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EurAnalysis Kindergarten 24 replies

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  • #50,601
  • Aug 28, 2012 3:28pm Aug 28, 2012 3:28pm
Quoting Cgb
Didn't see that but I was thinking just before the incident how nice it would be to see 1.10 so I can do this every day, then the winds picked up. Bad omen? You tell me!
Look at the bright side. You still don't know if that water tower is full or empty.

I don't believe in omens or fate although I may refer to them in jest or sarcasm. Those beliefs are for people who choose to relinquish control of their destiny to unknown (or perhaps non-existent) forces. I drive my own bus and beat my own drums... like every trader should
Those who say it cannot be done should not interrupt those who are doing it
  • #50,602
  • Aug 28, 2012 3:32pm Aug 28, 2012 3:32pm
Quoting PipTrapper
... I drive my own bus and beat my own drums... like every trader should
Reminds me of one old question asked like two weeks ago here.

Q: "Is there a god?"
A: "Sure, here I am."

T
"I know one thing, that I know nothing." Sokrates
  • #50,603
  • Aug 28, 2012 3:36pm Aug 28, 2012 3:36pm
I think it's broken . . .

10Y US bond yields at the lowest of the day (1.620) and so is the US$.

Can anybody think of a plausible reason why we are seeing this? Other than hopium because I think that's toast now and traders are pretty sure it's not going to happen.

So they are buying the bonds and not the dollar. Equities closed slightly lower. Crude is up on fears of Isaac (but still 100 points below yesterday's high). Gold is slightly lower than yesterday and has formed a nice H&S on the 4H chart.

Money has not been flowing into my account (I think I would have noticed that), so where is it going?

Seems like Euro and Swiss Franc are getting the influx. What am I missing here?
I observe your reality but live my own.
  • #50,604
  • Aug 28, 2012 3:36pm Aug 28, 2012 3:36pm
Btw, do you think Asia will break this 10 pip range? . They should, this is stupid price action. NY bulls really disappointed me today.

T
"I know one thing, that I know nothing." Sokrates
  • #50,605
  • Edited Aug 29, 2012 2:51pm Aug 28, 2012 3:40pm | Edited Aug 29, 2012 2:51pm
Quoting Tom_D_Trader
Btw, do you think Asia will break this 10 pip range? . They should, this is stupid price action. NY bulls really disappointed me today.

T
same, there wasnt much to do

have some shorts open @1.2569 now
How to Win at Sports Betting: DON'T DO IT!
  • #50,606
  • Aug 28, 2012 3:40pm Aug 28, 2012 3:40pm
Quoting Cgb
Seems like Euro and Swiss Franc are getting the influx. What am I missing here?
You are missing "I will do whatever it takes to save the euro". I think Draghi was not joking and once we see August balance sheet of Bank of Spain and Bank of Italy, it will be very clear how much money actually flowed into those junk bonds + Euro.

T
"I know one thing, that I know nothing." Sokrates
  • #50,607
  • Aug 28, 2012 3:45pm Aug 28, 2012 3:45pm
Quoting Tom_D_Trader
You are missing "I will do whatever it takes to save the euro". I think Draghi was not joking and once we see August balance sheet of Bank of Spain and Bank of Italy, it will be very clear how much money actually flowed into those junk bonds + Euro.

T
By which means did the ECB start to buy these junk bonds?
I observe your reality but live my own.
  • #50,608
  • Aug 28, 2012 3:50pm Aug 28, 2012 3:50pm
Quoting Tom_D_Trader
Reminds me of one old question asked like two weeks ago here.

Q: "Is there a god?"
A: "Sure, here I am."

T
Those who say it cannot be done should not interrupt those who are doing it
  • #50,609
  • Aug 28, 2012 3:57pm Aug 28, 2012 3:57pm
Quoting Cgb
By which means did the ECB start to buy these junk bonds?
ECB aint buing them, because they cant. However, there are just many ways how you can let the money flow. As I keep on repeating, problem in Spain is not its Debt/GDP ratio, but foreign capital leaving Spanish banking sector. And ECB can and is helping to the Spanish banks via regular market operations they have always been doing. Those are MRO and LTRO. Both of these started to run again after beeing silent for three month, right after Draghis speech. Moreover, I know Medici is only stranger from internet, but I trust him when he said ECB is easing rules for bond desk to raise exposure to PIIGS debt. And easing of the rules can help a lot. Lets say, ECB says, hey guys, we are going to print as hell and give you free money on September, just keep us afloat till then, ok? I know it is conspirational theory, but thats how it works.

I will try to find you some more info about principle of how MRO works, but the point is, that they dont necessarily have to buy neither bonds and neither bank equities. When bank assets are crumbling like in Spain, they can buy almost any type of market to save them. For example, they can buy Spanish MBS (mortgage backed securities), as real estate market is crumbling as well and draging banks balance sheet down. Then, banks will have more money left for junk bonds.

