Time for a Christmas break

After what has been a very eventful year, both for me personally and the market, it is time for a Christmas break. Regular blogging wont resume til 8th of January 2009. Til then, blogging will be intermittent, if any. It has been a very good year from an absolute financial return perspective. Next year will offer plenty of more opportunities. Hopefully readers and I will be able to catch some of them. I want to wish readers a Merry Christmas and a Happy New Year!
As always, 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.

CS - Investmentbank bonuses

I must say, I found the bonus payouts from CS quite inventive and very much Investment Bank like. Paying out the bonuses to employees in the form of toxic assets I find quite inventive. CS is sitting on nominal 5BN USD worth of toxic assets. Alledgedly written down to nil. Only a part of this will however be paid out as bonuses.

Hopefully the employees gets chunky enough amounts that, if the market turns or counterparties dont default, they will stand to make a bundle.
Obviously employess would prefer hard cash, but in this current environment, it is better than nothing. And, as I mentioned, it depends very much on the size of the toxic asset share vs any hypothetical expected cash and share bonus. It could just work out.





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.

Trading themes for (1Q) 2009

Talk is cheap. Especially in this environment. The number of "known unknowns" and "unknown unknowns" to use the words or Mr Rumsfeld, are large.

Therefore, I feel very humble trying to forecast anything next year and will suffice with the 1Q 2009.


1. The Usd.

As I expressed last week, I am still a believer in a strong Usd.
Main reasons expressed in my Usd piece of yesterday.


2. More Bearmarket rallies.
Think the institutional cash will get into equities at any rally attempt, pushing it further. With China and Russia´s equity markets having lost 60% and 70% respectively 2008 and with a bearish market consensus this should have a high likelihood of taking place.

3. Continued high asset market volatility

Despite the implied assetmarket volatilities having come off from their highs (barring interest rate volatilities), I expect them to pick up again next year. Main reason being the huge current asset dislocations still in place globally. The massively overwhelming, but still low precision statedriven measures and countermeasures are likely to increase these imbalances further. This will generate a circle of reallocations, keeping asset implied volatilities at a structurally high level.

Implied assetvolatilities have come from a prolonged period of structurally very low volatilites, it is very likely we will see a period of the opposite.

4. Lower levels of global cooperation as fiscal pressures intensifies - welcome to a world of competitive devaluations

As recession/depression gets a stronger hold, governments will become more desperate as traction from monetary measures are not gaining foothold. The focus and awareness of fiscal stimulus measures will increase further. The competitive devaluation stimulus will be a very tempting bait for politicians and some are set to take it. In turn, this will decrease the integrity and resistance capacity on other governments and politicians.

This scenario is a very negative one but I unfortunately believe it has a high risk of happening. To comfort; All Centralbanks, Economists and Governments are very aware of this risk and will do their utmost to coordinate globally to prevent it from happening. IMF;S efforts to spew money around at the same time as they are not encouraging currencyregulated currencies to depeg should be seen in this light.,,,, Stability everyone, stability.

5. I am bearish the CEE countries, Russia, Turkey and South Africa.

The main drivers will vary slightly from country to country of course.
A few ones I see as common and strong though;

Russia will have a very tough time even with the Oil price rebounding. This is due to the huge debt exposure in hard currency that the Russian corporates are currently running. (200 Bn Usd ish). With the currency reserves just north of 400 BN Usd and outflows still a very real risk, it is not very likely that the CBR will continue to defend the RUB as currencyreserves approach 200 BN Usd.

IMF should save their reserves and raise more capital (if they can), because that rainy day might just happen. Question is whether the CBR and Putin (yes, he runs everything) will be quick to ask the IMF for funds or whether they will let prestige rule.

For their sake, lets hope they do the former and then let their currency go. If you ask me, thats the most cost efficient way of doing it. Any currency regime in this environment is doomed to fail. You can keep it if you want, but the leadership mentality should then be more inclined to support leadership a la Mugabe style, ie not very sensitive to the suffering of the people and the economy.

In any case, dwindling domestic demand, too high short end rates (I believe we will see sharply steepening yield curves for these countries), too big loads of hard currency debt, a very difficult refinancing environment and sharply rising unemployment will push these currencies weaker.

South Africa might get some encouragement from a non soft or even biddish gold price, but doubt that will be the driving variable. Overall weak commodity prices (Ill leave oil out of that ) will not help.



6. The Baltics will continue to be under intense pressure to devalue due to extreme deflation pressure

The main factor holding it back will be the Scandinavian Banks applying strong pressure on the Swedish authorities and the Baltic ones not to. Together with certain local influental interest groups. A devaluation will bring hard pressure onto Scandinavian banks, with SEB and Swedbank in the main spotlight initially.

Swedbank have at least recapitalised themselves, albeit at quite a late stage. SEB should probably do the same, but are keeping their fingers crossed instead. Remember, this is NOT an issue about cashflow, purely about creditlosses, for now. Basically all banks globally have positive cashflows and a good underlying business. It is the money lend by the Banks that is the issue at hand. This issue has the capacity to sink many a Bank.

7. The SEK

The SEK remains the most undervalued currency of the G20 ones from any fundamental valuation perspective. We all know the reasons; high global assetmarket volatility, global balancesheet consolidation, where the SEK has been relatively overweight as an assetinvestment destination. The Baltics. This situation will most likely continue to generate a relatively volatile environment for the SEK and Swedish equitites til the Baltic issue is resolved, discouraging investments into Swedish assetmarkets in the process.

Although fundamentally undervalued, I believe the Baltics issue and the impact it will have on the Swedish Banking system and Economy, will maintain the SEK;s weak bias vs the "hard currencies".

8. Catching up from behind the curve - the NOK

The Norwegian Centralbank has, as usual, been behind the curve. question is whether they will close that gap soonish. Lets hope they will. the Norwegian economy will need all the stimulus it can get right now. With OIL and Shipping at its lows, they are probably the most vulnerable economy in Scandinavia right now. Quick fiscal stimulus measures will be the key here. The NOK following the SEK down should hopefully help. (Competitive devaluations?)

