EURUSD FX Blog

Another day of SNB intervention - Oct 6th 2011

2011-10-06T10:20:00.003+02:00

Well, today more intervention on behalf of the SNB, imo.

See this post also:

http://eurusd-fx.blogspot.com/2011/10/eurchf-snb-intervention-ahead-of-news.html

No news from SNB itself, but with the number of people involved in decision to intervene and or fix price level, the market probably gets wind before...

On Oct 4th it was a survey of CFOs that sparked buying: Most ever CFOs were negative on the economy.

Today Oct 6th numbers showed the hotels are seeing less and less foreign tourists, most likely due to strong swiss franc. A drop of between 6-10% was reported yoy.

Thomas Reuters price increases 2012: 10% for popular products

2011-10-05T15:53:00.002+02:00

We're heading into disinflation or deflation, banks everywhere cutting, and what's Reuters doing? Increasing prices for most popular products by 10%

"I am writing you to inform you of changes to the price of our products and services that will apply from January 1st 2012 or your first 2012 invoice.

The annual price increase supports our commitment to continually invest in an aggressive agenda of content and technology innovation to ensure that our customers have the most critical tools to meet their business objectives in today's challenging markets. Last year we launched our two major platforms Thomson Reuters Eikon (for the desktop) and Thomson Reuters Elektron (network and trading infracstructure). The launch of these platforms marks the beginning of a signigficant series of investments in advanced capabilities" ...

"Pricing for Thomson Reuters Markets products and services will be increased 5% unless listed below."

"D. an increase of 10% .... : Thomson Reuters Eikon, Thomas Reuters Messaging, Reuters 3000 Xtra ... etc etc"

EURCHF - SNB Intervention ahead of news Wednesday Oct 5th 2011

2011-10-04T18:35:00.003+02:00

Considering the negative EURO-News all over the place. The Dexia news. And more... isn't it surprising those jumps we're seeing on EURCHF this evening CET.

I think language tomorrow from SNB could be: We're not happy with 1.20 ! And they're intervening in the market to back the claim.

UBS Rogue Trader loss of USD 2 billion - My thoughts

2011-09-15T10:05:00.005+02:00

So this trader hid at least USD 2bn of losses and worked for the London equities division of the bank.

Funny that just the other day, the CEO of the bank, Oswald Grübel was saying they'd increased efficency since 2008/09. Who'd have thought he meant in incuring trading loses.

Got to love this analysts comment: "The pressure to finally downsize this rotten investment banking is rising!"

Not even analysts like the casino arms of these global banks... that says a lot!

Commentator: I wonder if the USD 2bn is including his bonus? Might be 2.1bn or 2.2bn including it!

Why the Swiss Franc CHF won't be a safe haven near or even medium term

2011-09-12T08:47:00.006+02:00

Markets have reacted quickly to the Swiss money printing. Safe haven investors have decided to look for currencies that offer the same security. And they've found interesting new places: Norway and Sweden. These two countries currencies have not reached the same overvaluation that Switzerland had seen.

The investors who are really interested in safety in times of a melt down know: the SNB is more likely to push Switzerland into inflation along with the EUR-Zone than back down. The SNB president is a former pro swimmer, who would only bend to most extreme pressures, I reckon.

I picture the situation as follows: The CHF was the fit, strong soldier that everyone wanted to protect their property/assets with. The Captain America of currencies so to speak. Then he shot himself in the leg. He won't and can't be forced into battle anymore.

So if I were a hedge fund manager I'd really think twice about betting against the SNB... Especially as the real safe haven flows have easily found a new home in Norway, Sweden - countries with similar GDPs but less fundamental reason to intervene and floor their currencies....

Proportion of EUR by country based on GDP 2009

2011-09-10T17:31:00.004+02:00

This pie chart shows the EURO-Countries GDP as of 2009. I gather that if you know what the GDP of a country is, you can deduct how much of the EURO currency they account for.

So according to my calculations based on IMF data found on Wikipedia Germany was 27%, France 21,5%, Italy 17%, Spain 12%.

If Italy and Spain really follow through on fiscal austerity, they'll probably fall into recession.

What I'm not sure of: If they improve their debt situation but cause consumption to drop, unemployment to rise, how do they get around paying more for their debt? Aren't they in a sort of Catch-22 or vicious circle.

The ECB will have to increase the amount of sovereign debt they buy off them to keep them from the vicious circle. That in turn leads to Germany, the healthiest, to get infected with the debt cancer, in my opinion.

I don't think Greece is of any real relevance except to show what happens when a country fails to comply with rules and guidelines: they get bailed out. But who will bail out the ECB? Their printing press. That's why Gold isn't dropping.

What in heavens name can bring back confidence? Jobs right? But jobs, factories are in China, India, Vietnam and other countries right? Why would they come back?

Why Asmussen Being On The ECB Board Is Killing The EURO

2011-09-10T13:14:00.003+02:00

So the german Stark resigns as of year end.

For him the germans want to send a certain Asmussen.

This guy was behind the policy of german banks like IKB, KfW and Landesbanken to buy ABS (asset backed securities) and CDS (credit default swaps) instruments. They subsequently got taken to the cleaners.

He was on the boards... He was member of the derivatives lobby org "True Sales International GmbH" that was promoting the ABS markets.

So if the markets tank due to this news, it's rational. This means a loss of discipline at the ECB and acceleration of money printing.

Fasten your seat belts!

Activist Sovereign Wealth Funds

2011-09-08T14:07:00.003+02:00

If I ran the SNB book I'd

a. invest a shit load of EUR I owned (maybe 50% of the 150bn?) in the equities markets

I'd probably buy lots of utilities companies and food producers. Maybe interesting tech companies too.

b. as a.) might cause a bit of a political problem I'd scatter my EUR among value and activist hedge funds or just plain old funds, but make sure they were buying the good stuff.

I wouldn't buy any developed world debt. They're going to debase/devalue/inflate their debts away or be crushed.

I love the idea of investing in Africa, but I'm pretty sure the Glencores' of this world are busy bribing important officials so they can pull out the natural resources without leaving any money in the country...

