Saturday, November 30, 2013
GBP
Ug, its frustrating, but i've had to abandon the short GBP position. It has been breaking through resistance in an illogical stream of strength for the past month or so. There is little fundamental information to drive this... it seems largely based on the theory that QE paces will continue at current rates in both contries. That being said the current sentiment may continue for a while until a "shock" hits to spark a retracement. It's sad but I don't want to continue waiting for this moment.... I feel like the gold bugs right now, holding and holding knowing your position is fundamentally right over the course of a decade but continuously taking short term losses. Oh well. I continue to be short EUR and Long USD/JPY, maybe that can get me out of this rut. On the bright side.... bitcoin has gone up 1000% percent in the last month. I suppose this is what keeps me from sitting at the bar alone in depression at this point.
Wednesday, November 20, 2013
QExperimentation
Whelp.... the time may be nearing....
One of these days the Fed will unleash the dreaded taper and we will no doubt dive into bear market territory. Maybe the fed is ignorant..... maybe they just dont care.... deep down I refuse to believe that the people at the fed are completely ignorant, and thus logically there will be no taper in December because I believe they DO in fact care.
Let us continue bolstering the rich and driving the poor into debt for a little bit longer pls, my portfolio would appreciate it.
One of these days the Fed will unleash the dreaded taper and we will no doubt dive into bear market territory. Maybe the fed is ignorant..... maybe they just dont care.... deep down I refuse to believe that the people at the fed are completely ignorant, and thus logically there will be no taper in December because I believe they DO in fact care.
Let us continue bolstering the rich and driving the poor into debt for a little bit longer pls, my portfolio would appreciate it.
Thursday, November 14, 2013
Wednesday, November 13, 2013
Linear vs. NonLinear....
A long while back I posted on the exponential growth of our monetary base/debt and how it stands in stark contrast to the finite availability of resources. Today I found a graph that sums this up quite well:
I give you the new normal. How long will it be until the masses understand that that there are only two outcomes for that red line on the graph:
1) It goes down.... otherwise known as monetary contraction, the deflation, and that for which "there is no plan B" - Bernanke 2013.
2) It goes up..... we continue inflating that which has been inflated (i'll give you a hint, it's not GDP).
neither outcome is good, one outcome is certain.
EUR/USD Outlook is Fundamentally Bearish.
I don't think there is a question as to the stance of Mario Draghi and the ECB's monetary policy sentiment. It is very clear that on a scale of dovishness, the administration lies somewhere between the BoJ and the Fed. At the current value of the EUR this leaves a lot of room open for downside risk. Thus I refuse to take positions long in this currency pair at the moment and the outlook for EUR/USD remains decisively bearish.
Friday, November 8, 2013
The Creation of Growth
This may be the single most important topic of economics and the basis behind fundamental differences in schools of thought.
It is very simple at its base, there are only two ways in which any economy can achieve growth:
1) Increased efficiency.
2) Increase in useful natural resources.
That is it. All sides to a large extent agree with these founding principles. It's notable that there is little to no argument revolving around #2. How to achieve an increase in natural resources is scientific and straight forward. You find coal, you mine it. You acquire land with a splendid aquifer... great! You have drinking water. You discover a diamond mine.... you get the picture. The only heads or tails situations that arise do so when weighing the cost of extracting the resources with the moral or possible future costs of doing so.
There is, however, ample confusion and difference of opinion on how efficiency is achieved. Specifically, whether it is more efficient/effective for a centralized government to control the operation of an entity or whether it would be better off in the hands of private enterprise. Then to a greater extent, the idea of whether or not the forced sharing of income of the wealthy with those less fortunate is beneficial to the well being of society.
It has long been tested and proven that in the majority of circumstances, government makes less efficient use of capital than the free market. This is the basis of capitalism and why it has been successful in history. I think it is also clear that prosperity aside, it is at least more efficient for the wealthiest to decide for themselves what to do with their money, if nothing else for the mere fact that handouts are a disincentive, and those receiving them are less incentivised to work.
