The ECB is forced to comply with markets expectations at todays ECB meeting.

* The ECB is cornered - again.
Stuck between a rock and a hard place.
Upbeat ECB forecasts for the Eurozone to be expected for today. Simoultaneously the ECB is mulling whether to buy PIIGS bonds again. The Eurozone Emergencyfund is also out declaring an 8BN Usd bond issue for this SPV(Special Purpose Vehicle), a classic vehicle from the the financialcrisis, by the way. Evidently, Asian Central banks seems to have a vested interest in ensuring its success.

This all boils down to a a correction in the market, in my book.
Eur/Usd has fallen 12 cents in 3 weeks, so a correction towards the mid 1.3350 should be in order, it could even stretch above that. Anyway, Im viewing this from a xmas perspective and I am not expecting these festivities to last beyond xmas.

I believe markets are currently ignoring Chinas liquidity depleting measures. I am not. I am hearing the Chinese loud and clear. The Chinese liquidity generator is gearing down. Deleverage.
Get ready for higher rates and stagflation.

If this is the case. This xmas rally should be treasured.


*Positions and positionchanges
Ive bought Eur/Usd for a move towards 1.3350. Trusting ECB to oblige market expectations today.


As usual, good luck





The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Keeping an eye on tommorrows ECB meeting; The ECB seems willing to buy peripheral bonds

* It seems the ECB has become worried enough to consider buying peripheral bonds again.
This will of course only help short term, but this is nonetheless a shortterm solution to try and normalise current markets.

If they do, markets will shift towards a positive risk on mode, benefitting Eur/Usd, equities,etc.

*Positions and positionchanges
Ive taken profit on my short Eur/Usd position. Iam now awaiting the ECB meeting tommorrow.

As usual, good luck.







The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

The curse of fixed exchange rates

* Fixed exchange rates creates huge misallocations of resources and have very much contributed to the global problems we are witnessing today.
China, Europe, the Baltics etc are good examples of it.

Without floating exchangerates there is less of a " mark to market" of a countries worth. The interestrates mechanism is not capable of compensating fully for the lack of exchangerate flexibility.

The US of A is admittedly in trouble and they do have a floating exchangerate, but- one of the reasons it could build up such extreme imbalances was the fact that the USD is the worlds reservecurrency. Im just saying that this is a distortion in itself. Without such a status, the Usd would probably have been punished way earlier and quite severely, too.
Well, now the world order is what it is.


*The Eurozone is in deep trouble, much due to the common currency and a lack of common fiscal policy.
However, human nature, acting on economic incentives, creates far greater risks with fixed exchangerate regimes compared with floating ones.
Politicians have really stepped in it this time around. My view is that there is very little chance that any politician will be able to pull off extreme internal devaluations in these countries. No one else has succeeded so far.

The Baltics, you say? Right. Latvia failed to live up to its "money for budgetpromises" set up - twice. And still got the money (the EU commission was willing to pay all along, no matter what. )Estonia is now generating inflation - what happened to the internal devaluation?

Anyway, with the PIIGS countries its on a whole other scale. I doubt the Germans are willing or capable to pay that bill. Mrs Merkel has already stated bondholders will face some losses on any government default from 2012 onwards, as the EFSF set up changes - PIIGS bonds, anyone? Chile ,Norway and Russia has got the message loud and clear - and stopped buying PIIGS bonds.

Having said that - there might actually be a bailout of Ireland. When/if this happens, I suspect the markets will rally, anticipating bailouts for all of the PIIGS countries if necessary.

This conclusion is on very shaky ground and I would be more prone to sell into it.

*Chinas role as a liquidity generator is over.
From now on liquidity is set to tighten.
Since China does not seem to dare using the most efficient weapon - FX, in fighting cost push inflation. The consequences could actually become worse if they dont, due to overkill behaviour with blunt instruments such as the interest rate and bankreserve requirements.

*Emergings are getting hit by tidalwaves of liquidity and Turkey has now started what might become a new emerging country trend; keeping the repo rate stable but cutting the Depo waaay down.
Turkey reently cut by their depo by 400bp!
No more carry here, hot money!

Hmmmmm, and where are all the long funds, pensionfunds and lifers invested? Could it be?,,,,,, oh yes,,,,,, emerging markets, the secret holy grail,,,, could become scary, this.


* Dont mention commodities - dont mention China
"All" banks are touting the mantra of commodities and portfolio diversification. The latter actually sounds good. The only problem is that currently, all assets are driven by hot money and the correlation is way up there. I bet that on a sensitivity based analysis, it doesnt look good either. Conclusion anyone?
There is currently no real portfolio diversification in owning various assets. Anyone thinking so might be facing some quite straining scenarios going forward. Assetmanagers should be cautious. They should be using instruments to protect themselves. There should actually be room for a new breed of assetmanagers out there. The old "fire and forget, buy - and hold em" assetmanagers have had some great twenty years, but those days are now most likely over.


* New positions and position changes
Im getting ready to take some shortterm profits in FX and commodities.


As usual, good luck









The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

No G20 deal this weekend was no surprise, Nov 11-12 is where the chance lies. Will we see more drunk driving til then? Use options.

* Implied and realised assetvolatilities are set to rise - no matter the Nov G20 outcome.

Depending on the outcome, the speed of the rise will vary. In any case, global liquidity has seen its top this time around. Global liquidity to get reduced going forward.


Im using options instead of underlying.



As usual, good luck













The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

This weekends G20 meeting = a stronger Usd.

* Big short Usd bets are about to go wrong

The FED is not going to devalue the Usd via a QE2 "shock and awe" approach, rather it will be pragmatic, based on a meeting by meeting approach with no commitments for any longer term approach. The bondbuying seems to be estimated to become about 100bn Usd at the time. This is way lower than the market has priced in.

There will be no "currencywar". China is preparing measures to reduce creditgrowth and inflation as well developing domestic demand and reduce leverage. This will require a stronger currency, higher interest rates and less bank lending, reducing credit further. It is necessary to stop the Chinese realestate market spiralling totally out of control. Or has it already? Over the last three months realestate prices in the most attractive locations have alledgedly risen by 40%! From an already very much inflated level. Anyone hearing the sound a bubble popping?