9. Staying WAY behind the curve - The ECB

At some stage during the 1Q, the ECB will have to cut aggressively, realising just how far behind the curve they are. This will sink the Euro, which is just what Europe needs. Expect massive political pressure on the ECB to do just that. Having said that, I do have a lot of respect for the ECB;s very complex task of trying to create a monetary policy for a cohort of countries that are really a mish mash with no real correlation to fiscal situations and thus, monetary policy needs. Maastrich is already out the window.

It is no easy, even, almost impossible task to run a coordinated monetary policy under those circumstances . Fingers crossed.Further out, the PIGS countries will blow this currency apart.

As always,
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.

Freaky December in FX

Freaky december. Thin markets, year end flows, low risk tolerance. This year the December risktolerance is the lowest in the last 15 years, for sure, probably the last 50 years, if not more.

This means wild correlation swings and correlation breakups, as witnessed so far this December.
Trading will wind down next week as most participants will have tried to complete whatever they needed to do this week. For those who for some reason are forced to do it beyond xmas up to new year´s eve, the transaction costs will increase sharply. Any such flow in decent size will most likely move the markets substantially.

Therefore, I do expect digital markets shaping up for next week. 1 or 0. On or off. Either extremely volatile, or absolutely nothing. I am shopping options wherever implied vol levels are not prohibitive in order to get part of any windfall profits to be had next week while celebrating xmas. Today, while starting off at decent levels, implied FX vols have become quite pumped post midday. Complicating further buying plans.
Tommorrow might be a different cup of tea with w/e and holidays affecting theta bills. We will see. I am already long options and will stay that way.

Over the last 5 years, violent trend moves established during December have rarely lasted long in the new year, unless slow and orderly pre new year´s. I do not expect this year to be an exception, rather more pronounced on the same theme. Thus, I would be wary of expecting the Euro strength to continue for long into 2009.

More on main trading themes going into 2009 tommorrow.






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.

Eur/Pln - I am taking profit and squaring - for now.

Eur/Pln has reached a high of 4.1874 today and I squared in the 4.17 area. It has been a swift move higher as I expected and I am opting to take profit. I am square for now and will await further developments. I will most likely buy on dips towards the low 4 area or alternatively on a break of 4.20, since I am still quite bearish on CEE and PLN.
Unfortunately, pricing of options are such that there is great difficulties of getting value out of it from here. Hence I am forced to the cash market.




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.

Still short Usd - but looking for a comeback

A very sharp drop for the Usd over the last two weeks have shifted market sentiment substantially against it. "The Usd rally has peaked", given the fiscal issues and interestrate differentials, the Usd will only go weaker from here, seems to have been the main argument.

While I do not disagree that fiscal issues and interest rate differentials play a role, I believe there are some other factors that must be looked at before saying the Usd rally is over.
In fact, I do not believe it is.

This December move has had more to do with general Euro strength. Other "high yielders" like Aud and Gbp have lagged vs the Usd.
If the Us fiscal issues would have been the cause of the move, we should have seen the CDS on US Treasuries rise sharply. We havent.

I suggest we look to the CEE area instead, where we have seen the Euro rise sharply vs certain CEE currencies. The CEE situation is becoming rather precarious and will weigh heavy on the European banks. As we have been running up towards year end there have beeen strong incentives for them to reduce overseas exposure and shore up their balance sheets. Hence repatriation flows into the Euro are taking place, with the low market liquidity exaggerating the move.

So for the rest of this year, repatriation flows and the widening yield differential could propel Eur/Usd further up towards the 1.47/1.50 area.

Going into 2009, I am tempted to become Usd bullish again.
Why is that then?

Well, fine, we all know that households, banks and corporates are all under pressure globally, consolidating their balance sheets. With the US being a net liability holder, this process is normally interpreted as working against the USD.
I dont necessarily buy into this at this stage.

With foreign investors mainly invested in (the relatively safe) US denominated debt. US based investors have their main foreign investments in (the relatively less safe) stock and high yielding bondmarkets.

However, with QE(Quantitative Easing) in place and US authorities aiming to bring credit spreads down, foreign investors in the US holding corporate and agency paper will benefit.
Since 25% ish of agency and corporate bonds in the US are held by foreign accounts,
getting the spreads to tighten will only happen if they remain committed to their investments.
A falling Usd does not work in this context.
Hence, as long as credit remains the main policy variable for the US authorities, they will have no incentive to weaken the USD. Quite the opposite.

If one expects the US to be the first country to rebound out of the current recession/depression and that this will happen during 1h 2009, yield differentials will move into the USD´s favour. With Euroland still behind the curve and most likely to do too much too late, starting early next year, there is a strong case for a lower Eur/Usd right there.

However, before the yield differentials move into the Usd´s favour and consensus starts shifting about the Usd direction, Eur/Usd will likely have fallen quite a good distance already.

I believe the more proactive and focused policy responses seen in the US compared to the slower and traditional policy response seen in Europe should keep the US asset markets relatively attractive to global investors and provide support for the USD.

Net net; For the remainder of this year, I do not rule out Eur/Usd touching 1.50. I am still short Usd and will keep a very pragmatic negative bias for now.
Going into 2009 I will look for evidence to position myself long Usd, looking for a move sub 2008 lows at 1.2330 within the first couple of months of 2009.

As always,
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.

FED and the 0ishrate policy +QE; Its the velocity-stupid!

Leverage
This reminds me of the PLN corporates I mentioned yesterday. They were hungry to reduce corporate hedging costs in a very low vol environment via taking on leverage and optionality short exposure. This leverage has now put them into severe difficulties, to the extent that the risk is affecting the country´s GDP.

This is the US version of it. In its quest for restarting growth and stopping deflation and debt spiral, they have now borrowed 2 TRN USD in 2009, cut rates to zero ish and introduced quantative easing.
(US Equities are still down 40ish% Y/Y, US 10 YR yield is 2.25ish%, US 30 YR yield is 2.75ish% with US core inflation at 2.0% and US O/N lending rates at 0ish%.
The Usd/Jpy carrytrade these days is to sell Usd/Jpy!)

It will generate massive riskmanagement issues for the US economy going forward. Having said that, relatively speaking, I believe they will be better off than regions such as Europe.

Admittedly, US will start 2009 on the verge of recession. Everything looks very gloomy. Leading indicators, production and orders have collapsed, unleashing deflationary pressures. Liquidity is hence provided a la helicopter Ben. It is being spewed out in desperation of getting that availability of credit going again.


