Bad Times Bringing Out The Best In People

I was just reading an article on guardian.co.uk about the disruptions to travel in Europe and England in particular.

One thing that had an effect on me was reading that the night-flights ban would be relaxed.

It just makes so much sense to chuck certain rules overboard at certain times and go into creative solution finding mode. If you have thousands of people and hundreds of planes stuck during a day-snowstorm, then by nightfall have all the runways clear; why shouldn't you then fly though the night and get everyone where they need to be?

I think that's what our system, politics and European treaties should really be able to encourage. If you have a special situation have a brainstorming session with ideas that are out of the box and just try and get the solution.

Maybe you could argue that a lot of peoples sleep will be impacted by such actions, i.e. planes landing and taking off through the night. But isn't that what Christmas is about, sharing? Sharing a burden in this case.

In any case I feel it makes a lot of sense to let thousands, if not tens of thousands of people travel at this time. As I read the passengers whose flights are being cancelled don't stand too much chance of getting regular flights in next days, as they are of course heavily booked in any event. This snow has compounded the problem.

So yeah, I think it makes a lot of sense to give airlines nighttime slots....

Are You A Good Trader

I just made this stuff up here on the spot after being grilled by someone who wants to know if he'd invest or if a third party would invest

1. How long did you keep your winning position

2. How long did you keep your loosing position

3. How many winners did you have

4. How many losers did you have

5. How much did you pay in commission

6. How much did you make net with trading

7. How much was the total account size

8. How much leverage did you use

My assumptions

1. Answer to Q1 should be greater than Q2

2. It doesn't matter if answer to 3 is greater than answer 4, (however if you have more winners than losers, but larger losers on average, you're in trouble!)

3. Answer to 5 should probably be at least 3x answer to 6!?

4. If 7 vs net gain (6) is less than 10%, it's probably not going to impress anyone

5. If you made 10% on an account of 100'000 but used 1'000'000 (10:1 leverage) - it's not good :D

Just some things that were floating through my mind afterwards....

Chinese Treasury Selling

So the chinese are selling boat loads of US treasuries, the rating agencies are pondering downgrading US debt, the Fed is buying bonds, interest rates are going north....

and yet....

Gold is down, the USD is flat to stronger in trading....

I don't get it :S

Follow Up Review Of The Ergotron DS100 Quad Monitor Stand

As you may have read here I've been pondering how to clean up my desk with regards to screens and using the available space in the best way.

http://eurusd-fx.blogspot.com/2010/11/ergotron-ds100-quad-monitor-stand.html

Now I actually own one of those quad monitor stands and must say I'm quite pleased. It's really easy to assemble and 3/4 monitors (I had four different models, 3 brands) were easily mountable except for one old one.

Considering you can get good 22" monitors on ebay etc for USD 100 (used) and the stand costs less than USD 450 - you can get a pro trader desk for USD 1000.

Considering I almost lost USD 9000 last week (last 10 days) that's an investment that will please me on a daily basis for years to come.

I use it this way: On one screen I have the FX open, with margin, open positions, charts, on another I have 4-5 market depths of stocks I'm active in, on the third I have general news and index charts. The forth slot on the Quad Stand is currently empty. My old 19" BenQ screen had this strange stand I couldn't unscrew.

But especially when you lean back in your chair (40") the upper two screens are really easy on the eyes. However when I sit 25" close to the monitor stand I do have to tilt my head slightly backward. Maybe I need a chair that can swivel higher... Not a construction fault of the stand, more a issue of my table being to narrow, me sitting to close.

Bottom line: If you're risking thousands of USD a week, this will be one investment that will give you a nice return and make all PC-related activities more comfortable.

Lost 400 pips, then won 390 pips. Still paying the market.

Nov 23rd was the day I decided that we'd seen enough selling in EURUSD.

Sadly the market didn't agree and stuffed me with a bigger than 400pip move (from my average entry!) in dollar terms: USD 9'000 loss on 30k equity in the FX account. I would probably have watched it fall to 1.25 and been forced out.

Lucky for me the ECB decided to buy bonds more aggressively without announcing it before and after the ECB meeting this week. Sneaky move. That's the best way to catch speculators off guard. Not announcing interventions.

Of course the biggest help was the US employment report though. I wonder if it's unethical to be pleased more people are out of a job? Well I'm not pleased actually, just pleased that the market wasn't expecting it.

Long story short: I got out with USD 200 loss, 270 really, but I had a small trade that netted me profit of 70 today. Oh and you can add USD 40-50 for interest I had to pay on being long EURUSD to my broker. So lost 240 maybe.

I am relieved!

Winter Wonderland

I was pretty surprised at the size and number of icicles I saw when looking through my attic window today. I picked one off. They're the size of a sword (well very close). Much bigger than any bread-knife or sushi knife... I wouldn't want to be walking below when one of those drops!

EURUSD - Just watching and hoping we hold 1.325. Guess the weaker hands are short? Still long at 1.3425.

When You Least Expect It

I think there's an unwritten law: As long as I'm positioned in an instrument AND watching it, it won't do what I want and/or expect. It's like a phone that won't ring when you're looking at it or expecting a call.

So you can bet I wasn't expecting a rally today!

How would the rational side of me explain what's happening?

1) The German, French, UK and US economic data (PMIs, etc) were a positive surprise

2) CDS Longs are reducing positions ahead of the ECB meeting Thursday

3) EURUSD bouncing 150 pips after a 700pip move down isn't really a big deal (and still puts it nowhere near b/e for me).

4) The S&P range 1180-1200 has been broken to the UPSIDE ?! (Will be very interested to see if it holds, because that should cause some people to hop on - then again I guess that's where all the shorts had their stops)

5) The market thinks that haircuts aren't going to be in the cards near term. No blood to lick.

6) Speculation the US is about to aid Europe?! (Kind of a joke if you really think of it)

As long as Europe and the US do the Japanese move of just guaranteeing everything and not allowing losses (from sovereign debt haircuts), the system can't break.

Instinctively everyone is shorting into the big move up. I'm tempted as well because:

The minute some drizzly no-action statement comes from the ECB, you can bet your ass the CDS market will start pricing risk again.

Robust PMI In The EURO Mammoths Germany and France

All that fuss about Korea first, then Ireland, now Portugal, Spain, Italy... It's such a pain in the arse!

Another reason for sticking in my loosing position in EURUSD:

"The final euro area manufacturing PMIs for November pointed to contrasting fortunes between northern and southern Europe. Manufacturing activity remained robust in Germany and France (despite a downward revision to the 'flash' German survey), while order books remain weak in Italy and Spain (and even more so in Greece). Moreover, an improvement in the orders-stocks differential in Germany and France suggests that these trends will continue in the coming months."

