* Equities should head lower short term - and then continue the correction higher.
However, equities have topped out for a while now. Risk for a heavier move lower is increasing.
But thats something for later on this summer/early fall.
* I am going short equities for this shortterm move 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.
16 August 2011
09 August 2011
Too high expectations
* Wham Bam thankyou ma´m
Equity markets dropping sharply globally after lower future growth signals triggers drastic revaluation of equities.
The hopeless situation in Europe as well as the dissapointment that US consumers will not be acting as the buyer of last resort for goods and services for the foreseeable future.
Lets try to look at the " bright" side;
- US corporates are still doing well and are very well capitalised.
- Eurobonds could still be launched to fill the holes in the Eur pockets.
As usual, however, there is no free lunch. While it might solve market turmoil short term. Lower growth and purchasing power for Eur countries and citizens will be the consequence. It will happen anyway. Question is just - how low will they go?
* China - the elephant in the room
I would also like to mention China, which today launched July´s inflation number; 6.5% on an anuualized basis. This should really trigger further tightening measures from China, but during the current "equities falling of a cliff"
circumstances, they will probably not.
In either case, what markets - and the rest of the world, should fear now is China going bust. China has been experiencing a classic boom - and bust scenario and I believe they are about to enter the bust phase. This scares me and should scare you too - lets hope Im wrong. If I am not, you´d better prepare your house for the fiercest economic environment you might experience during your lifetime.
*Correction higher in equities starting today?
Meanwhile, the equitymarkets are bound for a rebound/ shortsqueeze.
Today could very well be the start for a decent correction higher. I am going long.
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.
Equity markets dropping sharply globally after lower future growth signals triggers drastic revaluation of equities.
The hopeless situation in Europe as well as the dissapointment that US consumers will not be acting as the buyer of last resort for goods and services for the foreseeable future.
Lets try to look at the " bright" side;
- US corporates are still doing well and are very well capitalised.
- Eurobonds could still be launched to fill the holes in the Eur pockets.
As usual, however, there is no free lunch. While it might solve market turmoil short term. Lower growth and purchasing power for Eur countries and citizens will be the consequence. It will happen anyway. Question is just - how low will they go?
* China - the elephant in the room
I would also like to mention China, which today launched July´s inflation number; 6.5% on an anuualized basis. This should really trigger further tightening measures from China, but during the current "equities falling of a cliff"
circumstances, they will probably not.
In either case, what markets - and the rest of the world, should fear now is China going bust. China has been experiencing a classic boom - and bust scenario and I believe they are about to enter the bust phase. This scares me and should scare you too - lets hope Im wrong. If I am not, you´d better prepare your house for the fiercest economic environment you might experience during your lifetime.
*Correction higher in equities starting today?
Meanwhile, the equitymarkets are bound for a rebound/ shortsqueeze.
Today could very well be the start for a decent correction higher. I am going long.
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.
02 December 2010
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.
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.
01 December 2010
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.
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.
16 November 2010
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.
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.
25 October 2010
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.
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.
21 October 2010
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.
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
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