexican Peso previous week (16.0 percent)
Brazilian Real (-25.7 percent) vs Brazilian Real previous week (-13.8 percent)
Bitcoin (34.0 percent) vs Bitcoin previous week (12.7 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week resulted in a net position of -1,896 contracts in the data reported through Tuesday. This was a weekly lowering of -1,267 contracts from the previous week which had a total of -629 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.9 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish with a score of 36.8 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:62.122.212.4
– Percent of Open Interest Shorts:67.123.06.7
– Net Position:-1,896-3052,201
– Gross Longs:23,6818,4464,744
– Gross Shorts:25,5778,7512,543
– Long to Short Ratio:0.9 to 11.0 to 11.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.9100.036.8
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-7.35.97.2

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week resulted in a net position of 16,794 contracts in the data reported through Tuesday. This was a weekly reduction of -14,400 contracts from the previous week which had a total of 31,194 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 27.5 percent. The commercials are Bullish with a score of 76.7 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 5.5 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:27.660.410.8
– Percent of Open Interest Shorts:25.165.38.3
– Net Position:16,794-33,43216,638
– Gross Longs:188,258412,48073,567
– Gross Shorts:171,464445,91256,929
– Long to Short Ratio:1.1 to 10.9 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):27.576.75.5
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-21.821.0-7.7

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week resulted in a net position of 43,414 contracts in the data reported through Tuesday. This was a weekly rise of 8,244 contracts from the previous week which had a total of 35,170 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 82.1 percent. The commercials are Bearish with a score of 23.6 percent and the small traders (not shown in chart) are Bullish with a score of 50.1 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:44.941.111.5
– Percent of Open Interest Shorts:25.159.113.3
– Net Position:43,414-39,400-4,014
– Gross Longs:98,35290,14625,106
– Gross Shorts:54,938129,54629,120
– Long to Short Ratio:1.8 to 10.7 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):82.123.650.1
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-1.95.4-13.2

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week resulted in a net position of -143,230 contracts in the data reported through Tuesday. This was a weekly decrease of -14,124 contracts from the previous week which had a total of -129,106 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 94.3 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:17.464.815.9
– Percent of Open Interest Shorts:62.620.714.8
– Net Position:-143,230139,4943,736
– Gross Longs:55,190205,19550,476
– Gross Shorts:198,42065,70146,740
– Long to Short Ratio:0.3 to 13.1 to 11.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.094.3
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-18.211.127.7

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week resulted in a net position of -22,370 contracts in the data reported through Tuesday. This was a weekly decline of -402 contracts from the previous week which had a total of -21,968 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 3.1 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:24.464.511.1
– Percent of Open Interest Shorts:50.020.029.8
– Net Position:-22,37038,683-16,313
– Gross Longs:21,22056,1449,682
– Gross Shorts:43,59017,46125,995
– Long to Short Ratio:0.5 to 13.2 to 10.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.03.1
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-34.740.8-30.7

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week resulted in a net position of -51,223 contracts in the data reported through Tuesday. This was a weekly decrease of -933 contracts from the previous week which had a total of -50,290 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 16.1 percent. The commercials are Bullish-Extreme with a score of 84.3 percent and the small traders (not shown in chart) are Bearish with a score of 20.0 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: New Sell – Short Position.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:22.461.014.1
– Percent of Open Interest Shorts:48.434.414.7
– Net Position:-51,22352,481-1,258
– Gross Longs:44,220120,30727,748
– Gross Shorts:95,44367,82629,006
– Long to Short Ratio:0.5 to 11.8 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):16.184.320.0
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-42.331.9-1.7

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week resulted in a net position of -102,685 contracts in the data reported through Tuesday. This was a weekly increase of 2,767 contracts from the previous week which had a total of -105,452 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 4.4 percent. The commercials are Bullish-Extreme with a score of 97.5 percent and the small traders (not shown in chart) are Bearish with a score of 25.5 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:15.473.39.1
– Percent of Open Interest Shorts:61.022.514.1
– Net Position:-102,685114,086-11,401
– Gross Longs:34,557164,79020,421
– Gross Shorts:137,24250,70431,822
– Long to Short Ratio:0.3 to 13.3 to 10.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):4.497.525.5
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-18.715.5-1.7