I have looked at the EURUSD chart and think the short term bottom of this selling wave since 1.38 should be at 1.275. Probably we're going to meander around the 1.275-1.325 level. Just getting near enough to my entry of 1.3425 that I feel slightly less like an idiot, but not close enough to let me get out.

Funny, writing the last sentence above: There's nothing that won't let me out, stop me cutting my loss, EXCEPT my brain. I guess it prooves: Only you can beat yourself.

Trying to sugarcoat my loss (open and growing)

A few days ago I went long 1 lot of EURUSD at 1.3475 or so. Then I watched it tank by maybe 60pips. I then wrote on a piece of paper DO NOT BUY ANY MORE UNTILL TOMORROW. Not 30min later I bought some more when it was down around 100pips. Good old averaging right.

Since then it lost another 300 pips. And looks like it might extend down to 1.275 easily.

But I've taken a step back now and have turned it from a trading position into an investment. :D (Always a bad sign!) I try and tell myself: Hey, Europe is sorting out their problem in a way that doesn't seem to be hurting the EU economy. For a start the peripherals aren't very big producers or consumers. Actually they're really small. However sentiment because of them has whacked down EURUSD so badly, that exporting from Germany, France has become very attractive and is helping the whole EU.

So that's the pro EURUSD long position stance.

Then there's the emotional contagion fear feeding into my brain. Now Portugal looking worse, Portugal drags down Spain, Spain infects Italy. Spain will be in refi trouble as soon december, latest January. That's the con for being long EURUSD.

Miserable Sentiment in EURUSD / Equities

Well I'm long EURUSD and equities and I can tell you I'm pretty miserable.

This market is doing nothing to make my Xmas nicer. It's also not going to put me in the gift buying mood. The market is taking all my present-money!

So they sorted Ireland. Nice. What did we want them to do? Exactly, sort out Spain, Portugal and Italy. And now we can just wait.

Also completely useless that Spanish minister said they had no funding trouble at all for the next months. Then slid in: Or maybe 1.5 months.

Great! So we can expect January to really see hell break loose. And the markets are starting to discount that.

Close to hedging my clients position by short selling Index ETFs!

Reuters Eikon per month cost

So I notice Google is sending requests for people my way (well to this blog!) who want to know how expensive Reuters Eikon is per month.

I'll tell you:

Between USD 2'000-2'200.

So yearly cost of Reuters Eikon is USD 25'200 if you're a one-man shop (like myself).

Now I know from Bloomberg that their prices come down to USD 1'600 a month if you order two. Now that's no use to me at all, but if you're working for a company that already has Bloomberg or Reuters I'm sure they have quite some pricing room.

Also interesting: If you're sharing offices with other asset managers, traders etc who also use one of the services, there's a chance you'll get a discount. Of course you need to push and stretch the truth a bit.

And of course the best strategy is to get the salesperson to compete for your business and make new suggestions.

For example I was told by Reuters: If you want, I can push out the start of paying two months out. So you get Eikon on Dec 1 and only start paying on Feb 1.

They know once you've signed for one or the other it won't be easy to leave all your contacts and setups.

Which brings me to another point: If you're trading equities, the chances are high that the sales traders and bank has a preference for you using Bloomberg. I personally think that could change because Reuters has a nice product with Eikon. Plus they have good FX news, which is turning out to be pretty important these days with the whole sovereign debt situation!

So there's a little bit of my experience on the subject.

Other posts I've written on the issue;

http://eurusd-fx.blogspot.com/2010/11/cost-of-bloomberg-cost-of-reuters-eikon.html

http://eurusd-fx.blogspot.com/2010/11/breaking-reuters-bloomberg-duopoly.html

http://eurusd-fx.blogspot.com/2010/11/dear-google-please-make-your-own.html

Already Sick Of Korea-War Talk

There's just no way that that will escalate.

China will have every interest to stop any serious attacks.

I wonder if the South Koreans calculate:

Okay, they shelled and killed X of our citizens.

If we retaliate they'll kill Y and our economy will start contracting, costing MUCH MUCH more.

If there is a retaliation by South Korea which leads to a small war, China WILL step in. They should say that. It'n in their economy's interest!

So that problem keeps popping up on Bloomberg TV and newswires. But it's a non-economic event and would never turn into one without China stepping in a de-escalating the situation! I'm sure. :)

Second problem:

Ireland, Spain... That's where the real problem is. And specifically the banks in Ireland crashing on the equity markets PLUS the Spanish CDS spreads rising.

IF anyone can get the CDS spreads down for Spain then we can have our X-Mas rally I was hoping & positioned for!

IF they keep widening I'M FUCKED :)

For 2 days I've been long EURUSD at 1.3425 :S

Ergotron DS100 - Quad Monitor Stand

Well, the Ergotron DS100 might also be a good choice! This baby retails for USD350-450 I believe.

I wonder if it's worth it, well if it's worth having 4 screens vs the current 2 I have... maybe if I get to USD 50mn under management and can trade more actively.

Wanted: Kensington Dual Monitor Arm

Next on my X-Mas gift list to myself -

- and after the scratched IPC IQ/Max Turrett :(

- is this Kensington Dual Monitor Arm! Retailing at around $ 230 in my neck of the woods.

Price to buy it from B2B plattform is $153 excluding VAT...

I'm really surprised they are not easier to get hold of! Who doesn't have 2 screens or more! at the 100-300$ they now retail for! It's so much cooler and easier to keep an eye on everything with more screens. I need to keep my youtube and private email on a screen all by itself already!!! ;)

How Ironic: Bloomberg TV More Interesting Today Than Usual

They showed a documentary about KKR.

Some interesting comments by Donald Trump and John Mack and others on the legends....

Then they showed a re-run of Charlie Rose....

Basically more interesting showing such shows, without the

"okay, I have to cut you off there, we need to go to commercial...."

"we'll be back in 2"

Really annoying. I'm surprised more people don't tape the shows and upload them without the commercials! Like with US hit shows "Big Bang Theory" , "Two And A Half Men" etc... then again, what's the point if you only get 2min worth of airtime from analysts, economists etc... and if they do have 10minutes, it's cut 3 times by commercials :)

AND the biggest JOKE!

You pay for bloomberg!!!! You pay him (his company) to annoy you!

(Well I have the satellite feed, but still)

Breaking The Reuters - Bloomberg Duopoly

My opinions and views are based on using Bloomberg and Reuters for more than 5 years in an EQUITIES or OFF BALANCE SHEET DERIVATIVES environment.

At my last employer (a broker) I was told: Listen, you can have a Bloomberg - no problem - but YOU need to make the bro to finance it. So from the start, I need to make USD 20-25'000 (depending on data-feeds subscribed and discount offered by Bloomberg) EXTRA just to pay for that. Considering most individual brokers make somewhere between USD 400'000-3'000'000 in bro from their clients I guess Bloomberg/Reuters are taking a 5% to 0.5-1% cut of earnings. 5% is totally unreasonable I think. (see post on cost of Reuters Eikon and Bloomberg)

Q: Why did I personally need Bloomberg or Reuters?