EURCHF 1.20 floor

2011-09-06T10:33:00.008+02:00

I wonder if the SNB move was premature. Just today Credit Suisse came out with a study saying that while the strong Swiss Franc was hurting, it was not suffocating the economy.

But I guess this is one of those game changers like when the US prohibited Gold purchases back in the depression? Now: "No more hoarding of CHF allowed"

I guess people betting on a strong CHF just have to remember, that the CHF is a relatively small market and it won't take that much to scare the buyers of Swissies away.

I'm untouched by this move personally, having been killed on the CHFGBP move from 1.52 to 1.25... now 1.35-1.37.

Not much room for upside though... and the population at large isn't as uniformly behind the SNB measures as one would imagine. I wonder if they haven't become a media-scared victim...

Nice move on the SMI. +4% in minutes...

Fellow bloggers view:

A+++++ to Switzerland for finally slapping down these disgusting parasitic speculators pushing up the Swiss Franc to absurd levels that were 40% or more above fair valuations. Switzerland already made it clear to these manic speculators that it was totally unacceptable to be bidding up the Swiss Franc beyond fair value and fortunately they have finally taken effective and correct moves to slam down these unwanted and unwelcome speculators in the Swiss Franc who have caused massive damage to the Swiss economy. Thank you, Switzerland, for doing this and moving towards returning to a stable and reasonable valuation of the Swiss Franc.

Fellow bloggers view:

This is no good for Switzerland - they just gave up their "hard currency" for some dubious short-term benefits, good only for a small segment of their society - they have effectively chained their lifeboat to the sinking Titanic!

I hope though that this move will only be temporary - that the Swiss rebels and forces their stupid (or corrupt?) central bankers to reverse this move! If not - one lifeboat less for the rest of us...

Thanks GOD for (physical) gold and silver for they will be serving as Noah's Ark!

Fellow bloggers view:

This is a very poor decision by the SNB. They will now find depositors from all over Europe choosing the Swiss Franc. Marginally solvent European banks will also choose the Franc as a haven. We are now in a new stage of Currency Wars and uncooperative economic decision making. That is dangerous.

seth8777 | Sep 7, 2011 04:16 AM ET

How can a central bank with a strong currency not sustain forever weakening it? They just run the printing presses. And how can they make a loss if they buy a weaker currency and sell it again once it appreciates? In the contrary, they gonna make huge profits like the German Bundesbank did in the 80s and 90s when tried to weaken the German mark against the USD. Only a country with a weak currency will eventually run out of currency reserves trying to keep a peg to control import prices (like Russia was almost bled dry in 2008). It seems like this is just a hedgefund manager who cries foul since he lost a safe haven where to park his money while shortening the markets (together with his pal Soros). Oh, and the suggestion to invest in Chinese Renminbi, well, China has not been too well-known on its transparency, have they. How many bad loans from the real estate bubble are lurking in Chinese banks books? Also Rogers is known for his commodity investment advice in 2008, that backfired. Oil is still not back at 147 USD.

CashMcCall | Sep 7, 2011 09:10 AM ET
SOUR GRAPE... Rodgers was long SWISS FRANCS. So today his is bitter and telling the world the Swiss made a huge mistake when in fact, he and SOROS his old pal make the big mistake.

Jim Rodgers has been a relentless promoter of commodity bubbles. He has used the crisis just like Soros to promote his absurd theories about economics with half truths. But neither he nor Soros are economists.

There is one absolute certainty, if you push up the price of oil, you kill economies. Every modern recession has been preceded by high cost energy futures. Goldman is the largest trader of oil along with Morgan. Rodgers trades oil, so does Soros. They know that if they push up oil, all agricultural commodities follow. It take a lot of diesel to grow an acre of food or to raise a pound of beef.

So Rodgers commodity fund is built on a house of cards and speculative bubbles. As long as he can broadcast from his home in Singapore this expatriate can reach the US marketplace media and deliver his poison message.

He and Soros both got nailed by the Swiss who got tired of the swiss franc bubble.

Something Positive

2011-08-29T12:59:00.003+02:00

I think it's a given that the developed world won't grow for the next years. Japan could be some kind of playbook for what the markets have installed for us.

But there are going to be some very nice winning stocks. I'd like to see CEOs merging and acquiring and cutting costs. It's the only logical thing to do. Just like banks are doing.

That's what's got me optimistic at the moment. There's a big chance that states and consumers suffer in the coming years with unemployment remaining elevated. That doesn't mean that the companies listed on stock exchanges will suffer aswell.

Even if half the companies went bust, there would suddenly be a huge opportunity for cash rich companies. From a "Darwin" point of view, 20% of companies going bust might be a good basis for sprouts to appear. The more acceptable way of achieving that solution: Two companies merge and lay off 10% of their combined workforce...

I'm sure will see some of that in coming months, years. The companies just keeping still and changing nothing are the ones I wouldn't want to be near... unless they have lots of cash obviously...

Barclays also negative on sustainability of current rally:

2011-08-10T13:22:00.002+02:00

Consequently, for the time being we are not inclined to change our tactical asset allocation: we advise investors to remain neutral risky assets, while being underweight European risk across assets. The latter would be offset by higher regional equity, rate and credit exposure to the US and/or Japan and EM, which should serve us well in a short-lived bounce in risk sentiment. While valuations of many risky assets look attractive following the recent sell-off (see, for instance, Reaction to the US sovereign downgrade, 7 August 2011, for an assessment of present US equity valuations), we recommend to stay invested “close to home”, as value at risk is particularly elevated at this juncture and the interplay of macroeconomic momentum and policy-driven events does not provide a clear buying signal for risky assets other than for a very short-term recovery in risk sentiment. Neither would we want to be short risky assets, as decisive policy action, particularly by euro area politicians, if it were to happen, could provide the trigger for a more substantial relief rally. By contrast, while we expect the macro momentum to improve in the course of H2, the effect on asset prices would most likely be modest and gradual. That said, we would review this tactical view should a more credible, comprehensive and timely approach be adopted by politicians in Europe to contain the crisis and address the underlying reasons.