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week resulted in a net position of -7,528 contracts in the data reported through Tuesday. This was a weekly reduction of -1,504 contracts from the previous week which had a total of -6,024 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 39.0 percent. The commercials are Bullish with a score of 66.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 13.3 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:32.062.25.5
– Percent of Open Interest Shorts:44.144.910.6
– Net Position:-7,52810,695-3,167
– Gross Longs:19,72538,4213,383
– Gross Shorts:27,25327,7266,550
– Long to Short Ratio:0.7 to 11.4 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):39.066.813.3
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-40.245.2-56.0

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week resulted in a net position of 133,730 contracts in the data reported through Tuesday. This was a weekly rise of 1,662 contracts from the previous week which had a total of 132,068 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bearish with a score of 47.6 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:60.936.12.7
– Percent of Open Interest Shorts:18.480.40.9
– Net Position:133,730-139,4355,705
– Gross Longs:191,685113,5028,643
– Gross Shorts:57,955252,9372,938
– Long to Short Ratio:3.3 to 10.4 to 12.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):100.00.047.6
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:19.1-18.62.4

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week resulted in a net position of -3,261 contracts in the data reported through Tuesday. This was a weekly lowering of -11,948 contracts from the previous week which had a total of 8,687 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 30.3 percent. The commercials are Bullish with a score of 68.5 percent and the small traders (not shown in chart) are Bullish with a score of 52.2 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:58.234.86.6
– Percent of Open Interest Shorts:64.532.22.9
– Net Position:-3,2611,3591,902
– Gross Longs:30,31818,1393,413
– Gross Shorts:33,57916,7801,511
– Long to Short Ratio:0.9 to 11.1 to 12.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):30.368.552.2
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-25.725.2-0.3

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week resulted in a net position of 160 contracts in the data reported through Tuesday. This was a weekly advance of 1,235 contracts from the previous week which had a total of -1,075 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 68.8 percent. The commercials are Bearish with a score of 39.1 percent and the small traders (not shown in chart) are Bearish with a score of 32.2 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:81.75.15.4
– Percent of Open Interest Shorts:81.28.52.6
– Net Position:160-1,008848
– Gross Longs:24,3111,5131,619
– Gross Shorts:24,1512,521771
– Long to Short Ratio:1.0 to 10.6 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):68.839.132.2
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:34.0-56.2-1.1

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
06 Apr

Speculator Extremes: Silver, Gasoline & Peso lead Bullish & Bearish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on April 2nd.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

Silver

The Silver speculator position comes in as the most bullish extreme standing this week. The Silver speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 46.7 this week. The overall net speculator position was a total of 53,147 net contracts this week with a gain of 2,311 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Gasoline


The Gasoline speculator position comes next in the extreme standings this week. The Gasoline speculator level is now also at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 36.5 this week. The speculator position registered 83,723 net contracts this week with a weekly rise of 7,994 contracts in speculator bets.

Mexican Peso


The Mexican Peso speculator position comes in next this week in the extreme standings. The Mexican Peso speculator level also resides at a 100.0 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 19.1 this week. The overall speculator position was 133,730 net contracts this week with a small rise of 1,662 contracts in the weekly speculator bets.

Coffee


The Coffee speculator position comes up number four in the extreme standings this week. The Coffee speculator level is at a 96.6 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 11.9 this week. The overall speculator position was 67,482 net contracts this week with a boost of 11,447 contracts in the speculator bets.

Steel


The Steel speculator position rounds out the top five in this week’s bullish extreme standings. The Steel speculator level sits at a 93.6 percent score of its 3-year range. The six-week trend for the speculator strength score was 7.6 this week.

The speculator position was -714 net contracts this week with an increase by 1,074 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Japanese Yen


The Japanese Yen speculator position comes in as the most bearish extreme standing this week. The Japanese Yen speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -18.2 this week. The overall speculator position was -143,230 net contracts this week with a decline of -14,124 contracts in the speculator bets.

Swiss Franc


The Swiss Franc speculator position comes in next for the most bearish extreme standing on the week. The Swiss Franc speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -34.7 this week. The speculator position was -22,370 net contracts this week with a dip of -402 contracts in the weekly speculator bets.

US Dollar Index


The US Dollar Index speculator position comes in as third most bearish extreme standing of the week. The US Dollar Index speculator level resides at a 0.9 percent score of its 3-year range.

The six-week trend for the speculator strength score was -7.3 this week. The overall speculator position was -1,896 net contracts this week with a drop of -1,267 contracts in the speculator bets.

