* Immediate concerns for a complete Euro collapse will be replaced by a more nuanced view, splitting up the current very high Eur/Usd vs Equity correlation.
* Short Eur/Usd is an overcrowded trade, time for a squeeze towards 1.25/1.26. Something to sell into.
Equities are also due for a correction higher to the tone of 5%, at least. Also something to sell into. However, from there
* New positions and positionchanges
- I have sold shortdated equity index puts at very elevated vol levels.
- I have bought June index calls at quite decent vol levels. Looking for a correction/squeeze higher.
- I have bought Eur Calls on Eur/Usd, Eur/Jpy.
- I have taken profit on my short Eur/Usd, Eur/Jpy positions.
- I have taken profit on my long SOIL ETF
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
17 May 2010
11 May 2010
The Euro; A whiff of ERM 1992,,, ECB not independent anymore
* Euro already suffering from rescueefforts post shortcovering - Euro set to weaken further.
1.23 first stop on the road to parity. Politicians are low on communicationskills, understanding, or both. "They" believe they are supporting the Euro with the latest humungous package. In reality, theyve just undermined it - exposing it to a collapse.
Why?
Lets see;
- Lost independence by the ECB, now also an administrator for the EU commission
- The ECB is buying junk bonds - diluting the creditquality of their portfolio and thus, the Euro.
- No Euro country apart from Finland is currently sticking to the Maastricht criteria.
- ECB and politicians is trying to bailout their own economies and bond markets in order to "save" the Euro. In essence conducting intervention. Intervention has historically never succeeded when Macrofundamentals have been pointing the wrong way, and yes - they are.
- Increase of the supply of Eur as the ECB buys its "own" bonds as those flows will later be nonsterilised.
- Madoff, ECB,,,,, This seems almost like a Ponzi scheme. Only the first appliers will get funds from the "common" fund. Then the coffers will be empty.
- Lack of trust for the Eur from centralbanks globally as governing rules set to ensure stability and value are changed without notice.
- For the last 10 years, centralbanks across the globe have been diversifying their FX reserves into Eur. I doubt those programmes will continue as before. Eur to suffer.
* It seems likely there will be a constitutional court hearing in Germany re the legality of Germany bailing out other Euro countries. This will likely be announced by the end of this week. This have the potential to shake the markets substantially in the case of non approval (not likely) from the German constitutional court. Even the hearing itself could make markets uncomfortable.
* Heads up; Since Greece and the rest of the PIIGS is nothing else than the Baltics and Latvia magnified by 20 and more, Im looking for the Baltic story to come back on the agenda. Banks to suffer in that case.
- LIBOR, has moved from 80 to 110 over the last months. Any moves higher should be monitored.
* What happens when Trillions of Euro sovereign debt is added to already indebted countries simoultaneously with extremely tight fiscal policy at the same time as Asia is struggling with inflation ,tightening monetary and fiscal policies, stimulating domestic demand instead of exports, reducing currencyreserves in the process?
Well, the long answer; Asian currencies will strengthen, G7 currencies will weaken. ; Asian countries will generate growth, exporting inflation, G7 countries will experience deflation(Eurozone). US struggling. Whats the short answer?; Stagflation. No growth with inflation.
* Whats the scope from here?
Towards the end of this week, I expect consolidation with an upward bias in equities, commodities. The euro to remain heavy. By the end of the week, more bearishness in equities, commodities(except gold) due to the expected German Constitutional Court announcement of hearing re Germany legality as paying part of the bailout package (38%).
- Eur to continue suffering, you just aint seen nothi´n yet.
-I am short Eur/Usd, Eur/Jpy. For a test of 1.25 and 116.
- Oil to continue suffering, I am long SOIL ETF.
- I am long GLD options (ETF). I will look to go long "new" gold though; Silver, Platinum. Gold is "old" Gold, owned by the centralbanks,,, - not that good.
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
1.23 first stop on the road to parity. Politicians are low on communicationskills, understanding, or both. "They" believe they are supporting the Euro with the latest humungous package. In reality, theyve just undermined it - exposing it to a collapse.
Why?
Lets see;
- Lost independence by the ECB, now also an administrator for the EU commission
- The ECB is buying junk bonds - diluting the creditquality of their portfolio and thus, the Euro.
