Global Macro Trading Journal

[ralph00]

Quote from Daal:

The nytimes article saying 'This could be 2008' marked the 'effective' bottom for the Aug collapse
http://www.nytimes.com/2011/08/11/b...comparison-to-2008-crisis.html?pagewanted=all

The close that day was only slightly higher then the actual bottom. I accumulated some losses leading up to those days by buying the decline too early. I thought the panic was ridiculous and kept buying, I recoup the losses I end up having a smaller loss of 1.5%

Its funny how this is not 2008 anymore. Bottom line here is this, the actual news(fundamentals) are almost irrelevant in a short-term basis, what matters is how the emotions are playing out. Yet I see it over and over again people saying 'This decline will only stop once politicians do the right thing', this MIGHT be true on a long-term basis(we could see further 10-15% collapses in the future because politicians are screwing up) but in a short-term basis it doesn't mean shit

In case anyone hasn't noticed, shares have been in a powerful bull run since August 9. The swoon in markets was a 2 week event and ended nearly a month ago - about the same time as the Fed announced 0 rates for the next 2 years.

Everything I bought (too early off course) in late July/early August - mostly big cap stuff, but also more NLY and TUP - is nicely higher now. Not tooting my horn - these shares are in the buy and hold account for at least 10 years while math and the power of compounding works its magic. I could care less about their short-term price action (in fact, like Buffett, I'm hoping for prices to go down, so my reinvested divvies buy more shares). I'm just trying to point out the markets have moved on, the analysis should as well.

I would also note STOXX has removed underperformers SocGen, Unicredit, Intesa Sanpaolo, and Nokia from the Stoxx 50, and replaced with stronger stocks. Indexing sucks. Read up on survivorship bias.

 

[ralph00]

Markets now seem to be pricing in worldwide monetary easing - hence the ability of stocks to shake off recent horrid economic data, including today where Europe is about to turn green despite recession-like figures from the PMIs.

Brazil cut rates unexpectedly last night. Expect cuts from a half dozen central banks over the coming weeks as well as more from the Fed.

It's the biggest risk to being short the AUD (though Oz may cut as well). One reason why I have bought some deep OOM calls on TBT this morning.

 

[ralph00]

FWIW, whispers going around of a 43 print on ISM at 10. Probably started by some seriously underwater shorts trying to scare the market lower.

 

[m22au]

Quote from ralph00:

FWIW, whispers going around of a 43 print on ISM at 10. Probably started by some seriously underwater shorts trying to scare the market lower.

OK I'm curious, what's the source of these 'whispers' ?

I agree that any such whispers were started by someone trying to influence trades in their desired direction.

Quote from ralph00:

Markets now seem to be pricing in worldwide monetary easing - hence the ability of stocks to shake off recent horrid economic data, including today where Europe is about to turn green despite recession-like figures from the PMIs.

I agree in the short-term, but surely we've read this story before? ie, once the loose monetary policy juice runs out, we return to reality, ie, a balance sheet recession and debt deflation.

Note - I'm long gold, which will (after it works off its recent excess) will benefit from loose monetary policies around the world. But I just find this whole situation of financial markets surviving only on funny money to be silly.

I also note that today the airlines (down 0.6% on the XAL and more on the FAA) are starting to react to $114.80 brent, which again, is only this high because of loose money. In early August brent dropped below $100.

 

[Kassz007]

Quote from Daal:

Barrons says buy bank preferred stocks
http://online.barrons.com/article/SB50001424052702304539504576532340245942076.html?mod=BOL_twm_fs

One reason I don't like this is because I'm a non-US investor. I get taxed by the IRS 30% of the dividend income right off the bat

I don't know where you live and what the tax code is like there, but in Canada we deduct a portion, if not all (I forget off the top of my head), of foreign dividend tax paid from the domestic tax payable which at least partially negates this.

 

[ralph00]

Quote from m22au:

OK I'm curious, what's the source of these 'whispers' ?

I agree that any such whispers were started by someone trying to influence trades in their desired direction.



I agree in the short-term, but surely we've read this story before? ie, once the loose monetary policy juice runs out, we return to reality, ie, a balance sheet recession and debt deflation.

Note - I'm long gold, which will (after it works off its recent excess) will benefit from loose monetary policies around the world. But I just find this whole situation of financial markets surviving only on funny money to be silly.

I also note that today the airlines (down 0.6% on the XAL and more on the FAA) are starting to react to $114.80 brent, which again, is only this high because of loose money. In early August brent dropped below $100.

A couple guys I follow on twitter who I know to be fairly serious and not run-of-the-mill douchebags tweeted of the rumors flying about.

Well, the near entirety of this thread concerns central bank funny money, so this isn't a new thought. I think it's pretty clear that these easings, like mainlining heroin, have less of an effect over time. U.S. shares have bounced nearly 10% since August 9, so much is baked in. I would certainly look on the short side if anything comes out of the Sept 21 Fed meeting.

 

[gmst]

Tactical trade call:

Long EURO at 1.425, Stop 1.42/1.415, Target: 1.435. I will be out of the position before NFP.

Edit: I will keep a much tighter stop on this one. Stop 1.432. Enter at full size.

 

[m22au]

Quote from ralph00:

A couple guys I follow on twitter who I know to be fairly serious and not run-of-the-mill douchebags tweeted of the rumors flying about.

Well, the near entirety of this thread concerns central bank funny money, so this isn't a new thought. I think it's pretty clear that these easings, like mainlining heroin, have less of an effect over time. U.S. shares have bounced nearly 10% since August 9, so much is baked in.

Yes you're right - my last post was just lamenting the amount of central bank intervention in financial markets.

But on the other hand I shouldn't complain - it would be much harder for me to remain long gold if Volcker was in charge of the Fed and not promising to keep interest rates low for a long time.

It will be interesting (if and) when financial markets have little or no reaction to hints from Bernanke about QE4 or QE5. But I'm just crystal ball gazing with that.

 

[ralph00]

Bernanke's a fool, another in an unending line of failed egghead phd central planners. Despite the fact that he's doing his best to destroy the standard of living in this country, I almost want to see QE to the nth power just for the laughs. This will be something to pass down though the generations.

 

[m22au]

Quote from ralph00:

Bernanke's a fool, another in an unending line of failed egghead phd central planners.

Agree.

It's funny - the financial companies love their QE. Meanwhile the poor airlines are being cooked slowly by rising jet fuel prices.

Guess which sector peaked in November 2010, 4 months before the financials. Clue: it starts with the letter A.