Buying Now Could Be The Proverbial First Mouse Going For The Cheese

2011-08-10T12:17:00.004+02:00

Well the market got the Reversal I wrote about yesterday morning.

I've seen comments out from BlackRock, Henderson, Pioneer Investments saying this is the moment value investors can find interesting purchase prices.

A lot of the argument is based on historical P/Es, S&P downgrade alone not suffice to cause selling of Treasuries and panic reaching investors. However some of the above are only expecting 6-10% rally from the low. Well we've had that by today (I believe) in some markets.

Some points that make me pessimistic:

A majority of the several longterm investors I spoke to think we haven't seen a bottom yet. They're not in the least in panic mode.

There are two rating agencies out there Fitch and Moody's who haven't done the obvious yet. Downgrade the US.

I can imagine a prolonged drip-feed of negative news into the market over coming months as sentiment drops occuring feed into real consumption reduction.

Worry often gives a small thing a big shadow

2011-08-09T11:23:00.003+02:00

or "Every path has its puddle"

well this path seems to be a river now.

I guess it's like in the mountains, near the top, small little streams, but at the foot of the mountain cascading waterfalls...

We need a nice -10% day WITH REVERSAL now....

Then again with a US president saying his country will always be Tripple A just shows lots of people haven't "got it" yet. The greek guys said the market was being unfair and overreacting.

I think it's depression time. Or time to take a step back and see what matters in life. Mostly it's not numbers in an account. I know exactely how it feels though, if you do think that, after getting clobbered...

Why the US equity market is overreacting, in my opinion

2011-08-08T21:49:00.003+02:00

It's about the STATE not the COMPANIES...

This just released from S&P....

"The sovereign downgrade will not affect the ratings or stable rating outlooks on the six U.S.-domiciled highest-rated nonfinancial corporate issuers: Automatic Data Processing Inc. (ADP; AAA/Stable/A-1+), ExxonMobil Corp. (AAA/Stable/A-1+), Johnson & Johnson (AAA/Stable/A-1+), Microsoft Corp. (AAA/Stable/A-1+), General Electric Co. (AA+/Stable/A-1+), and W.W. Grainger Inc. (AA+/Stable/A-1+).

WHY THERE IS NO IMPACT ON OUR TOP-RATED U.S. INDUSTRIALS

According to Standard & Poor's criteria, ratings on a nonfinancial corporate borrower may exceed those on the sovereign if we expect the borrower to continue to fulfill its financial obligations, even in a sovereign default scenario. Depending on the industry sector or individual company's financial strength, a company may be better or less able to withstand macroeconomic shocks or other country-related risks. In considering corporate ratings vis-à-vis the sovereign rating, we consider how exposed a company would be to a typical sovereign stress scenario, which, in the past, has included: sharp currency movements, credit shortages, a weakened banking sector, higher government taxes and fees, late or partial payments from the public sector, a more difficult regulatory environment, economic contraction, and rising inflation and interest rates.

Corporate entities that we would typically consider to be most exposed to country risk include firms with mainly domestic customers, highly cyclical companies or companies for which profitability is highly correlated with the general condition of the economy, and companies with high exposures to government sector customers. Corporate entities that typically are least exposed to country risk include globally diversified companies and export-oriented companies. Local economic conditions have less of an effect on such companies, and they generally benefit from currency depreciation."

Excerpt!

source: S&P

S&P is the good guy - Uncle Sam a bloody halfwit

2011-08-08T12:03:00.003+02:00

"Safe-haven flows saw U.S. Treasury prices erase early losses on Monday, pushing down yields on the securities despite Standard & Poor’s unprecedented decision to cut the U.S. government’s credit rating by a notch below AAA." Marketwatch.com

Got to love all people bitching about S&P doing something "unprecendented". Looking at a graph of US deficit and seeing the level of debt clearly shows the root of the evil. Money junkie governement...

The analyst who had the guts to downgrade the US is a hero in my eyes. If I saw correctly from the S&P press release, he's canadian :)

Trying To Have Sex When Having Just Lost USD 20k

2011-08-03T10:51:00.002+02:00

Well, I hadn't just lost it. It has been more of a gruelsome torment over the last several months.

I stopped looking at the FX account - until yesterday. Something about the being bombarded ALL DAY with the news: Record level, Debt, etc... that just doesn't let you keep cool.

So anyway, I have a -1600 pip loss and decide to a. buy 1 lot more around 1.26 (only had one lot) and put in a stoploss on CHFGBP at 1.24. Sure enough this morning I'm closed out at 1.2393 or so ...

Luckily or unluckily my girlfriend has been on my mind most of the time - and enjoying life. But this morning, seeing that loss really affected me physically. I didn't want to let on to her though. There didn't seem any point. She's very careful with money so the thought of me just chucking it out the window in such a way would have been rather couterproductive I felt.

But trust the SNB to intervene once my fear level is reached. For a moment I just thought, that when headlines get really bad a turning point is near. This time it may be so once again. As the "weak" hands, like mine, have now been crushed I wouldn't be surprised.

Now time to about planning a comeback! Or think of another way to fullfill my gambling addiction?!

Why someone with money is the best kind of advisor

2011-08-01T11:20:00.003+02:00

Just to get it out straight away: I'm not loaded. I'm well off compared to the majority of people on the planet, but here in Switzerland I'm in the lower half. I don't mind too much though (Work-life-balance etc).

But one thing I've come to realise: People with money, owners of a company with good cash-flow are the people that should advise you when it comes to investing. Recently I was speaking to a guy, owns his own advisory company, has 12 employees and is very well off. When he talks about investing, he doesn't say "you need to buy X, you need to buy Y". He asks everyone he meets their opinion on things his interested and then based on their rational will choose his side, i.e. if he likes it or not.

Another place I noticed you should listen to "sales people" is in swiss private banking. The owners, the guys whose relatives actually founded the bank, are very well off financially. There not interested in the "fast money". They want investments. Specifically the guys I'm thinking of, who work in senior advisor roles at private banks, own substantial wealth and advise with a view to making sure that in 25 years you as client will still be standing and still be paying them for there services.

Long-term dedication is one key. Giving advice that you follow yourself another.