Both this weekends G20 meeting and the upcoming EU heads of state meeting the weekend after will both work in favour of a stronger Usd.



This will also have a negative effect on Gold, Copper and Oil - a few other overcrowded trades . The weaker Usd, continued strong Chinese growth, weak currency and a continued strong growth of global imbalances have been important variables driving these trades.


Well, time to take profit and reverse.



* This weekends G20 meeting

The probability for an agreement between US and China has, according to the best guesstimates out there, increased from 40% pre the Chinese rate hike to 60% post it. In either case, the signals seen so far, (with China basically handing over the printing press weapon to the US by hiking their rates and increasing their own sterilizationcost at the same time as the US has scaled back their QE approach to a pragmatic - meeting by meeting one instead of "shock and awe"), indicates there will be no "currency war" (silly name).



So, from here on, global rebalancing and deleveraging could be the name of the game. This means lower growth in the Western hemisphere and increased risk for ditto in the Eastern one.

In any case, its the right riskmanagement path and it is way better than the very high risk alternative of continued global imbalance building and then disaster - scenario.




* Assetliability ratios to go lower again - credit multipliers to drop and ditto for profitability.

We have likely seen the global liquidity peak this time around - time to review leverage set ups as implied and realised volatilities are set to rise



*Emerging markets - yet another overcrowded trade. This one is running the risk of turning the "holy grail" into "holy sxxt!"

Emerging market inflows are now back at the record levels at the end of 2007, beginning of 2008. Theres a big difference between now and then though - initial liquidity. While liquidity at the time was very good, it is the reverse now - despite the low volatility circumstances.
Once vol starts pumping up, liquidity will be nowhere to be found. In emerging markets this is normalprocedure, but there are always various levels for illiquidity and this time around such a scenario is running the risk of being the worst nightmare for naive investors and speculators.

Trust me, so far I have always been on the "right side" on any emerging market crisis, you do not want to be on the wrong side of it,,,,, This time around the exitdoor might get clogged up altogether.

Perhaps not today, or tommorrow, but the signs are building.



* Positions and positionchanges
No changes




As usual, good luck














The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Chinese rate hike; CNY appreciationpace to increase, US QE to decrease - and so does global liquidity

* Eye of the storm - not for much longer?
China hiking rates - positive from a macro rebalancing point of view - but not from a shortterm liquidity and global growth point of view. As Ive mentioned earlier; globalrebalancing = global deleveraging.

As the cost and volume of the Chinese currency reserves have accelerated drastically, so has the exposure and the entailing risks. The cost of sterilization is sure to increase as the humongous currencyreserves have been allowed to accumulate over time, pushing inflation higher in the process. So far, the sterilization measures have not been adequate as only part of the currencyreserves have been sterilized. As imported inflation from commodities etc has also increased, a stronger currency is just what the doctor ordered.

The cost of sterilisation will now increases with the latest rate hike, (I believe this is just the beginning ), the Chinese authorities are likely to have concluded that it is in their best interest to increase the pace of Yuan strengthening. There are obvious risks to Chinese growth in this process. The authorities will have to walk a tight rope, but I doubt they have much choice. Fingers crossed.

This also means its time for liquidity drunk market participants to sober up - fast.


* What will happen from here?
Asian currencies to continue strengthening against the USD as they get dragged along by the CNY. The Usd to strengthen against everything else.
Gold and other supercrowded commodities to suffer. This will also be a structural phenomenon and not just shortterm. See global rebalancing above for explanation.

I also have a few other very interesting trades to get into from here, but Ill save those til later.



I would like to point out that Emergingmarkets in general are also supercrowded trades and would be looking for signs these are about to reverse. Liquidity is low and will not increase on any such development,,,,,,,,


*Positions and positionchanges
-Long GLL ETF (leveraged short Gold).
-Long SOIL ETF (leveraged short Oil).
-Long SCOP ETF (Short Copper).
- Short Aud/Usd
- Took profit on short Eur/Cad



As usual, good luck






The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

The ECB is playing liars poker - low yields to remain.

* The ECB is playing liars poker. Jawboning about "normalisation" of the yield curve.
The audience here is supposed to be the EU commission. Sending a clear ECB message that they will NOT agree in substituting ECB monetary policy for fiscal policy in order to finance and save the PIIGS.
Meanwhile, markets have literally believed in the ECB talk, pushing yields higher.
However, as the realisation sinks in that this is just - talk, yields will come lower and so will the Eur. Besides, a stronger Eur is NOT what the eurozone needs right now. In fact, for Eurozone stability reasons, it is necessary for the Eur to weaken. A strong Eur will wreak havoc.

On top of this, this weeks ZEW and IFO numbers are likely to show a Germany topping out and turning down, which will really cause angst among politicians and policymakers. Expect some political jawboning for a weaker Eur nearterm.


* China - best and worst case scenario
Running into the G2o meeting it might be worthwhile pointing out the obvious fact that China is running a nonconvertible, semifixed currency regime, which is NOT in line with open, free markets. These facts themselves have caused severe disruptions to the world economy cet.par.

A best case scenario, both for China and the rest of the world, would be for China to let its currency float. This will infer economic global pain, a lot of it. However, letting the China bubble grow further would not only infer economic pain but could also mean a new level of armed conflicts, beyond control. You choose; rebalancing today with upfront pain, or fingers crossed with upfront pleasure for extreme pain tommorrow?

What do you choose?
Humans normally pick the latter, while riskmanagement states the former.
You decide.


In any case, we are in for some very rough and turbulent times. Rollercoasterstyle. But as any rollercoasterrider knows, its on the way down the scary stuff starts and it always ends the same way; down at the bottom where we started. Question is; where is that?


* All in all
Shortterm we are in for a pre G20 correction in assetmarkets.
Beyond that, set up for BIG trouble continues. Big questionmark is whether there will be an agreement in the near future on rebalancing or not. Without it, assetmarkets will remain positive, til we sail out into the storm again.