Australian Dollar


The Australian Dollar speculator position comes in as this week’s fourth most bearish extreme standing. The Australian Dollar speculator level is at a 4.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -18.7 this week. The speculator position was -102,685 net contracts this week with a gain of 2,767 contracts in the weekly speculator bets.

1-Month Secured Overnight Financing Rate


Finally, the 1-Month Secured Overnight Financing Rate speculator position comes in as the fifth most bearish extreme standing for this week. The 1-Month Secured Overnight Financing Rate speculator level is at a 8.2 percent score of its 3-year range.

The six-week trend for the speculator strength score was -39.6 this week. The speculator position was -220,606 net contracts this week with a decrease by -48,562 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
05 Apr

Week Ahead: EURCAD ready to breakout?

By ForexTime 

  • Big week for minor currency pair
  • BoC + ECB rate decisions in focus
  • EURCAD trapped within 300 pip range
  • Prices gaining bullish momentum on D1
  • Bloomberg model: 76% chance EURCAD – (1.45454 – 1.48439)

Key central bank decisions, speeches from policymakers, high-impact data, and earnings announcements by US banks may inject markets with fresh volatility next week:

Sunday, 7th April

  • CNH: China forex reserves

Monday, 8th April

  • GER40: Germany industrial production
  • JPY: Japan current account balance
  • CHF: SNB President Thomas Jordan speech
  • SEK: Riksbank Governor Erik Thedeen speech
  • USD: Minneapolis Fed President Neel Kashkari speech

Tuesday, 9th April

  • AU200: Australia consumer confidence
  • CN50: China aggregate financing, money supply, new yuan loans
  • TWN: Taiwan CPI
  • CHF: SNB Vice Chair Martin Schlegel speech
  • SEK: Riksbank Deputy Governor Martin Floden speech
  • ZAR: South Africa manufacturing production

Wednesday, 10th April  

  • CAD: BoC rate decision
  • JP225: Japan PPI
  • NZD: RBNZ rate decision
  • TWN: Taiwan trade
  • NAS100: US March CPI, FOMC minutes, Chicago Fed President Austan Goolsbee speech

Thursday, 11th April

  • CN50: China CPI, PPI
  • EUR: ECB rate decision
  • US30: US initial jobless claims, PPI, New York Fed President John Williams, Boston Fed President Susan Collins speech
  • GBP: BOE policymaker Megan Greene speech
  • SEK: Riksbank Deputy Governor Per Jansson speech

Friday, 12th April

  • CAD: Canada existing home sales
  • CNH: China trade
  • GER40: Germany CPI
  • JP225: Japan industrial production
  • NZD: New Zealand food prices, PMI
  • UK100: UK industrial production, Manufacturing production, Trade balance, GDP (MoM)
  • USD: University of Michigan consumer sentiment, San Francisco Fed President Mary Daly speech
  • US500: Citigroup, JPMorgan and Wells Fargo earnings

The spotlight shines on the EURCAD which has been trapped within a 300-pip range since December 2023.

Given how the Bank of Canada (BoC) and European Central Bank (ECB) rate decisions have the potential to rock the minor currency, a major breakout may be on the horizon.

Here are 3 reasons why:

    1) BoC rate decision

The Bank of Canada is expected to leave interest rates unchanged at 5% on Wednesday.

When considering the two consecutive downside surprises in inflation, expectations are rising over the central bank cutting interest rates in summer. Nevertheless, much attention will be directed towards the policy statement for fresh insight into the central bank’s future rate decisions.

Traders are currently pricing in a 72% probability of a 25-basis point BoC cut by June 2024 with a move fully priced in by July.

  • Should the BoC hint that a rate cut could be on the horizon, the CAD is likely to weaken – boosting the USDCAD as a result.
  • If the BoC signals that more time may be needed before rates are lowered, this could lend support to the CAD – dragging the USDCAD lower.

 

    2) ECB rate decision

Markets widely expect the European Central Bank to leave interest rates unchanged on Thursday.

Back in March, the European Central Bank signalled that interest rates could be cut by June after lowering its forecast for inflation. So much focus will be on Lagarde’s press conference for additional clues on future policy moves, especially after inflation fell to 2.4% in March – its lowest rate in more than two years.

Traders are currently pricing in a 92% probability of a 25-basis point ECB cut by June with a move fully priced in by July.

  • A dovish sounding ECB that confirms that rates will be cut in June may hit the euro, sending the EURCAD lower.
  • If the ECB sounds more hawkish than expected, the euro may jump – pushing the EURCAD higher.