Your thoughts?

Why Big Banks Deserve To Go To Hell

2011-01-05T15:07:00.002+01:00

I manage an account, not large, but I'm very active on it. I buy and sell shares on a nearly daily basis. I generate trading income for the bank in excess of 3% of the assets. That's 300bp. Any bank dreams of such customers, believe me.

So today my moronic account manager (just happens to be a woman) sends me prospectus for some fund the bank is going to launch. They charge 1.6% a year for it, plus a 2.5% subscription and 0.5% redemption fee. The subscription fee is waived if I subscribe untill febuary....

Now this prooves a couple of things to me:

1.) The account manager has no fucking idea how much I generate in commissions.

2.) Why would someone managing an account actively, generating 300bps a year, be told to subscribe to a fund on which the bank earns 160bps?! I couldn't trade as actively anymore...

3.) Banks are so keen on stuffing your account with their daft actively managed funds, that they don't even notice if they'll be earning LESS if they sell them to you...

An ETF has a yearly charge of 0.4%. Knowing that most active funds, especially at banks, don't beat the index, why in gods name would I pay 4! times more for it....

And that my friend is why I think these big banks deserve to go bust. They are feeding off us, not paying any attention to what's best for us!!

*rant*

:-) Happy New Year!

Bad Times Bringing Out The Best In People

2010-12-20T14:25:00.003+01:00

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

2010-12-09T12:35:00.005+01:00

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

2010-12-08T16:31:00.003+01:00

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

2010-12-04T09:52:00.003+01:00

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.

2010-12-03T21:58:00.006+01:00

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

2010-12-03T11:10:00.003+01:00

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

2010-12-01T20:30:00.006+01:00

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

2010-12-01T11:28:00.003+01:00

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)

2010-11-30T11:01:00.003+01:00

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

2010-11-29T14:27:00.002+01:00

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

2010-11-28T13:14:00.007+01:00

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.

Already Sick Of Korea-War Talk

2010-11-26T17:01:00.002+01:00

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

2010-11-25T22:50:00.003+01:00

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

2010-11-25T18:47:00.006+01:00

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

2010-11-25T16:19:00.008+01:00

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

2010-11-25T09:41:00.007+01:00

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?

2010-11-24T20:28:00.003+01:00

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

2010-11-24T14:55:00.003+01:00

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!

2010-11-24T12:36:00.003+01:00

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?

2010-11-23T12:01:00.009+01:00

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!

2010-11-22T20:27:00.004+01:00

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

2010-11-22T19:42:00.003+01:00

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!

2010-11-22T14:34:00.010+01:00

***

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

2010-11-21T15:47:00.006+01:00

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

2010-11-19T16:43:00.001+01:00

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

2010-11-19T15:14:00.004+01:00

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

2010-11-18T20:04:00.005+01:00

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"

2010-11-17T20:00:00.004+01:00

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

2010-11-17T11:21:00.006+01:00

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

2010-11-16T11:57:00.003+01:00

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

2010-11-12T20:25:00.006+01:00

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

###

Irish sovereign bonds have reached new highs

2010-11-10T10:09:00.002+01:00

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

2010-11-08T15:33:00.002+01:00

. . . “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!

2010-11-04T10:46:00.004+01:00

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!

2010-10-29T09:50:00.006+02:00

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...

2010-10-27T15:19:00.005+02:00

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?

2010-10-25T15:41:00.003+02:00

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

2010-10-22T13:46:00.002+02:00

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

2010-10-21T21:41:00.006+02:00

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

2010-10-14T16:04:00.002+02:00

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?!

2010-10-13T15:31:00.003+02:00

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

2010-10-03T18:38:00.005+02:00

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...

2010-07-08T15:18:00.003+02:00

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

2010-07-02T18:45:00.001+02:00

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

2010-07-01T16:12:00.004+02:00

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

2010-06-30T09:37:00.002+02:00

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

2010-06-23T20:05:00.010+02:00

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

2010-06-21T19:21:00.004+02:00

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.

----

the above are quotes from the speech...

read the whole text

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

2010-06-19T19:50:00.006+02:00

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

2010-06-12T11:40:00.002+02:00

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...

2010-06-11T15:10:00.004+02:00

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

2010-06-04T19:04:00.003+02:00

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

2010-06-01T15:24:00.003+02:00

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

2010-05-31T02:10:00.003+02:00

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

Don't Like Gold Short Term

2010-05-28T16:00:00.005+02:00

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

2010-05-27T14:50:00.002+02:00

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

2010-05-27T06:45:00.003+02:00

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

2010-05-26T10:40:00.005+02:00

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

2010-05-25T10:59:00.003+02:00

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.

A Morning Waking Up To 7k Loss And 50% Margin Used

2010-05-24T12:54:00.006+02:00

The above is what I woke up to on Friday morning. My 4lot size exposure - very unusual that I get sucked into positions of such a large size - showing me over 150 pips in the red. A total of over 7k USD. The margin used was showing over 50%, something I don't think I'd had since last summer.

I felt sick, annoyed and stupid. I thought how is this possible that when I had my strongest conviction it goes against me so quickly. It was painful as I had just comeback to breakeven on my account after 8-9 months of being in the red. Knowing that you've destroyed so much in such little time is a blow to the stomach.

What did I do when I saw the over 7k loss? I thought of increasing my position further for a second. That idea was quickly scrapped as the weekend was coming up and I'd get a margin call if I increased any further. So I just watched in horror. I didn't want to close, but I was very very close. I think if EUR had kept moving up I'd have closed out with 8-9k loss. Or maybe I'd have just frozen and been liquidated automatically.

By friday evening my margin used was fluctuating between 30-34%. I transfered another 2-3k to the margin account so that I could carry the trade over the weekend. I got an automatic email from my broker shortly after 22.00CET alerting me to the fact that I was on level 1 of 3 margin call levels. That email just being a warning that it's getting tight regarding my account. I hated that as it reminded me of my "Maximum Pain" day. It was like a replay. This time I held tight (a bad thing to do really) - like a stubborn mule. My rational was: If all the shorts got blown to bits like me Friday morning CET and market is flat to lower vs the highs there's some hope I can see some extension of post-squeeze pullback.