The velocity of money is what counts
Without velocity of money, just pumping in liquidity without any other measures, will have as much effect on getting the economy going as pushing on a piece of string.
Once the US economy do gain traction, the mighty power of velocity of money in the monetary base will be felt in the form of very quick acceleration in inflation. The extent of that inflation increase will be strongly correlated with the amount of money that have been pumped into the monetary base. Stagflation will intially be a significant risk with this kind of debt leverage.

For now, the measures taken in the US is most likely overkill from a pure liquidity point of view. Having said that, US will probably be the first one out of the jaws of deflation. Compared to Europe, US is the best in class. Europe will, relatively speaking, be frothing with slowness and/or inability to act, political bickering and policymistakes. The overwhelming risk in Europe is that they will do too much, too late. Fiscal authorities and the ECB seems to ignore that Eastern Europe is about to fall apart.


This is a process,effect is lagging
Just as a driver, skidding on a snowy road in an "old school car" (no ESP etc) can only turn the wheels to a suitable angle and wait for friction to return and then adjust again, monetary policy authorities will have to have some patience for the process to work through.
This timespan can be used to launch smart infrastructure projects.

The driver will only put himself in a worse situation by turning the wheels too much, while awaiting friction to return.
From an economic point of view monetary policy authorities run a similar risk. Unfortunately, noone knows what the right angle on the wheels should be when friction and monetary velocity comes back.

This time span could be wisely spent launching infrastructure projects. This would help getting the monetary base moving and increase the velocity of money, without the negative effects of pumping up the monetary base to extreme levels. This is what I want to see from here.
I expect US to be first, and Europe to be a very distant second or third.

How will this affect the USD?
More on that in a piece later.






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.

Eur/Pln - 4.00 Barriers taken out,- on its way to 4.20?

The barriers has been taken out, marketmakers are scrambling to cover their short gamma. Polish corporates scrambling to cover everything. Market is still awaiting the national regulator estimate of the Polish corporate Fx Structures related losses. Whatever the number they release, suspicions are it will be too low.
Being December and all, will we see 4.20 before year end? Currently at 4.05, it would not seem impossible. I am staying long Eur/Pln.






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.

Eur/Sek; First target at 11.00 achieved

Eur/Sek had a swift move to 11.00 yesterday. Thin December markets the biggest factor in the swift move. Corporate book rebalancing has to be done and this is the result. I will not blame it on the Baltics this time around. Next time, maybe.

Still long Eur Calls/Sek puts thinking about letting them go or rolling the strikes higher. Bought Eur puts as well for an initial correction lower and locking in profits. Take it from there.






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.

FX;PLN; Corporate hedging gone horribly wrong

The perils of very low volatility,,,,
Polish corporates have cheapened their corporate hedges in a very low volatility environment by selling optionality via structures. (When PLN was trending stronger, back in the leverage days, if anyone remembers them).

On the back of it, they are now basically short gamma, vega, vanna and volga on highly leveraged positions. I dont know what plan B was, but it should have included some form of riskmanagement. Right now though, it seems many of these corporates are caught up in this unpleasant situation with huge losses to follow.

Size of the losses are such, that Economy minister Waldemar Pawlak last week warned of "potential losses in the billions of Euros" and added that those losses were "a threat to the Polish economy".

The financial regulator has mentioned that the losses will be less than 1% of the Polish GDP , but with a Polish GDP of around 350 BN Euros, it is still quite chunky.
Further, talk is that most of these structures have NOT been unwound as of yet and that collateralisation against losses has been rather limited so far.
Hence, chunky margin calls will be rolling in soonish, putting pressure on these corporates to come up with additional capital, bringing the losses further into the spotlight.

The Polish financial regulator is supposed to release the loss estimates by the 15th or 16th of Dec. However, it will be quite difficult to make a correct macroeconomic estimate on this one and the risk is that the number will be too low.

4.00 in Eur/Pln is supposedly a big barrier level which will trigger spot buying from the options market north of it. On top of this, there is a high probability corporates will have to start unwinding long PLN positions on a massive scale before long. This all has the ingredients for a swift move towards 4.20 should we break 4.00. Spot is currently 3.9875, so very close.

This is just the FX impact.
Naturally this will have ramifications for equities, corporate CDS´s and corporate bonds.
It should also speed up the steepening of the Polish yield curve as corporates go down, unemployment increases and domestic demand takes a hit.

Likewise, it does not spell good news for the Euro either. (I am, as any frequent reader will know, not bullish on CEE as a whole, which will be a drag for the Euro)I am still long Eur/Usd and will try to ride it towards 1.36, but I am getting ready to buy Eur Puts and reverse the position.
I am adding to my Eur/Pln long.

As always, 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.

Good news at Swedish insurance company Folksam?

Talk that Swedish insurer Folksam made 5-10 Bn Sek on being long Bond Calls. Sounds great. They will surely need it if they are to guarantee the Swedbank IPO.
Folksam will still be in trouble as they will get dragged down along with Swedbank, me thinks.
Anyway, although not confirmed, nice with some positive stories at least.



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.

Bad news at State Street?

Anything in the works at State Street?
Friday was a wild options trading session for State Street.
According to Optionmonster.com,turnover for puts soared from a daily average of 1,800 for the last 30 trading days, to 14,000 during the first 90 minutes of trading. January 25 puts had a turnover of 5,500 contract, of which 4,400 in one print at $1.85 and implied volatility spiked from 79% vol to 100% vol even as spot went higher.

It now look like 36 USD might be an important closing level on the charts. The stock closed at 37.24 USD after having printed a low at 33.68 Usd.

Sizeable increase in volume.
Unless a close out, it should definitely have distorted the options portfolios out there and will have a big effect on the market price action should spot drop below 30 USD.

Will try to find out more on this one. Stay tuned.






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.

Market passing the test with flying colours

Got to stay constructive for equities going into this week. Second Friday in a row where the market has turned around a very dire data and news situation. The positive sentiment weve seen for the last two weeks is staying strong and the positive signals are still there.