However, from a prosperity perspective things can take a whole new form. Is everyone, on average, better off if the poor are better off and more is taken from the rich? This becomes a matter of opinion that is more difficult to apply scientific reasoning to. Many, if not most, would be inclined to say yes we are all better off. I believe it to be true.... if the excess wealth of the rich is spread among the poor, disabled, and underprivileged, equality and a greater prosperity ensues.
The issue with this is that the phenomenon is fundamentally and predictably temporary. The better off the lower class becomes, the more incentivised a population is to become lower class. This is never a big deal at the onset, but history has shown it to grow ominously over time. It's a dangerous phenomenon in a democracy, because if the lower class beneficiaries ever outnumber those who provide the benefits, majority voting favors the side of sustained and increased benefits for the lower class beneficiaries. This has not only been the driving factor behind numerous rises of socialist and communist movements throughout history, but part of the downfall of those very same movements.... because a nation of unincentivised workers is not nearly as productive as a free one. It's an unforgiving circle: The poor are disincentivised and become less productive, less production drains value from the economy producing more poor people and less benefactors, more people are in turn disincentivised and the process continues.... Its a deadly circus of dwindling prosperity... or "The Road to Serfdom" as Hayek coined it. Its a deficit building, production unfriendly cycle that acts slowly but with a high degree of certainty.
I do not shun the idea of helping the less fortunate. I merely implore that it should be done via choice. The second that the redistribution of wealth becomes mandated through the process of democracy, the countdown to a lesser standard of living has begun.
It is very simple at its base, there are only two ways in which any economy can achieve growth:
1) Increased efficiency.
2) Increase in useful natural resources.
That is it. All sides to a large extent agree with these founding principles. It's notable that there is little to no argument revolving around #2. How to achieve an increase in natural resources is scientific and straight forward. You find coal, you mine it. You acquire land with a splendid aquifer... great! You have drinking water. You discover a diamond mine.... you get the picture. The only heads or tails situations that arise do so when weighing the cost of extracting the resources with the moral or possible future costs of doing so.
There is, however, ample confusion and difference of opinion on how efficiency is achieved. Specifically, whether it is more efficient/effective for a centralized government to control the operation of an entity or whether it would be better off in the hands of private enterprise. Then to a greater extent, the idea of whether or not the forced sharing of income of the wealthy with those less fortunate is beneficial to the well being of society.
It has long been tested and proven that in the majority of circumstances, government makes less efficient use of capital than the free market. This is the basis of capitalism and why it has been successful in history. I think it is also clear that prosperity aside, it is at least more efficient for the wealthiest to decide for themselves what to do with their money, if nothing else for the mere fact that handouts are a disincentive, and those receiving them are less incentivised to work.
However, from a prosperity perspective things can take a whole new form. Is everyone, on average, better off if the poor are better off and more is taken from the rich? This becomes a matter of opinion that is more difficult to apply scientific reasoning to. Many, if not most, would be inclined to say yes we are all better off. I believe it to be true.... if the excess wealth of the rich is spread among the poor, disabled, and underprivileged, equality and a greater prosperity ensues.
The issue with this is that the phenomenon is fundamentally and predictably temporary. The better off the lower class becomes, the more incentivised a population is to become lower class. This is never a big deal at the onset, but history has shown it to grow ominously over time. It's a dangerous phenomenon in a democracy, because if the lower class beneficiaries ever outnumber those who provide the benefits, majority voting favors the side of sustained and increased benefits for the lower class beneficiaries. This has not only been the driving factor behind numerous rises of socialist and communist movements throughout history, but part of the downfall of those very same movements.... because a nation of unincentivised workers is not nearly as productive as a free one. It's an unforgiving circle: The poor are disincentivised and become less productive, less production drains value from the economy producing more poor people and less benefactors, more people are in turn disincentivised and the process continues.... Its a deadly circus of dwindling prosperity... or "The Road to Serfdom" as Hayek coined it. Its a deficit building, production unfriendly cycle that acts slowly but with a high degree of certainty.
I do not shun the idea of helping the less fortunate. I merely implore that it should be done via choice. The second that the redistribution of wealth becomes mandated through the process of democracy, the countdown to a lesser standard of living has begun.
QQE
Otherwise known as the new normal.