As you have surely seen from the action today EUR is off and I've closed my position at a tiny profit even though I feel very strongly about EURCHF retesting the lows in coming months. But I just can't control myself as I should be able to. After being so deep in the red and then coming back to very light green, it's really really difficult for me to hang on to a position. It's so classic. Letting losers run and closing out winners quickly. I thought the first part of the week had shown me I could let winners run better after all, but I'm sure my instinct is just a real problem.

Final P&L is +536$ after -7'700$ at one point. It has proven that my account is at risk as a whole. The account size is the stop loss. That's scary.

EURCHF - SNB Intervention surfing

2010-05-19T16:52:00.004+02:00

Sold some EURCHF, kept going up, sold some more - then it came back to entry of 1st lot. I got out and of course it keeps going down as I write....

But, today is definitely a good day! It's best when a central bank is screwing around as it gets all those quants and algos on the wrong foot? I always trade best when it's humans messing around !

How Surreal! Close @ 1.22887 :: ECB is starting intervention?!

2010-05-19T14:17:00.006+02:00

Incredible ... EURUSD shoots up, I don't know what the hell is going on. But I decided to close my "oversize" position!

Nice move! Jesus!

God must be on my side in 2010 ;) Or the ECB is starting intervention?!

EURUSD Stuck Long - Entry Price 1.22219 - 2lots

2010-05-19T12:52:00.005+02:00

Interesting sideways action just 40pips below my entry. I had gone in with 1 lot at 1.22689. It fell to 1.2160 - I bought some more at 1.21749. It jumped right back to breakeven yesterday evening - even a 100$ profit. Since it has collapsed back down but seems stable. Showing me 890$ unrealised loss.

Are they going to shake me out by riding it down to the big big 1.2000 ?!

But unbelievable how it keeps knocking its head at exactely my entry price! (see below) God must know I'm long :( .... ;)

Are Finance Ministers Idiots?!

2010-05-18T07:47:00.006+02:00

EU ministers thrash out details of loan scheme

Group vows to establish global tax on financial transactions

Read the above headline on in the FT. In the article it quotes ministers who think Hedge Funds, Speculators are to blame - and to be punished with a tax on financial transactions - for the girations in the CDS market. "Group vows to establish global tax on financial transactions" <-- Yeah, that will really really help rolleyes

Actually this article is better to link to as FT has subscriber-only access:

http://www.guardian.co.uk/business/2010/may/17/hedge-funds-eu-regulations

But after months of threats and deliberations, French, German and Spanish leaders within the EU are expected to push ahead with a directive which is aimed at clamping down on speculators who they believe contributed to the global credit crunch and more recently pushed Greece to the brink of collapse.

Read that quote above and you feel like shorting EUR even at these levels. These guys really don't get it.

I've been watching the action in the CDS market. And there's nothing inplausible or immoral about what's happening. Why wouldn't anyone buy protection when a country like Greece has lied about its accounting and is seing massive strikes and demonstrations? Why wouldn't people sell EUR if there's a real risk of contagion? And now demonize and tax the people hedging their portfolios?

Finance ministers are politicians just looking for scapegoats for their own (or predecescors) shortcomings. No tax on transactions is needed. It's pretty disturbing that these morons think that they can somehow hide the ugly truth that a lot of EU countries just have been fiscally responsible the way a 5year old is responsible when given pocket money and sent past the sweet shop... They need to realize that they can't spend money they can't repay. Isn't it incredibly irrational to want to punish people wanting to protect themselves against this accident happening in slow motion?!

Current account status: -1.8k (year-on-year)

2010-05-15T09:39:00.005+02:00

Biggest mistake of the week:

I'm always buying into dips of a major downtrend.

Biggest gamble of the week:

Doubling up into an accelerating down day. (That's also a mistake I guess.)

What should be happening:

Selling EURUSD every week, doubling up every week. (We've been going down for 4 weeks I believe. Ha! Trust me to come to that easy conclusion when we've lost 2500 pips in recent months!)

BTW: Just as I was writing this I had to sneeze. As I opened my eyes I heard a splattering sound on the floor. I'm glad I didn't sneeze at the screen. Who'd have thought so much "stuff" can come flying out one's mouth when sneezing. Quite fascinating (and a bit disgusting). Reminds me of the time I was in the supermarket and an old lady sneezed infront of the fruit... :S Always wash fruit from the store!

Picking A Level And Watching It Accelerate Away From Entry

2010-05-14T19:03:00.004+02:00

One of my classic trades *. It falls by 75-100pips. I hop on. It looses another 75-100pips. I double my position. The pair makes a comeback and I net a profit (59.1pips) on the 2nd lot and take the loss (-13.9pips )on the first. *just sometimes I don't get off so easy!

Good thing I was watching Kick-Ass when I put the trade on. It kept my mind off getting too frustrated. I did get annoyed and double up, but then I kept my eyes on the movie 97% of the time. Maybe it's best to just watch currencies out of the corner of ones eye and do something else with ones mind aswell.

Won't work for scalpers I guess. But for swing-bounce-whatever trading style I have it's quite useful. But the moment my position was showing me -880$ wasn't cool. But I've gotten use to watching something go against me. Second time in a row I've cheated fate. Mustn't overdo it. Otherwise I'll be writing about a 6k loss in the not so distant future!

Crisis could still become a blessing in disguise for the Eurozone

2010-05-14T07:30:00.003+02:00

A positive spin on the austerity..... And a falling EURUSD is good for european equity markets in price terms as it becomes more interesting to large US funds!? (Just as the weak dollar never hurt the Dow etc for long)

.............................................

A blessing in disguise?

With luck, the crisis could still become a blessing in disguise for the Eurozone.

(1) The periphery is now delivering some long-needed fiscal and structural reforms.

(2) Europe's fiscal surveillance tools are evolving in a way that will make a repeat crisis more unlikely.

(3) Continental Europe is getting a headstart on the fiscal adjustment that other parts of the Western world will likely have to tackle as well in the years ahead, in our view.

