GU, GJ and EU Analysis Thread

http://blogs.telegraph.co.uk/finance...e-bond-market/

http://online.wsj.com/article/SB1000...174107122.html


I’m sure many of us read the articles attached to the links above, and, well, did nothing as the realization that we are powerless to seek redress dashed the hope for retribution.

It is with a peculiar regret that I feel vindicated in some of my earlier posts regarding the Spanish economy, and the seemingly imminent collapse of the living standards for the average citizen within Spain, and the greater ‘poor’ Europe. By collapse, I mean down from what is already a weak level of support, to one of hitting new lows.

To focus on Spain for a moment, the economy is pretty much busted as a ‘major player’ within Europe, levels of unemployment are getting out of control, wages and social security payments are not forthcoming, and austerity measures are so upsetting that those still fortunate enough to hold employment, are bringing the country to halt through strike and collective action. And then we learn that the Spanish Government are spending the population’s pension and health insurance on buying the country’s bonds in an effort to encourage large investors that this debt is still serviceable. Hmm, maybe short term, but big money cares not for social consequence, and will be out as quick as it got in. For those left behind, it seems like a leather noose of torture. Money comes in; leather becomes wet and expands from its grip a little. Money goes out; leather dries to a tighter constriction than last time it was dry, and so tightens the torture. Money comes in, but to a lesser degree as its reserves are gradually depleting, and the leather expands less than before. Money again leaves and the noose contracts more than before. The point seems to be fast approaching whereby there will be no more money to spend, and thus suffocation seems inevitable.

Moving on, we have seen the simultaneous drops across all the indices, and oil, and jump on gold. 20+ Dollars within the space of an hour or so yesterday when the NYMEX opened. In the space of a month, spot has risen by almost 100 Dollars. This tells me that many have had enough of trying to ride the ever-shortening periods of cyclical opportunities, or that said opportunities are becoming fewer and fewer, and that all the chatter from the politicians and big money is just, well, please excuse the language, but utter crap.

As for the protestations of recovery for economies that will see the economic situation of the citizen improve… erm, well, the recent figures for mortgage approvals in the UK, Europe and the US would suggest that these protestations are nonsense. I have passed comment upon retail figures previously; needless to say I remain sceptical.

I have also questioned the integrity of the stress tests undertaken by banks in the UK and Europe, and yesterday we learn that many of them had, and let’s not beat around the bush here, lied. Some banks have refused to detail their exposure – ah, the French, you have to admire their esprit de corps. Reading through the excuses of others for not having accounted for what are claimed to be, for example, innocent discrepancies in reporting format, one harbours the feeling that, at least at the executive level, bankers really are *ankers. Sorry gammase1, I could not resist.

But seriously, how much longer can government and executive finance continue the show? Of course, probity is long gone, and too much would be lost by those that hold something, should the real book be opened to public scrutiny and subsequent consequence. Yes, the ‘system’ would take a knock, but would it fail? Well, that is the big question that has few quantitative results to support qualitative comment about containment probability and the human spirit – I guess in this world of instant gratification, selfish procurement and dumbing down via education and soundbite news – all of which are not necessarily through personal choice, but, arguably, through a mix of direct and indirect social engineering – the human spirit today is not forced to aspire to the levels one would hope for.

Hmm, I’m not sure if I should go to the top of the roof of this hotel and just jump, or grab a smoke, beer and girl, and party.

Still sort of watching the GBP daily, remain unconvinced of either a good bear or bull case aside from the "re-aligning with reality" trade (in which case I would rather sell the euro than cable). Because of the below posted by me August 12:

2.5% on the 10y yield gets a big tick from the bond market. With the Fed POMOing it up 3 days a week, hardly a big surprise. I wonder what China is doing with all this strength in Treasuries, do you think they're selling into strength or not?

I think this link which just popped up today should be a mandatory read for all traders:
http://www.zerohedge.com/article/sel...ecy-bond-trade


smikester, how you like my cheer now?

While perusing forexlive today, I saw a post which said Citigroup forex tech analysts had exited their EURUSD shorts in the money because of the exact same worry: what is coming down the pipe for USD and will we be on the wrong side of a 1000 pip gap?

My above statement stands. The current bum-rush into fixed capital markets is a precursor to a stampede for the exits on the other side. Maybe the Fed can hold the line on Treasuries if we get a Japan-style deflation in the US, I doubt they will have anywhere near as much success with the huge corporate, muni and state debt sectors which will almost certainly be what sets the whole shebang off. "Too Big To Fail", yeah right, as soon as these vultures turn on one another all bets are off.