- No Euro country apart from Finland is currently sticking to the Maastricht criteria.
- ECB and politicians is trying to bailout their own economies and bond markets in order to "save" the Euro. In essence conducting intervention. Intervention has historically never succeeded when Macrofundamentals have been pointing the wrong way, and yes - they are.
- Increase of the supply of Eur as the ECB buys its "own" bonds as those flows will later be nonsterilised.
- Madoff, ECB,,,,, This seems almost like a Ponzi scheme. Only the first appliers will get funds from the "common" fund. Then the coffers will be empty.
- Lack of trust for the Eur from centralbanks globally as governing rules set to ensure stability and value are changed without notice.
- For the last 10 years, centralbanks across the globe have been diversifying their FX reserves into Eur. I doubt those programmes will continue as before. Eur to suffer.
* It seems likely there will be a constitutional court hearing in Germany re the legality of Germany bailing out other Euro countries. This will likely be announced by the end of this week. This have the potential to shake the markets substantially in the case of non approval (not likely) from the German constitutional court. Even the hearing itself could make markets uncomfortable.
* Heads up; Since Greece and the rest of the PIIGS is nothing else than the Baltics and Latvia magnified by 20 and more, Im looking for the Baltic story to come back on the agenda. Banks to suffer in that case.
- LIBOR, has moved from 80 to 110 over the last months. Any moves higher should be monitored.
* What happens when Trillions of Euro sovereign debt is added to already indebted countries simoultaneously with extremely tight fiscal policy at the same time as Asia is struggling with inflation ,tightening monetary and fiscal policies, stimulating domestic demand instead of exports, reducing currencyreserves in the process?
Well, the long answer; Asian currencies will strengthen, G7 currencies will weaken. ; Asian countries will generate growth, exporting inflation, G7 countries will experience deflation(Eurozone). US struggling. Whats the short answer?; Stagflation. No growth with inflation.
* Whats the scope from here?
Towards the end of this week, I expect consolidation with an upward bias in equities, commodities. The euro to remain heavy. By the end of the week, more bearishness in equities, commodities(except gold) due to the expected German Constitutional Court announcement of hearing re Germany legality as paying part of the bailout package (38%).
- Eur to continue suffering, you just aint seen nothi´n yet.
-I am short Eur/Usd, Eur/Jpy. For a test of 1.25 and 116.
- Oil to continue suffering, I am long SOIL ETF.
- I am long GLD options (ETF). I will look to go long "new" gold though; Silver, Platinum. Gold is "old" Gold, owned by the centralbanks,,, - not that good.
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
09 May 2010
The ECB balance sheet is set to swell. China, Asia to reduce global liquidity
* The G7 finance ministers set to expand emergencyfund by 60 Bln Euro.
Perhaps this will consolidate markets somewhat nearterm, but I have a feeling more drastic measures will be needed to stop marketconcerns re the rest of the PIIGS countries.
- Perhaps a "massive" (pick a huge number) swap line from the FED to secure liquidity via the ECB to the PIIGS countries.
- Direct bond buying by the ECB.
Neither will sound good to the ECB, but the second will sound worst.
In either case, I feel fairly confident the ECB balance sheet will swell substantailly before long.
Diluting its portfolio with junk bond paper.
Both factors will sink the Eur substantially.
At the same time, Asian centralbanks are reducing the size of their currencyreserves as they are switching from exportoriented policies to domestically demand led ones. Tightening liquidity in the process ( China leading the way here, and yes, are they overleveraged or what? Same old, same old.)
I expect this liquidity factor to push up riskpremiums on assets globally regardless of what happens in Europe. Lets just hope the G7 finance ministers can get this situation under control to start with. I somehow doubt it. Although I can definitely see short term consolidation measures having shortterm effects.
* So far, the 2008 crisis has not really been RISKmanaged at all, just managed.
Liquidity has been poured over the leverage problems in the private sector and debt has then been transferred to the public one. Hoping it would be forgotten there. In essence, the stakes have been RAISED substantially, instead of lowered. The financialbubble in 2008 may have burst, but it has NOT been deleveraged,. Just transformed and increased, keeping fingers crossed for positive growth (the leverage would then generate superior growth). With negative growth,,,,, well lets not go there.
