Global Macro Trading Journal

Yeah pretty interesting chart

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I want to be bullish and everything, I'd love to be long stocks up to my eyeballs and make 10% a year PLUS be able use the stock holdings as margin for my short-term trading systems or levered macro bets. But I just can't

The list of things going against stocks as a general investment as of 2012 is just too long
 
I'll tell you what's too long, the amount of people in this thread long EURCHF, myself included. I'm thinking about flipping my position now that the whole world is front running the SNB. I agree with the fundamentals of being long EURCHF 100%, but man do I hate crowded trades.
 
Quote from jj90:

I'll tell you what's too long, the amount of people in this thread long EURCHF, myself included. I'm thinking about flipping my position now that the whole world is front running the SNB. I agree with the fundamentals of being long EURCHF 100%, but man do I hate crowded trades.
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We all know it is going to break 1.2000. Didn't come back without a reason. And sure, uninformed was not selling at 1.2000. Not an easy one as CHF bank can play little game of intervention.

It may be that all east EU economy runs on chf loans taken out at 1.65 :D :D

Interesting to see how stops below 1.2000 will work out :-)
 
Quote from jj90:

I'll tell you what's too long, the amount of people in this thread long EURCHF, myself included. I'm thinking about flipping my position now that the whole world is front running the SNB. I agree with the fundamentals of being long EURCHF 100%, but man do I hate crowded trades.
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One possibility is the SNB letting 1.20 break, washing out all the longs in a cascade of stops, letting people think they caved in, so the spec money goes short. And then buying in size back up to 1.20 in one day, trapping everyone short. The price would then probably go up to the mid 1.20s on short-covering. At least, that's what I would do if I was running the SNB intervention policy, seems like a no brainer to make a few billion free money in a week or so.
 
Quote from Ghost of Cutten:

One possibility is the SNB letting 1.20 break, washing out all the longs in a cascade of stops, letting people think they caved in, so the spec money goes short. And then buying in size back up to 1.20 in one day, trapping everyone short. The price would then probably go up to the mid 1.20s on short-covering. At least, that's what I would do if I was running the SNB intervention policy, seems like a no brainer to make a few billion free money in a week or so.
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one should keep option open that price came back to 1.2 because of fundamental cash flows - large interest and capital repaymnets.
 
Quote from Daal:

The answer to the first question is the Russian default(not recession but the EU thing is all about default)

To the second point, I wouldn't agree. Yesterday was a great example, Spain and Italy got killed and the ES followed.

I'm not sure how much people realize that the 'improvement' in Europe was self-fulfilling due people thinking things were better which made things better(like PIGS spreads over bunds)

The same thing will happens in reverse. If Italy or Spain defaults tomorrow of couse SPX will tank(Even if there is no recession or meaningful impact in earnings), its human nature
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No, in 1998 there was a correction, not a bear market - it lasted 3 months and fell just under 20%. And that was something that was not on Wall Street's radar at the time, whereas today everyone is aware of the EU issues.

The historical record is that external macro worries usually cause pullbacks or corrections in the US rather than outright bear markets. Yes there's always the chance the this time is different, but I think the odds are against it.

As for the S&P 'tanking', there's a big difference between a 5-10% pullback, a 10-20% correction, and a bear market. No one cares if it tanks 2-3%, that's almost just noise.
 
Quote from mm19:

one should keep option open that price came back to 1.2 because of fundamental cash flows - large interest and capital repaymnets.
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Sure but the main issue is that lots of people are betting on the level holding, trying to get a free option. It doesn't really matter to the trade *why* the market is testing 1.20, all that matters is that it's being tested and many people are leaning on the level.

If the SNB defends the level in 'monolithic' (:D) fashion, then they will be providing free money to speculators and helping to cap any rise in the Euro against CHF (since specs buying at 1.20-21 will be trying to sell a few handles higher). That conflicts with their goals.

If they really want to push the price up, they should persuade the market to stop trusting the level and to get short, then trap them short. This will cause short-covering, and discourage future exploitation of the SNB bid, leading to a market with far less weak longs. That's much more conducive to the rate going in the direction they want.
 
Quote from darkhorse:


For an even more blunt non-prediction example, consider the casino's edge in blackjack against the average punter. There is no prediction involved on the casino's part as to how any hand or series of hands will turn out.
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The casino predicts they will make a profit on a long series of hands. If the CEO asks the blackjack manager "how much do we expect to make from our 50 blackjack tables this year, Smithers?", then Smithers will not last long in his job if his reply is "I have no idea sir - it's impossible to predict any hand or series of hands".
 
Quote from Ghost of Cutten:

The casino predicts they will make a profit on a long series of hands. If the CEO asks the blackjack manager "how much do we expect to make from our 50 blackjack tables this year, Smithers?", then Smithers will not last long in his job if his reply is "I have no idea sir - it's impossible to predict any hand or series of hands".
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to keep the job he is forced to rig the game. and then go to prison if something goes wrong. Kasino keeps profits. Banks model.
 
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