A: So that I can chat to my clients, show them prices in a more convenient way than calling them. (Always remember I don't use much analysis, risk management or anything like that. )

Q: Why couldn't I just tell my clients to install messenger (AOL, MSN, etc)?

A: They don't have a good reputation it seems, aren't secure etc....

That brings me to my point yesterday that someone powerful like Google needs to start an OpenSource standard for IM that is secure and attractive for banks and brokers to install on their trading floors.

I believe some banks/brokers offer their clients different messengers. But it's very fragmented. A standard would be great to have and promote OpenSource efforts. (I love OpenSource.)

Another very useful feature that I loved in Bloomberg:

When you send a message you can check to see if it has been read in real time. That is very nice when showing prices and being given executions.

In summary:

If you can have secure messages and secure instant messaging you really cover a lot more users needs than you may think. Especially in the mid and back-office sections of banks. Many banks use sub-licensed chat systems like MindAlign (which I loved but is expensive!) or similar.

****

Another post on the subject of cost for Reuters per month etc

Insider or insight information?

Nice point by a guy from Citi on Bloomberg telly earlier I happen to agree with;

An analyst or investor who takes the time and trouble to have a chat with a CEO or CFO of a company and/or its competitors is probably gaining insight in more than 9/10 cases, NOT INSIDER information.

An insider is someone who has information about specific numbers, when the numbers will be published and what the consensus is expecting. That kind of person is an insider.

However if someone gains insight through in-the-field research, that product or service XYZ could bring trouble or large profits, then it's okay. I think anyway.

Commodities Bubble

I'm just brainstorming myself below, and know I'm probably missing a few things... but

I recently caught myself thinking that maybe I really do need to increase my clients Gold position or buy other commodities to hedge the risk of turmoil created by sovereign debts escalating.

But if I think out 10 years from now and ask myself :

How much will these commodities have returned and also what will their outlook be?

I come to the conclusion that they will likely have returned nothing.

Equities on the other hand, companies will still be around and earning dividends.

The only way the commodities prices can be justified at these lofty levels is:

1. the world runs out of them

2. companies traded publicly go bust en masse in a Bear Stearns/ Lehman fashion

I can imagine number two if debt restructuring by the US involved a haircut. I don't think the system can support a haircut.

It's very possible that number 2 happens. Not today, not tomorrow, but the direction is so, that rational people can nearly only come to such a conclusion. But those people have been buying Gold for years. (They'll probably sell the day panic breaks out, equities crash. They'll invest the paper money in new or merged companies, private equity placements etc, where they know there's no risk from a debt point of view)

So number 2 happens and new currencies and dominant players come to power. Paper money will still be around, and you'll invest as during the last 200 years in companies/equities and their debt.

And that's why Gold will go out of fashion. You just don't want to be holding Gold the day the debt situation is cleared and new&growing companies appear.

Might only be in 2-5 years though. But if you're not speculating, but investing for the future, I think Gold must be overvalued. And I've thought that since before USD 1200. Probably wont stop us going to 2-3'000 though. Especially if margin trading Gold is made easier.

Dear Google, please make your own Reuters Eikon or Bloomberg Terminal equivalent!

**

see this post for background

**

Dear Google,

I'm an honest, small asset manager with just a handful of clients. I have a problem though. I have used and know Bloomberg and Reuters products in the past and think the FEATURES they offer are very helpfull. However: I really can NOT pay USD 2'000 a month for some software that is glorified instant messaging and charting system with quotes thrown in.

I do however NEED and WANT to talk to my brokers over instant messenger.

I do NEED and WANT to send my different brokers orders from one centralized trading plattform.

Please help me, by offering such a software application.

I know for a fact that

- newswires cost less than USD 150 (dow jones)

- charting systems are very cheap

- real time exchange prices are very cheap! USD 12 maybe - depending on exchange...

So why would I pay USD 2'000 a month?! Do you know what a nice appartement I can get for that cash? Or office space? Or a nice expensive car on leasing?

It's just crazy. I swear.

Are Hedge Funds Evil By Default Vs Mutual & Pension Funds?

Couple of things go through my mind when looking at this graph and thinking of yesterdays headlines (FBI probe into insider trading).

1. Are mututal funds and pension funds not prone to insider trading like hedge funds seem to be even though they manage much more money?

a. because their managers don't have incentives (performance fees) to try and get information that pays off.

b. because those managers and the pension&mutual funds they manage are raping their investors as banks help them

i. by buying structured products (with high fees inbuilt)

ii. by getting hidden kick backs (invitations to sporting events, cash envelopes)

ASSETS MANAGED

2. This graph misrepresents who is active in the market. Hedge funds would probably lead turnover by a large margin.

Maybe those who trade often are more likely to look for short cuts...

3. I guess you can look at it another way: Hedge funds will go the extra mile to get good performance for you as an investor. And sometimes they tend to cross a certain line when going that extra mile :D

I Need An IPC IQ/Max Turret Phone!

Well, need, not really NEEED... It's like a sexy car or a sexy woman. You just WANT IT.

I definitely want one of these... :)

What a beautiful phone!

Hm. A bit of price issue though. USD 2k is a bit steap for the front end, then you need backoffice servers where it really gets expensive!

I think I may get a similiarly good setup by acquiring two regular SNOM 300 IP phones....

Just a shame that you can't have lines to certain brokers blink up :(

FBI Strategy To Make US Equity Market Go Up

Plan A

1. Find out which large hedge funds are negative on stocks, short stocks.

2. Send the FBI to these hedge funds to do a "investigation".

3. Investors will run for the exit at those hedge funds

4. That will mean hedge funds need to close out their shorts.

5. Markets go up. Everybody happy. ;)

Plan B

1. Find out which large investment banks are short equities

2. Ask these banks for much more capital

3. Other banks will cut their credit lines to those banks.

4. Long only lives happily ever after.

Cost Of Bloomberg, Cost Of Reuters Eikon - SICKENING!

***

also see this post for background

Another post on the subject of cost for Reuters per month etc

***

I just don't get it. Why can't I as a small asset manager get a discount or a light version of Bloomberg or Reuters!?

Bloomberg: Why do I have to pay USD 1'900 a month, or 1'975 from December for something that I need in such a simple way. (It goes down 20-25% if you buy 2 terminals)

- I want to chat

--> I can download several different instant messengers for nothing. They have all the messaging functions I need.

- I want to trade equities

--> Any broker offers me free software and tools to trade equities.