T
"I know one thing, that I know nothing." Sokrates
  • #50,610
  • Aug 28, 2012 4:04pm Aug 28, 2012 4:04pm
Quoting Cgb
I think it's broken . . .

10Y US bond yields at the lowest of the day (1.620) and so is the US$.

Can anybody think of a plausible reason why we are seeing this? Other than hopium because I think that's toast now and traders are pretty sure it's not going to happen.

So they are buying the bonds and not the dollar. Equities closed slightly lower. Crude is up on fears of Isaac (but still 100 points below yesterday's high). Gold is slightly lower than yesterday and has formed a nice H&S on the 4H chart.

Money has not been flowing...
Yesterday the newswires were chattering about major US banks buying up short dated EZ bonds like they were at fire sale prices (actually they have been).

So what we have is a risk averse market. Check it...

UP: US bonds, Short dated EZ bonds.
DOWN: All equity and commodity indices and futures.

The reason USD is down is because more capital is flowing to European bonds (Highly speculative based on Draghium) than to US bonds.

Note though that the USD losses are relatively low. The USD did make significant gains since the FOMC minutes last week. Since then it's just been playing within range. The Euro is also up (same Draghium speculation) against most currencies. AUD/USD is still down and chopping the bottom of the range.

From what I see, although a little unusual, it makes sense to me. Just a little divergence from the norm. After JackA$$Hole is over, things should start returning to normal as the Euro Zone drama unwinds and the true colors are exposed.
Those who say it cannot be done should not interrupt those who are doing it
  • #50,611
  • Aug 28, 2012 4:06pm Aug 28, 2012 4:06pm
'No QE' Bernanke Will Disappoint Markets Friday


http://seekingalpha.com/article/8320...markets-friday
  • #50,612
  • Aug 28, 2012 4:09pm Aug 28, 2012 4:09pm
Quoting Tom_D_Trader
ECB aint buing them, because they cant....

....they dont necessarily have to buy neither bonds and neither bank equities. When bank assets are crumbling like in Spain, they can buy almost any type of market to save them. For example, they can buy Spanish MBS (mortgage backed securities), as real estate market is crumbling as well and draging banks balance sheet down. Then, banks will have more money left for junk bonds.

T
Excellent theory. Only time will tell if that is what is actually happening.
Those who say it cannot be done should not interrupt those who are doing it
  • #50,613
  • Aug 28, 2012 4:19pm Aug 28, 2012 4:19pm
Quoting Narrow FX
'No QE' Bernanke Will Disappoint Markets Friday


http://seekingalpha.com/article/8320...markets-friday
Of course there will be no QE, but don't go get your panties in a knot and lever up on an E/U short just yet. We still need to be disappointed by Draghi... after he pumps a bit more hopium into the markets. Until then, either short or long with extreme caution. That's my view anyway. Intarday trading is the key for now. Mid to long term trades should only be entered with very low leverage and a pre-determined risk limit.
Those who say it cannot be done should not interrupt those who are doing it
  • #50,614
  • Aug 28, 2012 4:41pm Aug 28, 2012 4:41pm
Ok, got a nice link. Not easy link, but nice

http://www.ecb.int/ecb/legal/pdf/l_3...n000100951.pdf

95 pages of ECB trying to cover up how they do it. Nevertheless, what can be easily found:

3.1.2. Main refinancing operations
The main refinancing operations are the most important open market operations conducted by the Eurosystem, playing a pivotal role in pursuing the aims of steering interest rates, managing the liquidity situation in the market and signalling the stance of monetary policy.
The operational features of the main refinancing operations can be summarised as follows:
(a) they are liquidity-providing reverse operations;
(b) they are executed regularly each week ( 13 );
(c) they normally have a maturity of 1 week ( 14 );
(d) they are executed in a decentralised manner by the NCBs;
(e) they are executed through standard tenders (as specified in Section 5.1);
(f) all counterparties fulfilling the general eligibility criteria (as specified in Section 2.1) may submit bids for the main refinancing operations; and
(g) marketable and non-marketable assets (as specified in Chapter 6) are eligible as underlying assets for the main refinancing operations.

Chapter 6 is like 10 pages long, so lets say, there are simply many assets which are eligible for MRO. They are divided into two types - marketable assets and non marketable assets. I will just point out few lines as that document is really long and I dont want to read it all right now.

Marketable assets:
Type of asset - debt instrument, it must be traded on proper market, in proper currency and so on. But I am sure clever boys from GS can fit in the terms. There are just many ways how to create proper debt instrument which fits into terms. Thats called financial engineering.

Non - marketable assets:
Three types of non-marketable assets are eligible as collateral in the single framework for eligible assets: fixed-term deposits from eligible counterparties, credit claims and non-marketable retail mortgage-backed debt instruments (RMBDs). There you got it all. They can buy almost anything.

