m22au's journal

This just in from the "interesting to note" department:

ES premarket high of about 1222
Regular trading session low 1217 shortly after 9.30am ET
ES breaks above 1223 just after 11.20am ET

ZG (gold) futures high from yesterday 1393
breaks above this level after 11.20am ET

yet while ES and ZG rallied, EUR/USD remained below 1.4120
and IBEX Nov futures remained below 10,440.

*****

So what does this mean for trading?

ZG probably has better correlation with ES (USA stock index) than EUR/USD (Euro currency) and $IBEX (European stock index).

However if you are of the view that QE2 is bad for Europe (and Spain and other PIIGS in particular) because conditions are tighter in Europe (than the USA), then you could consider a pair of (long ZG and short EUR/USD) or (long ZG and short $IBEX).
 
I could write paragraphs about the US economy and the outlook for earnings in Q4 2010 and 2011.

But those kind of fundamental aspects of market analysis don't really matter that much these days.

All you need to do is just analyse what the crazy central bankers are doing.

On that score, here is an important article from Prag Cap about the Bernanke appearance at a Florida university:

http://pragcap.com/ben-bernanke-explains-fed-qe

snippet, with my bold emphasis:

"He says the price increases in commodities (caused entirely by speculators and not fundamental changes) are not a concern because the slack in the economy will make it difficult to pass these costs along to consumers (sound familiar?). Unfortunately, I think the Chairman is overlooking the fact that corporations will be less likely to hire as they see their margins squeezed. This is a significant issue the Chairman appears to be glaring over. It should not surprise any of us that he is viewing this environment as an academic and not as a business owner. Just one more piece of evidence showing he is unqualified for this position."

Link to C-Span video:
http://www.c-spanvideo.org/program/296446-1
 
It is flat out unbelievable that anyone iat the Fed could print remarks like this (i.e. that make sense). I would expect Bernanke to attempt to completely marginalize Warsh at the Fed and for his gov't career to end ... soon.

I should add is that its highly probably that Bernanke actually assigned Warsh to write this article to cool down some of the remarks from overseas central bankers and to try and halt the run on the dollar. Chances are, it does not truly reflect the thinking of Warsh or almost anyone at the Fed.
 
Quote from ralph00:

It is flat out unbelievable that anyone iat the Fed could print remarks like this (i.e. that make sense). I would expect Bernanke to attempt to completely marginalize Warsh at the Fed and for his gov't career to end ... soon.

I should add is that its highly probably that Bernanke actually assigned Warsh to write this article to cool down some of the remarks from overseas central bankers and to try and halt the run on the dollar. Chances are, it does not truly reflect the thinking of Warsh or almost anyone at the Fed.
More...

Yeah similar thinking to me Ralph.

Get some (relatively unknown?) non-FOMC-voting person to write a sensible article to halt the slide in the USD.

In my view, the Bernanke article in the Washington Post is 1,000 times more relevant than this piece by Warsh.

I know this is something that can't be measured, but I think the Bernanke Washington Post article by itself is worth a few hundred billion of QE, because it's quite clear in explaining Fed policy.
 
Great topic, I haven't encountered it before but I will follow it from here on.

If I can just ask one question, m22au...

Your first post states you were long silver at 5$ and bullish in gold.

Is that a position you held on to all these years or did you get in and out of that trade depending on market sentiment?

Cheers.
 
Quote from Debaser82:

Great topic, I haven't encountered it before but I will follow it from here on.

If I can just ask one question, m22au...

Your first post states you were long silver at 5$ and bullish in gold.

Is that a position you held on to all these years or did you get in and out of that trade depending on market sentiment?

Cheers.
More...

Thanks for your kind words Debaser.

The long answer to your question (which was asked on 19 June 2010 by Ghost of Cutten) can be found here:
http://www.elitetrader.com/vb/showthread.php?s=&postid=2875842#post2875842

The short answer is: in 2007 or 2008 (not sure of exact date), I sold all my silver and bought gold with the proceeds.

So I have been long precious metals since 2003.
 
Quote from m22au:

Yeah similar thinking to me Ralph.

Get some (relatively unknown?) non-FOMC-voting person to write a sensible article to halt the slide in the USD.

In my view, the Bernanke article in the Washington Post is 1,000 times more relevant than this piece by Warsh.

I know this is something that can't be measured, but I think the Bernanke Washington Post article by itself is worth a few hundred billion of QE, because it's quite clear in explaining Fed policy.
More...

Warsh is on the Fed Board and thus is a permanent voter in the FOMC
 
Quote from Daal:

Warsh is on the Fed Board and thus is a permanent voter in the FOMC
More...

My mistake. I should have checked my facts before posting.
 
I don't trade bonds, but obviously an understanding of bond market moves helps to provide colour to the overall picture of financial markets.

A guest on CNBC Europe mentioned the potential for longer dated bond yields to rise substantially, to 8%.

So I looked at some charts of US 10 year bonds and US 30 year bonds and noticed (belatedly) that the 10-30 year spread has risen by about 60 bps, from about 100 bps to about 160 bps since the end of August.

More bond data here:

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

http://finance.yahoo.com/bonds
http://finance.yahoo.com/q/bc?s=^TNX+Basic+Chart&t=1y
http://finance.yahoo.com/q/bc?s=^TYX+Basic+Chart&t=1y

2 year
http://www.bloomberg.com/apps/quote?ticker=USGG2YR:IND

3 year
http://www.bloomberg.com/apps/quote?ticker=USGG3YR:IND

5 year
http://www.bloomberg.com/apps/quote?ticker=USGG5YR:IND

10 year
http://www.bloomberg.com/apps/quote?ticker=USGG10YR:IND

30 year
http://www.bloomberg.com/apps/quote?ticker=USGG30YR:IND
 
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