- Newswires incorporated into application

--> Many brokers offer apps with news in them. Especially the FX plattforms. (It's interesting how strong FX is regarding being at the forefront of technology and margin trading.)

Why am I even considering paying the Reuters USD 2'000 want for their Eikon product?!

I want to use several brokers when trading equities for example

I want to chat with brokers over IM, different sales at different banks (How many banks install regular IM clients on there sales desks?!)

Bloombergs FX is weaker than what my current brokers offers me: My current brokers connects to Currenex liquidity which in turn has over 70 banks plugged in. Try getting credit lines to 70 banks setup via Bloomberg. <-- In this case Bloomberg has a service that is below the "free" service from my broker!

What could remedies be?

1. Brokers allow their traders and sales traders to install regular IM (security issue - so unlikely to happen until that's sorted)

2. Newsfeeds should be provided directly and standalone by companies like Dow Jones...

I think Bloomberg and Reuters are a rip off for a small trader. :( Why don't they give me their software for 500 USD a month. I only need such a small portion of it, that even that is pushing it!

Why Eric Cantonas Idea Of A Bank Run Would Backfire

Eric Cantona, actually one of my favorite football players of the last decade, has expressed an interesting idea.

http://www.youtube.com/watch?v=-Uop5R7E314

He says the best way to change the system is to pressure (maybe destroy?) banks, as they are the system. His idea: Go to your bank and clean out your account. That way the state will have to take more notice than if people are demonstrating in the streets.

I reckon such a plan would backfire bigtime for several reasons:

1. Crime, robberies would suddenly increase if people horded money at home.

2. Central banks and then banks would increase interest rates for deposits, trying to attract back the cash.

3. Retail amounts of silver, gold etc demanded would explode and the price for them would aswell. That in turn would lead to a bubble in those commodities with the investors getting screwed.

4. A law could quickly be created - like in the US with Gold back in 1933 - prohibiting keeping either gold, silver or cash in specific quantities.

Probably a good way to fight against the "bonus-culture" would be to move all ones assets to banks that follow better ethical standards. But trying to bring the monetary system to a halt would be counter-productive I reckon, personally.

Probability of debt restructuring in Europe has increased

Dexia yesterday wrote:

From a long term perspective, the probability of debt restructuring in Europe has increased and the new debt mechanism could put peripherals under renewed pressure. Also, due to the high cost of funding for the peripheral bonds, it cannot be excluded that the rating agencies will start a new round of downgrades. If this were the case, the peripheral bond markets will remain under pressure due to some forced selling.

If Sovereign Debt *A-Bomb* Detonates

Theres must be some companies that will prosper in those conditions aswell (If Sovereign Debt *A-Bomb* Detonates). Just as the '29 crash and following depression saw some companies grow.

The company I would feel comfortable owning would have:

1. Cash reserves

2. Not have Cash with banks at risk of going bust (that's a tough one!)

3. Non-Substitutable/Best-in-class products (or just difficult to substitute)

4. No Sovereign Debt (I remember industrial co's announcing losses when Lehman went bust, when you'd expect them to have Zero exposure to such an event really?!) - as I think Sovereign Debt is the single largest risk out there.

5. Sells and produces with little or no currency risk

My list of such companies is small. Actually empty. :(

You have one that fits the ticket?

GM and spiked flat S&P day

What's with the US market today? Up over 1% out of the gates this morning, then steady as a rock.

This is the first time I've ever thought that the market is being "held" by ONE "investor".

But then I remembered something Don Miller had written in his blog: That markets tend to move overnight/european session, then volatility just disappears.

Yesterdays poll of where investors, well actually Marketwatch.com website visitors, think GM will close (I put in a emotional under 30$) had over 40% saying below 30$ and over 25% 30-35$. Now however it looks like over 35$ will be close. The percentages did change this morning to a more balanced view. But if your chips had been placed yesterday, 65-70% of people, myself included, would have been wrong.

Market Is Making Me "Schizo"

So investors are fighting to get into GM.

Why?

1. ...because the weak dollar is going to allow exports to be very competitive vs the cars manufactured by Japan, Europe? Or because the import of cars from Europe will drop?

2. ...because cars will be made in the US and shipped to Emerging Markets?

3. ...because cars like the Volt will get subsidized by the US Gov?

4. ...because the US population is going to grow and need more new cars?

5. ....because GM produces in several strongly growing emerging markets?

Or is GM valuation a bubble?

1. ... because loads of big european car manufacturers have plants in the US and competition will remain stiff no matter what the USD does?

2. ... the guys building TESLAs or future version of it will negatively impact sales of GM?

A. I have no idea about the valuation metrics of GM at the moment. I guess the question is, are people getting richer and do they need NEW cars? I can imagine a lot of people will switch to an electric or hybrid car when it has mass market appeal and is a lot cheaper!! I like driving 5-10 year old cars because insurance rates are low and depreciation isn't as steep as with newish cars.

B. To be honest I don't understand why there's always a silent period when information would be needed most when it comes to IPOs. Yesterday on Fox Business the guy from GM just made comments about new models they have. No hard facts about markets, competition - or anything of real value!

This poll on GM seems about right to me. They should have left range "cheap". But I guess the IB's doing the deal had to lick the US Govs shoes - lucky UBS that they're not left holding any paper ???

Atmosphere Is Being Charged - Thunderstorm Needed

Todays headline:

The real issue:

The US have taken another wrong turn with QE2 and are now headed the wrong way. They think everyone else is going the wrong way though. Delusional. :)

Anyway. The only thing that is going to get them to stop spending like complete jackasses is a nice brutal move on their treasuries.

As long as they can do what they're doing we'll see them continue. Investors round the world had better wake up to this colossal risk soon!

Ireland, Greece are in the headlines now. But they're NOTHING compared to the USA and UK.

The above is a fundamental view. As the USD is getting stronger one had better just ride it for the moment. M&A, IPOs are en vogue. Even though I think GM is going to be a terrible investment for those buying (even if they do have the VOLT?!), at least the US Gov can get out...

A few assumptions I currently am making

Assumption 1

Sometime in 2011 or early 2012 people are going to start wanting more interest on their US and UK investments. (Maybe similiar to what the greek, irish and portugese have seen in 2010)

Assumption 2

Price of treasuries and gilts will have to come down. (Knowing that the Fed will need to reign in liquidity at some point will become clear and will have everyone front running them. Just like they got front run into buying at astro levels with QE1 and QE2)

Assumption 3

Companies with

a. high levels of debt

b. exposure to drop in treasury prices

c. risky balance sheets

will do badly

Assumption 4

Companies with

a. lots of prime location land or office space

b. low debt level

c. solid balance sheets

will do well

Assumption 5

Inflation will go to high single digits in western economies.