Additionally, Britain has now ended up with the Conservative-Liberal coalition that is so familiar to the continent. London may now move to a sustainable fiscal stance, that is to a fiscal stance much more like that of Rome and Berlin, in our view.

source: BofA

.............................................

The Potent EU Package - A Safety Net

2010-05-12T08:58:00.006+02:00

What I think is one of the most important points of the recent package, below quotes from a Barclays Capital report:

[...]what markets feared before last weekend and why the large, initial EUR110bn bailout package for Greece had not addressed those fears. Bond yields actually rose on news of the initial bailout for Greece, including yields on the other countries considered vulnerable (Portugal, Spain, Ireland and Italy).[...]

[...]

c) Greece’s bailout package made markets look even closer at Portugal, Spain, Ireland and Italy, and they concluded that those countries would need similar bailout packages.

With regard to concern c), the EU’s mega package provided perhaps the most potent answer. As we calculate below, the EUR750bn more or less matches the combined gross financing needs of Greece, Portugal, Ireland and Spain for three full years. Therefore, it would allow for the replication of Greek-like packages, allowing these countries, in principle, to remain out of the market for two to three years. This would seem to substantially reduce the immediate threat of financing crises. [...]

That said, it seems as though people now waiting for an escalation of the crisis could have to wait quite a while. That in turn should lead to nervousness about the short term plausibility of shorts in banks and in general. Therefore the market could start ticking higher if global growth news keeps coming in on a positive note...?

They go on to write however:

This weekend’s news did not alter the challenges that provided the initial reason for this report – namely, the massive fiscal adjustments needed (in particularly in face of reduced growth prospects and very elevated REERs) to successfully turn around these countries’ adverse debt dynamics. The aggressive EUR750bn support package and the ECB policy actions announced last weekend can go a long way in addressing the financing and liquidity-related issues, thus lowering the risk of self-fulfilling dynamics, but it did not ease the task of successfully turning around debt dynamics. Going forward, we think this is likely to shift the market’s attention to the actual implementation of announced fiscal measures and also to the growth performance. In response to them If these developments on the implementation and growth fronts surprise on the downside, the strongly positive market reaction to the EU’s mega package may not last.

But if this graph stays the way it is, i.e. flatlined on low levels I think we really could see a rally in equities....

B EURUSD @1.2637 // S EURUSD @1.2646

2010-05-11T23:40:00.001+02:00

Small trade. No patience holding on though.

My FX Trades Jan-May As Of 2010-05-11

2010-05-11T15:40:00.007+02:00

Thought I'd check my trade history for this year on FX. Not much been going on as you can see:

Since my starting the FX in May '09 I'm down about -2.3k. Looks like I've had a "perfect" start to 2010 making close to 3k $. Starting to get hungry for more $$$$ now! But it really is good that my account shows my since "inception", otherwise I might tend to think I'm doing better than is actually the case.

The standout was April 1st, when I was on the right side of SNB intervention. And I made a decent gain this Monday.

On a sidenote: It's really a shame my broker doesn't calculate all the PIPS historically, not just per day and trade.

Global Growth Momentum vs Wall Of Debt & Spending Cuts

2010-05-11T09:54:00.012+02:00

I was speaking to an old school friend yesterday evening who had bought into options of a large bank mid-last week. He told me about the positive surprise when he looked at the Monday open. For a while he thought his eyes were playing tricks on him. The market moving with such a big percentage move early morning CET was something he'd not ever seen. His option which was out of the money (worthless) Friday suddenly moved back into the money. As he'd already written off this particular investment Friday afternoon, the feeling of joy must have been similiar to mine on my EURUSD position. I had also come to conclusion that it was just a question of how large the loss would be.

The big difference though: He didn't feel the need to sell the options yesterday, telling himself maybe we'll see another 3-4% move and the option will double-triple. I couldn't have done that.

I am wondering at the moment whether the currencies situation is clouding my judgement on the valuation of the market, i.e. whether selling into the strength of banks Monday was a mistake.

Yesterday on Bloomberg TV Mike Holland (Holland & Co.) said that this european "TARP" is a game changer for sentiment (equities at least). Thursday destroyed sentiment, Monday rebuilt it. Which leaves us neutral I guess? [Edit: Actually on second thought: It leaves us back in down trend, just not panic downtrend] There is still some decent probability, according to Barclays, that the global growth momentum will compensate or even outweigh the negative from the spending reductions of the PIGS. (I wonder how US, UK spending reductions, debt reductions will be possible though without reducing global growth!)

However EURUSD is a different matter. The line of finance ministers: We'll do everything to protect the EUR is just noise. The market is showing us (1.27) that with this liquidity and long term debt problem, the trend is down. They sold into the strong upmove yesterday quite fiercly. On the chart it looks like it failed horribly to break out of down trend in my view.

It also reminds me of the constant talk of the SNB that they didn't want EURCHF falling in an unoderley fashion. They spent more than 40bn at 1.50 and probably another 30bn at 1.43 propping it up [Edit: Now we're around 1.41]. They're doing the classic fighting the tape and doubling up into a shit position (based on fundamentals). That's why I personally have no faith whatsoever in the "we'll fend off the wolf pack" bullshit.

It's not speculators, not hedge funds and no nasty "wolfs". It's bond portfolio managers, big banks managing risk of their positions. They're being forced to buy protection because the countries who borrowed money aren't using it wisely, on the contrary in fact. And even though many countries know they're debt is spiralling out of control, they won't be able to pass tough measures until their respective populations see that there's no way around brutal cuts. From that point of view it's good that the world gets a glimpse of what happens when you run your country into a wall of debt as it could bring back some modesty and spending discipline.

Cheating Death

2010-05-10T10:31:00.008+02:00

I really thought I was going to have to take losses on the financials I'd bought for the 3rd party account recently. Then this morning one of them was up 8% the other 5%. I had a loss of close to 6% on the first so I've netted a 2% gain. On the second I'd bought some Friday on the close but also already on Wednesday so I made a net profit of 2.5% on the total there.

Writing it down now it seems like bad risk reward trades. I also sold into the rally this am slightly too early as it's still moving up (one now up 10% and the other 6.5%).