* Positions and positionchanges
- Short Eur/Usd, Gbp/Usd, Eur/Jpy, Eur/Cad and Gbp/Jpy since last Friday.
- Monitoring equity indicies, gold, silver, copper, steel and oil for signs of a correction lower.



As usual, good luck







The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Assetrally - Usd sinking - the eye of the storm

* Global tradeimbalances are expanding at an ever increasing pace.
As these imbalances continue to grow, the global setbackrisks are as well.
I believe we are currently in the eye of the storm.


These tensions should not be able to continue for any stretched period of time.
Why not then?

1) As the world is competing ever more fiercely for exports, the realisation that fixed or semifixed currencies are creating big domestic as well as international risks will become evident.
The Chinese argument that a stronger Renminbi will risk their economy is similar to accept an even greater sensitivity in the future as their surpluses accumulate. "When in trouble, double". Not the way to go.

2) Global fierce competition for exports will lead to trade tensions, which will lead to trade restrictions and tariffs. This will reduce global trade and hence, global GDP. The risk for armed conflicts will increase drastically. Especially as higher soft commodity prices will correlate with the weaker Usd. Noone wants risking major armed conflicts at this stage.

3) As the US currency depreciates, the risk for a suddenloss of confidence in the US currency increases, especially as the US deficits and debt continues to build and yields are close to nothing.
Should this happen, any country sitting with huge currency reserves - especially the fixed or semifixed currency regimes, China being one of them, would suffer massively. The extent of Chinese Fx reserves would mean the government would have to raise taxes or debt to compensate for the FX losses. Essentially, China would fall apart, given the extent of leverage, misallocations of investments, bank exposures to realestate markets and corporate projects and corruption. And if China falls,,,,,,, fill in the blanks please. US doesnt want it, and neither does China.


Better then to try and control this global deleveraging and rebalancing process by making a G20 agreement. Unfortunately I believe the probabaility for that is quite low since politicians only have one strategy - the ruin strategy; "when in trouble double".
Hopefully, riskappetite will adjust downwards as trade tensions increase on the back of a G20 "no deal".

Short term, I believe the market has overpriced the US QE and we will see a moderation towards QE from Bernanke tommorrow, as positioning for the G20 meeting begins. If the US softened their QE easing approach, probabilities would at least increase that China would agree to let the Renminbi appreciate at a slightly faster pace. Although a deal would still be slim, at least both parties are probabaly willing to try making one.


* Short term conclusions, outlook for the Usd, (and currently high correlated commodities);
With US QE pricing overdone, IMM positioning ditto, my expectation of increased riskaversion no matter the outcome of the G20 (G20 deal = drastically lower Eur/Usd, no deal would = further trade tensions - reduced risk appetite - lower Eur/Usd. Also, long term US interest rates would rise drastically on a deal due to China buying less US bonds as their FX reserves would grow at a slower pace. Long term US interestrates would rise much less so on a no deal. In any case, higher implied asset volatilites are to be expected.



* We are currently in the eye of the storm - enjoy it while it lasts
Have your stormgear handy.
This is the time to prepare for what's to come, while making as much as possible out of the current environment. This period should be treasured since commonsense will dictate that massive reallocations could be around the corner in order to rebalance the world economy and deleverage it. It is important to remember that rebalancing of the world economy will mean deleveraging it. That process will be very harsh indeed.




* New positions and position changes
- Stopped out of my short Eur/Usd position
- Stopped out of my short Gbp/Usd position
- Took profit on my short Eur/Jpy position
- Stopped out of my short ETF equity index positions and reversed

I will go short Eur/Usd, Eur/Jpy and Gbp/Usd pre the Ben Bernanke speech tommorrow, expecting a moderation of the QE approach in line with pre G20 positioning. I will use options in order to get cost efficient leverage and costcontrol. On top of it I expect implied volatilities to increase from here.




As usual, good luck





The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Lets play,,,,, the weakest link

* "The weakest link" was a gameshow running in the UK quite a few years back. A quite harsh program voting out the contestants percieved to be the "weakest links" in a group.
This can now be applied to the Eurozone, but with a different twist. We already know who the weakest links are; the PIIGS countries. However, they are currently supported by the Eurozone
rescue fund, the EFSF (The European Financial Stability Facility).
At the european head of state meeting in October, a proposal will be made to upgrade the rescue fund to a permanent tool.
The EU commission has already suggested that the EFSF should be made permanent.

What about the weakest link theme?
Well, if this proposal gets a green light, the implications are quite substantial for Eurozone surplus and deficit countries. The deficit countries are essentially written a blank check. This obviously includes a substantial moral dilemma and much increased risks of being abused.
As financiers, the surplus countries are at risk of getting massively increased bills. At some point this will become too much. If they cave in, the Eurozone implodes. Hence, in this context, the surplus countries will come under massive pressure. Amongst the surplus countries, the most important is Germany. All in all -the weakest link is,,,,,Germany.

Currently, the market doesnt care about these consequences, but prefer to focus on the inner EMU yield pick up play due to the "successful" peripheral bond auctions- and the EU commission proposal of making the EFSF permanent. Strenghtening the Eur in the process.


However, expect Germany to be on collision course with the Eurozone deficitcountries as they obviously has no interest whatsoever to migrate the peripheral countire's debt burden to Germany. I expect implied volatilities for eurozone assets to pick up in the run up to this meeting. The outlier risk is for a drastically weaker Eur.


*The Peripheral bond rally - enjoy it while it lasts, but take your profits in time for the European heads of state meeting.
With the EU commission proposal of making the EFSF permanent, the peripheral high yielders will be perceived as very attractive, reminiscent of a "free lunch". A word of caution will be in place.
The bets are increased and hence the risks are rising in the Eurozone game. The perception that governments and centralbanks will be able to sort out a growing mountain of debt may hold as long as a good cashflow/high growth remains. This assumption is very uncertain in itself. Add to that the necessity for growth to increase further in order to service the rising debt and it is not very difficult to imagine a situation where this spirals out of control.
Especially if the anchor funding entity of them all, Germany - balks.



* New positions and position changes
I view the recent Eur rally as overdone and have taken profit. I see Equity markets vulnerable for a pullback.