How To Save The USA

My summary of Jeremy Granthams' point: The US needs to spend on infrastracture, not on own treasuries/bonds... and they should hire boatloads of builders, who'll all go and spend the cash on home improvement, restaurants, maybe also booze, hookers and other fun things like gambling. Worst thing is feeding banksters and hedgies. They seem to not spend enough. Surprising really.

His words:

###

Fiscal Stimulus Appears To Be the Only Option

I’ve always been sympathetic to the general idea of crowding out: that government spending displaces an equal and offsetting amount of private spending. But it is an academic argument and, although it may have a grain or two of truth, it smells of the typical recent tendency in economics: to be heavy on assumptions and light on common sense and the real world.

This concept is known, after the British nineteenth century economist, as Ricardian Equivalence, but to be fair to Ricardo, there were no government statistics then, so everything had to be theoretical. The same relatively small group of taxpayers also owned most of the bonds, so one can see how Ricardo might have gotten there. But today, the government’s hiring someone is absolutely not the same as a private company’s hiring exactly the same person, for if the person is not hired, the government bears all of the costs of unemployment and the corporation none. This cost is not merely welfare, food stamps, and the loss of taxes federally and locally. It also includes the long-term cost to society of the unemployed losing their skills and becoming less employable. For lower-paid workers, these total costs may equal, on rough estimate, one-third to one-half of the cost of hiring them. In this situation, there is no equivalence. A hired worker who would otherwise be unemployed is simply a better bargain for the government. A more capitalist alternative would be to offer some or all of the government’s savings as a subsidy to employers who hire lower-skilled workers. This has been tried and, at times of severe unemployment, seems to be effective.

The real problem starts when direct governmental spending cuts into the always limited pool of skilled workers, or it is attempted when the pool of unemployed workers is only marginally above normal and the private sector has begun to hire. That is “crowding out.” None of these conditions applies now. It is intuitively obvious, at least to me, that if fiscal spending were directed only: a) to lower-skilled workers, b) when there is clearly an abnormal level of unemployment, or c) when you hire them only to do jobs with a high return to society, that we will all come out ahead and there is no equivalence. Future debt commitments are paper; current useful jobs are real life. How can we possibly be better off when the unemployed who want to work are sitting idle and depressed, as their skills decay? Be serious! With a dreadfully deteriorated infrastructure and a desperate need for improvements in energy efficiency, there is certainly a great potential supply of high societal returns waiting to be had on one hand, and an army of non-frictional unemployed ready to get to work on the other."

GMO, Quarterly Letter – Night of the Living Fed – October 2010

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Irish sovereign bonds have reached new highs

The Irish are messing up the pre-X-mas rally in equity markets I anticipated!

***

Irish sovereign bonds have reached new highs in the last days (7.9% for the 10yr bond). In our view, the high probability of default implied by the recent hike in spreads is more a reflection of very negative market sentiment and recent press releases than a result of changes in underlying macroeconomic and financial fundamentals. The increase in the spreads has followed a series of negative press reports on the potential losses of the banking system, including in the two largest banks. In addition, there is considerable uncertainty regarding the ability of the government to get Parliamentary support on December 7 2010 on the 2011-2014 fiscal adjustment programme, which aims at reducing the deficit to below 3% of GDP by 2014.

***

source: Barclays Capital

***

Unhappy market participants waiting for pullback

. . . “Money managers are unhappy because 70% of them are lagging the S&P 500 and see the end of another quarter approaching. Economists are unhappy because they do not know what to believe; this month’s forecast of a strong economy or last month’s forecast of a weak economy. Technicians are unhappy because the market refuses to correct, and gets more and more extended. Foreigners are unhappy because due to their underinvested status in the U.S., they have missed the biggest double play in decades. The public is unhappy because they just plain missed out on the party after being scared into cash after the crash. It almost seems ungrateful for so many to be unhappy about a market that has done so well . . . Unhappy people would prefer the market to correct to allow them to buy and feel happy, which is just the reason for a further rise. Frustrating the majority is the market’s primary goal.”

. . . Robert J. Farrell

Bob Farrell was Merrill Lynch’s esteemed strategist for decades. He penned the aforementioned comments in September of 1989 after the D-J Industrial Average (DJIA) had risen from that year’s January price of 2100 to its September high of 2791 without any meaningful correction. Accordingly, those investors waiting for a pullback to “buy” were frustrated. Similarly, present-day investors are pretty frustrated as the DJIA has leaped from its August “low” of ~9940 into last Friday’s high of 11451 without any significant correction. The recent “Buying Stampede” began on September 1st with a 255-point Dow Wow and has continued for the past 47 sessions without anything more than a one- to three-day pause/correction before resuming the onslaught.

^ The above is from a Investment Strategy comment out of Raymond James today...

Equities: If you're short or in cash - you're fucked!

That provocative statement sums up my opinion very neatly. Of the equities I watch and which are in the news in my local market, most have been beaten up going into results, only to then be bid up once the news hits. Also movements after positive earnings surprises tend to be stronger than I'd expect. I put this down to short covering. This market has got a lot of shorts and they're weak. They have fundamentals brutally against themselves: Liquidity for one. Then you have an IPO market and M&A starting to glow. Just check out the last 30 issues and check how many are up and by how much.

I think it's a great time to be long.

PS: The above is my position talking. Especially love financials as they've been lagging and are today moving big time!

Sterling is pretty impressive! Credible spending cuts key to confidence!

CHFGBP: It's gone from 1.52 a few days ago to 1.574 now.

I nearly sold some at 1.545 thinking: 200 pips is enough for a day!? I'd now be out of 300 pips!

I guess I didn't sell CHFGBP for two reasons:

1. the current government seems to be genuinely doing something big about spending which leads to 2.

2. S&P have given the thumbs up, green light to the new strong spending cuts....

Now if the US can do something as convincing as the UK, the world economy is going to exhale a huge sigh of relief and the markets will be off to the races!

BTW: Did you see that chinese IPO the day before yesterday on the Nasdaq. The two leads UBS and Credit Suisse must have made a killing on that one (+60% on the open)! Also the two yesterday were pretty decent coming in with +5% gains....I think Q4 is going to look pretty good compared to Q3! IPO pipeline is always a good gage of markets. And it's full.

Offtopic: Mentally challenged...

So I have this friend right, she works in an old peoples home. This place is about 20min drive from the city. Among other things it has a cafeteria where people can eat.

Well yesterday, as on many evenings, they had a mentally handicapped guy, who lives round the corner of the home, eating with them. Now this guy is about 6'2 tall and has a very strange habit. He wanks off before and after each meal (and several more times a day). So we agree he's special.

But yesterday he came back to the table with his trousers still half undone, his fly open. Not a picture the young women working in the home should be seeing while eating, nor the other inhabitants. So one of them tells him that he must go to the bathroom and "re-dress". He doesn't want to. Finally she decides to accompany him to the bathroom and to wait outside. He still doesn't close his fly though, so she tries to do it.

