Global Macro Trading Journal
- Thread starter Daal
- Start date
Great note from DB (via ZH):
"EUR is probably the worst instrument to express Euro area negative views with both periphery bonds and equities purer gauges of stress."
Word to that. Reminds me so much of 2008 when I was trying to eke out a few pips short GBP, finding out later the big swinging dicks were long CDS on MBS and making fortunes.
Expressing an idea through straight up currency or interest rate or stock plays is not the best way of doing things. Sadly, at the retail level, there are few other choices.
"EUR is probably the worst instrument to express Euro area negative views with both periphery bonds and equities purer gauges of stress."
Word to that. Reminds me so much of 2008 when I was trying to eke out a few pips short GBP, finding out later the big swinging dicks were long CDS on MBS and making fortunes.
Expressing an idea through straight up currency or interest rate or stock plays is not the best way of doing things. Sadly, at the retail level, there are few other choices.
Just an observation that the trade these past months has been to buy EUR just when things are getting really ugly - as some new leak about some new solution is sure to jar the currency higher. And things were looking really ugly 3 hours ago. Then you can re-short after the "summit" enshrines said solution.
I'm pleased that I used the two recent bounces to enter shorts, but at this moment am not smart enough to take my advice and cover. In the back of my mind, I just can't help thinking the big one is coming and this puppy is going to drop 1000 pips in a week. I'm willing to risk holding my short against what - if recent history means anything - could be a nice bounce at some point this week.
I'm pleased that I used the two recent bounces to enter shorts, but at this moment am not smart enough to take my advice and cover. In the back of my mind, I just can't help thinking the big one is coming and this puppy is going to drop 1000 pips in a week. I'm willing to risk holding my short against what - if recent history means anything - could be a nice bounce at some point this week.
As I understand it, Paulson allows his investors to have their funds essentially denominated in gold. His sale of GLD has nothing to do with where he thinks the price is going and likely everything to do with big redemptions - less funds, means less gold needed to be held.
As for the BAC deal, he owns a lot of financials. It's possible he sold something else, offsetting the extra exposure to BAC. It's also possible he's doubling down.
As for the BAC deal, he owns a lot of financials. It's possible he sold something else, offsetting the extra exposure to BAC. It's also possible he's doubling down.
Kyle Bass - Germany in trouble too. 81% debt/gdp ratio and they still have to recapitalize their banks. No chance they're going to take on debts of southern Europe. Eurobonds aren't happening. Either the ECB let's the euro go or the contagion continues.
http://news.bbc.co.uk/2/hi/programmes/hardtalk/9639507.stm
http://news.bbc.co.uk/2/hi/programmes/hardtalk/9639507.stm
If got it right, the idea is to devaluate massively the EUR to make debts easier to sustain?
This would simply kill countries with a highly negative trade balance (read Spain and Netherlands)
If we do get to a critical level where something HAS to be done, some form of Eurobonds could become a (better) option.
The most likely IMO is ECB guaranteeing some nice % of all sovreign Bonds (even if different for each country and based on some function of the country statistics). This wouldn't necessarily cause a devaluation in EUR and actually -unless ECB is forced to pays the guarantee- it could cause a rally.
Kind of a mind trick really, if investors see that the bond is actually guaranteed, they wouldn't be scared and in practice there wouldn't be any need for ECB to pay in.
Well, that's the Paulson repsonse (if the markets know I have a bazooka in my pocket, I won't have need to use it), and the markets - after a euphoric rally - have blown through that theory every time. Math is a bitch. It holds no ideology and isn't short or long, thus has no bias. The only way to change that math is to have the ECB monetize the continent's debt. The adjustment would then move from bond yields to the currency value.