 

    3) Technical forces

EURCAD seems to be gaining bullish momentum on the daily charts with prices trading above the 50, 100 and 200-day SMA.

  • A solid breakout above 1.4700 may trigger a move towards 1.4750 which has proved a tough nut to crack. Should bulls secure a solid daily close above this level, it could open the doors towards 1.4850.
  • Should prices drop below the 100-day SMA at 1.4665, this could trigger a selloff towards the 50-day SMA and 200-day SMA at 1.4620. Below this point, will be the low at 1.4545.

The Bloomberg FX model now forecasts a 76% chance that EURCAD will trade within the 1.45454 – 1.48439 range through next week.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions
04 Apr

America’s green manufacturing boom, from EV batteries to solar panel production, isn’t powered by renewable energy − yet

By James Morton Turner, Wellesley College 

Panasonic’s new US$4 billion battery factory in De Soto, Kansas, is designed to be a model of sustainability – it’s an all-electric factory with no need for a smokestack. When finished, it will cover the size of 48 football fields, employ 4,000 people and produce enough advanced batteries to supply half a million electric cars per year.

But there’s a catch, and it’s a big one.

While the factory will run on wind and solar power much of the time, renewables supplied only 34% of the local utility Evergy’s electricity in 2023.

In much of the U.S., fossil fuels still play a key role in meeting power demand. In fact, Evergy has asked permission to extend the life of an old coal-fired power plant to meet growing demand, including from the battery factory.

With my students at Wellesley College, I’ve been tracking the boom in investments in clean energy manufacturing and how those projects – including battery, solar panel and wind turbine manufacturing and their supply chains – map onto the nation’s electricity grid.

The Kansas battery plant highlights the challenges ahead as the U.S. scales up production of clean energy technologies and weans itself off fossil fuels. It also illustrates the potential for this industry to accelerate the transition to renewable energy nationwide.

The clean tech manufacturing boom

Let’s start with some good news.

In the battery sector alone, companies have announced plans to build 44 major factories with the potential to produce enough battery cells to supply more than 10 million electric vehicles per year in 2030.

That is the scale of commitment needed if the U.S. is going to tackle climate change and meet its new auto emissions standards announced in March 2024.

The challenge: These battery factories, and the electric vehicles they equip, are going to require a lot of electricity.

Producing enough battery cells to store 1 kilowatt-hour (kWh) of electricity – enough for 2 to 4 miles of range in an EV – requires about 30 kWh of manufacturing energy, according to a recent study.

Combining that estimate and our tracking, we project that in 2030, battery manufacturing in the U.S. would require about 30 billion kWh of electricity per year, assuming the factories run on electricity, like the one in Kansas. That equates to about 2% of all U.S. industrial electricity used in 2022.

Battery belt’s huge solar potential

A large number of these plants are planned in a region of the U.S. South dubbed the “battery belt.” Solar energy potential is high in much of the region, but the power grid makes little use of it.

Our tracking found that three-fourths of the battery manufacturing capacity is locating in states with lower-than-average renewable electricity generation today. And in almost all of those places, more demand will drive higher marginal emissions, because that extra power almost always comes from fossil fuels.

However, we have also been tracking which battery companies are committing to powering their manufacturing operations with renewable electricity, and the data points to a cleaner future.

By our count, half of the batteries will be manufactured at factories that have committed to sourcing at least 50% of their electricity demand from renewables by 2030. Even better, these commitments are concentrated in regions of the U.S. where investments have lagged.

Some companies are already taking action. Tesla is building the world’s largest solar array on the roof of its Texas factory. LG has committed to sourcing 100% renewable solar and hydroelectricity for its new cathode factory in Tennessee. And Panasonic is taking steps to reach net-zero emissions for all of its factories, including the new one in Kansas, by 2030.

More corporate commitments can help strengthen demand for the deployment of wind and solar across the emerging battery belt.

What that means for US electricity demand

Manufacturing all of these batteries and charging all of these electric vehicles is going to put a lot more demand on the power grid. But that isn’t an argument against EVs. Anything that plugs into the grid, whether it is an EV or the factory that manufacturers its batteries, gets cleaner as more renewable energy sources come online.

This transition is already happening. Although natural gas dominates electricity generation, in 2023 renewables supplied more electricity than coal for the first time in U.S. history. The government forecasts that in 2024, 96% of new electricity generating capacity added to the grid would be fossil fuel-free, including batteries. These trends are accelerating, thanks to the incentives for clean energy deployment included in the 2022 Inflation Reduction Act.