It's a bit like what happened to my PA on EURUSD - I got out with just under 1.29 and now it's over 1.30. So I missed 140pips x2.

But what makes me feel okay with my sales: there are several stocks I own for the 3rd party that are trading only slightly up. This must mean the fear in the market has left an offer overhang. The financials are seing a brutal short squeeze, but I sure as hell wouldn't expect that it's sustainable. But if we've bottomed that's something positive for the economy and general market. It will take good news to break the down trend (from here onward!) - I believe.

Final thought: All this money being set aside by the central banks is nice. But don't you feel like it's 5-6 big guys jumping into the water to save some small kids (PIGS) - the big question remaining, won't the torrents, tides drown the rescue team aswell....?! Then again that picture helps underscore that they have no choice but to instinctively jump in and try. Their "lives" would be ruined if they "lose their children" anyway....

Close 2lots @1.28953 +28.9pips (after -340pips! THU)

2010-05-09T23:08:00.003+02:00

Wheeeeeew. You wouldn't believe the anxiety I'd endured Thursday afternoon CET - 1.2525. Then to get out just now 23:05CET Sunday @1.28953 is such a relief. Especially as 29 pips on 2 lots.

Below what the fx plattform I use was showing me at 23:00 and then 23:05....

Not Following Intuition And Even My Weird Dreams

2010-05-09T20:53:00.002+02:00

It's funny how I got stuck with my long EURUSD position. I had watched 1.30 break coming from 1.325 in less than 48 hours. So when I saw 1.2950-65 I thought nice bounce surely waiting here. I bought and was able to sell within several minutes for 11 pips profit. Then I watched it patiently. It dropped to 1.2920 and I decided to go long 1 lot. Within a short time it fell though 1.2900. I left it. When it got to 1.2820 area I thought : fantastic opportunity to ride it back up. My thinking: 1.32500 to 1.2820 in 48-72 hours on EURUSD is a move that needs a countermove.

As I was buying, and unknown to me, the CDS market was coming apart with sovereigns deterioating across southern and eastern europe.

So I was long going into the Aussie/Asian session. I drifted off, just waking up a few times checking my screen hoping for 1.29 so I could knock my averaged down lots out. I would have even sold 1.287. Then I had a strange dream (Wednesday-Thursday night). I dreamt I was selling 1.2865-75 level and no longer had to worry about the position. Then I went to sleep and woke only in the european session. By then the EURUSD was in the 1.27s I believe. In the afternoon it crashed though 1.27 to 1.26 and even 1.255 briefly.

It was so annoying. My subconscience wanted out in the night and that dream put my mind to ease so I missed the exit. It's funny how that happens. We can know something doesn't make sense to be holding onto fundamentally (i.e. sovereign spreads had been increasing all weak) and yet being sucked in by price - what I think of as the sales reflex - taking advantage of something suddenly being cheaper.

EURUSD Long 2lots @1.2866 - Why the market will keep falling though...

2010-05-08T11:02:00.006+02:00

It's funny how it repeats. Not history but my story. Everytime I see a 3-5% pullback I think: This is a chance to get in cheap and ride it for quick reaction. Then suddenly you have the CDS market accelerate to hell. Even the central bankers now think we're in for a repeat of the subprime freeze, just this time it's a sovereign debt freeze. Banks everywhere worried about interbank lending to italian, spanish and obviously greek and portugese ones. They can't lend and you send one country after the other into a blitz-recession as the interbank markets freeze up. Hello double dip sauce.

And even though I'd like to talk up my position in EURUSD saying it's fallen from over 1.5 to 1.2525 and is at 1.2750 now, I'm having trouble convince myself that the parity talk isn't a possibility. But it shouldn't be. Because if something leads the EU into recession and knocks holes into Deutsche Bank, BNP Paribas, Santander, SocGen etc it will definitely feed into US exports, travel, etc. And of course there's the bigger UK and US debt bombs ticking. Those go off and the EUR will look safe as Gold or at least not worse right?

Regarding my own trading. I was watching the Dow slide and the Marketwatch.com site was refreshing every few seconds with 150-200 point drops at one point (as the whole world knows of course). I was kind of fascinated, my bigger worry was the EURUSD though. I think that the general direction of the Dow and also speed probably is pretty much right. The trades going though on PG were obviously stupid but that an index is down 3-5% on the back of what is happening on currencies and of course in the sovereign debt market is quite reasonable. Anyway I watched my P&L increase to -5k temporarily and then recover to -2.5k. I'm glad I didn't buy 1.27, 1.26, 1.2550 and then get a margin call. I've even been able to hold my EURUSD position with reduced weekend margin. Just goes to show that I'm not completely resistent to learning, i.e. my past experiences.

I've been buying into stocks on the way down for the 3rd party account. I'm still overweight cash/underweight equities, but I'm starting to think it's better to cash out with 5% losses on recent purchases and be even more overweight cash. Interbank markets freezing mixed with politics is not something I like being exposed to.

Another reason for my current bearish mood. The drop has sucked in a lot of money that probably thinks: Buy the dip (like me!). And as the days go by, we have less and less reason to be long. The Dow move says it all - down 10% up 6.5% (to finish at -3.5%) then down again 1.4% means that a lot of unsteady buy the dip hands are holding shares. I've seen this first hand in a stock I'm active in at the moment. The market maker has overloaded and the big buyer I saw regularly putting in nice bids has disappeared cos he got hit on the bids too often.

As a trader on Bloomberg said: Sell into the rallies.

Long EURUSD open@ 1.29652 close@ 1.29764

2010-05-04T23:50:00.004+02:00

See how this goes. Stable in to upward is my bet in the oz-session...

EDIT:

wow. just 5min I was able to hold it....

Spain - the fattest of the PIGS - needs EUR 280bn. Nice.

2010-05-04T13:43:00.006+02:00

Seems that Spain is talking of needing financing to the tune of EUR 280bn. Which begs the question: What is Spain doing supporting the IMF/EU package for Greeece with more than EUR 10bn? Sounds like a sovereign ponzi scheme. They all need the cash themselves. This game of musical chairs is not going to end without lots of tears.