Over the weekend there has been some positive talk as well;
* According to WSJ, President elect Barrack Obama´s team is considering a stimulus package over two years of 700BN-1TRN Usd. Two weeks ago they were considering a package of "only" 500BN Usd.
*From Bloomberg; "General Motors Corp. moved closer to a possible government rescue yesterday as the Bush administration said it may tap a bank bailout fund for financing and GM's top executive discussed terms with administration officials."

Should be enough for a positive start to the week.
December might just get a nice run up to xmas. Beyond that is a different cup of tea though.







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.

Madoff and the 50 Bn Usd ponzi scheme

Bernard L. Madoff Investment Securities has been up and running since 1960.
Madoff, a former chairman of Nasdaq, alledgedly applied the "split strike conversion strategy", which essentially meant owning stock and buying and selling options in order to limit downside risk. The management was really tight knit with all of them being family members.

The reported returns were extremely stable with 7.3% - 9.0% since 2004.
For the last decade reported reurns has otherwise been in the low double digit returns.
Due diligence advisor Aksia investigated Madoff´s firm for 18 months and the conclusion was for clients not to invest. Aksia never suspected fraud, however.

During September and October, the firm reported zero ish returns, which surprised many competitors. In early December the firm faced 7BN Usd in redemptions, which could not be met. Hence, the scheme was revealed.

Investors consisted of 11-25 accounts, of which 50% were hedgefunds, the remaining being high net worth families and charities. Hence, many other funds and clients are dragged into this as well, since many of the funds were so called "feeder funds",

The fund managed 17 Bn Usd, leveraged to 50 Bn Usd. The loss is expected to be 50 Bn Usd. Investigators suspect this fraud went on for several years.

Obvious risks are that hedge fund redemptions could see an increase again from investors getting another variable to worry about and asset liquidations as hedgefunds and other investors hit by losses sell other assets to cover.
All in all, not helping sentiment. Us will lead the way on this of course.






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.

Would they or wouldnt they? They wouldnt-for now

Litmus test for the market today with the US Senate rejecting the GM, Ford 15BN Usd bailout plan. Doing the right thing, if you ask me. Global political tensions already increasing as seen in the bickering between Germany and the UK, and it will get worse as we move along. Bailouts will just make it worse. Unfortunately I do not think we have seen the end of this bailout story yet.

As politicians realise the seriousness and length of this recession/(soon depression?), they will need capital for infrastructure projects instead. Dont spend all the bullets on bailouts and fiscal stimulus, infrastructure projects will provide more bang for the buck for any recession with longevity. Fiscal stimulus is the short term solution and bailouts are just silly. Just stop it. Change tac.

The Swedish government should stick to their original strategy instead of throwing good money after bad to the Swedish auto suppliers, as was done yesterday. Fine, thats not exactly what they call it, but in essence, that will be the main effect.

For what is expected to become a negative day, the question is how bad? Will the positive market signals we have seen over the last few days make it through this?
Well, so far, the signals havent been that good, Usd/Jpy reached a low of 88.10 overnight, Asian equity markets down with the Hang Seng Index leading the way with -5.9%. JP Morgan CEO saying Q4 trading "terrible"and Blackrock CEO saying Q4 results being "horrific" does not help.

Will monitor implied volatility development from here but risk is of course that this was just a brief relief and that we go back to the trend again. However, given the positive marketsentiment over recent days I will await the full day before saying it is over for this year.

I have now added puts to my former calls in US Bank stocks, still long USD puts vs Euro.
Added to my long Eur Calls vs Sek after the bad Swedish unemployment data yesterday, looking for Eur/Sek to test the alltime highs of 10.79 before long, on its way towards 11.00.
Long Eur/Pln. Emerging markets is a clear and present danger here, we will soon be aware of how big, unfortunately.

As always, 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.

Beware of the Russian Bear

CBR reserves plunged by 17.9 BN Usd last week, up til 5 Dec.
12 Bn Usd of those stemmed from capital outflows and the RUB weakened by 2 % against the basket(USD 0.55+Eur 0.45).
This morning the RUB weakened by another 1% vs the basket.

The country´s sovereign creditworthiness is now in focus as oil prices stay weak and outflows continue. S&P recently downgraded the country rating to BBB with a negative outlook.

With PM Putin on the barricades reiterating again and again that there will be no "sharp moves", the currency reserves dwindling (now at 437 BN Usd as of 5 Dec), and total sovereign and quasi sovereign external (hard currency) debt at 195 Bn Usd (as of 1 July), Q1 of next year may very well provide very sharp moves for the RUB. CEE will take its que from it. The Baltics even more so.

Monitor this one.







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.

Implied volatilities collapsing

Implied volatilities has collapsed in FX and Equities. Fixed income volatilities are still holding up due to the TARP programme forcing down long end yields. This combined with end of year cash flows has created a strong momentum in the bondmarkets with US 10 year yields falling to the extremely low level of 2.67%.
This is a bullish signal and will lure investors into the market short term.

On top of that, Bill Gross at PIMCO yesterday concluded that there is a "bubble element" in the TBill market as yields hit zero yesterday at the treasury 3 month auction. (30 Bn Usd was issued at 0% yield).

Look out for near term flows moving out of TBills and bonds into more risky assets. Watch the 10 year yields. Such an event would create implied volatility spikes in the fixed income markets as this is by no means priced in. Effects on the Equity and Fx market could be swift pro risk moves. (Higher Equities, lower Usd, stronger risk currencies) with vols coming off. Long gamma, short vega, should be the non Fixed Income vol play in such a scenario.

Oil rebound could be in the works as well, benefitting the RUB, NOK and CAD.
With all these bullish signals I will be long Equities, short the Usd, short term.
However, will also use it to reposition for another bearish wave development post it.

Morgan Stanleys very bearish depression report published this morning has not caused any massive falls in the market, indicating the market sentiment is still to shrug off bad news and focus on the positive ones, lowering implied volatility in the process.

There is one area that is still a big concern and it is spelled Emerging markets.
Check out Eur/Pln. Pln is weakening as we speak, and has done so for the last week, despite these bullish signals. Something to be concerned about despite the current positive sentiment.







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.

Swedish Fin Min Borg believes Latvia is "bailable".

So far, The Swedish Finance minister Borg has done a good job, I think (apart from the Swedish Bank bailout plan. Got the impression it was a very hasty one with no real incentive for banks with a competitive advantage to join in.) He has kept a very firm and sound line in many issues.
Now, however, it seems to me he has lost his way.