So far things have been looking quite good; rallying assetclasses, and market values slowly but surely approaching book values on various balance sheets, sinking implied volatilities int pre crisis territory. This, would in turn unclog the liquidity plug. Getting credit flowing and then - yes - growth going. Well, no more. Now it seems we might have a problem getting there,,,,, I expect money velocity to slow down further.
The Banks thought they were on safe ground, but they might soon get wet feet again,,,,
Just as some of them shouted out loud they didnt need any government support any longer,,,,, Oh well,,
* CEE to suffer hard if G7 liquidity measures fail to work
Usd liquidity and CHF liquidity dried up last week and this situation will just get worse if the G7 "liquidity rescue operation" fails to work.
*Whats the scope from here then?
- Well, I took profit on most of my equity puts on Friday, buying calls, anticipating urgent liquidity measures taken over the weekend.
- I have taken profit on most of my short Eur positions. Bought Eur calls.
- I have taken profit on my long
SOIL ETF.
Ive kept some limited exposure for continued weakness, just in case markets reject the measures taken alltogether and we'd spin into some kind of "black monday" scenario.
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
Perhaps this will consolidate markets somewhat nearterm, but I have a feeling more drastic measures will be needed to stop marketconcerns re the rest of the PIIGS countries.
- Perhaps a "massive" (pick a huge number) swap line from the FED to secure liquidity via the ECB to the PIIGS countries.
- Direct bond buying by the ECB.
Neither will sound good to the ECB, but the second will sound worst.
In either case, I feel fairly confident the ECB balance sheet will swell substantailly before long.
Diluting its portfolio with junk bond paper.
Both factors will sink the Eur substantially.
At the same time, Asian centralbanks are reducing the size of their currencyreserves as they are switching from exportoriented policies to domestically demand led ones. Tightening liquidity in the process ( China leading the way here, and yes, are they overleveraged or what? Same old, same old.)
I expect this liquidity factor to push up riskpremiums on assets globally regardless of what happens in Europe. Lets just hope the G7 finance ministers can get this situation under control to start with. I somehow doubt it. Although I can definitely see short term consolidation measures having shortterm effects.
* So far, the 2008 crisis has not really been RISKmanaged at all, just managed.
Liquidity has been poured over the leverage problems in the private sector and debt has then been transferred to the public one. Hoping it would be forgotten there. In essence, the stakes have been RAISED substantially, instead of lowered. The financialbubble in 2008 may have burst, but it has NOT been deleveraged,. Just transformed and increased, keeping fingers crossed for positive growth (the leverage would then generate superior growth). With negative growth,,,,, well lets not go there.
So far things have been looking quite good; rallying assetclasses, and market values slowly but surely approaching book values on various balance sheets, sinking implied volatilities int pre crisis territory. This, would in turn unclog the liquidity plug. Getting credit flowing and then - yes - growth going. Well, no more. Now it seems we might have a problem getting there,,,,, I expect money velocity to slow down further.
The Banks thought they were on safe ground, but they might soon get wet feet again,,,,
Just as some of them shouted out loud they didnt need any government support any longer,,,,, Oh well,,
* CEE to suffer hard if G7 liquidity measures fail to work
Usd liquidity and CHF liquidity dried up last week and this situation will just get worse if the G7 "liquidity rescue operation" fails to work.
*Whats the scope from here then?
- Well, I took profit on most of my equity puts on Friday, buying calls, anticipating urgent liquidity measures taken over the weekend.
- I have taken profit on most of my short Eur positions. Bought Eur calls.
- I have taken profit on my long
SOIL ETF.
Ive kept some limited exposure for continued weakness, just in case markets reject the measures taken alltogether and we'd spin into some kind of "black monday" scenario.
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
19 April 2010
Goldman and Volcanoes
* Goldman under fire from SEC for selling CDO;s without disclosing who structured it - in this case the -now famous hedgefundmanager John Paulson.
Politics, politics,,, well, so what else is new?
Question is whether this really holds water.
Alledgedly Goldman invested alongside it and lost 90m Usd on it - excluding their 15m Usd fee.
