Global Macro Trading Journal

Quote from Daal:

Look at the CHF. Huge market that responded immediately. The onus is on you to explain why risk free profits would stay out there for so long
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because there is nothing risk free on moving cash into treasuries - especially USTs
 
Quote from Butterball:

I wonder who ever started this urban legend?
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it is called discounting.

of course low rates are usually during bad times when asset prices are unsurprisingly not sky high. but ceteris paribus discounting and cash flow is the only thing that rules investing...
 
My old friend FCX hitting new 52 week lows this morning. Off 40% YTD while copper sits above $4.00/lb. Do you think maybe something is up with the metal (i.e. massive manipulation of the price in China)? :p

Disclosure: having made all I need shorting this proxy for fake Chinese growth, I no longer have a position. :cool:
 
Quote from dhpar:
banks will have to park money somewhere, i.e. treasuries. lower yields should benefit asset prices and reduce cost-of-carry - at least in the medium term...
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But do you really want to "park" your money in an asset like UST? All sorts of risks (duration, credit, etc) and what do you get? Not a whole lot more than cash...
 
Quote from dhpar:
btw can somebody finally explain me why IOER=0 is a bad thing now?
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Because it further exacerbates the issues that the banks are having... Effectively, IOER = 0 implies that there's a tax on excess reserves (due to the FDIC levy). If there's no adequate outlet for these excess reserves, which is what I believe, they will remain at the Fed and bleed the banks further. Furthermore, it's additional complications for the money-mkt funds, which are still funding a lot of the banking system. Disrupt that industry further (generally, a good thing to do, but maybe not right now) and who knows what you're gonna get.
 
Quote from Martinghoul:

But do you really want to "park" your money in an asset like UST? All sorts of risks (duration, credit, etc) and what do you get? Not a whole lot more than cash...
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you are right. i don't want to park it there. but we saw many times in the past few years that there will always be some "fools" who buys into "low" yielding treasuries (and make money)..
 
Quote from dhpar:
you are right. i don't want to park it there. but we saw many times in the past few years that there will always be some "fools" who buys into "low" yielding treasuries (and make money)..
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For sure... It's just a question of how much fear there is. All I'm saying is that until we know that US is like Japan it's hard to imagine a couple trillion of excess reserves going into USTs, no matter how much financial repression is used. Obv, I might be totally wrong on this.
 
Quote from Martinghoul:

Because it further exacerbates the issues that the banks are having... Effectively, IOER = 0 implies that there's a tax on excess reserves (due to the FDIC levy). If there's no adequate outlet for these excess reserves, which is what I believe, they will remain at the Fed and bleed the banks further. Furthermore, it's additional complications for the money-mkt funds, which are still funding a lot of the banking system. Disrupt that industry further (generally, a good thing to do, but maybe not right now) and who knows what you're gonna get.
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i see. thanks. i was missing these FDIC insurance costs...
 
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