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Global Macro Trading Journal
- Thread starter Daal
- Start date
Quote from Ghost of Cutten:
End result - to save the Euro, and the integrity of the EU, the ECB president will be made to fall on his sword and replaced with a Bernanke Mk II from southern Europe with a mandate to fight unemployment and assure prosperity, not just a 2% inflation target. That's my working hypothesis on how this plays out.
Ironic isn't it. To save the Euro, the ECB will start printing them like mad...
Right... So after a lengthy discussion of the various scenarios and possibilities for the Euro, we're concluding that it's best to have no exposure to it? Funny, innit? As I have mentioned previously, I very much agree with the sentiment.Quote from Daal:
This view also raises a question of, since I'm long EURCHF and short EURUSD(And looking to add if I don't see strong counter arguments to the thesis), whether is better to go long USDCHF(Since that is the position I would have on basically)
There should be a interest income savings in that pair(it costs more to borrow EUR than to borrow CHF). But at the same time if my view is that outflows will be strong, a lot of it will go towards CHF and their debt instruments. In that scenario SNB will have to print a lot of money, at some point they could balk. I might be able to predict when they will balk(inflation is turning, money supply growth getting to uncomfortable levels) and get out at no loss since the ceiling will still be there
So yes, long USDCHF might be superior. I'd be laying off my risk to the SNB UNTIL they are ready to throw up, then I have to get out. I'd appreciate feedback here because it looks like this trade could have substantial upside and small downside
In general, I like long USDCHF, regardless of the recent run of relatively weak(ish) data out of the US (apart from ISM, that is).
Quote from Martinghoul:
Right... So after a lengthy discussion of the various scenarios and possibilities for the Euro, we're concluding that it's best to have no exposure to it? Funny, innit? As I have mentioned previously, I very much agree with the sentiment.
In general, I like long USDCHF, regardless of the recent run of relatively weak(ish) data out of the US (apart from ISM, that is).
Its not no exposure at all. I'm indirectly short it because as a long the CHF peg holds they are EUR effectively just with a different risk reward profile from my perspective
Quote from Daal:
This view also raises a question of, since I'm long EURCHF and short EURUSD(And looking to add if I don't see strong counter arguments to the thesis), whether is better to go long USDCHF(Since that is the position I would have on basically)
There should be a interest income savings in that pair(it costs more to borrow EUR than to borrow CHF). But at the same time if my view is that outflows will be strong, a lot of it will go towards CHF and their debt instruments. In that scenario SNB will have to print a lot of money, at some point they could balk. I might be able to predict when they will balk(inflation is turning, money supply growth getting to uncomfortable levels) and get out at no loss since the ceiling will still be there
So yes, long USDCHF might be superior. I'd be laying off my risk to the SNB UNTIL they are ready to throw up, then I have to get out. I'd appreciate feedback here because it looks like this trade could have substantial upside and small downside
What is the rationale for being long EURCHF? Do you have a reason to expect it to rise, or is it just that your downside risk is capped by the SNB whereas the upside is theoretically unlimited?
The main problem I have with short EURUSD is that it's surely a massively crowded trade at this point. Most of the 'hot money' that's going to flee Europe must have already done so, speculators are heavily short, etc. Obviously a full-blown panic, chaotic Eurozone breakup and cascading national defaults changes things - at least for a brief period - but how likely is that really?
If the ECB prints it will in theory weaken the Euro, but every central bank is printing these days. It's just as conceivable that a full-blown ECB monetization would cause the Euro to shoot up, since cataclysmic breakup would seem less likely.
As Daal is the only one disclosing his entire allocation I also took a few mins to put together my asset allocation numbers.
As % of my net worth:
- approx. 130% long and 40% short equities for 90% net long
- 200% long bonds, mostly gov futs
Rest is minor positions 20% long commodities, long interest rate futures (Euribor & Aussie rates), short approx. 25% EUR. Will allow myself to get stopped out on major adverse movements and will ride whatever isn't stopped out into the summer.
For those who are willing to share, how are you positioned?
As % of my net worth:
- approx. 130% long and 40% short equities for 90% net long
- 200% long bonds, mostly gov futs
Rest is minor positions 20% long commodities, long interest rate futures (Euribor & Aussie rates), short approx. 25% EUR. Will allow myself to get stopped out on major adverse movements and will ride whatever isn't stopped out into the summer.
For those who are willing to share, how are you positioned?
Quote from Butterball:
As Daal is the only one disclosing his entire allocation I also took a few mins to put together my asset allocation numbers.
As % of my net worth:
- approx. 130% long and 40% short equities for 90% net long
- 200% long bonds, mostly gov futs
Rest is minor positions 20% long commodities, long interest rate futures (Euribor & Aussie rates), short approx. 25% EUR. Will allow myself to get stopped out on major adverse movements and will ride whatever isn't stopped out into the summer.
For those who are willing to share, how are you positioned?
Are those equities and bonds from the US?
What is your thesis behind the play?
No thesis to share as I enter and exit exclusively on technicals, although I use fundamentals in single stock selection.Quote from Daal:
Are those equities and bonds from the US?
What is your thesis behind the play?
Equities mostly US, some emerging market. Have been completely out of European equities for some time now, would like to re-enter if they showed some lasting strength. Bonds globally, mostly gov's across all maturities. Considering they're the most hated asset class known to mankind they've been doing surprisingly well most recently.
Quote from Specterx:
Obviously a full-blown panic, chaotic Eurozone breakup and cascading national defaults changes things - at least for a brief period - but how likely is that really?
Its hard to put a number on it. I just have a small short at this point
One strong counter-argument to my thesis I found is Latvia
They had a 30% GDP drop. UR went from 5%ish to 21%, yet they STILL have a peg to the EUR(They are in the application process). It seems that the insanity of politicians can last quite a while, this could be 1931 where most countries were still on the gold standard and would only start to materially leave later on. We could be 1-2 years away more any meaningful change so having the short on could be expensive. Lithuania(22% GDP drop) also is in a similar situation, they didn't drop EUR peg either
But I'm keeping my guns loaded for the 2 trades I mentioned(Short EUR hugely the minute anyone drops out, buy stocks in the country that drops out). I'm also keeping an eye for any canaries in the coal mine and short hugely when they show up
I might also buy the black swan puts just in case things happen faster than I thought.
But now that I remembered about Latvia and the others I see that having a big short on right now its probably premature