Looking ahead

The big lesson here is that the challenge in Kansas is not the battery factory – it is the increasingly antiquated electricity grid.

As investments in a clean energy future accelerate, America will need to reengineer much of its power grid to run on more and more renewables and, simultaneously, electrify everything from cars to factories to homes.

That means investing in modernizing, expanding and decarbonizing the electric grid is as important as building new factories or shifting to electric cars.

Investments in clean energy manufacturing will play a key role in enabling that transition: Some of the new advanced batteries will be used on the grid, providing backup energy storage for times when renewable energy generation slows or electricity demand is especially high.

In January, Hawaii replaced its last coal-fired power plant with an advanced battery system. It won’t be long before that starts to happen in Tennessee, Texas and Kansas, too.The Conversation

About the Author:

James Morton Turner, Professor of Environmental Studies, Wellesley College

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Energy Opinions
04 Apr

Expert Shares the Best Silver Stocks for the Breakout

Source: Ron Struthers (4/3/24) 

Ron Struthers of Struthers Resource Stock Report compares six silver stocks to the SLV ETF, shares Pan American, a gold producer with many silver lines, and touches on Mag Silver, which he believes is not well known enough. 

This chart compares the silver ETD ‘SLV’ to 5 well-known silver producers, Hecla, Coeur Mining, Majestic Silver, Mag Silver, and Pan American Silver. Also, non-producer Discovery Silver.

Like gold stocks, silver stocks are beaten up. SLV shows a 40% gain since the September/October 2022 bottom, while only Coeur Mining has outperformed, but that is because it is really a gold producer now. Hecla has almost caught SLV, and Pan American shows a small gain during the comparison period.

Coeur Mining Inc. (CDE:NYSE) might be remembered as a silver stock, but in 2023, 70% of its revenue came from gold. They do have about an equal value of reserves in silver compared to gold, so there is still leverage to silver. Couer stock has moved up lately, and that is related to the gold price increase.

First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE) used to be one of my favorites, but I am not too happy with their performance of late. In 2023, production was 26.9 million silver equivalent (AgEq) ounces, consisting of 10.3 million silver ounces and 198,921 gold ounces. It gets about 60% of its revenue from silver.

Hecla Mining Co. (HL:NYSE) is an old well, well-known silver stock, and currently about 60% of revenues are from silver production. It should do well with rising silver prices.

Two silver stocks lagging on the chart that should do more than catch up are Pan American Silver and Mag Silver, so I am adding these two to our Selection list along with Discovery Silver as huge leverage to silver and a take-over target and also lagging silver on the chart.

Pan American Silver

Recent Price – $15.80

Dividend yield – 2.5%

Shares Outstanding – 364.7

Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ) trades like and is valued like a silver company, but it is really a gold company when it comes to production, so it is one of the gold stocks that has lagged recently.

However, Pan American has huge silver resources, over 1 billion ounces Measured and Indicated, so it is like a gold stock with several silver linings.

  • For 2023, silver production was 4 million ounces, and gold production was 882,900 ounces.
  • For silver, they realized a price of $22.94, so gross revenue was about $468 million.
  • For gold, they realized a price of $1,951/oz, so gross revenue was $1.72 billion.

You can see that gold is over 70% of revenues, but the stock has not responded to the rising gold price, as well as many other gold stocks.

They have 1,033,800,000 M&I ounces of silver at $6/oz in the ground is about $6 billion value, and 16,083,600 M&I ozs gold at $150/oz in the ground is about $2.4 billion.

PAAS has a market cap of US$7.76 billion, less cash plus debt, for a value of $6.12 billion. You can look at the stock as either the silver is valued cheaply or the gold is valued cheaply. The current dividend gives about a 2.5% yield, and I expect this to rise as gold and silver go higher.

Pan American enters 2024 in a solid financial position with cash and short-term investments totaling $440.9 million and the full $750.0 million available under our undrawn credit facility. Total debt of $801.6 million was related to construction and other loans, leases, and two senior notes Pan American assumed through the acquisition of Yamana.

Pan American acquired Yamana Gold this year, which will drive growth in 2024. The company is very diversified, with 11 producing mines, so rather than get into each mine, this graphic from their presentation gives you a good idea of the diversity.

