Global Macro Trading Journal

Great piece by Josh Brown. While I believe that the nonsense has created some wonderful profit opportunities, I agree with his sentiments and offer a hearty "up yours" to the central planners who have created this situation.

http://www.thereformedbroker.com/2011/12/14/retail-investors-say-no-mas/

How many all-or-nothing gap-up and gap-down days can the normal human being watch occur in a row before they realize that the whole thing is bullsh*t? How many beatings can an investor take in their portfolio holdings when not a single piece of news on their stocks ever even came out? How much correlation can a person stand when they're watching 40 of their holdings get jerked up and down every day on rumors and innuendo, thus negating the benefits of diversification and research entirely?
 
Quote from Ghost of Cutten:

IMO China is a bear point. They own lots of Euros and have been steady price-insensitive (and fundamentals-blind) buyers, propping up the exchange rate. Eventually, even dumb foreign bureaucrats are going to realise that the Euro is toast, at which point they will either i) stop buying until the price crashes (this buying strike will accelerate the decline) or ii) panic and sell out. Both are very bearish developments.

I can't think of any reasons why China would look at the Euro right now and say "You know what, it's in our strategic interests to start buying even more Euros". Once things get shaky, they will buy dollars like everyone else.

This China/Euro thing reminds me of the sovereign wealth funds in 2007 and 2008 - they were long and hopelessly wrong, but some people actually thought the market wouldn't go down just because a few tens of billions were being spunked into oblivion by clueless foreign pen-pushing apparatchiks. Since retail is an irrelevancy in FX, foreign institutional 3rd world money is the dumb money.
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GoC, those are pretty solid points, especially on the similarity with the sovereign wealth funds example, and how all of them got massacred. Market is bigger than any player, thats true even for China.

Actually, when you begin to see China dumping Euro, that will be a sight to behold and make money from. EURUSD will behave similar to the way EURCHF was behaving few months back, down 200-400 pips in an hour day after day. Will be a great profit opportunity for the nimble, if China does have to sell eventually.
 
How do we know they're not selling this week.:)

Much of China's buying of euros is an accounting identity. Exporters get euros from customers and turn them into their bank which turns them into the PBOC which gives the bank freshly printed yuan in exchange.

China can't "sell" its euros any more than it can bail out European sovereigns.
 
Quote from gmst:

GoC, those are pretty solid points, especially on the similarity with the sovereign wealth funds example, and how all of them got massacred. Market is bigger than any player, thats true even for China.

Actually, when you begin to see China dumping Euro, that will be a sight to behold and make money from. EURUSD will behave similar to the way EURCHF was behaving few months back, down 200-400 pips in an hour day after day. Will be a great profit opportunity for the nimble, if China does have to sell eventually.
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EUR is tough right now. I've been burned many times this year shorting the low 1.30ish only to see it spike to 1.40 again and again. I might have to bit the bullet and try the trade again(up from my current small short). I won't be adding right now, might as well wait for the next 'we are saved' rally

I suppose it makes sense to put a largish short and put a stop on some kind of upside break of the downtrend
 
Please let us know when you decide to pull the trigger on the euro short, so I know when to cover my own short. :D

Seriously, I'm waiting for the French downgrade. I expect a 100 point whoosh down in the euro at that point, and that should mark the low for the time being.
 
isn't it amazing, that a currency (NOK) that has no problems whatsoever (debts/deficits/etc) and which would in case of a demise of EUR basically link to the strong northern club currencies (and is therefore a natural hedge against this occurring) is under-performing even EUR? (not even mentioning the carry)

there is nobody dumber than the smart money...



p.s. the similar thing could be said about the loonie...
 
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