Global Macro Trading Journal

PBOC first and now the Beard on tap.

How bad must things be in China right now. Beijing seems to be in more of a panic than Hank Paulson in summer 2008.

Not only the rate cut, but they suspend implementation of capital rules for banks, and are pushing through infrastructure projects that have been held up in red-tape for years. That's sure to help. A few more steel plants is just what the country needs.:p
 
Covered EWH in the pre-market here(16.38). Got a bit unlucky, I was thinking of covering this morning then they announced the rate cut. Overall I endup making money in the HKD long and the EWH short
EWH endup underperforming SPY by around 9% since 17 sep 2011 when it was I started the trade, its beta is less than 1. My actual results on the short were a bit better because I took some profits last year

Yet I still like shorting EWH. Mainly due the old thesis, the fact that it gets affected by the triad of fear(China hard landing, US recession plus EU crisis due the crisis being systemic and taking down global equities with it)
But I will let this 'rate cuts' will save us rally go on before I short again. This could be Sep 2007 for HK and the market might just keep going
 
Quote from ralph00:

I've been involved with rentals for over 25 years - worked my way up from slums and student housing to nicer suburban properties where 99-100% of the rent due shows up in my post office box within the first 3 days of the start of the month.:)

Assuming one has access to reasonable financing, the returns available from rentals are outstanding right now. If you can by something with a cap rate 200 basis points over your financing cost, that's a no-brainer. More than 200 basis points is a gold mine. Financing is available at 4% now - there is plenty of good stuff on offer at over a 6 cap in the Phila area.
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Aren't there better yields in Nevada and Arizona? If I could get 30 year fixed-rate dollar financing and lived in the USA, I would be investing in those locations now.
 
About gold:

1. It tested the major support low of the trading range, but couldn't break through. That's bullish.
2. It rallied hard and fast after the test. That's bullish - exactly what a bullish reversal should do after the lows of a trading range were hit.
3. It skyrocketed in one day, having a huge surprise wide-range day after the NFP data. That's bullish - vigorous response to moderately bullish news.
4. The beard wants to step on the gas. That's bullish - central bank on-side.
5. No meaningful pullback for those wanting to buy after the Friday shock. That's also bullish - shows few longs there to take profits, lots of shorts covering and keeping a bid in the market.
6. EU banks may blow up later this year. Also bullish (possible grey swan 'shock' to the upside).
7. Gold miners got so cheap that the value guys took serious pain. Also bullish - values got not just cheap but painfully low, weak longs got squeezed out.

On the bear side...old cobwebs, wind blowing through abandoned streets, a mean-looking guy spitting out gum as he fingers his six-gun...i.e. nothing, nil, nada. The only real bear point before was crowded longs and the price action. Now, the weak longs are out, and the price action just got bullish. The liquidation has already happened.

So, what's the risk? Easy - a proper break of the lows means long is wrong. In fact, even a move below say 1550 means long is probably wrong. After a shocker wide-range day like Friday, the market should never close below the low of that day, or even get near it. So, a series of stops at say 1565, 1545, 1525 on a closing basis, would be good. In fact I think the market probably shouldn't close below 1575, if the rally is going to continue.

Upside is back to the old highs, and potentially higher. It is quite possible this starts a new bull leg going into a true late-bull market blowoff top taking gold to 3000 and above. 1950-2000 is the minimum target. So you have a trade which is probably going to work, has $75-100 risk max, and minimum $350 upside, possibly $1400-3000+ upside. That is a nice risk/reward. And if you look at gold mining stocks, they are even cheaper than the metal.

Arguably it is time to put on decent size on gold, and especially gold miners.
 
Quote from Daal:

Also sold all my TLT. Global verbal and actual intervention started sooner than I expected. Plan to rebuy it though
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Why do you plan to rebuy? Treasuries, like bunds, are indefensible as an investment, they are at true bubble valuations. They are only acceptable to buy as a trade, and you cannot say with certainty that they will offer another setup on the long side. Instead of planning to be bullish, be of no opinion, and simply take the next trading setup - long or short - that the market provides.
 
Re gold

I'm trying to think where the market would go on a shakeout of any recent longs. $1570-80 seems like a good spot - enough to cause a bit of pain for a day or two. That would also be a correction of about half the rally. But, the path of most frustration might be just to break out higher again, not allowing anyone to easily get long.

So...seems like a stop a bit below 1570 on a closing basis would be best - maybe 1565 or 1560. Be at least half long here, arguably a proper long position, and prepared to go to maximum size on a $40-50 dip (which might last a very short time).

Gold miners (GDX) seem a bit more extended, I could see a pullback to 43-44. So maybe we will actually get a short dip down e.g. 40-50 in the metal, $3-5 in GDX.

Any thoughts on this?
 
Quote from Ghost of Cutten:

Re gold

I'm trying to think where the market would go on a shakeout of any recent longs. $1570-80 seems like a good spot - enough to cause a bit of pain for a day or two. That would also be a correction of about half the rally. But, the path of most frustration might be just to break out higher again, not allowing anyone to easily get long.

So...seems like a stop a bit below 1570 on a closing basis would be best - maybe 1565 or 1560. Be at least half long here, arguably a proper long position, and prepared to go to maximum size on a $40-50 dip (which might last a very short time).

Gold miners (GDX) seem a bit more extended, I could see a pullback to 43-44. So maybe we will actually get a short dip down e.g. 40-50 in the metal, $3-5 in GDX.

Any thoughts on this?
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agree with that. reduced some of my long goldies before Ben puts a cold shower on all this...will rebuy later.

took some profits on my short schatz - plan/hope to re-increase later...:)
 
Quote from darkhorse:

I understand the dynamics of the debate, the difference between policy impact and psychological impact, the MMT stuff, and so on.

I'm curious as to whether someone can explain in plain English, in a few sentences, what the Fed would expect QE3 to accomplish and why.

As far as I can tell -- and I'm just a simple caveman trader -- QE3 would do piss-all at this point because long rates are already rock bottom, and attempts to provide additional liquidity as a means of economic boost are somewhat pointless in a deleveraging cycle, because the problem is not availability of credit but overhang of existing debt, coupled with general bank unwillingness to lend (except to cash rich entities that don't need to borrow).

In a deleveraging cycle, QE is like offering food after Thanksgiving dinner. The problem is bloating and indigestion after too much gorging, not a hunger for more food (credit / liquidity etc).

My suspicion is that there is no rational justification for QE3 -- that it's a bunch of hail Mary b.s. -- but again, I am wondering if anyone knows how a Fed official would explain it, i.e. what their logical path of reasoning would be, were they to undergo QE3, and what they would expect it to accomplish.

p.s. And don't tell me they would simply hope for a stock market wealth effect by boosting confidence and lifting the value of paper assets. If that is the only QE3 rationalization left, then the current state of academia vis a vis economics, and central bank policy making, is even more fucked than the most cynical would guess.
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Let's say they double the money supply overnight. US real debt levels fall 50% - no more debt overhang. Savers and banks flee out of cash and Treasuries because they fear more inflationary money-printing - thus being forced to invest in productive assets. The liquidity trap disappears overnight.

Of course, this would totally shaft everyone who is hoarding cash and government bonds (and foreign investors in the dollar), and would cause political uproar. But it would achieve its primary goal.
 
Oh Ben, we had such high hopes (not)

Rented longs all either cashed or breakeven now -- red close today would be pretty bad mojo for ze boolz
 
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