Legally Goldman was not obliged to disclose John Paulson in the offering . End of story.
From a populistic and political point of view, however, Goldman might still be viewed as guilty.
In any case, this means the door is open for more financial regulation.
* The Volcano impact
Well, apart from threatening to lower European GDP and world trade ditto plus some heavy impacts on certain industries and business models, it seems certain to generate the favourite European political answer to any economic problem these days; yet more subsidies.
Its interesting to note that so far sovereign debt within the OECD equals 50% of OECD savings and global sovereign debt equals 25% of global savings,,,, Higher yields, anyone?
It would be interesting to hear the riskmanagementplan from various countries, on how to handle the tremendous sovereign leverage currently at hand. Politicians in Brussels may well believe they are in the process of saving the Euro area, but there is an unquantified risk that may very well be substantial, that they actually are in the process of sinking it instead.
With the sovereign debt mountain growing and growing, perhaps it would just be prudent if a Volcano popped the bubble in time. The Icelandic bigger sister Volcano Katla, might just do this, if it too comes to life. Unfortunately, we might now be beyond the point of control due to the leverage situation. Hence, the fall out (pardon the punt) could be very scary indeed. Til then, low rates means low volatility and a continuation of already inflated assetprices. And then?
*Positions
- After having pushed through 1,3530, theres been some noice. Given the background macro scenario and the fact that we pushed below 1,3530 again, I am now short Eur/Usd, looking for 1,30.
- After Equities pushed through on the topside, I went long. I have now reversed to short. Looking for 2-5% retracement in this current low volatility environment.
- Short European airlines via options
- Short GLD ETF via options
- Short Oil via long SOIL ETF
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
Politics, politics,,, well, so what else is new?
Question is whether this really holds water.
Alledgedly Goldman invested alongside it and lost 90m Usd on it - excluding their 15m Usd fee.
Legally Goldman was not obliged to disclose John Paulson in the offering . End of story.
From a populistic and political point of view, however, Goldman might still be viewed as guilty.
In any case, this means the door is open for more financial regulation.
* The Volcano impact
Well, apart from threatening to lower European GDP and world trade ditto plus some heavy impacts on certain industries and business models, it seems certain to generate the favourite European political answer to any economic problem these days; yet more subsidies.
Its interesting to note that so far sovereign debt within the OECD equals 50% of OECD savings and global sovereign debt equals 25% of global savings,,,, Higher yields, anyone?
It would be interesting to hear the riskmanagementplan from various countries, on how to handle the tremendous sovereign leverage currently at hand. Politicians in Brussels may well believe they are in the process of saving the Euro area, but there is an unquantified risk that may very well be substantial, that they actually are in the process of sinking it instead.
With the sovereign debt mountain growing and growing, perhaps it would just be prudent if a Volcano popped the bubble in time. The Icelandic bigger sister Volcano Katla, might just do this, if it too comes to life. Unfortunately, we might now be beyond the point of control due to the leverage situation. Hence, the fall out (pardon the punt) could be very scary indeed. Til then, low rates means low volatility and a continuation of already inflated assetprices. And then?
*Positions
- After having pushed through 1,3530, theres been some noice. Given the background macro scenario and the fact that we pushed below 1,3530 again, I am now short Eur/Usd, looking for 1,30.
- After Equities pushed through on the topside, I went long. I have now reversed to short. Looking for 2-5% retracement in this current low volatility environment.
- Short European airlines via options
- Short GLD ETF via options
- Short Oil via long SOIL ETF
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
26 March 2010
Eur/Usd consolidating post Greece announcement; 1.3530 should cap it.
* Eur/Usd has moved higher since yesterday
I took profit on my short Eur/Usd position as spot broke through 1.3350.
Alledgedly there are real money on the bids today. Whether that is an indication that we will see a correction higher or not well have to see. A consolidation/correction might very well take place here but any move higher should be capped in the 1.3530 area or Ill reevaluate. Til then 1.30 will remain my near term target. I will be looking to reenter short Eur/Usd positions.
* Equities correcting lower; take profit/squeeze friday?