Conclusion

The company is well diversified and in strong financial shape. Their gold and silver ounces are valued cheaply like most miners now, but I don’t believe the stock has responded as well to the rising gold price as others. I see it catching up.

The company believes its stock is undervalued as well because it announced a normal course issuer bid to buy back up to 5% of the stock. They will have rising revenues and cash flow for 2024.

Its guidance for 2024 is 21 to 23 million ounces of silver at AISC of $16 to $18.50 per ounce. For gold, it is projecting 880,000 to 1 million ounces of production at AISC of $1,475 to $1,575. PAAS will have very good margins for 2024, and the higher gold and silver prices will add significantly to this.

Of note, and because New Pacific Metals -NUAG is on our list, Pan American owns an ~11.6% undiluted interest in New Pacific, which is advancing the Silver Sands exploration project in Bolivia.

Don’t be surprised if Pan American buys out New Pacific. The stock is way down from 2020/2021 highs, so it has lots of legroom to the upside. We need to see a close above $17 for a higher high and confirm the turnaround. I see that soon.

I believe the stock could easily break the $20 resistance and get back close to $30 or better this year.

That makes the Call Options attractive as well. I like the January 2025 $20 Call option for US$2.50.

Mag Silver 

Recent Price – US$11.45

Share Outstanding – 103 Million

Mostly Institutional held –  owning 70%

No debt and US$68.7 million cash on Dec 31, 2023

I have followed MAG Silver Corp. (MAG:TSX; MAG:NYSE American) for many years.

It is a relatively new producer because its mine just started production in 2023, so it is probably not known so much as a major silver producer. This principal asset is a 44% interest in the Juanicipio Mine located in Zacatecas, Mexico, which achieved commercial production at its 4,000 tonnes per day (“tpd”) processing facility on June 1, 2023.

MAG’s partner is Fresnillo Plc., a London-based company that debuted on the London Stock Exchange in 2008 following a successful, profitable, and decades-long track record as a Mexican mining company.

Due to its history as part of the Peñoles Group, Fresnillo can trace its origins back to the commencement of Peñoles’ mining operations in 1887 and smelting and refining operations at Torreon in 1901. The Juanicipio mine is high grade at 472 g/t silver and low cost at $9.18/oz AISC, so it will be a real cash cow for Mag Silver now that it is in production. A mine does not get much better than this one, and I don’t think the stock reflects this fact.

The silver recoveries are good at 88%, and in the last half of 2024, the mine generated a free cash flow of about $103 million, of which $33.4 million went to Mag Silver.

This is a great slide from their presentation that shows free cash flow at very conservative base case pricing and at spot prices.

Free cash flow of $180 M/year at current spot prices. If we get the prices I expect, hang on tight.

The mine has M&I resources of 406,277,000 AgEq ounces — Mag Silver 44% would be 178,740 ounces. The current valuation for MAG is about $6/oz silver, which is about the average of other companies, but this is an above-average mine.

There is tons of upside exploration potential here, so it will be a very long mine life, and the potential the mill rate could be expanded in a few years to increase production.

Conclusion

About 75% of revenue is from silver, so this is a pretty pure play on silver. Cash flow for the fourth quarter was around US$36 million, and with higher silver prices, we could easily see cash flow in 2024 for MAG around $160 million.

The stock is trading at around 11.5 times cash flow, according to MarketWatch. If it simply maintains that multiple, the stock should move to about $18.00 in 2024. On the chart, the long-term downtrend has been broken, and the stock is about to break out to a higher high and above the first resistance, around $12.00.

Discovery Silver

Recent Price – CA$0.85

Shares Outstanding – 395 million.

Eric Sprott owns 23% and Institutions 37%

Many of you will remember Discovery Silver Corp. (OTCMKTS:DSVSF) as it was on the Selection List for quite a while, but we got stopped out in 2022 at $1.55.

We can buy back much cheaper now. Discovery’s flagship project is its 100%-owned Cordero project, the world’s largest undeveloped silver deposit. The feasibility study completed in February 2024 demonstrates that Cordero has the potential to be developed into a large-scale, long-life project with low unit costs and attractive economic returns that offers the combination of margin, size, and scalability.

Cordero is located close to infrastructure in a prolific mining belt in Chihuahua state, Mexico. In the chart below, Mag Silver would fit between Ays and Hecla.