Instead of having to bail out SEB, Swedbank and Latvia once. It now seems he is in the process of doing it twice. Even if the currency regime, against all odds, would hold, they would need more money still. Reason is the nuclear meltdown of the economy. It has started, and if other countries with floating currencies think they are having a tough time, they have no idea. Not compared to a country with a fixed currency regime. Likelyhood is thus very high there will be a deval in the end anyway. With Mr Borg and the Swedish taxpayers paying twice.

Mr Borg, his advisors and the Riksbank should know better. Or is it the Swedish banks lobby that has talked him into it?
Admittedly the ECB seems to be in the same corner. That is not necessarily an advantage though. I would suggest using the EU funds to guarantee the Emerging markets bankingsystems instead. Perhaps something for Mr Borg? And oh, your very own Swedish banks IS the bankingsystem in Latvia and the Baltics, Mr Borg.






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.

The reasons I dont like the Auto bailouts beyond Dec

As promised this morning, a short piece on why I dont like these auto bailouts (or any other non bank-essential one for that matter)
Bailouts = Subsidies = Protectionism = Competitive devaluations. All in the name of getting domestic demand going again.
Competitive devaluations in this environments means a HUGE risk for the global GDP.
Competitive devaluations would mean a lot less coordination globally. It would most likely mean the global monetary base expanding at an even faster pace as monetary policy would be used as a means of increasing the domestic liquidity base even faster as well as lowering the value of the currency.

The worst country example would of course be China. Lets just hope they dont drastically lower the value of their currency. We dont need them as a global deflation machine at this point in time.

What do I suggest?
Use this opportunity to speed up restrucuring processes that would have taken place over time anyway. This represents a unique opportunity to save time and money in that very process. Take it. Activate infrastructure projects that were planned over a longer time span and implement them over a shorter time span instead. There should be auto labour being able to transfer straight into the infrastructure projects. Other fiscal stimulus measures to be added as well to soften the transaction process.

BUT, as mentioned earlier, markets dont care about this dilemma, for now.
So lets not concern ourselves with it, not for the next few days anyway, and hopefully, few weeks.




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.

Chinese statements supporting equities, yielders

Comments our of the Chinese Central Economic Work Conference suggests that the Chinese authorities will be focusing their efforts on boosting their domestic demand via dramatic increases in public spending and tax cuts. They also wants a stable CNY at a "reasonable level". The statement and decision to boost domestic demand via fiscal measures instead of external ones (weakening the CNY) should be a welcome relief to the markets. Short term, it should provide support for equities and weaken the Usd, lowering implied volatilites in those assetclasses. I am staying long Us equities, going short Usd via options.

As mentioned earlier this morning, markets are shrugging off bad news.
The following bad numbers were more or less ignored;
- Chinese exports contracted 2.2% Y/Y in Nov following gains of 19.2% Y/Y in Oct.
The first contraction for seven years.
- Imports plunged by 17.9% Y/Y.
Trade surplus at record highs of 40.1 BN Usd.

ECB Nowotny came out on the wires today further supporting the markets by indicating full commitment of EU funds to any European Emerging Market country in potential need of it. Thereby indicating the consequences should they fail. It is a massive commitment in my book. A mistake perhaps, but will be soothing and supporting for now. Lets end it with that bull feeling while it lasts.








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.

Steady as she goes - early(mini) xmas this year?

The bear rally still holding, ish. Yes, ok, US down, but market reacting to any bit of positive news these days and largely choosing to ignore the negative (and discounted?) ones. Sounds short term bullish to me. Im sticking to my long US bank calls for now. Not planning to be a long term structural holder of them , but still,,,,

Hearing institutions on buying strike when it comes to Swedbank and SEB. Very interesting,,, although I do not perticularly like them and there is the clear and present danger of new capital having to be raised, Latvia doing a deval surprise, (yes, I know theyve said they are not going to, but, thats part of the game) etc,,,, I feel tempted taking on a very short term bet going long,,,, must be loosing it. However, NOT in cash. Options only. Very important. Using the Dec maturity.

For the record; Beyond short term, I do not like the bailout processes going on at the moment. Not one bit. Short term it is being ignored, but not for that long.
More on this and other topics later today.

Be lucky.







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.

Bullish turnaround on friday - solid sign?

I was very impressed with the bullish turnaround in the US equity markets last friday. Especially on the back of the disastrous news that day. It makes me wonder whether we will see an US led equity rebound from here. I will be adding to my US equity calls today. Will take it from there. Todays US close will become interesting.
Watch rebounds in Brent Crude Oil, higher 10 year US yields.

The big problem still; Emerging markets.



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.

Went on a trip,,,,

Went on a trip to Lon last week, got back this W/E.

A few observations from the trip;


+ Met up with my brother´s two month old babygirl, his second one - wow she was really tiny, how quickly one forgets... Great to see him and the rest of his family. A lot of fun.

- Not surprisingly, a solidly pessimistic outlook on personal opportunities from people in this business. Many fearing next year. Especially on the sales side. Traders not that concerned, naturally. Hedgefunds with a mixed outlook depending on what strategy they are running. Common concern is and will be withdrawals combined with fee structures. Perhaps also not so surprising, even the ones doing extremely well not expecting to get paid anything close to what they should get.

+ The ones I know have done extremely well, I am very happy for them. They will keep their jobs AND get a bonus.

+ Saw blue skyes everyday! In London!

+ Bars are still there. Even went to a wine bar and worked hard to seek out the best wine.
Hard work, but somebodys got to do it. Loads of laughs with people I know made it a very joyful experience. Thank you.

Remember; There will always be opportunities, and in this market, even more so.



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.

Latvia deval on the backburner,,,,for now.

Sold out my SEB and Swedbankputs on a lucky dip in the stocks around lunch.
Went shorttem short Eur/Sek this AM and just squared it.

Unfortunately for the Latvian population, the max cost alternative for Latvia has been opted for. Hopefully, it is just a spoof and they will deval soonish anyway, otherwise it is just sad. The Latvian economy is now doomed to continue its nuclearlike meltdown before the devaluation takes place.