- Took profit and reversed position on Eur/Usd.
- Took profit and reversed position on Gbp/Usd.
- Took profit and reversed position on Eur/Jpy.
- Went long on various bearish Equity ETF;s.


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.

Reversing Eur/Usd ,Gbp/Usd

* I am reversing Eur/Usd and Gbp/Usd into long positions
Closing short Gbp/Chf and going long Eur/Jpy.


More later.
As usual, good luck


The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Taking partial profit

* The swift moves in the markets this week seems somewhat overdone - for now.
Im taking partial profit.
I believe well see more of these bearish developments ahead , but there is a good chance of an assetbullish reaction first.

*Open positions and positionchanges
- Took profit on my short Gbp/Jpy
- Took profit on my long Usd/Zar
- Took profit on my short Aud/Usd
- Took profit on my short Aud/Jpy
- New position; Short Gbp/Chf

Never got hold of short position on the Australian ASX 200 index. Bought ETF;s on short European indexes instead. Took profit there as well.

Still short Eur/Usd and Gbp/Usd.



* Other
Getting a view on deflation - stagflation - inflation.
More on these subjects in a later posting.





As usual, good luck



The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

CNY reval to the (temporary) rescue or not?

* CNY reval is on the agenda again. From a Chinese perspective it might become a necessity as steps are taken to try and manage this leveraged economy.

On that note, got some info re counterfeiting in China. Alledgedly, if one deducted Chinese growth stemming from counterfeiting, the annual GDP growth would be zero. If one applied "green accounting" all current GDP Chinese growth would be erased as well. So, all in all, deducting these two variables, the remaining net Chinese GDP growth would be negative.
Add to this a highly leveraged, centralised and very corrupt regime and a cowboy style economy you end up with,,,, Russia in the nineties? Only, the variance in livingstandards in China is even greater than in Russia back then, hence the risk of socialtensions and massive political turbulence is higher in China.

What Im trying to say is; In the "short" run the Chinese economy is overvalued and overexposed.


*Oh yes, the Chinese reval.
Well, although there are some bearish winds blowing again, a CNY reval should actually be good for riskappetite. This would definitely disturb the AUD case shortterm. Especially since the AUD would likely be one of the currencies benefitting most from such an event.
Ill return on this issue later on.


* Was a bit quick in going short CBA and Westpac - its just not doable. These stocks are stilll under a shortingban. Wonder why,,,,,, Oh well, Ill try the index instead then - if possible!




* New positions and positionchanges
No changes.



* Other
- Still trying to add a short Australian equity position - well see.
- Pondering the deflation vs inflation, stagflation outlook. Been a deflation "fan" but am currently reassessing.
- CNY revaluation timing. Not good for AUD bears when it happens. Stay posted.
- JPY intervention; Not before 80 in Usd/Jpy. Stay posted.


As usual, good luck






The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

The Australian housingbubble - will it bring down CBA and Westpac?

* I havent really noticed much publicity when it comes to the Australian housing bubble.
However, Ive had a look at it and its very,very scary. As always, its a matter of timing, but I believe were getting there before long. Hence, I am selling the Aud as well as the Australian banks CBA and Westpac (they hold 50% of the Australian mortgagemarket). The loan to equity ratio is so high that a 6% writedown of mortgages would wipe out these banks equity. When this housing market heads south, a 6% writedown will be a best case scenario,,,,

Ive got some quite compelling research on the subject. If you´re interested in obtaining it, send me a mail.


* Yesterdays FED comments post the FOMC decision provided a minimum QE outcome.
It is doubtful this will match the high expectations that were build up pre FOMC. The impetus from this for assets should be a weakening one.


* New positions and positionchanges
- Added to my short Aud position
- Looking for the best ETF;s to short CBA, Westpac or ASX 200



As usual, good luck






The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Time to change positions

* Its been a great bull ride since June in Equities, Eur, Aud and Oil, not to mention Wheat (ahhh, what a rocket).
However, I feel now is the time to reverse these positions - again.
Why? Well, to me the weaker Usd was a temporary retrieve in any case. The Usd is coming back soon due to a leveling of positions and the markets overpricing of QE is US vs recovery in Europe. Hence , I believe we will see a relative shift in long term rates favouring the Usd.
I am going long the Usd.


* The China syndrome - soon in Australia?
Australia is to suffer on the back of continued Chinese tightening as well as continued weakening Chinese assetmarkets. According to research, Chinese GDP growth is 100% due to the domestic industry of making fake brands. At least that makes me quite worried. Top it off with a very centralised structure, high leverage, insane capital allocation and you have the recipe for a real bubble burst with a bang. On the positive side; Basel 3 will likely mean an increased allocation from banks into reserve currencies such as the Aud. Short term, however, Im a seller of Aud.


* Equities still in a range - but its about to move lower within it.
Equities will still be looking good from a capital allocation model point of view, but short term I believe the market has gotten ahead of itself. Europe is not out of the woods - not by far.
I am going short European Equity indexes.


* While Oil may very well be in short supply going forward, the Gulf issue is overplayed and so is the demand for now. Im going short Brent Oil.

* The Wheat panic rocket is falling back to Earth - ish. Beware of setbacks.
However, with the recent move and the Russian wheat export stop and bad harvests already discounted by the market and a very, very swift move higher. I am at least looking for a correction lower before we get a top out test of the former high. Caution warranted though. Proper strict riskmanagement should be applied, as always.

* SouthAfrica - the Worldcup is over and the shine has faded. Whats left? A corrupt government, trying to silence the press in order to make room for murky deals and yet more corruption. This country was meant to set an example for the rest of Africa, leading openness,transparency, education, social responsibility and growth. Now its heading the other way. Mandelas legacy is fading fast. On top of it, neither the World Cup, nor the Olympic games are rarely an economic success for the hosting country, rather the opposite. I doubt it will be different for South Africa.
I am buying Usd/Zar.



