Global Macro Trading Journal
- Thread starter Daal
- Start date
A good article by Sumner on why the Fed has been actually too tight over the past years
http://www.nationalaffairs.com/publications/detail/re-targeting-the-fed
Even though that is not the impression you get by reading all the pundits and newspapers out there. This is the stuff that edges in Global Macro are made of, when you get a more solid understanding of what is going on than the next person. The markets aren't as silly as the people writing junk out there but they still make some mistakes sometimes
http://www.nationalaffairs.com/publications/detail/re-targeting-the-fed
Even though that is not the impression you get by reading all the pundits and newspapers out there. This is the stuff that edges in Global Macro are made of, when you get a more solid understanding of what is going on than the next person. The markets aren't as silly as the people writing junk out there but they still make some mistakes sometimes
http://www.hkma.gov.hk/media/eng/publication-and-research/quarterly-bulletin/qb201109/E_halfyear.pdf
It seems to me that looking at FX interventions over the past years that CBs tend to act during period of 'maximum pain', days where the currency moves a large amount in a short-period and they just can't take it anymore, throw the towel and intervene
A similar thing could happen in the HKD. If the currency where to hit its upper band(lower band on USDHKD) I might take a very large position there because in order to keep the peg they would have to provide further stimulus which they might not be so willing to do like in 2008-2009 when everyone was afraid of a global depression
I could keep a huge position for a few weeks with max loss capped at 1% and see if the HKMA can take that kind of pain
It seems to me that looking at FX interventions over the past years that CBs tend to act during period of 'maximum pain', days where the currency moves a large amount in a short-period and they just can't take it anymore, throw the towel and intervene
A similar thing could happen in the HKD. If the currency where to hit its upper band(lower band on USDHKD) I might take a very large position there because in order to keep the peg they would have to provide further stimulus which they might not be so willing to do like in 2008-2009 when everyone was afraid of a global depression
I could keep a huge position for a few weeks with max loss capped at 1% and see if the HKMA can take that kind of pain
Good point
It's amazing how this aspect of Keynesianism still hasn't died, after 20 years of counterfactuals. Ditto for the fiscal spending policy also (see Japan 1990-2011).In a bear market, that which is cheap becomes even cheaper.
Quote from Daal:
I sold my EUR/CHF on the spike, it was a small position. But my lunch is paid today
Isn't the EURCHF just the same trade as HKD, except with the triple kickers of a catalyst, positive carry, and a central bank in your favour? Downside is 1.20, upside is what, 1.30, 1.40, 1.50? I don't understand why you put on a small position, then exited after a tiny move, to choose a much longer-term trade with negative carry and no central bank policy in favour of the position.