Spoke to some bigdogs over the week so far. Most have pulled the plug on their trading models and are refunding investor cash, refusing new cash. When guys who make a few million each month for their clients with annual volume in the billions tell you that the market is unprofitable due to manipulation by CBs, you feel a bit vindicated and less crazy.

All of these I spoke to have stopped hiring new traders and quant analysts. Smart bigdogs aren't even investing their cash positions into overnight money markets (which has been a 30 year norm), let alone bonds and bills!

Spending most of my time talking to the few I know, who are in the know. Along with continued research into Delta-Neutral trading. Will post any interesting tidbits if/as they arrive.

Not sure where I saw it, but recently someone commented quoting Jim Morrison:
http://www.litkicks.com/Images/morrison.jpg

Should remove your uncertainty, no?

The light you see at the end of the tunnel is the front of an oncoming train.

David Lee Roth



I like beer, cigs and girls; so what?

(Bender from Futarama - have never really watched it, but never forgotten this one.)

Sinner-

I think this link which just popped up today should be a mandatory read for all traders:

http://www.zerohedge.com/article/sel...ecy-bond-trade

Condor? Did you take this? I was (luckily) positioned but the move occurred immediately after your post... I think it's worth one of those little yellow men, Which one? Oh yes:

No Sir - too busy with coffee and cigarettes as I watched the 500 pips roll in from positions on Cable and EU. C'est la vie...

Glad you bagged it.

It's all unraveling as previously proposed...

http://www.ft.com/cms/s/0/5ea164e2-b...tml?ftcamp=rss

...Overnight, the rating agency Standard & Poor’s had downgraded Ireland to AA- and warned that its outlook was still negative, even at that level. Irish spreads against German bunds pushed further beyond their May highs, though yields on German bonds themselves were slightly higher following a steep decline on Tuesday.

Interesting posts today. Sinner, these guys liquidating their positions? That's a position isn't it? I mean uncertainty means we close our positions. Something I should do more often.

I am sure going flat is part of the trading model exactly as you said smikester, but that is completely different from unplugging the whole model and redeeming the cash to clients.

That is the scary thing. This isn't a matter of being bearish, otherwise they would just go short. These people are taking their ball, and going home.

Maybe I am over-reacting. Maybe everything will be just fine, this is all a momentary lapse in confidence. Being right in this case is about as comforting to me as a fork up the bum. I would rather be wrong.

By all means, trade the chart using small size on a broker you trust with money you can afford to lose. But personally I am not looking to chase the sort of returns that were reaped in previous years until things fit something I can understand again.

‘We still have to obtain clarification on its interpretation'. Christine Largarde.

For reasons unknown - just a little bored - stumbled upon:

http://www.google.com/insights/search/#

Typed in Forex, and a very interesting graph and country breakdown was given.

What is it with the Nigerians?

As referenced to in chart three. http://www.forexfactory.com/showpost...&postcount=323

Cripes, I'm not twenty anymore, but been invited for weekend out in Japan - meaning, I fear, no return to the hotel until Sunday morning-ish to hopefully catch brunch. Stocky, Rappongi is looking on the cards...

Anyway, was going to pen something earlier before leaving the room - due out any second but addicted to the charts - but this old geezer thought it best take a nap before in order to survive.

Have a good weekend all. Back in Europe next week.

First stop, Juki's rockbar. I think that is the name. First request:



Come on....

Just dropping by to check out this place, IbKa mentioned it on the other thread. And I see 45Condor's post that he's going out .. in Japan! I am SO jealous. I lived outside of Tokyo for 9 months and LOVED it ... Rappongi ... <sigh> good times. I am still studying some Japanese & kanji .. just for fun & to help keep the memory alive as long as possible.

I'll be back this week to see what it's like in here when trading is active.

Dewa matta.

Well, where to start with the editorial?

Let’s head off to Jackson Hole. Very picturesque, from what I can see this evening in my print of the FT. I see Jean-Claude Trichet is making an effort to appear to be a man on the go, even when being relaxed… I’m not sure who he is talking to on his phone (no love, I’m in a meeting, honest), but his name badge and red throw-over look like an open invitation to proclaim himself a target. And so I’ll shoot:

As perhaps the most important fiscal figurehead for the European Union, put a tie on, man. If Ben Bernanke can manage it, so, too, can you. I doubt the photograph was a capture at opportune moment, but more staged to show that even in retreat, you take your calls – when in reality, your ‘more bad news indicator’ is turned off, or passed to a minion at the first available moment. Right, now that is out of the way, I turn focus to your comment about ‘the primary macroeconomic challenge for the next 10 years is to ensure that they do not turn into another ‘lost decade ‘’. Well, okay, I think you are being as honest as you can to the public without causing outright panic. But, it would be fair to say that we have just seen 2 years, and anyone over thirty these days realises that 10 years goes by pretty quickly. Referring to Japan’s 10 year stroll in the wilderness – I’m not sure they have yet made it back home - this was while the rest of the ‘important’ world was firmly by the fire; so, prey tell, how the challenge will be overcome now? I think you think it may not, and are trying to soften the shock to come from Greek default and downgrades to other European countries. Finally, Jean, any chance you can intervene in the risible shenanigans concerning multiple pay rises next year over in Brussels?