I will now leave this case on the backburner til there is any new information.
Sek should and have recovered on the back of it. After slicing through the 10.50-54 support area this morning we are now at 10.39, after having reached 10.78 friday evening. We should base in the 10.30 area.
The divergence showed on the charts is something to take seriously though.
Will monitor this one.






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.

IMF says NO DEVALUATION in Latvia

Will follow up on this one.

Swedbank and SEB will rally on the open.
SEK already stronger since this came out yesterday PM.
Divergence on the SEK charts as well.
10.50-10.54 is important support for the Eur/Sek.'
Ive sold most of my long Sek puts, got smalls left.
Still long Bank puts. Will gap higher on the open so will be opportunistic.
Stay posted.




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.

The Baltic wave

Talk that IMF officials were inofficially promoting a depegging of the Lvl in conjunction with an IMF package were officially confirmed by the Latvian finance minister, Atis Slakteris and a finance department spokesperson yesterday.

The COL has already spend 23% of its currency reserves, without any external speculation. The domestic need for hard currency is set to increase. This might very well break the currency regime from within. It seems we are inching closer to a float.

As if the Eastern front wasnt looking gloomy enough, GS earlier in the week released their new Russian forecast. They now expect the RUB to decrease by 25% vs a basket of Eur and Usd for 2009. Well, if they say 25% over a year, the decoded message might perhaps be 40% in 6 months.

It is not looking good, not at all as long as Oil is getting drilled. (Pardon the punt). The Emerging implosion story will have to run its course before assets have a sustained turn. We still have a bit to go there, and there are other waves coming as well, the Russian one, the Chinese one, the Brazil one, etc etc
Sounds too bearish? Perhaps, but Im just calling it as I see it.

We aint seen nothing yet when it comes to Emerging market yield curve steepenings. This seems to be an opportunity knocking together with the ensuing currency weakness. For individuals it might be tricky getting access to this one. For institutional market participants, it is easy peasy

Eur/Sek to test the all time highs of 10.68, targeting 11.00 on a break. A float could take it beyond that though.
My guesstimate would be that SEB and Swedbank would be diving for 25 and 15 Sek respectively, on a float.
I am increasing my long Swedbank and SEB puts, Sek puts vs Euro on the back of it.

As always, 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.

Competitive devaluations to come in the BIG one? and Australian consequences

Usd/Cny has gained for two straight days now(0,6% and 0,26% respectively), closing at the high of its trading band. Nothing strange with that initself. Why is that then? Well, the Chinese PMI yesterday fell from 44.6 to 38.8.
Chinese assetclasses are all way down this year.

Worries are now arising whether China will make dear policymistakes in adressing the falling domestic demand situation. Last week they already made one when they cut their exportduties, increasing competitiveness within an already falling market. This will increase deflationary pressures globally and weigh on equity markets going forward. (Admittedly, PBOC later today denied that the recent weakening of the CNY was part of any policy shift.) Eur/Usd bounced higher from 1,2570 up to 1,27 plus on the back of it.

Unfortunately, there is a real threat of this taking place as other countries have already started the competitive devaluation race in the face of falling domestic demand. The difference here is,,,,, the difference. China alone has the power to export deflation globally by itself. Not good. Also,,,, remember, China received massive inflows of speculative capital over the last years. A significant share of which is Usd funded.

This still represents a gigantic short Usd position. With Chinese equities and realestate getting hit a weakening CNY could be the trigger for another big wave of Usd buying. Not to mention the situation of other Usd thirsty emerging market countries such as Russia and perhaps soonish, Turkey.

If so, the Aud will come under renewed pressure as commodity prices would be presured further and global risk aversion would increase. China is the biggest export destination for Australia as well. The RBA cut rates by 100 BP today, but real rates are still too high at 0,95% (Nominal 4.25%, inflation 3.3%) in this credit crunching environment. The Aud should remain under pressure.

Going forward, the adjustment process for emerging market will become a very significant factor. In the process of staving off falling domestic, demand many will be tempted in using the currency tool. This will include emerging market countries and China. To be monitored.







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.

A new month,new opportunities

Going into the month, I have a few main themes;

1) The rebound in US bank stocks
2) The Baltics - Scandinavian Banks - Swedish currency domino dilemma
3) Russia, Turkey, South Africa and CEE`s downward slide gathering pace


1) The US bankstocks rebound from last week will most likely stop today, at least temporarily.
In light of last weeks positive developments; VIX falling off a cliff, credit and mortgage spreads tightening, I will focus on whether US banks stocks will fare any better than their European counterparts. Looking for any break up in correlation.

Overall, on a relative basis, it seems to me there is more gloom and doom to come out of the Eurozone from here. Lets face it, the Euroarea itself sits with all PIGS countries running unsustainable deficits already, and we havent passed Zenit as of yet. Those CDS spreads are not looking good. I guess the Maastrichtcriterias are out of the window from here on. In this environment, those countries will realise that "debt lasts, assets dont". Fiscal stimulus or Zero rate policy, anyone? Skip the talk about joining the Euro. Ask how long will it last instead. The strains could become overwhelming in this recession.


2) IMF releasing terms and conditions regarding their loan to Latvia this week. If Ukraine is anything to learn from, the UAH has been allowed to slide in line with IMF recommendations. The fact that BOL only has reserves for another 9 months if they keep on supporting the LVL at the current pace provides a clue. One should also notice that there is no external speculation in the LVL due to the wide forward spreads. The outflows stem from internal flows combined with the Scandinavian and Swedish banks covering their needs. With an imploding economy, empirical and logical evidence should point in the direction of a float, sooner rather than later. This despite official assurances of the opposite. Scandinavian and Swedish banks should suffer if so. So should the SEK. Will review timetable post this week.


3) These countries downwardslide has gathered pace recently and it seems like we should see more evidence in assets there deteriorating going forward. This will hurt Europe the most.
Turkey has alledgedly been receiving quite a bit of FDI and realmoney flows from the Gulf states up til now, helping Turkey in avoiding a steeper downturn. Those flows are now drying up and Turkey will surely need all the IMF money they can get. the sticking point with IMF at the moment is the fiscal discipline area, where Turkeys current government is trying to avoid the IMF straightjacket. Russia is sliding and CEE ditto. The process of steeper yieldcurves, weaker local currencies is already in progress. Europe will be hit hard.




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.

End of month Usd buying at the Lon 4pm fix?