Well that's the reason banks are selling off I read. These PIGS are the harmless thing though. The Gorillas are still sitting in the room, looking more and more in trouble by the minute if you ask me.

Considering how fast ratings can deterioate, I wouldn't be surprised if we see this whole sovereign debt situation escalate. I wonder if they'll nationalise ratings agencies in the interest of stablising the market. Doesn't seem the market waited for rating agencies to call trouble recently.

Bestcase: Portugal, Spain, Italy and Greece get support.

Worstcase: The minute one country is "saved" the next will be attacked by the market.

EDIT. 15:24 CET - Just went long a large bank for 3rd party acc. Merger mania with continental and UAL is going to beat this greece, spain noise?! Yeah yeah I know it was y'day. But still. IB is doing alright it seems!

US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941

2010-04-29T19:11:00.003+02:00

Now this really is a good report. Good fundamental analysis. These guys do their homework. It's the long term picture.

http://www.sprott.com/Docs/MarketsataGlance/04_10%20Weakness%20Begets%20Weakness.pdf

Regarding the USA!

using reasonable assumptions, “roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020.”8 This is news! In less than ten years, using reasonable assumptions, there will essentially be no money left to run the US government - 93% of all tax revenues the US government collects will go to pay social security, Medicare, Medicaid and the interest costs on their national debt. This implies no money left over for defense, homeland security, welfare, unemployment benefits, education or anything else we associate with the normal business of government. And the US government is rated AAA!?

I wonder who will rescue the IMF and the ECB. They can't just print money to bail out PIGS and the others...

In our opinion, as they relate to sovereign debt, the ratings provided by the agencies are highly suspect. While these agencies claim to provide ratings that consider the business credit cycle, there appears to be very little forward-looking information actually factored into their credit models. In some cases, the agency ratings end up looking absurdly optimistic. This of course should come as no surprise - we all remember the subprime mortgages that were rated AAA that are now worth pennies on the dollar.

Fascinating times ahead. Hope you own property or have good hunting skills ;)

Greece Is Just A Small Pig, Keep Eye Out For The Dog UK And The Ugly Hippo USA

2010-04-28T14:03:00.008+02:00

"All this drama on financial markets cos of the greeks?!" I thought for a second. But I guess it's not really about Greece anymore. It's about the fact that many many states are in deep debt and the fact that the fallout from the financial crisis was just transfered to the sovereign market.

The shit has been been moved, but it still stinks. And someones going to find it. So what if the ECB and IMF "save" Greece now? What money exactely are they using? Yeah, money that will be missing in their own pocket. I understand Germans reactions. Why pay for the laissez-faire politics and head-in-sand tactics of other nations/governments.

Portugal, then Italy, how are the IMF and Germany, France going to finance handout after handout? It just doesn't make a lot of sense to me right now. With unemployment rates in those countries approaching 10-15%?!

Demonizing Goldman

2010-04-26T11:57:00.005+02:00

I really don't see the problem. It's a market right. You have someone who thinks houses were fairly priced or cheap, so that person buys an instrument backed by mortgages for example. Then you have someone else who has come to the conclusion that housing is overpriced historically and pace is just unsustainable. They sell the mortgage backed securities.

So why the hell shouldn't these two market participants be allowed to place their bets? I've been "gambling" in the market for more than a decade (sounds dramatic) - and if I happen to place a wrong bet I don't go running to anyone saying it's unfair.

I read some US senator thinks it's not on to make money if others lose or are miserable (implicitely anyway). Well guess what, if you want that you should maybe join the communist party.

The only thing I do find a joke, is how Goldman was able to milk the US (taxpayer) by milking AIG. That was wrong. But betting against a housing bubble is not.

Context:

http://www.marketwatch.com/story/goldman-emails-show-need-for-bank-reform-dodd-2010-04-25

Mobile Phone Market - Why Nokia Is Crumbling And iPhone Is On Everyones Mind

2010-04-23T15:05:00.007+02:00

I have this friend who works promoting different brands of mobile phones. It's a really good contact to have cos she can give me "real time" info on what consumers are asking for and more to the point buying.

Recently she was promoting Nokia phones and said that it was just unbelievable how many people have recent Nokia models explained to them and then just move on. She spoke to the shop manager cos she was worried she's somehow miss-selling it and got the answer: Don't worry about it, nearly everyone is asking for iPhones.

A week later she was promoting Samsung phones. And it seems they really do have a phone that is nearly as good as the iPhone and has the same kind of screen aswell as intuitive operating system. The difference being its much cheaper than the iPhone. But the problem is: the iPhone is always getting free advertising because a lot of apps are first developed for it, so people aren't as eager or openminded.

I was recently also speaking to a tech company who make payment apps and was told that iPhone users seem to be more communicative and open when talking to friends (i.e. marketing for them). The tech company didn't want to offend Samsung but it was clear that they weren't trying as hard for the phones produced by them. They also said that the Facebook "via iPhone" is a huge bonus for promoting that brand. (I did notice that Blackberry also have a neat little logo when someone writes a status from their phones, but the iPhone is more widespread at the moment)

Hopefully that will change, because I'm a big fan of LG and Samsung phones.

Macho Trading Is Such Fun

2010-04-14T16:40:00.004+02:00

I love lifting a decent size offer and then being the bid. There's something about the power to have a stock do what YOU want that I find very stimulating. It's probably a character fault of mine.

I remember when I was trading client orders I loved having good size so that I could pin a stock to whatever price level I thought was appropriate for the given day.

Even better, but forbidden, would have been to lift the warrants offers before lifting any underlying offers. That's always fun because the option seller / market maker will need to buy some stock sooner or later (if it's an in the money option anyway).

I always loved when a sales would tell me: Buy the company at xy price!!

I would have had lots of fun intervening like the SNB did on EUR CHF recently. Jack the price up by 170bp in a couple of minutes. Not surprised they do it. It's fun ;)

The flip side to macho trading is trading with 15-20% and limits. That was always my nightmare. But of course from a investor standpoint that makes more sense. You don't want to be holding or pushing a stock only to see it collapse as soon as your done.