Summary of Cordero feasibility study results:

  • Large-scale, long-life production: 19-year mine life with an average annual production of 37 million ounces silver equivalent in concentrate in year 1 to year 12 and 33 Moz AgEq in concentrate over the life of the mine;
  • Highly profitable: low unit costs with all-in sustaining costs per AgEq ounce of under $12.50 (U.S.) in year one to year eight and under $13.50 (U.S.) over the LOM, placing Cordero in the bottom half of the cost curve;
  • Tier 1 reserve base: reserves of silver: 302 Moz, gold: 840,000 oz, lead: 3.0 billion pounds, and zinc: 5.2 billion pounds, positioning Cordero as the largest undeveloped silver deposit globally;
  • Clear upside potential: 240 million tonnes of measured and indicated resource sit outside of the feasibility study pit, highlighting the potential to materially extend the mine life at modestly higher silver prices;
  • Low capital intensity: initial development capital expenditures of $606 million resulting in an attractive after-tax net present value to capital expenditure ratio of 2.0;
  • Attractive economics: base-case after-tax net present value discounted at 5% of $1.2 billion (U.S.), growing to $2.2 billion (U.S.) in year 4, when the project reaches final completion to 51,000 tonnes per day.

Conclusion

On December 31, Discovery had a strong cash position of almost CA$59 million, so they have plenty enough to move this through permitting to the construction phase. DSV submitted an Environmental Impact Assessment (MIA) in August 2023; the review process is ongoing.

The deposit is massive. With the Feasibility and more drilling, the Measured & Indicated Resource grew by 70 Moz AgEq to 1,202 Moz AgEq within the pit outline.

Discovery has a market cap of US$255 million less cash, a value of about US$210 million. This puts a value per ounce of a measly US$0.17 cents. I expect a lower valuation with a lower grade deposit, but the average grade in the first few years of mine life is around 100 g/t silver, which is pretty decent for an open pit.

As you can see on the chart, this had a much higher valuation with fewer ounces and about the same silver price, but it is beaten down like every miner. The downtrend is broken, and the stock is close to breaking out to a higher high and resistance around $0.95. From here, it could soon get back to the $1.50 area.

As you have probably noticed from yesterday’s report, silver broke out today, currently at $26.77 on Comex.

I bought silver coins from my dealer yesterday, Colonial Acres. It is the most silver coin I have seen in stock there for years. I would not wait long; I expect this will soon get bought up.

 

Important Disclosures:

  1. Mag Silver Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
  2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Pan American Silver Corp.
  3. Ron Struthers: I, or members of my immediate household or family, own securities of: Pan American Silver Corp. and Discovery Silver. I determined which companies would be included in this article based on my research and understanding of the sector.
  4. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found  below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
  5.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

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Struthers Resource Stock Report Disclosures

All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author’s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information & statistics the author/publisher strongly encourages the reader to communicate directly with the company and/or with their personal investment adviser to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial adviser & is not acting as such in this publication.

Metals Opinions
03 Apr

A century after the EEG was discovered, it remains a crucial tool for understanding the brain

By Giridhar Kalamangalam, University of Florida 

Jena, Germany, 1924: Working in near-isolation and with painstaking tediousness, the psychiatrist Hans Berger observes rhythmic electrical activity from the scalp of human subjects. He is convinced the activity arises from within the brain and coins the term “electroencephalogram.”

It is 10 years before the scientific community accepts Berger’s work, birthing the field of electroencephalography, or EEG for short.

Today, the electroencephalogram – also abbreviated as EEG – is widely known as a medical test measuring brain electrical activity that’s used on patients who have, or are suspected to have, neurological disorders. The EEG provides a window into the living brain, with a continuous electrical readout of what is happening inside our heads. The procedure may be short, often just a 30-minute recording. But for patients monitored for diagnosis or treatment of brain disease, it can be continued for much longer – days or even weeks.

As a neurologist specializing in epilepsy, I use EEG on a daily basis. Our team at the University of Florida interprets thousands of EEGs a year in neurological patients. I also run a research lab where our goal is to understand the basic structure of the EEG in health and disease.

A history of unexpected twists

The story of EEG is colorful and littered with fables. Berger’s interest in brain electricity was not to combat disease, though that was his day job as a physician, but to find a biological basis for his belief in telepathy. He wondered whether the brain waves of EEG could convey thoughts through space, allowing people to read each other’s minds. He was unsuccessful in his mission, but the field he founded nonetheless took off.

By the mid-1930s, researchers had observed the striking differences between the awake and asleep EEG. The EEGs of patients with brain disease turned up a variety of unprecedented observations.