And what did the guy do? He went home to his mum and told her he'd been sexually harassed. Poor girl who tried to help him explained the situation to the mother who is siding with her son 100% and says she's going to press charges! The girl in tears of course and shaken since...

How relevant is US unemployment rate for the world or equity markets?

So the yellow line in the chart is the unemployment rate in the US in the last 50 years or so. This is what all the bears are looking at and concluding that we're in for weak times in stock market performance, as such high unemployment caps growth of companies.

They're probably right in principle. But what I miss is the global context. You have a completely new animal in the game - well four or five animals actually; Brasil, Russia, India, Indonesia, China.

Now any company doing business with those is bound to do pretty well. And of course looking at multinational companies with earnings across the globe, you will certainly find that a lot of them can compensate or even grow despite high US unemployment.

Now the big risk going forward would be if the emerging markets suddenly started contracting. But I've not seen anyone putting that argument forward. Have you? I hear and see China is cooling from +30% to +24% growth rates or similiar.

TV Show Review: The Only Way Is Essex

I've been watching all the episodes of the "reality" show "The Only Way Is Essex" and must say it has one character named Mark who is just like a broker I use to work with!

1. He talks exactely like him

2. He physically looks like him (-15years)

3. He acts like him

a. chasing girls

b. keen on expensive gear (cars, watches)

It's not a clichée !

I recommend the show for the accents. I love them. Just search

"torrent the only was is essex s01e0x" where x is the episode you want - goes till 4!

There's something about people acting immature I really enjoy a lot.

Equities Trading Volume Bonanza

Equities day-trading

So the cash balance going into today for one of the accounts I manage was $1.2 mn.

I was pretty active today in the european markets clocking in turnover of $1.7 mn.

The end of day balance is $ 950k (mind you, that decrease is not due to P&L, but positions now larger than yesterday....)

I guess a Miami based client I had back when I was on a trading desk was right when he said:

"I can tell; you're a flipper!"

The above stats proove it aswell.

I think what I learned today is the following:

Don't follow one stock with your eyes glued to that quote, but rather follow several - in my case today 5 equities - and dart in and out of them.

My new tactic is the following:

1. Have several position I feel comfortable with medium term (remember I need to justify my holding at least once a year, which is nice, as it's not too often right!?)

2. Have bids and offers in the stock, try and gage where support resistance will be, and just wait till something gets hit. Then depending on what I make of order book, general market conditions I'll either sell some more on offer or bid where I just got lifted.

It's great fun, even if today was pretty much zero sum game. Yesterday I was playing this chinese memory game with a girlfriend on her PC, forgot the name (of the game not girl), which is a zero sum game aswell.... Anyway, I'm sorry to say the equity market and having a "bet" on, are much more fun!

I think I'm going to ask a bank to employ me again. I can generate flow for their customers and increase the level of activity, commissions.... Just got to put into more stuck-up language why what I do is so clever and useful :)

IPO Window Opening

It's official, IPOs are back on the table. The window has opened, maybe just a crack, but a draft of fluttering dollars around the world is going to push it wide open, I promise you!

Let me know what IPOs are looking hot in your part of the world!

Atm it looks like Asia and Hong Kong in particular are the place to be?!

Seriously: The Chinas and Brasils of this world need to protect themselves against the toilet paper aka treasuries they bought! And how better to do that than buy know how, market share and technology?

Tell me if I'm missing something here. But I haven't been this excited about the markets since 2006!

QE - Is that going to push stocks up?!

I'm starting to think that this falling dollar has an advantage. As the large overseas funds holdings in US equities are reduced in value due to the USD suffering, a new force comes into play: Companies have large cash piles, as do many investors and TAKEOVERs start looking very attractive! These large cash piles are going to lead to a global merging frenzy as no-one wants to be stuck with lots of paper in the bank when market shares, competitors are up for grabs?!

Note: This is wishful thinking. But the Dow is now more likely to go to 12k than 10k as it's underpinned by the fact that a lot of US companies generate revenues abroad and can export whatever they do produce in the US at a nice discount... ?

*random thoughts*

Terroralert to put people off demonstrating against Austerity

That's what I think is happening at the moment.

Pretty slick move by intelligence agencies.

If they can keep people off the streets, and not protesting the austerity measures I think the whole thing will turn out really well for 2011 and the stock market.

Interesting to see oil ploughed thorugh the USD80 mark. Wonder why brokers like MF Global have been making such a big fuss about USD 80 being the top of trading range. And they're always going on about no demand if not enough jobs in the US.

I think they're missing the picture in the rest of the world to be honest.

*random thoughts*

Who's On The Other Side Of Your Selling Equities...

Interesting to see who's on the other side of the doom and gloom crowd - myself nearly convinced aswell...

Number 1: (statement made today by BlackRock)

"BlackRock’s top performing European Equities Style Diversified team believes that worries over indebted European territories are obscuring powerful factors that will work for investors in the years ahead. Greece’s problems have delivered a wake-up call to European governments which are increasingly making firm plans to tackle budgetary problems urgently and effectively. Add to this the fact that Europe possesses competitive companies exposed to global growth, which now have the added advantage of a devalued euro."

Number 2: (research out of BofA Merrill Lynch couple of days ago)

"History suggests that intelligent austerity works.
Many countries in the Western world have to rein in their budget deficits, often by significant amounts. Can this derail the recovery from the post-Lehman recession? May austerity even be self-defeating, as a tighter fiscal policy hits demand and tax revenues? These are among the key concerns rattling financial markets. In this report, we examine the historical evidence. We find that the opposite can often be the case. Intelligent austerity can even raise GDP growth."

Number 3: (research out of Barclays Capital last Friday)

"We would caution against any substantive re-evaluation of the economic outlook, however. Although recent data highlight modest downside risks to our forecast of US GDP growth of 4.5% in Q2, they have not been uniformly downbeat. In particular, within the GDP release, both the household income and corporate profit data were revised up, while the May personal income and outlays report indicated that a rebound in labour income will support consumer spending as income from government transfer payments fades. These developments are consistent with our expectation that the recovery will continue to build momentum and that GDP growth will be stronger in Q2 than it was in Q1."

So - breather for equities or just a little blip in the downtrend....?!

How Goldman gambled on starvation

Worthwhile read!

Johann Hari: How Goldman gambled on starvation

Speculators set up a casino where the chips were the stomachs of millions. What does it say about our system that we can so casually inflict so much pain?