Due to S&P being down 10% on the month, there is guesstimates that today will bring 12-15 Bn Usd of Usd buying mainly vs Euro, Gbp and Aud. Last month it was widely talked about and discounted. This time it seems less discounted, although the amount is also about half the one in October. Expect heavy Usd buying as we approach the fix. Watch out for Usd selling post it. Hence, should be quite choppy price action around 4pm Lon time.

Russia - slipping on that slippery slope

The Russian centralbank confirmed they are widening the RUB corridor at the same time as hiking interest rates from 12% to 13%.
This was motivated by; "stemming capital outflows and dampening inflationtrends". Smells like they are loosing the grip to me. Hmmm,,, perhaps the bull rally will not last that long? At least not in Europe. I honestly hope that the Latvian government knows what to do in this situation. First thing I come up with is for the currency to float. But then again, what do I know?

Where is the Swedish Riksbank contingency planning? They need to become more proactive on this issue and realise that this is a very serious crisis, coming soon to a Swedish bank and currency near you. Get involved. Stop pretending everything is hunkydory. The Swedish banks will lobby their hardest in order not to float. They should be ignored.

Anyway, keep a very close eye on the developments in Russia nearterm.
If the Russian bear should fall, it would drag many others with it, with strong repercussions for Europe.

For anyone interested, go to http://www.imf.org/external/index.htm and read the IMF;s latest working paper on "The tasks ahead". In essence, it highlights the very problematic funding issues for the IMF in order to be able to support the Emerging markets, as well as the necessity of it. Not very encouraging reading if one expected the Emerging market funding issue to have been all figured out. Any big Emerging country going down, such as Russia would cause major problems as such a country by itself, might empty the IMF;s funds.

GS downgrading Europe - big time

For the first time in 25 years, the GS European chief economist is making a dowgrade just 1 month after the previous revision. This underscores the severity of it, in my opinion. Doing such a thing is a hard prestige hit. Europe is going dooown, if anyone thought otherwise.
GS is revising Eurozone GDP growth for 2009 from -0,3% to -1,3%.
The biggest recession in postwar history.

This is equivalent to what Sweden went through in the early nineties, in what is regarded as the worst banking crisis in European history. (Although I guess it has faded somewhat compared to what we are witnessing in the global banking industry this time around.)Well, we havent seen the Baltic "subprime" collapse unfold yet. Scandinavian banks will surely get a chance to break their previous record. I reckon theyve got good chances of achieving this. Will be a strong sense of dejavu for the Swedish Riksbank, but with a new twist, bailing out the banks AND the Baltics!

Enjoy the ride of this bear rally while it lasts and make money on it, but dont buy into the story that we have bottomed. It might last one more hour, day, week or month, but, not months or a year. I want to see a solution to the Emerging market story first. A downgrading of Europe is NOT going to help.
I have bought calls on US banks, looking for US equities and banks to outperform other markets in the short term.
As always, good luck!

No Latvian pegchange demanded by IMF, it seems,,,,

LATVIAN IMF PLAN WILL NOT CHANGE CURRENCY PEG, GODMANIS SAYS.
"Stupid is as stupid does", as Forrest Gump used to say.
Guess Ill revise my timing on this one then, unless this is a political classic in these matters, saying one thing and doing another.
Lets see. In any case, I hope the population agrees with this, and I also hope the politicians have found a solution. Really, I do. Its just that I dont quite know myself what that solution would look like with the current currency regime set up and given the global macro environment.

Equitymarkets up for the 4th day, and counting.

Bearmarket rally, still rolling. Will it continue? Well, everybody trying their hardest, for sure.
US quantitative easing in full progress post Tuesdays Usd 800Bn Fed funded programme to buy GSE and other mortgage debt. Bond and mortgage yields falling on the back of it.

* US home (average) loan rates declined from 6% on Monday to 5.5% on Wednesday. Stressed mortgage rates for 30 year fixed loans fell from 6.33% Monday to 5.97% Wednesday.
Corporate bond spreads declining along with mortgage spreads, all supporting the equity market, which has responded very well.
* Citigroup jumping ca 85% since the closing last friday, with the rest of the banking sector tagging along, although with various speed. All courtesy of the US Treasury.
* One of the delevaring indicators, the USD, has weakened against the Euro from 1.24 last week to over 1.30 yesterday. Sub 1.29 today. Emerging market buying of equities and currencies, with the EU bringing cohesion funding spending forward.

Question is, will we now see the pools of unleveraged liquidity, generated from the forced asset liquiditation over the last months come back into the market? Will attractive valuations be enough? If so, there will be a substantial bearmarket rally. Institutional realmoney will be the main indicator. The "Once (or twice/third) burned twice shy" rule is still applicable though. Capital preservation focus should still rule for now.
Watch this space.

Me myself am dipping my toes using mainly options. After being long US bank puts, I am now long ditto calls as well, having reduced the puts. Want to get hold of Brent Oil and Gold Calls, but easier said than done at the moment.
Monitoring the Emergings closely.
I am still long Swedish bank puts due to the Baltics, long Fx Sek puts vs Euro for ditto reasons. (There are other reasons as well, more on this later).
Still long the Usd in cash.

Happy thanksgiving! Count your blessings and best of luck.

Oh no,EU bailout, 6.5BN Usd to the autoindustry

So it has officially started, the bailoutrace. Wrong track. This will lead to protectionism and competitive weakening of currencies in efforts to jumpstart "their own" economy. Suboptimal global GDP growth is NOT what we need right now. Oh dear,,,