And then came a defining moment for modern medicine. In December 1934, a group of Boston physicians observed the rhythmic EEG spike-wave appearance of seizures in patients with “petit mal” epilepsy. Petit mal is an anachronistic term for a type of epilepsy where a patient’s flow of thought, speech or action momentarily freezes during seizures. For the first time, the symptoms and behavior of patients during seizures were correlated to a brain signal occurring in lockstep.

EEG quickly evolved from a scientific curiosity to a mainstream clinical tool. The first clinical EEG laboratory was set up at Massachusetts General Hospital in 1937. The practice grew in the ensuing decades into the specialized services that institutions like ours have offered since the 1970s.

The EEG explained

So what, exactly, is the EEG?

Imagine taking two small metallic discs connected by a conducting wire. Place one disc on the scalp and connect the other to a neutral reference, such as the ear. Watch a tiny alternating current flow in the wire, proportional to the electrical activity sensed by the conducting contact. This activity is the EEG, the electrical milieu that bathes brain tissue.

In turn, the EEG arises from the excitable nature of nerve cells, or neurons. When neurons fire, action potentials – brief, high-voltage spikes traveling outward from their cell bodies – set up local electrical activity in other neurons, causing current to flow within and outside them.

These local current flows may cause the targeted neurons to fire in turn and set up yet more current flows. Thus, the system sustains itself. The average overall activity is a mix of many different frequencies, with the five main ones called delta, theta, alpha, beta and gamma waves.

If the EEG were just random up-and-down drift – “the bloodless dance of action potentials,” commented a skeptical early 20th century neurologist – it would be much less interesting. The remarkable fact is that EEG tends to spontaneously organize into patterns in time and space.

The spike-wave pattern of petit mal, referenced earlier, is a classic example, but scores of others are now known. Clinical EEG practice is just recognizing characteristic EEG patterns and correlating them to specific disease states.

Fluctuating neurons

Beyond the clinic, an unsettling scientific question emerges. Simply put, how do electrical patterns arise in the brain? How do the billions of neurons and their trillions of local current flows fluctuate in just the right ways to create globally ordered structure?

Our research group has been interested in the fundamental question of pattern formation in EEG. It turns out that activity in the brain is naturally repetitive – that is, oscillatory. This is due to the way neurons are connected and the fact that they interact by excitation and inhibition to produce push-pull effects.

Considering local oscillations as fundamental building blocks, we showed that the EEG over the entire brain could be built up from such elementary blocks. More interestingly, the differing frequencies could be made to coalesce, or synchronize, into a common rhythm. We recognized that synchronization of this type underlies some seizurelike patterns observed in patients.

EEG is but one way to study the brain.

EEG, AI and the mind

Pattern formation in nature is deeply fascinating. How does a leopard get its spots? How does the audience at a concert spontaneously settle into a rhythmic applause? Many such questions trace their origin to a classic paper on biological pattern published in 1952. Its author was Alan Turing, better known as the father of computer science and early advocate of artificial intelligence, or AI.

The hardware underlying the majority of today’s AI systems are neural networks. Neural networks were introduced in 1943 by Warren McCulloch, a physician and electroencephalographer. Like Berger, McCulloch’s interest in EEG extended beyond brain disease. He wondered where in the brain’s neurons and EEG lay the capacity to think. He conceived the idea of grouping artificial neuronlike computing units into networks, analogous to how real neurons in the brain interconnected.

Together with Walter Pitts, he proved that such neural networks could function as a general-purpose computer. The seminal McCulloch-Pitts ideas were refined over the ensuing decades and reside in the “deep learning” neural networks of today’s AI.

Deep learning AI has infiltrated all areas of biomedicine, including neurology. For example, AI systems can successfully interpret brain scans. AI methods have also been used to analyze EEG.

Can AI systems be trained to deduce thoughts from the EEG? Can AI approach Berger’s quest for telepathy? Incredibly, recent deep-learning AI research has shown that some aspects of mental activity may be decoded from EEG.

In 2024, EEG turns 100. What windows will it open into the brain and mind in the future? Doubtless, clinical applications will grow. Surely, brain pattern generation will be better understood. Perhaps EEG will glimpse the content of the mind. And for neurologists like me surveying the AI revolution, there’s the quiet pride that EEG was really at the start of it all.The Conversation

About the Author:

Giridhar Kalamangalam, Professor of Neurology, University of Florida

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions
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