By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You're wrong. There's more. It turns out that the most destructive of all their recent acts has barely been discussed at all. Here's the rest. This is the story of how some of the richest people in the world – Goldman, Deutsche Bank, the traders at Merrill Lynch, and more – have caused the starvation of some of the poorest people in the world.

http://www.independent.co.uk/opinion/commentators/johann-hari/johann-hari-how-goldman-gambled-on-starvation-2016088.html

Also on a sidenote, this from a Barclays report today I found interesting:

Financial markets’ focus on Europe switched from sovereign debt to the banks this week as the expiration of last year’s 12-month long-term repo operation loomed. Despite fears that the event might uncover severe stress in funding markets, the headline news was positive. The combined demand for liquidity in Wednesday’s 3-month operation and Thursday’s 6- day fine-tuning operation left the liquidity surplus in the eurosystem at about half of the level it had been recently. We believe that the normalisation of Eonia is likely to come ahead of the current market expectation of end-2011.

This is not to say that concerns about the European banking system have dissipated. It still seems likely that a number of Greek banks and Spanish Cajas, for example, are heavily reliant on the ECB for funding. The impending stress tests of European banks may shed further light on any latent vulnerabilities. If conducted effectively – which means applying appropriately designed and calibrated stress scenarios, with the details and results made public – the exercise has the potential to instil greater confidence in the banking system, even if (perhaps especially if) some governments have to provide capital injections to support fragile institutions. It remains unclear, however, how close the practice will come to this ideal, and there is a resultant risk that market concerns about the robustness of some segments of the European banking sector will not be fully dispelled.

Sometimes Algos Are Your Friend

I've been trying to stabilise this puny stock for the 3rd party account I trade. To my delight the moment I put in a 2x usual size bid, an algo lifted the offer. So even though these coder wiz kids coding these algos are right in trying to front run your typical aggressive buyer, it can backfire when someones bluffing. I like bluffing.

So the best thing to do if you want to sell is actually bid like a world champion and sell to the front runners or order depth gamblers.

It's also interesting to see what happens when you lift 4-5 offers of a algos "market making" and see it immediately switch side, sometimes bidding higher than last sale...

Algos aren't good market makers, they're front runners. And they're good at it!

Is this ethical? You fucking bet! ;)

EURCHF - Smallish Bounce

By chance I read this post over at fxmadness. The moment I read it I thought: "True, this pair will be due for some kind of bounce anytime soon". What I didn't know was that EURCHF was trading at 1.3189 - instead of the 1.329 or so I had seen earlier in the day. That's also down from 1.36 just days ago. As he rightly says: That's a huge move.

So I bought some last night before going to bed. Woke up this morning, checked price - and was happy to sell.

Economy Ok, Banks/Insurances Sovereign Losses Not

I think that title sums it up. Companies are making decent profits and providing a reason to be long equities. However the sovereign debt problem is like the subprime asset backed securities I suspect. That is it is unfolding very slowly, but it's clear there are multi billion losses still being hidden, and they're a ticking time bomb?! So if you can figure out which insurance companies or banks are hiding them and find some out of the money options valid thru 2012, I'd say you're going to make a bundle. Keep me posted eh?! :P

I mean look at the CDS market. Greece's CDS is trading close to 900bps - and Spain at under 300bps. If spain is really as bad as everyone is saying, it should be 500bps. Too bad there are no warrants or options available to me for speculating in that market!! :( Of course I'd buy CDS on the USA. They're at under 40bps. Now that sounds like fantastic risk reward. If the US gets downgraded one day in 2011/2012 that should move to something like the spanisch levels :D I bet you banks aren't allowing retail speculation on that for patriotic/political reasons or afraid that if they need a bailout again, they won't be served equally. Like Lehman didn't get equal treatment to AIG.

Very good read in that context:

The Big Short - M. Lewis

It's a great book - apart from the prologue and the last chapter, where he goes into too much detail about who he knew back in the day and how Salomon has to do with everything. But the huge chunk inbetween is really exciting.

Very good accounts of what happened to hedge fund managers/prop traders at investment banks who had done their homework during the 2006-2008 subrime drama.

Edit: Changed first and second paragraph slightly. Missing logic and spelling mistakes. I tend to just have thoughts and write them as they're developing. Doesn't make for good second reading... :S

SNB comments to the Swiss-American Chamber of Commerce

Some interesting comments by the chairman of the governing board of the SNB, Philipp Hildebrand...

This public debt crisis is multi-layered. It is clearly a crisis of market confidence and as such a liquidity crisis. The trigger was a classic fiscal crisis combined with severe competitiveness problems in the periphery of the EU. However, it is also an institutional crisis. The institutional mechanism to ensure fiscal discipline inside the Eurosystem was clearly insufficient.

Obviously, part of the fiscal imbalances and the resulting build-up in public debt were directly related to the financial crisis and its aftermath. One part of the fiscal expansion can be explained by the direct fiscal effects of the measures taken to stabilize the financial system. Another part is explained by the drop in revenues and increases in social benefit payments in response to the post-crisis recession. According to recent IMF calculations, this accounts for about fifty percent of the increase in debt levels globally since the outbreak of the crisis. The other roughly fifty percent are unrelated to the financial crisis and its effects on the broader economy. 

To put it differently, some countries had simply lived beyond their means well before the financial crisis erupted in 2007. 

The reaction of financial markets is a wakeup call to all countries that sooner or later government finances must be put on a sustainable path.

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the above are quotes from the speech...

read the whole text

No action in equities, feeding into FX.... and killing trading appetite..

Well the last week has seen volatility shrink. As most swing or day traders will probably agree, trading isn't fruitful in such times (except oil traders or scalpers generally?).

Big investment banks trading floors have seen volumes collapse in recent weeks after the high vola spring.

I'm not sure it has anything to do with the world cup, as the mornings should be business as usual. 

Maybe it has more to do with the CDS market having calmed down. I believe a lot of impulses were coming from there. Spreads exploding would feed into EUR fx rates and bank shares and from there into the index futures and ETFs....

That's just me brainstorming myself.  No trades. I am starting to get interested in EURCHF as I find the actions of SNB completely incomprehensible. They seem to have stated that the strong swiss economy isn't being impacted by CHF strength for the time being.

So why the hell take on 70 or more billion EUR... God help them if we see the world go into double dip in Q3. That will dwarf the UBS stability fund exposure they took on during the financial crisis.

What I'd Need To Do To Make Money

For the records; my trades of the last 30days.

No big gains, no big losses, some small winners, no losers.

Why aren't I makin more money?

1. I never want to close a trade that is in the red

2. I always want to increase size if the move against me is strong enough

3. I THINK I am good at picking important turning points

4. I take profit too quickly

5. I can't sit back and relax and watch a position go deeper and deeper into the black, even increasing.

Remedies....

1. Pills that change my brain chemistry (don't know which are recommended...) so that I'm less "nervous"

2. Stop trading

3. Just trade long term trends (ha! If I believed the tape, but I never trust the tape and believe it can turn at any point), adding to positions that are in the black.