* Positions and position changes
- Took profit on my long Eur/Usd position, reversed.
- Sold Gbp/Usd.
- Took profit on my long Aud/Usd position, reversed.
- Sold Gbp/Jpy.
- Took profit on my long GLL ETF (short gold).
- Took profit on my long LOIL ETF (Long Brent Oil).
- Went long SOIL ETF (Short Brent Oil).
- Long Bear ETFS on European Equity indexes
- Long Usd/Zar



As usual, good luck



The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Change of plans, short term, things seems to be looking up.

* Spanish bond auction went well, positive numbers overnight from Japan, Australia and China

This means increased global rebalancing potential as European countries are getting increased possibilities for exports, as asian fiscal policies are turning more domestic. With asia and parts of the emerging world requiring tighter monetary policies. With Europe in delevraging mood due to sinking domestic conditions, this export potential will help.
The Eur will still have to weaken substantially, even below parity, to test all time lows. However, now does not seem to the time for it. Also, the Eur/Usd move lower has to take place during semicontrolled conditions in order to avoid European banks and general asset markets falling.

With the Eur moneymarket curve flattening, Portugal and Spain successfully issuing 3 year bonds. Should the ECB extend its liquidity terms today, I expect OIS spreads to narrow further, dragging high yield and assetmarkets higher. BOE will remain soft.

Equity markets remain at a low value compared to expected profits for 2010. A short term Equity move higher would therefore be in line with a positive ECB outcome.


*Positions and positions changes; Change of plans
My change of heart from yesterday is based on markettiming issues as well as the comments above. Main scenario remains, however, I choose to participate in this shortterm development/correction.

- Took profit on my short Eur/Usd, position reversed.
- Took profit on my short Gbp/Usd
- Took profit on my short Aud/Usd, position reversed.
- Took S/L on my long Usd/Jpy
- Took profit on my long equity index put options
- Took profit on my long bank put options.
- Long GLL ETF (short Gold)
- Long LOIL ETF (Long Brent Oil)






As usual, good luck







The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

BP vols skyrocketing to 130%, sell Gold

* A lot of talk whether BP will make it or not, strategic chapter 11 in the US, etc. Comparisons with Lehman seems misplaced to me. However, the political pressure is immense.

This will have repercussions on the assetmarkets. The risk is that all offshore drilling will be banned. Norway is alledgedly contemplating such a ban as well. This would drive Oil north, of course. On the other hand, Gold seems like a classic crowded trade, and the current violent moves might push margin accounts to consolidate, selling gold in the process.

* Positions
- Short Aud/Usd
- Short Eur/Usd
- Short Gbp/Usd
- Long Usd/Jpy
- Short European Equityindexes, European banks via options
- Long GLL ETF (short Gold)
- Long LOIL ETF (Long Oil)


As usual, good luck




The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

China, already on the ropes, getting hit by European slump, dragging Aud with it.

* Equity markets continue dropping
Eur bid! Looks like a classic shortsqueeze although intervention rumours are floating around. Personally, I dont believe the latter. It would probably be one of the most silly things ECB could do. It would give a green light for a Eur collapse. Rather I believe Eur shorts are covering as risklimits are cut and losses forces consolidation. I prefer to view Eur/Usd at 1.25 as a sell.


* A vicious circle
Euro area deflation pushing down European demand, as Chinas main export market, this pulls down Chinese exports. As China is the biggest exportdestination for Australia, this drags down Australias exports. AUD is/was a crowded long trade for all the wrong reasons. Hence, we are now watching both a washout as well as a fundamental shift in the approach to the AUD.
It will have further to fall.

Further, with European banks under strain, this will reduce liquidity, same thing in China due to tightening measures and falling asset classes. Liquidity driven trades will now suffer.
Carry traders get carried out.


*With leverage further increased, we are now in a situation with very high stakes. Any missstep by politicians or centralbankers will be magnified due to leverage. Remember, there is no riskmanager or riskmanagement in this equation. No stoplosses. May the force be with them.
It seems it would be time for a shortsqueeze, but,,,,,?





* New trades and positionchanges
- Took profit on my long GLD
- Took profit on my long VXX ETF
- Took profit on my long QID ETF
- Stopped out my short Eur/Usd and Gbp/Usd spotpositions
- Sold Aud/Usd
- Bought Equity puts on equity indices and banks



As usual, good luck










The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Talk of German shortban - there goes the upside correction, down again,

* When will they ever learn?
German authorities are alledgedly looking to apply a short ban on government debt, and major financials; banks and insurers. An act of desperation.
Thought European authorities learnt something during the latest fire emergency in 2008/2009.
Apparently not. Read my lips; banning shortselling does NOT stop assetmarkets from caving in.
Repeat and write down 10 times on the blackboard please.

This is actually becoming quite silly. If Germany, Europes hope, is coming up with these kind of silly ideas, who knows whats next. This does not bode well. All bets are off re my correction expectations. The Eur/Usd blip higher to the high 1.24;s most likely WAS the Eur/Usd correction. This could also drag the equity markets down with it.
Whats next, intervention?

I tell ya, they've got it coming,,,,, This is not looking good at all. Actually, Europe is following the kamikaze actionplan to the letter. This will all end in tears. Authorities have no plan B. This is it. This is a onewaytrip downnnnnnn. But hey, add another package, it will probably help,,,,,, right.
Markets are coming to the conclusion that current plan is not working and that the people in charge have no clue what they have done so far.


* Humans have a hard time managing huge leverage.
Now , the leverage levels might have been managable earlier on, but now we are quickly moving to very extreme levels. To think that politicians and centralbankers will be able to manage from here I do not believe is realistic, unfortunately.


*Equity analysts need to think twice.
Corporate earnings and data have come in strong, balance sheets look quite good. So far so good.
However, basic economic theory will tell you that this is merely the mirror image of the monetary stimulus that was created by governments and centralbanks.

If a government runs a deficit other agents will do well.
If you inject the corresponding deficit amount into the economy it will surely help.
However, as tight fiscal policies are introduced and stimulus is withdrawn, the economy will slow and corporate results will get hit.


* "Noone" expects the equity lows from 2009 to be challenged again.
However, if European authorities do not think twice and shift their policies to more common sense ones, I believe we will.