Not to me. Equities looks toppish and should cave in before long. Im running short equity positions on US and European indexes, spiced with some shorts on weak banks, looking for a 10% move nearterm. Ill stop out and reevaluate if indexes push above their highs from yesterday.
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
I took profit on my short Eur/Usd position as spot broke through 1.3350.
Alledgedly there are real money on the bids today. Whether that is an indication that we will see a correction higher or not well have to see. A consolidation/correction might very well take place here but any move higher should be capped in the 1.3530 area or Ill reevaluate. Til then 1.30 will remain my near term target. I will be looking to reenter short Eur/Usd positions.
* Equities correcting lower; take profit/squeeze friday?
Not to me. Equities looks toppish and should cave in before long. Im running short equity positions on US and European indexes, spiced with some shorts on weak banks, looking for a 10% move nearterm. Ill stop out and reevaluate if indexes push above their highs from yesterday.
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
25 March 2010
Greece;"Old" Plan "B" is launched, lower Eur, Equities to follow.
* German profile on Greece rescue plan increasing pressure on the Euro
Focus now on yield curves; with yet more European peripheral deflationary pressure unleashed and US yield curve steepening, the scene is set for a lower Eur/Usd still.
It seems the EU rescue plan for Greece is a copy of a German proposal presented three weeks ago. And as such, it is not really "new". Anyhow, the proposal is short on detail and will certainly mean severe hardship for the citizens of Greece. They are about to share the Latvian people´s experience. Question is, will the Greece citizens handle the hardship in a similar way? I doubt it. To me, civil unrest risks are higher in Greece.
EU politicians are hardly united, but more importantly, the ECB is voicing quite strong objections against any IMF led resue plan, emphasising an EU led solution. Markets will want more details on the proposal, translated into concrete action. I does not seem we will get it for the time being.
* Eur/Usd to go lower still
With a steepening US yield curve and longer end long term correlation to break up with the European ditto and Europe facing yet another wave of deflation initiated by Greece and upcoming fiscal budgetary measures for the other southern European PIIGS countries represented by Spain and Portugal, Eur/Usd should be heading lower still. The 1.30 level is within striking distance.
* Eur/Usd, US yield and equities
There has been a breakup there for a while now. However, I believe equities will play catch up. Ie equities will soon go lower. US yields will be important to watch as any move by the 10 year bond above 4% - 4.25% is likely to make many institutional investors consider scaling back on their equity holdings. With equity vols at close to pre crisis low levels, long equity puts seems an interesting proposition. The timing seems to be right. Famous last,,,,
* Usd/Jpy going higher
Japanese institutional flows to seek higher yields abroad post fiscal year end as Japan is going back to QE. Besides, majority of outflows during this fiscal year has been currency hedged by Japanese institutions, buying Jpy in the process. Going forward, due to the Japanese QE and the Usd strength, the FX hedging ratio may well be lower, meaning less Jpy buying.
The important 91 level in Usd/Jpy has broken to the topside. I go for a continuation towards the high nineties.
As usual, good luck.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
Focus now on yield curves; with yet more European peripheral deflationary pressure unleashed and US yield curve steepening, the scene is set for a lower Eur/Usd still.
It seems the EU rescue plan for Greece is a copy of a German proposal presented three weeks ago. And as such, it is not really "new". Anyhow, the proposal is short on detail and will certainly mean severe hardship for the citizens of Greece. They are about to share the Latvian people´s experience. Question is, will the Greece citizens handle the hardship in a similar way? I doubt it. To me, civil unrest risks are higher in Greece.
EU politicians are hardly united, but more importantly, the ECB is voicing quite strong objections against any IMF led resue plan, emphasising an EU led solution. Markets will want more details on the proposal, translated into concrete action. I does not seem we will get it for the time being.
* Eur/Usd to go lower still
With a steepening US yield curve and longer end long term correlation to break up with the European ditto and Europe facing yet another wave of deflation initiated by Greece and upcoming fiscal budgetary measures for the other southern European PIIGS countries represented by Spain and Portugal, Eur/Usd should be heading lower still. The 1.30 level is within striking distance.