4. Learn how to build positions instead of in/out/in/out...

Wrong Timing, Wrong Pair...

Well, got bored with the Pharma stocks options and cashed out 2/3 with a slight loss (500$)... Still long with 1/3. Used the cash to have margin available for FX.

Stupid thing is, I chose the wrong pair to play a bounce (and also the wrong point in time). EURUSD had been at 1.193 and EURCHF at 1.3750-65. Then EURCHF gaped up to 1.39 and came back to 1.3820, I thought it must be the SNB showing that they don't want the pair below  1.40 for long. I was wrong however and stuck in a shitty risk reward trade for 3 days while EURSD bounced to 1.21 *rolleyes*.

 Btw just noticing (looking at screen captures below) that my broker just resets all open times for trades to 23.00CET instead of showing actual entry date. Pain in the ass. They show it correctly if you go to the menu and choose "show all my trades from date x to y..."

Anyway, I'm annoyed I didn't wait for EURCHF 1.39 and enter at 1.3760 instead of entering at 1.38182 and exiting at 1.38523... 

So, net I'm down 200$ from my last FX trade. 

Switched My Exposure To Small Pharma Stock

I think I'd have been tempted to buy some EURUSD and especially EURCHF at 1.2040, 1.3940... But yesterday I bought some out of the money options on a smallish pharma co. It's not doing anything since I entered trade. Which is kind of a positive surprise. When I came back to my desk at 14:30CET (just missed the number) I saw the index futures and though OH FUCK IT.... However the stock didn't budge, not a bit. So I'm happy about that. Wondered about getting out B/E. Then again there's insider buying recently at exactely where I entered. The guy who owns this company has a level he likes buying, and if he likes it, I sure as hell like it! Why would he put to work cash now, in these uncertain times, if he wasn't pretty sure that his "baby" was going to do well mid-term. Granted, that won't help me with the time value of my options, still I feel okay holding on for the moment. Trust me to change my mind as soon as it goes south though!

Gaging Important Levels With Intuition? Maybe Not, But Something Like It

Well if you're a regular you'll recognize my trades and graphs by now. I feel pretty confident buying a 80-100 pip pullback, then after pausing for 20-60min, the trade goes sour without ever giving the chance to get out with decent profit. So I double up. Then I have to wait 4-5 hours for it to get back to the first entry point. At least for my ego I can state that at both levels I chose - just by gut - the market stabilised at least temporarily...  But when I was down 900$ at 11CET I did think: How bout if today is the "flash euro crash".... and the pair moves 3-4%. I'd be knocked off my feat pretty quickly! Russian roulette trading.

Friday-Sunday Position Closed

Weekend position closed. Opened friday shortly before close...

Don't Like Gold Short Term

I think we're going to see Gold fall. A lot of people who have buying for last 5-6 years did so because they saw the state deficits/spending were just not sustainable. But look at Europe now. They're adressing it country by country and getting it down. Seems to be going pretty well. France, Italy, Spain are taking it a lot less tragically than Greece did. I'd want Gold if there was panic and civil wars across Europe. Important banks going bust. But these PIGS are going to turn out to be angels in disguise. They gave us a good fright. Now they're putting on more than just lipstick. That's why when I look at a Gold chart 73-10 I think: This is not where I'd want to be invested for next 10 years. Look at the nice pullback at the turn of the eighties. We're due for a pullback to 1000 pretty soon. I can't imagine spending cuts in the US will incite mass protests crippling the country due to the very capitalistic nature of the system. And it certainly helps looking at international companies and seeing they're yielding nicely. So maybe state spending cutbacks will reduce it slightly. Emerging markets will compensate.

Small Fish

The current totals for the day below. Two trades.

The last trade was a reaction type entry. Just feel EURUSD is going to stabilize around 1.22-1.24 and therefor feel comfortable owning it around 1.22.

Another Small Winner After A Large Paperloss

At the roulette table once again. Risk reward of my last trade can't have been very good. I was in the red by -1000$ 1hour after the US close. Went to bed watching some "King Of Queens". Always a soothing proposition. Woke up pretty early this morning to find EURUSD at 1.2222 again. I was rather surprised I had wondered whether we'd be below 1.21 to be honest. Even the S&P Futs up by 6 then. Now EURUSD 1.2282 , Futs up 8-9 points - pretty big moves.

I had formulated a plan to buy 1 lot every 50pips on the way up. But after having 100 pips on the downside that changed. Shouldn't have really. When everyone else is scared of doing something, it should give a favourable risk reward.

The chinese looking at their eurozone debt exposure (source FT) is about as relevant as all the talk they were behind the move in EURUSD to 1.50. The media talking of the chinese is usually a good sign a major top or bottom will be put in - at least that's what I'm starting to think.

Anyhow. Got out of my EURUSD trade with 17pips profit. Account now 1k in the green since last May. 

Weird how the USD was weak last year with equities going up and now weak with USD being strong. Well it's a bit counterintuitive to me. S&P Futs and EURUSD trading in tandem is something someone needs to explain to me...

Interesting Bloomberg Interview With David Bloom HSBC

I had Bloomberg -"the pulse" - on in one of my screens (kind of picture in picture). Instead of the by-now-boring economic non-event Oil-Spill they're beating to death every 15minutes, they had two currency strategists on. One from UBS and one from HSBC.

Now it seems UBS had a EURUSD target of 1.50 in DEC. Now they have 1.15! The guy from HSBC however has 1.30-35. The fun part was the guy from HSBC saying that UBS was just swinging with the market changing its mind. He made the point that both currencies are "bad" because they both have debt-problems in the background. But he thinks the US is worse off because they're doing absolutely nothing to adress the problem. His conclusion the EUR will get back in favour and just swing around like a pendulum. The UBS guy thinks the EUR is fundamentally flawed, then the HSBC guy cut in and said: "That didn't stop you having a 1.50 target last year did it..." It's rare you see the guests have a go at each other. The UBS guy just calmly said that one has to follow the money/flows/liquidity.

I personally also believe the USD isn't really a safe place long term at all.

PS: Bloomberg TV is a pain in the ass 90% of the time though. Why do they give "breaking news": Timothy Geitner has landed in London. I mean who really gives a shit. It's what he says or when it starts that is of interest. They are so effing superficial on these channels 90% of the time.

Too Human For Trading Big Time

My god do I look stupid now. Less than 24 hours ago selling EURCHF at 1.4349 (now 1.4200) and EURUSD 1.24088 (now 1.22). That means my premature closing cost me 4.5k on EURCHF and 2k on EURUSD. Job well done eh *rolleyes*.

I know it's no use regretting trade decisions. It's very hard though when looking at market action. I'm just too human for trading.