* New positions
- Ive bought puts on Eur/Usd, Gbp/Usd, Eur/Jpy and Gbp/Jpy on the back of this.
- Ive bought VXX ETF;s
- Ive bought QID ETF;s





As usual, good luck



The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Markets trading on the breakup of the Euro -fine, but its NOT happening now

* Immediate concerns for a complete Euro collapse will be replaced by a more nuanced view, splitting up the current very high Eur/Usd vs Equity correlation.



* Short Eur/Usd is an overcrowded trade, time for a squeeze towards 1.25/1.26. Something to sell into.
Equities are also due for a correction higher to the tone of 5%, at least. Also something to sell into. However, from there



* New positions and positionchanges

- I have sold shortdated equity index puts at very elevated vol levels.

- I have bought June index calls at quite decent vol levels. Looking for a correction/squeeze higher.

- I have bought Eur Calls on Eur/Usd, Eur/Jpy.

- I have taken profit on my short Eur/Usd, Eur/Jpy positions.

- I have taken profit on my long SOIL ETF






As usual, good luck


The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

The Euro; A whiff of ERM 1992,,, ECB not independent anymore

* Euro already suffering from rescueefforts post shortcovering - Euro set to weaken further.


1.23 first stop on the road to parity. Politicians are low on communicationskills, understanding, or both. "They" believe they are supporting the Euro with the latest humungous package. In reality, theyve just undermined it - exposing it to a collapse.

Why?


Lets see;
- Lost independence by the ECB, now also an administrator for the EU commission


- The ECB is buying junk bonds - diluting the creditquality of their portfolio and thus, the Euro.


- No Euro country apart from Finland is currently sticking to the Maastricht criteria.


- ECB and politicians is trying to bailout their own economies and bond markets in order to "save" the Euro. In essence conducting intervention. Intervention has historically never succeeded when Macrofundamentals have been pointing the wrong way, and yes - they are.

- Increase of the supply of Eur as the ECB buys its "own" bonds as those flows will later be nonsterilised.

- Madoff, ECB,,,,, This seems almost like a Ponzi scheme. Only the first appliers will get funds from the "common" fund. Then the coffers will be empty.

- Lack of trust for the Eur from centralbanks globally as governing rules set to ensure stability and value are changed without notice.


- For the last 10 years, centralbanks across the globe have been diversifying their FX reserves into Eur. I doubt those programmes will continue as before. Eur to suffer.


* It seems likely there will be a constitutional court hearing in Germany re the legality of Germany bailing out other Euro countries. This will likely be announced by the end of this week. This have the potential to shake the markets substantially in the case of non approval (not likely) from the German constitutional court. Even the hearing itself could make markets uncomfortable.


* Heads up; Since Greece and the rest of the PIIGS is nothing else than the Baltics and Latvia magnified by 20 and more, Im looking for the Baltic story to come back on the agenda. Banks to suffer in that case.

- LIBOR, has moved from 80 to 110 over the last months. Any moves higher should be monitored.





* What happens when Trillions of Euro sovereign debt is added to already indebted countries simoultaneously with extremely tight fiscal policy at the same time as Asia is struggling with inflation ,tightening monetary and fiscal policies, stimulating domestic demand instead of exports, reducing currencyreserves in the process?

Well, the long answer; Asian currencies will strengthen, G7 currencies will weaken. ; Asian countries will generate growth, exporting inflation, G7 countries will experience deflation(Eurozone). US struggling. Whats the short answer?; Stagflation. No growth with inflation.





* Whats the scope from here?

Towards the end of this week, I expect consolidation with an upward bias in equities, commodities. The euro to remain heavy. By the end of the week, more bearishness in equities, commodities(except gold) due to the expected German Constitutional Court announcement of hearing re Germany legality as paying part of the bailout package (38%).

- Eur to continue suffering, you just aint seen nothi´n yet.

-I am short Eur/Usd, Eur/Jpy. For a test of 1.25 and 116.

- Oil to continue suffering, I am long SOIL ETF.

- I am long GLD options (ETF). I will look to go long "new" gold though; Silver, Platinum. Gold is "old" Gold, owned by the centralbanks,,, - not that good.










As usual, good luck


















The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

The ECB balance sheet is set to swell. China, Asia to reduce global liquidity

* The G7 finance ministers set to expand emergencyfund by 60 Bln Euro.

Perhaps this will consolidate markets somewhat nearterm, but I have a feeling more drastic measures will be needed to stop marketconcerns re the rest of the PIIGS countries.



- Perhaps a "massive" (pick a huge number) swap line from the FED to secure liquidity via the ECB to the PIIGS countries.

- Direct bond buying by the ECB.

Neither will sound good to the ECB, but the second will sound worst.



In either case, I feel fairly confident the ECB balance sheet will swell substantailly before long.

Diluting its portfolio with junk bond paper.

Both factors will sink the Eur substantially.



At the same time, Asian centralbanks are reducing the size of their currencyreserves as they are switching from exportoriented policies to domestically demand led ones. Tightening liquidity in the process ( China leading the way here, and yes, are they overleveraged or what? Same old, same old.)

I expect this liquidity factor to push up riskpremiums on assets globally regardless of what happens in Europe. Lets just hope the G7 finance ministers can get this situation under control to start with. I somehow doubt it. Although I can definitely see short term consolidation measures having shortterm effects.



* So far, the 2008 crisis has not really been RISKmanaged at all, just managed.

Liquidity has been poured over the leverage problems in the private sector and debt has then been transferred to the public one. Hoping it would be forgotten there. In essence, the stakes have been RAISED substantially, instead of lowered. The financialbubble in 2008 may have burst, but it has NOT been deleveraged,. Just transformed and increased, keeping fingers crossed for positive growth (the leverage would then generate superior growth). With negative growth,,,,, well lets not go there.



So far things have been looking quite good; rallying assetclasses, and market values slowly but surely approaching book values on various balance sheets, sinking implied volatilities int pre crisis territory. This, would in turn unclog the liquidity plug. Getting credit flowing and then - yes - growth going. Well, no more. Now it seems we might have a problem getting there,,,,, I expect money velocity to slow down further.