* Eur/Usd, US yield and equities
There has been a breakup there for a while now. However, I believe equities will play catch up. Ie equities will soon go lower. US yields will be important to watch as any move by the 10 year bond above 4% - 4.25% is likely to make many institutional investors consider scaling back on their equity holdings. With equity vols at close to pre crisis low levels, long equity puts seems an interesting proposition. The timing seems to be right. Famous last,,,,
* Usd/Jpy going higher
Japanese institutional flows to seek higher yields abroad post fiscal year end as Japan is going back to QE. Besides, majority of outflows during this fiscal year has been currency hedged by Japanese institutions, buying Jpy in the process. Going forward, due to the Japanese QE and the Usd strength, the FX hedging ratio may well be lower, meaning less Jpy buying.
The important 91 level in Usd/Jpy has broken to the topside. I go for a continuation towards the high nineties.
As usual, good luck.
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
19 March 2010
Low rates, low vol - what more can assetmarkets ask for?
* CB;s are clinging to QE, but the correlation in long duration bonds between Us and Europe is likely to break up, generating increased assetvolatility in the process.
We are entering a new phase where many western countries will find themselves in a situation where synthetically low rates is increasingly making a workable exitplan very difficult.
My guess is that Centralbanks will wait too long before they raise rates, risking stagflation to develop pre raising. Once they do raise they will be unnecessesarily far behind the curve, generating a swift and drastic rate rise once the trigger is pulled.
* Whats happening next then?
Greece still in focus, and may remain there for a while still, as the Greece April and May refinancing is rapidly approaching. Otherwise, it seems the headline frequency would indicate it is a bit overdone.
Nearterm I am positioned for lower equitymarkets, banksectors and Eur/Usd, weaker Zar and Try.
* The Swedish bullcase
The increased focus on sovereign debt has served Sweden well, since Swedish finances, from a relative perspective is doing quite well. A word of caution is warranted here however.
1) This is now a clear consensus trade by every category of the market.
2) Europe and Sweden has not cleaned up their toxic assets in the same way US has. Sweden and their baltic assets being a case in point. Swedbank still has baltic assets valued at very weird levels; Swedbank lost 11Bn SEK last year, they have baltic goodwill valued at 12 Bn SEK.
This equates to the board expecting a 6%-7% annual growth for the Baltic assets for the next 30 years!
Now, thats a crystalball for you.
The Baltics is still an unstable asset area no matter what the banks say,
3) Sweden is one of the few countries where the vast majority of household loans are floating shortterm rates. and loanvolumes are still rising sharply,,,,,,, Should/when the Riksbank be forced to sharp interestrate rise,,,,
Well see,,,,
Anyway, short term I expect weaker SEK assets.
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
We are entering a new phase where many western countries will find themselves in a situation where synthetically low rates is increasingly making a workable exitplan very difficult.
My guess is that Centralbanks will wait too long before they raise rates, risking stagflation to develop pre raising. Once they do raise they will be unnecessesarily far behind the curve, generating a swift and drastic rate rise once the trigger is pulled.
* Whats happening next then?
Greece still in focus, and may remain there for a while still, as the Greece April and May refinancing is rapidly approaching. Otherwise, it seems the headline frequency would indicate it is a bit overdone.
Nearterm I am positioned for lower equitymarkets, banksectors and Eur/Usd, weaker Zar and Try.
* The Swedish bullcase
The increased focus on sovereign debt has served Sweden well, since Swedish finances, from a relative perspective is doing quite well. A word of caution is warranted here however.
1) This is now a clear consensus trade by every category of the market.
2) Europe and Sweden has not cleaned up their toxic assets in the same way US has. Sweden and their baltic assets being a case in point. Swedbank still has baltic assets valued at very weird levels; Swedbank lost 11Bn SEK last year, they have baltic goodwill valued at 12 Bn SEK.
This equates to the board expecting a 6%-7% annual growth for the Baltic assets for the next 30 years!
Now, thats a crystalball for you.
The Baltics is still an unstable asset area no matter what the banks say,
3) Sweden is one of the few countries where the vast majority of household loans are floating shortterm rates. and loanvolumes are still rising sharply,,,,,,, Should/when the Riksbank be forced to sharp interestrate rise,,,,
Well see,,,,
Anyway, short term I expect weaker SEK assets.
As usual, good luck
The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.
Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.
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