T
"I know one thing, that I know nothing." Sokrates
  • #50,615
  • Aug 28, 2012 4:49pm Aug 28, 2012 4:49pm
Hi sisse.

edit: I wanted to go to sleep already, but I will wait for you to post . Looking forward for another fundamental sum up.

T
"I know one thing, that I know nothing." Sokrates
  • #50,616
  • Aug 28, 2012 4:59pm Aug 28, 2012 4:59pm
Quoting Tom_D_Trader
Ok, got a nice link. Not easy link, but nice

http://www.ecb.int/ecb/legal/pdf/l_3...n000100951.pdf

95 pages of ECB trying to cover up how they do it. Nevertheless, what can be easily found:

3.1.2. Main refinancing operations
The main refinancing operations are the most important open market operations conducted by the Eurosystem, playing a pivotal role in pursuing the aims of steering interest rates, managing the liquidity situation in the market and signalling the stance of monetary policy.
The operational...
Your posts are getting deeper and better by the day...enjoy reading such a well back and technical post...2 thumbs up for that...

IMO, You are digging too deep in the legal technicalities of the ECB processes (btw nice, alternative and less competitive field to apply for a job with the bastards ...if you ever want to) my only suggestion like always is before you go to deep in search for answer why not start with the basic first?

....sure the directive provide all the cover for the ECB to act but the key is not in what is here but in what is not there....sovereign bonds are not cover (obviously) and the problem right now that not only the bond vigilantes but also some of the big bastards are/were aiming and translating the private banking problems to the sovereign side (which is fck u up but that's what it is in Spain and Italy) and the ECB cannot act directly.

In simple word the ECB gets aggressive with it's operations helping private banks and etc under the table while the bastards crossfire their ammunitions in the sovereign bond markets where the ECB is with its hands "tie" until Germany and the political circus in Europe get themselves togheter and agree on something real....

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #50,617
  • Aug 28, 2012 5:14pm Aug 28, 2012 5:14pm
I am glad you liked it mate. I like to dig, I am staying out from market till this bull runs out of steam, so I finally have some time for digging.

Btw, I agree with what you have said. ECB has their hands tied and they cant intervene in the bond market directly. So it will cost them a lot more, while they are trying to intervene indirectly, using MRO and LTRO to reliquify Spanish banking sector. If you missed the link below, check it. I know you dont like zerohedge, but if you skip their "shock everyone around" attitude, you can see there are links to Bank of Spain and Bank of Italy balance sheets, which got some nice cash injection on July. And I belive this injection will be even higher on August.

http://www.zerohedge.com/news/spanis...parabolic-rise

Going to sleep, cya tomorrow,

T
"I know one thing, that I know nothing." Sokrates
  • #50,618
  • Aug 28, 2012 5:23pm Aug 28, 2012 5:23pm
Quoting Tom_D_Trader
I am glad you liked it mate. I like to dig, I am staying out from market till this bull runs out of steam, so I finally have some time for digging.

Btw, I agree with what you have said. ECB has their hands tied and they cant intervene in the bond market directly. So it will cost them a lot more, while they are trying to intervene indirectly, using MRO and LTRO to reliquify Spanish banking sector. If you missed the link below, check it. I know you dont like zerohedge, but if you skip their "shock everyone around" attitude, you can see there...
Thanks for the link. Great chart but I insist that's not news....of course we know that parabolic trend is happening (thats not unexpected)... The key is in the bond markets...if they intervene openly and unlimited (like a proper CB) or they create a band, etc the bastards are goin to get squeeze out and big big time ...until they find the backdoor to attack somewhere else ....

My call is a bit different than the typical PIIgs but will be via Finland and the other small, strong seriuos members pushing them out via excessive negative "rates" with the media and extreme right parties feeding the pigs on "too much money for the lazy south" speech.... We'll see

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #50,619
  • Aug 28, 2012 5:27pm Aug 28, 2012 5:27pm
Quoting PipTrapper
Of course there will be no QE, but don't go get your panties in a knot and lever up on an E/U short just yet. We still need to be disappointed by Draghi... after he pumps a bit more hopium into the markets. Until then, either short or long with extreme caution. That's my view anyway. Intarday trading is the key for now. Mid to long term trades should only be entered with very low leverage and a pre-determined risk limit.

Totally agree with this.
  • #50,620
  • Aug 28, 2012 7:38pm Aug 28, 2012 7:38pm
Quoting PipTrapper
If you can upload the file as an attachment, that would be great. If you would rather email it, just PM me and I will send you my email address.

I have granted you access so that you can post in the Kindergarten thread if you wish. When posting there, try to be as clear as possible with any instructions you include and make sure yiou include disclaimers if you feel you should.

Cheers
PT
Thanks PT. Split-Entry-Calculator uploaded and available in the new "KinderGarten";

http://www.forexfactory.com/showthre...88#post5965688

Whoever want's to use it (use it at your own risk). Just ask if any questions.

http://content.screencast.com/users/...08-28_2030.png
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