The Banks thought they were on safe ground, but they might soon get wet feet again,,,,

Just as some of them shouted out loud they didnt need any government support any longer,,,,, Oh well,,





* CEE to suffer hard if G7 liquidity measures fail to work

Usd liquidity and CHF liquidity dried up last week and this situation will just get worse if the G7 "liquidity rescue operation" fails to work.



*Whats the scope from here then?



- Well, I took profit on most of my equity puts on Friday, buying calls, anticipating urgent liquidity measures taken over the weekend.



- I have taken profit on most of my short Eur positions. Bought Eur calls.



- I have taken profit on my long
SOIL ETF.



Ive kept some limited exposure for continued weakness, just in case markets reject the measures taken alltogether and we'd spin into some kind of "black monday" scenario.







As usual, good luck















The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.Errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Goldman and Volcanoes

* Goldman under fire from SEC for selling CDO;s without disclosing who structured it - in this case the -now famous hedgefundmanager John Paulson.
Politics, politics,,, well, so what else is new?
Question is whether this really holds water.
Alledgedly Goldman invested alongside it and lost 90m Usd on it - excluding their 15m Usd fee.
Legally Goldman was not obliged to disclose John Paulson in the offering . End of story.
From a populistic and political point of view, however, Goldman might still be viewed as guilty.
In any case, this means the door is open for more financial regulation.

* The Volcano impact
Well, apart from threatening to lower European GDP and world trade ditto plus some heavy impacts on certain industries and business models, it seems certain to generate the favourite European political answer to any economic problem these days; yet more subsidies.
Its interesting to note that so far sovereign debt within the OECD equals 50% of OECD savings and global sovereign debt equals 25% of global savings,,,, Higher yields, anyone?

It would be interesting to hear the riskmanagementplan from various countries, on how to handle the tremendous sovereign leverage currently at hand. Politicians in Brussels may well believe they are in the process of saving the Euro area, but there is an unquantified risk that may very well be substantial, that they actually are in the process of sinking it instead.

With the sovereign debt mountain growing and growing, perhaps it would just be prudent if a Volcano popped the bubble in time. The Icelandic bigger sister Volcano Katla, might just do this, if it too comes to life. Unfortunately, we might now be beyond the point of control due to the leverage situation. Hence, the fall out (pardon the punt) could be very scary indeed. Til then, low rates means low volatility and a continuation of already inflated assetprices. And then?



*Positions
- After having pushed through 1,3530, theres been some noice. Given the background macro scenario and the fact that we pushed below 1,3530 again, I am now short Eur/Usd, looking for 1,30.

- After Equities pushed through on the topside, I went long. I have now reversed to short. Looking for 2-5% retracement in this current low volatility environment.


- Short European airlines via options

- Short GLD ETF via options

- Short Oil via long SOIL ETF



As usual, good luck









The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.

Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Eur/Usd consolidating post Greece announcement; 1.3530 should cap it.

* Eur/Usd has moved higher since yesterday
I took profit on my short Eur/Usd position as spot broke through 1.3350.
Alledgedly there are real money on the bids today. Whether that is an indication that we will see a correction higher or not well have to see. A consolidation/correction might very well take place here but any move higher should be capped in the 1.3530 area or Ill reevaluate. Til then 1.30 will remain my near term target. I will be looking to reenter short Eur/Usd positions.

* Equities correcting lower; take profit/squeeze friday?
Not to me. Equities looks toppish and should cave in before long. Im running short equity positions on US and European indexes, spiced with some shorts on weak banks, looking for a 10% move nearterm. Ill stop out and reevaluate if indexes push above their highs from yesterday.


As usual, good luck




The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.

Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Greece;"Old" Plan "B" is launched, lower Eur, Equities to follow.

* German profile on Greece rescue plan increasing pressure on the Euro
Focus now on yield curves; with yet more European peripheral deflationary pressure unleashed and US yield curve steepening, the scene is set for a lower Eur/Usd still.

It seems the EU rescue plan for Greece is a copy of a German proposal presented three weeks ago. And as such, it is not really "new". Anyhow, the proposal is short on detail and will certainly mean severe hardship for the citizens of Greece. They are about to share the Latvian people´s experience. Question is, will the Greece citizens handle the hardship in a similar way? I doubt it. To me, civil unrest risks are higher in Greece.

EU politicians are hardly united, but more importantly, the ECB is voicing quite strong objections against any IMF led resue plan, emphasising an EU led solution. Markets will want more details on the proposal, translated into concrete action. I does not seem we will get it for the time being.



* Eur/Usd to go lower still
With a steepening US yield curve and longer end long term correlation to break up with the European ditto and Europe facing yet another wave of deflation initiated by Greece and upcoming fiscal budgetary measures for the other southern European PIIGS countries represented by Spain and Portugal, Eur/Usd should be heading lower still. The 1.30 level is within striking distance.


* Eur/Usd, US yield and equities
There has been a breakup there for a while now. However, I believe equities will play catch up. Ie equities will soon go lower. US yields will be important to watch as any move by the 10 year bond above 4% - 4.25% is likely to make many institutional investors consider scaling back on their equity holdings. With equity vols at close to pre crisis low levels, long equity puts seems an interesting proposition. The timing seems to be right. Famous last,,,,


* Usd/Jpy going higher
Japanese institutional flows to seek higher yields abroad post fiscal year end as Japan is going back to QE. Besides, majority of outflows during this fiscal year has been currency hedged by Japanese institutions, buying Jpy in the process. Going forward, due to the Japanese QE and the Usd strength, the FX hedging ratio may well be lower, meaning less Jpy buying.
The important 91 level in Usd/Jpy has broken to the topside. I go for a continuation towards the high nineties.




As usual, good luck.









The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.

Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Low rates, low vol - what more can assetmarkets ask for?

* CB;s are clinging to QE, but the correlation in long duration bonds between Us and Europe is likely to break up, generating increased assetvolatility in the process.

We are entering a new phase where many western countries will find themselves in a situation where synthetically low rates is increasingly making a workable exitplan very difficult.
My guess is that Centralbanks will wait too long before they raise rates, risking stagflation to develop pre raising. Once they do raise they will be unnecessesarily far behind the curve, generating a swift and drastic rate rise once the trigger is pulled.

