* 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.
21 January 2010
04 January 2010
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.
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.
03 January 2010
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.
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.
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