Bass' latest, dated yesterday, but no doubt written before Ben and Tim's latest attempt at a bailout
http://www.scribd.com/doc/74335711/Hayman-Nov2011
http://www.scribd.com/doc/74335711/Hayman-Nov2011
Global Macro Trading Journal
- Thread starter Daal
- Start date
posted this idea in another forum, but let me post it here also if anyone wants to run away with the idea. Do it at your own risk though 
For trading today's NFP, a hedged trade would be to buy 100,000 usdjpy and sell 1 ES contract. Current prices: USDJPY 78.00, ES 1157.
Case 1: If NFP comes out way better than expected, USDJPY will spike 70-120 pips and ES will spike 15-25 points. Book USDJPY profits and leave ES short open. In a day or two once we get some bad news from Europe ES will be back at 1157 or even lower. There is also a strong possibility that ES might sell off today itself after the initial euphoria of good payrolls number is behind us in half an hour or at open. Because a lot of good news (good ADP numbers, swap cut etc.) is already being reflected in ES.
Case 2: If NFP comes bad, USDJPY and ES go down, make money on ES and leave USDJPY position. You might have to hold this USDJPY position for 3-6 days. BoJ has been buying USDJPY and has been doing continuous market intervention in smaller volume since the last big one. So, in next 3-6 days, USDJPY will be back at 78 and then trade can be exited.
For trading today's NFP, a hedged trade would be to buy 100,000 usdjpy and sell 1 ES contract. Current prices: USDJPY 78.00, ES 1157.
Case 1: If NFP comes out way better than expected, USDJPY will spike 70-120 pips and ES will spike 15-25 points. Book USDJPY profits and leave ES short open. In a day or two once we get some bad news from Europe ES will be back at 1157 or even lower. There is also a strong possibility that ES might sell off today itself after the initial euphoria of good payrolls number is behind us in half an hour or at open. Because a lot of good news (good ADP numbers, swap cut etc.) is already being reflected in ES.
Case 2: If NFP comes bad, USDJPY and ES go down, make money on ES and leave USDJPY position. You might have to hold this USDJPY position for 3-6 days. BoJ has been buying USDJPY and has been doing continuous market intervention in smaller volume since the last big one. So, in next 3-6 days, USDJPY will be back at 78 and then trade can be exited.
i think NFP number is close to irrelevant and if you think the rally in the past few days is because of good expectations of NFP number then you are trading blind. the market wants to rally - and that's how it is going to interpret any number (of course unless it is hugely off)
it is all about europe - and the action tells you what is likely going to happen. i am hearing within a week - big bang...use your imagination
it is all about europe - and the action tells you what is likely going to happen. i am hearing within a week - big bang...use your imagination
If the ECB or the EU region central banks are really going to lend to the IMF to me this is goodbye to the Armageddon scenario and hello to â¬Japan
http://www.bloomberg.com/news/2011-...-providing-up-to-270-billion-through-imf.html
http://www.bloomberg.com/news/2011-...-providing-up-to-270-billion-through-imf.html
Quote from dhpar:
i think NFP number is close to irrelevant and if you think the rally in the past few days is because of good expectations of NFP number then you are trading blind. the market wants to rally - and that's how it is going to interpret any number (of course unless it is hugely off)
it is all about europe - and the action tells you what is likely going to happen. i am hearing within a week - big bang...use your imagination
If you are asking me, then no I don't think this rally in last week had anything to do with NFP. My experience show NFP number is reflected only by Thursday's and early Friday's price action and not before that.
Btw, whats your source of Big Bang! Want to give some more color ?
However, I do remember when EU came out with 1 trillion bazooka, Euro rallied 5 big figures and then gave back all the gains in 1 London session. So, it might not hurt to go in the direction of bazooka initially, but at some point, booking profits and fading the bazooka might be the right trade (depends on what bazooka is and what kind of underlying problems its going to solve).
if I wanted to give the source (or could for that matter) I would have done it in my previous post...
things are changing quickly in this political space - but the bigger ideas take few days to tune up before they get published. i may be wrong here but the market says differently - for the time being at least...
I would urge to keep an eye on the euro. Every time it rallies on a new solution to the crisis, it just puts more pressure on the struggling EU economies, screwing government budgets even more, requiring even bigger rescues. A beautiful reflexive action.
The ECB needs to break this cycle. A sharply weaker euro needs to be part of any EU solution. At some point the correlation between risk and euro strength needs to break down, or the EU economy will just get worse.
The ECB needs to break this cycle. A sharply weaker euro needs to be part of any EU solution. At some point the correlation between risk and euro strength needs to break down, or the EU economy will just get worse.