* Whats happening next then?
Greece still in focus, and may remain there for a while still, as the Greece April and May refinancing is rapidly approaching. Otherwise, it seems the headline frequency would indicate it is a bit overdone.

Nearterm I am positioned for lower equitymarkets, banksectors and Eur/Usd, weaker Zar and Try.

* The Swedish bullcase
The increased focus on sovereign debt has served Sweden well, since Swedish finances, from a relative perspective is doing quite well. A word of caution is warranted here however.
1) This is now a clear consensus trade by every category of the market.
2) Europe and Sweden has not cleaned up their toxic assets in the same way US has. Sweden and their baltic assets being a case in point. Swedbank still has baltic assets valued at very weird levels; Swedbank lost 11Bn SEK last year, they have baltic goodwill valued at 12 Bn SEK.
This equates to the board expecting a 6%-7% annual growth for the Baltic assets for the next 30 years!
Now, thats a crystalball for you.

The Baltics is still an unstable asset area no matter what the banks say,

3) Sweden is one of the few countries where the vast majority of household loans are floating shortterm rates. and loanvolumes are still rising sharply,,,,,,, Should/when the Riksbank be forced to sharp interestrate rise,,,,

Well see,,,,

Anyway, short term I expect weaker SEK assets.



As usual, good luck




















The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.

Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Chinese tightening fears and the Greek´s fiscal problems

* Chinese tighteningfears and Greek budget issues are currently weighing on equities

The Chinese tighteningfears may be well placed, but the Chinese numbers seem to indicate that inflation is no big issue as of yet. Question is if one can trust the numbers.

Same goes for the Greek fiscal numbers. There is an obvious market risk with the Greek CDS rate climbing higher. Countries with similar or worse problems might get under the market´s spotlight, increasing market volatility. A few CEE countries are still suffering from overleveraging in hard currencies. The Baltics are still in dire straits, with Latvia still a case in point. It seems there is a discrepancy between the market pricing of assetrisk vs the current macro realities.



* If 2009 was the year for Centralbank conformity, will 2010 become the year of Centralbank differentiation?

Although the Western world is still in a world of deflation, Asia is not. Liquidity is abundant. Capital is not. Asia will likely increasingly focus on domestic demand and less on exports. Hiking interestrates in the process, sucking in hot money. To prevent hot money inflows, regualory measures will have to be taken in order to disincentivise these flows.

A net effect will still be stronger Asian currencies, increasing the speed of global rebalancing.
This will increase the pressure for a stronger CNY, and thus a ditto USD.

Macrowise this should weigh on equities, especially if China starts exporting inflation, increasing the impetus for higher global rates.

On a positive note, this should also mean increased margins for Western exportcompanies with solid finances and an Asian distribution.



* New positions and position changes
- Took profit on my Long Eur/Usd position.
- Short Eur/Usd
- Long R/R on various banks with exposure to the Baltics and the CEE.





As usual, good luck





The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.

Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Government debt - the ignored risk.

* Although markets have recently been reminded of the dangers of too high government debt, it is not really viewed as a major risk.

To some extent, this makes logical sense. After all, last year governments and centralbankers coordinated their efforts in taking on debt on a massive scale and it worked, right?
It sure did. For the markets. Shortterm. From here though, there is not a lot of room to take on more government debt. Rather the opposite. The build up has been massive. Still though, the private sector is struggling with high unemployment, low growth, weak corporate balancesheets and a still highly leveraged household sector as well as a mixed realestate world, where some realestatemarkets have not really adjusted as of yet.

To top it off, the creditplug is still in place.


On the positive side, the patient is out of the hospital, but still high on drugs. Whether everything actually works as it should it far from certain. However, the patient viewed as if this is the case.

Against this background, I am focusing on macro fundamentals to get it right. I suggest will likewise have a sovereign theme to start off the year.

Hence, NOK and CAD should be preferred, GBP, EUR, JPY, ZAR and NZD should not. Although in the ZAR and NZD case, the yield factor will likely be counterproductive to such position in a low volatility environment.

China´s and India´s PMI rises to 56.6 and 55.6 respectively will support the stockmarkets. However, this will also drive expectations of Asian rate rises. This in turn will affect US rate hike expectations. Which in turn will generate expectations of a stronger USD in order to compensate for undervalued Asian ones. This could tip the stockmarket lower,,,,,,,


* The US ISM number should be under scrutiny today. A strong one will likely drive US yields higher still, dragging the Usd with it. I view the last two weeks low correlation between the USD and equities as temporary due to year end flows. A strong Usd from here should weigh on equities.



As usual, good luck







The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.

Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.

Happy new year and decade

* A new calendar year, a new decade
If leverage up was the theme for the last decade, it certainly still hangs around as a theme going into the new one. With centralbanks keeping rates artificially low it is bound to continue.
Question is for how long.

Sovereign risk is definitely high up on the agenda and will likely play an important part in the macro world from here. As the creditplug remains, this is still a big risk ..factor to be reconned with.

The vanilla household realestate market are is not really viewed as a big risk factor for creditlosses in the northern European countries, but it is likely underestimated.



* Initial assetviews on 2010

- Stronger Usd via a flatter US yieldcurve and an increased volatility for US yields, shift in Asian investment patterns from exports to domestic investments, contributing to global rebalancing.
Short term the most recent Usd strength looks a bit stretched. Shortterm I am selling Usd, looking to go long it once the correction is completed.

- Weaker equity indicies, especially in Europe, Euro related sovereign problems will remain, as will ditto creditplugs, creditlosses, high unemployment.

- Strong asian demand for soft commodities keeping them well supported, not so for other dittos.

- Increased pressure on "pegged" currencies due the global rebalancing process.

- Emerging market currencies increasingly vulnerable due to risk of higher global rates and a stronger Usd, disruptions to the "global recovery" story.

As usual, good luck



The comments and posts published in this blog ARE NOT trading recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk.

Trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
Errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice."www.todaysmacrotrading.blogspot.com" will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

© 2008 "www.todaysmacrotrading.blogspot.com:The traders blog" All Rights Reserved.