A thread to keep track of my thoughts on medium term fundamentals and trends in which positions can be built. For me, I've tried the short term intra-day stuff. Don't have the time to manage something like that. I have a job, a life, and hobbies. They all encompass markets, but to balance them out, I prefer to build positions with the trend. In this manner, time is with me, not against me.
27Feb2012.
JPY. BOJ finally found something that works. with breakeven for expporters calc'd by the cabinet office @ 87.00 for USD/JPY, I assume they will continue talking the market up and in the coming months, add another leg to their QE program. This should weaken JPY. Did I mention record trade deficit? Their exporters are dying. They are moving operations. Japs being japs, they are nationalistic and want their boys to remain onshore. They will continue to try to weaken the JPY, though the 2yr+ downtrend could take awhile to reverse. Nonetheless, we have seen the weakest JPY in the past 2yrs. Possible change of gears here, but thus far, visibile only on the daily.
GBP. BOE contemplating QE again, depending on data. they want to avoid a 'severe recession'. Could be win/win.
Good data --> up.
Bad data --> QE.
Possible strong GBP cus of this.
Long GBP/JPY on dips seems likely.
AUD. Depends on data. RBA has said they lean towards easing IF data deteriorates. Data dependent. But risk on ccy.
NZD. rebuilding probby the main theme. They got something like NZD36bn worth of fiscal injection for rebuilding. should give kiwi a pop.
I clearly like short JPY alot at this juncture. We are seeing 70% reduction of JPY longs. They all got fucked.
USD. I believe this is equity dependent at this juncture. If we see a breakout above 13,000 dow and 1371 for SPX, we could see more dollar weakness.
we are also seeing further equity real money boys going, "oh SI)U*#&. I missed the boat!" and waiting for a dip to buy into. Buy side friends confirm this.
Longer term, I think we are due for Dollar weakness since most central banks are going to be supporting the economies and trying to keep this boat afloat.
Medium term, risk on.
Barring a default in Europe, risk faces a win-win scenario over the medium term.
Corrections will likely be used to add positions because of this.
(A) if the global economy is strong, stocks and risk will of course rise;
(B) If growth is weak, we are likely to see a wave of liquidity and fiscal support via central banks:
(1) Fed via QE3 if US economy weakens,
(2) China's 'fine tuning' policy in 1q12 - expect fiscal injection and monetary loosening. expect AUD to benefit and NZD as well, by proxy.
(3) LTRO by ECB could easily be expanded, and they will do as much as they can to ensure there is no banking crisis. In the mean time, eurozone pollies will do their best to smooth things over and push things back along the growth path.
C/banks have either added to the punch bowl or taken it away. Don't mess with them. Currently their incentive is to add to it. So I am of the view that therein is the medium term direction... weeks/months, with the inevitable risk off along the way.
While I will trade with the risk on/off trend, I have a bias towards risk on for the coming months, and am inclined to hold on longer in that direction.
In particular, I like, short JPY, short USD, long AUD, NZD, and in the interim, GBP due to potential QE again. The dip in GBP due to QE is likely to be bought into like all the recent dips.
----
some background. I have been working on my entries for a long time. found out recently that the next 3 to 5 bars of visibility is do-able, but ridiculously time consuming.
looking to position with the bigger trend, and build positions. have been long A/J and N/J since 85+ and N/J since 66+.
JPY is strengthening, looking to add on to positions. hope don't get taken for BE.
----
hoping to incite some medium term discussion, since the entries and mgmt part are all up to the individual.
will update when there are other thoughts/changes in the environment, as time permits.
27Feb2012.
JPY. BOJ finally found something that works. with breakeven for expporters calc'd by the cabinet office @ 87.00 for USD/JPY, I assume they will continue talking the market up and in the coming months, add another leg to their QE program. This should weaken JPY. Did I mention record trade deficit? Their exporters are dying. They are moving operations. Japs being japs, they are nationalistic and want their boys to remain onshore. They will continue to try to weaken the JPY, though the 2yr+ downtrend could take awhile to reverse. Nonetheless, we have seen the weakest JPY in the past 2yrs. Possible change of gears here, but thus far, visibile only on the daily.
GBP. BOE contemplating QE again, depending on data. they want to avoid a 'severe recession'. Could be win/win.
Good data --> up.
Bad data --> QE.
Possible strong GBP cus of this.
Long GBP/JPY on dips seems likely.
AUD. Depends on data. RBA has said they lean towards easing IF data deteriorates. Data dependent. But risk on ccy.
NZD. rebuilding probby the main theme. They got something like NZD36bn worth of fiscal injection for rebuilding. should give kiwi a pop.
I clearly like short JPY alot at this juncture. We are seeing 70% reduction of JPY longs. They all got fucked.
USD. I believe this is equity dependent at this juncture. If we see a breakout above 13,000 dow and 1371 for SPX, we could see more dollar weakness.
we are also seeing further equity real money boys going, "oh SI)U*#&. I missed the boat!" and waiting for a dip to buy into. Buy side friends confirm this.
Longer term, I think we are due for Dollar weakness since most central banks are going to be supporting the economies and trying to keep this boat afloat.
Medium term, risk on.
Barring a default in Europe, risk faces a win-win scenario over the medium term.
Corrections will likely be used to add positions because of this.
(A) if the global economy is strong, stocks and risk will of course rise;
(B) If growth is weak, we are likely to see a wave of liquidity and fiscal support via central banks:
(1) Fed via QE3 if US economy weakens,
(2) China's 'fine tuning' policy in 1q12 - expect fiscal injection and monetary loosening. expect AUD to benefit and NZD as well, by proxy.
(3) LTRO by ECB could easily be expanded, and they will do as much as they can to ensure there is no banking crisis. In the mean time, eurozone pollies will do their best to smooth things over and push things back along the growth path.
C/banks have either added to the punch bowl or taken it away. Don't mess with them. Currently their incentive is to add to it. So I am of the view that therein is the medium term direction... weeks/months, with the inevitable risk off along the way.
While I will trade with the risk on/off trend, I have a bias towards risk on for the coming months, and am inclined to hold on longer in that direction.
In particular, I like, short JPY, short USD, long AUD, NZD, and in the interim, GBP due to potential QE again. The dip in GBP due to QE is likely to be bought into like all the recent dips.
----
some background. I have been working on my entries for a long time. found out recently that the next 3 to 5 bars of visibility is do-able, but ridiculously time consuming.
looking to position with the bigger trend, and build positions. have been long A/J and N/J since 85+ and N/J since 66+.
JPY is strengthening, looking to add on to positions. hope don't get taken for BE.
----
hoping to incite some medium term discussion, since the entries and mgmt part are all up to the individual.
will update when there are other thoughts/changes in the environment, as time permits.
One Mind, Any Market