http://www.eurotribune.eu/?p=14317&l=0&idioma=2


Moving on: In order not to feel cheated of self-productivity, I multitasked as I read the Wall Street Journal, and some other editorial that covered Ben Bernanke’s speech down in the hole. According to Ben, ‘Central bankers alone cannot solve the world’s problems’. No, perhaps not, but they can certainly create and exacerbate them. And you tell us: ‘When we last gathered here, the deep economic contraction had ended ‘. Hey, come again with that one. From what I saw, you threw funny money into the economy under various schemes, which, in this observer’s eyes, only served to slow down the ride south that serious commentators, and many indicators, suggested was still in motion on longer-term trends. You also tell us of the surprise at the deterioration in the second quarter of the US trade balance, but that this can be explained in terms of how the deterioration seems to have reflected a number of temporary and special factors. Ah, come on dude, tell it like it is… the trade balance has been gaining negativity for quite some time now, and is called deficit.


Anyway, I’ll stop with the dissection of Bernanke’s speech, and just say that I was glad that I took the decision to managed my time more effectively, and once finished reading the ramblings of what, in this reader’s opinion, was a vague, contradictory, opaque address by someone whom it seems clear has no firm handle on the current fiscal situation, I took my hand, and firmly flushed the chain.

… ahem, I apologize for being so crude in the last paragraph, but, well, I couldn’t miss the opportunity.

To the female readers of this thread, please excuse the chauvinistic manner in which I sometimes write when Christine Largarde is involved. It is not how I am usually – forget being far too polite, it is more far too afraid to act as such in public. Of course, with this being an anonymous mode of public comment, one’s bravado begins to rise.

Next up: Sausage and spice; it never really mixes well.

Okay, I'm back, following the retirement of DT's thread and hope I can continue to post my 'musings' and 'scenarios' without any 'unconstructive' criticism, although all constructive debate and arguments are welcome as long as they contribute to making us all better traders.

The 4 hourly candle from Friday, below, looks 'kindof' bullish to me so was it the last opportunity for a while for some more to jump on board for a brief northbound trip?

Taking this into account, and looking where we are in relation to the monthly open (about 1.5725), could we end up closing the month at 1.5725 as a monthly doji? If so, then might we test the high of the month so far, this week i.e. 1.59x before closing the week at 1.572 (the monthly open)?

I'm bullish on cable, at least in the short term, with Brother Ben talking down the dollar again; and am closely watching both the USD/CAD and USD/CHF which look like they'll be knocking on parity's door again shortly, bar any intervention from the CNB and SNB respectively.

Gut instinct for this week is to buy, and hold cable, with an SL below 1.535 to see if we hit 1.625 over the next fortnight or so, and to sell any rallies on the swissy and loonie (if we rally at all on these pairs - again, bar any intervention).

Oops, just realised this is just meant to be for the GJ, Eur & cable, but with the Geppy so volatile, and still awaiting the BOJ to show their hand, I'm not touching that pair till I see a daily candle that gives a clear signal, if I miss out, so be it.

Have a great trading week all!

i

Edit: Rather disappointing opening..., was looking for some nice gap up which didn't happen. Last 2 weeks saw a 240 pip weekly range on cable, hope we don't have the same this week...

To all of us in the UK that is..

Not going to do that much watching today, just leave those pending orders in, and will see what the US does this afternoon; off to try and enjoy the 'not so sunny' bank holiday.

Have a good one all.

i

I'm in long from 5537, now have stop at 5547, tp is 5587 so this is just a little trade based on 15 m chart action, now confirming with 30 min. With London off at play, I'm surprised there is as much movement as there is...

I'll be posting charts soon but these are rather 'experimental' charts I am using so want to test them a bit longer.

I'll explain the construct to the submitted chart a little later - working on some comments. What I will say is that price has returned to the 38.2 FE, appears contained under a descending 61.8 fan from the last major swing, has a couple of important standard fib levels to breach, and so may not run away too much from this region until London returns.

I wonder if London may try to catch all the stops placed today on orders that anticipate a run north with no retracement? Hope not, but would be mindful of the games played.

My 4hr Guppy profile, while appearing to be taking a twist, is still not confirmed.

Good morning ladies.

...will have to clean up my innuendo, and 'male' manner when referring to certain public figures of the fairer sex.