Full throttle against the raging river

Been away on a trip. Looking into a company with a very bright future.
Quite a few events taking place meanwhile;
* General and specific packages being launched in US, UK and "promised" in Europe.
* Tax cuts talked about in Europe, US, tax hikes for the wealthy in the UK.
* Global rate cuts continuing globally. As Ive mentioned before, we are now seeing Emerging markets joining in as well; Russia, Turkey, Poland, South Africa, and more will follow. Expect weaker currencies there, but first the short Try positions are being flushed out.
* Quantitative easing showing its effect in the long bond market with long bond yields falling heavily in the US.
* FED buying MBS and GSE debt, in essence directly supporting the consumers.
* However, Usd funding demand very heavy, especially from UK banks, pushing 3mth eur basis euribor from -120 to -165, 3mth cbl, gbp libor was -165 to -212. Cbl was at its highest to start with, so it has just kept pushing. Next week there will be an 84 day ECB auction.
So far these auctions havent attracted much demand due to their current rates being 40-50 bp above the market. This level is now attractive due to market developments, so expect heavy demand there. Cbl situation does not seem to get that relief. Anyway, where am I going with this? I am concerned that liquidity spreads are widening when state money continues to be injected on a scale never seen before. To sum it up; Extreme amounts of money, but wheres the velocity? Without money velocity, no "bang for the buck". More Tax cuts and infrastructure programs to get people into work, please.
All in all, the efforts made by centralbanks and governments globally is simply massive, extraordinarily, for a lack of a better word.
* I am now concerned by the velocity of money. It need to be sped up. This is where the fiscal measures come in. Instead of spending money on dinosaur businesses and corporations, please make sure people get money in their pockets by making labour cheaper via lower taxes for employers as well as lower income taxes and VAT.
* Governments should invest in infrastructure projects, there are plenty to choose from. Some are even urgently needed anyway. This will achieve higher efficiency, productivity and profitability, making each country more competitive. We are facing a worsening global macro outlook. Making the right decisions are key here. Unfortunately it all smells like protectionism in the end. As long as the bailout talks of various industries persist, anyway.
I suspect unemployment will have to rise towards 10-15% in western countries. Higher in Emerging ones. At least, infrastructure projects can sort some of that out, or at least cap it.
Net, net;
Hard efforts are being made, but not enough fiscal policy measures to make me bullish.
Im still bearish.
What comes after deflation? Inflation. Not really on the radar screen as of yet, but something to keep in the back of your mind. Now; Cash is king, then; Cash will be the worst place to be.

Something going on?

Eur/Sek reaching 10,58, Swedbank down 8% from up 5%, SEB down 6% from up 4%,,,,
Well, I guess there is a weekend coming up,,,, Time to make an IMF deal?
Hold on to those Swedish bank and Sek puts.
Dont miss out on the Austrian bank puts either.
Good luck

What now?

Asia not behaving as I would have expected, for sure. Seems like a classic weekend clearing with assetshorts getting squeezed. We have seen similar tendencies in Europe and could end the day on that note in US. However, beyond the noise, we still have a bear case.
Yesterdays news that Latvia was in talks with the IMF sounds like a clear and present danger that they will let their currency float before long.
Hence, buy puts on the Swedish banks , sell the Sek.
We will probably see further rate cuts globally on the back of Switzerlands 100bp cut yesterday. Plus IMF money being cascaded left, right and center. This will create violent short squeeze rallies. On top of that, Citigroup wants a short selling ban. Anyway, when the dust has settled, I believe there is a quite high risk that IMF and others will have come up short vs the economic realities.
Use options, dip your toes buying calls for short asset shortsqueezes. Reposition bearish again post it.
When it comes to Swedish banks, just position short via options. Do it now, despite the short squeeze risk. Since the Baltics is Swedens own mini subprime, Swedbank and SEB is likely to follow in the footprints of Citigroup. Ie they both have a good cashflow, like the vastmajority of banks, but the creditlosses will/can wipe them out. This will change the whole perspective on these stocks, from undervalued to vastly overvalued. Facing government ownership (Swedbank), to Investor having to transfer their cash to SEB, plus an IPO. Risk in such a scenario is for stocks to drop to the 5 to 15 Sek range. Drastic, I know, but worth considering.
Eur/Sek would approach the 11.00 handle or more, Usd/Sek towards the 9.00 handle or more.
Stay short Sek, both against the Eur and the Usd.

Trying my hardest with a bullish hat on

Getting tired of my own bearishness. Therefore, in the midst of the deepest bearishness, will try my hardest to find the bullish scenario instead.
So what would such a scenario look like?

One could be a massive injection of funds to the worlds Emerging markets via the IMF, the world Bank, EU etc, enough to bail out all the hard currency loans and guarantee each countries banking system. Not including Asia or Latinamerica, how much would it cost? 1Trn Usd? 2 Trn Usd? Just to cover the hard currency loans. Guaranteeing each countries banking sector would be a different cup of tea.
Anyway, the two main remaining surplus countries, Japan and China, would have to foot the majority of these funds. Such a scenario would nevertheless make me bullish from here.
Add to that a global, coordinated fiscal stimulus program including tax cuts and infrastructure works and I would be bullish as an equityhouse.
While Im at it, add government funded restructuring programs to phase out and speed up the necessary transformation of old, overestablished industries, making them leaner and meaner, ie more efficient and costeffective. Preferrably enviromental friendly as well.
The autoindustry would be a good start. No bailouts, no subsidies, rather tax cut incentives, driving the development in the right direction. Bailouts and subsidies risk driving the development towards protectionism instead. This should be avoided at all costs. Just say NO to the D-word.

Other bullish thoughts with the bull hat on;
*Harder and harder to find a bull these days. It is very mainstream to be bearish. Not that everybody and their mother is bearish yet, but were getting closer. No bus or taxidrivers telling me were going down in a bucket,,,,yet.
*Stocks at extremely low valuations, and tons of cash on the sidelines. Companies with good cashflow and dividendyields are also amongst the victims. Stocks hit by forced selling likewise.
*Balticdry index down 93% on the year, getting close to that zero.
*Commodities severely hit.
*Very steep yield curves in the western world, coming soon to a country near you, globally.
*New all time high for the CBOE VIX index, hitting 81% vol. Extremely high volatilities in all assetclasses. These high implied volatilities are basically preventing hedgers from getting efficient insurance via options, forcing them to sell the underlying asset instead. These sell offs are often "capitulation like". How much more to go? Good question, thank you. Getting implied volatilities higher from here will take something extra though. Once we get lower asset volatilites, this will lure "investors" in again.

There, I did it. Some bullish scenario and thoughts to chew on.
Hoping for the best but preparing for the worst.

While this scenario is a distinct possibility I will stay bearish til it starts showing. Right now the global coordination capacity seems too weak to me. At the same time the protectionism tendency has reared its ugly head. I fear that this tendency will get stronger as the economic developments worsen and the focus increasingly is directed to the domestic arena.
More bearishness to come in my next piece.