The Bank of Japan now refers to QE as QQE, or Quantitative and Qualitative Easing. The addition of quality is a nice touch BoJ, now we know your purchase programs are not just about the quantity of money but about the quality.
I wonder what they presume to be a qualitative easing purchase? I surely hope they don't mean their own treasury bonds...... (insert troll face)
The Bank of Japan now refers to QE as QQE, or Quantitative and Qualitative Easing. The addition of quality is a nice touch BoJ, now we know your purchase programs are not just about the quantity of money but about the quality.
I wonder what they presume to be a qualitative easing purchase? I surely hope they don't mean their own treasury bonds...... (insert troll face)
Wednesday, November 6, 2013
TWTR IPO
I am fairly confident that the TWTR IPO will be a success. Why???? This is the perfect investment atmosphere for an IPO. The climate is firmly bullish without regard for industry sustainability or fundamentals, and thus TWTR should flourish. Janet Yellen gives a us promising hope that the QE train will keep rolling for at least another three months (and realistically probably longer), so I see no reason to be bearish until the great taper comes into play.
Monday, October 28, 2013
A Couple of Gems from the Chicago Fed
Are we really supposed to believe that the feds looks at these charts and think "ya, this is pretty accurate, we are going to be alright."
I'm not convinced.... The first two charts shown below are my favorite, whereby the Chicago fed presumes both a rise in interest rates to 2% and a decrease in unemployment to just above 5% by 2016. I don't even think most modern Keynesian economists would find this to be plausible, unless they are simultaneously ramping up asset purchasing programs? I suppose the assumption that QEnfinity will stop before they begin to raise interest rates is a bit presumptuous, recklessness is trending.
For my next favorite graphic, I give you the Federal reserve assets and liabilities. You can see that Fed assets in every class have shrunk miserably except for one: purchase programs. The fed is holding 3.7 trillion in government IOU's. That's 3.7 trillion dollars the government has spent that it otherwise would not have. He who says the fed is not an enabler of government debt may want to rethink some things.
Friday, October 25, 2013
GBP Technical Analysis and Outlook
It's no secret that I remain bearish GBP/USD.... and the technical setup now seems to be favoring this opinion. The resistance around the 1.625 to 1.630 is very strong and goes back to April 2012; take a gander at the charts below.
While its best to see a little bit of follow through to the downside before shutting the door and calling this a bearish reversal, i'm going to add slightly to my current short position now. The reasoning is simple, any time significant technical resistance aligns with fundamental directional reasoning, the situation is unmistakably +EV. If it confirms to the downside I may add again.... go big or go home right. It wouldn't be unexpected for the pair to go up and bump that 1.625 to 1.630 ceiling a bit, but I highly doubt we will break through it entirely. The longer this pair remains directionless, the more I believe it will begin to favor the downside as we approach further tapering expectations from the fed and more accommodating banking policies from the BoE and a maintained asset purchase program.
What about the other fundamental drivers you say?? Take your NFP number and your quarterly GDP and throw them in the toilet. These numbers cause market reactions only because they have influence over the fed's monetary policy.... but these numbers are manipulated and watered down at best. Fed policy is all that matters right now.... Imagine an old rope that has been taped back together so many times that none of the original rope exists anymore, only tape. The tape is the feds monetary policy, its been forced into a corner and only has one way that it can go.
The chart above is on a weekly scale and shows the resistance zone I am referring to. The chart below is a daily chart with a fib retracement. A top seems to be forming around 1.625, and if you look closely, you can actually see the crossing of the Tenkan and Kijun lines of the Ichimoku cloud (bearish sign).
While its best to see a little bit of follow through to the downside before shutting the door and calling this a bearish reversal, i'm going to add slightly to my current short position now. The reasoning is simple, any time significant technical resistance aligns with fundamental directional reasoning, the situation is unmistakably +EV. If it confirms to the downside I may add again.... go big or go home right. It wouldn't be unexpected for the pair to go up and bump that 1.625 to 1.630 ceiling a bit, but I highly doubt we will break through it entirely. The longer this pair remains directionless, the more I believe it will begin to favor the downside as we approach further tapering expectations from the fed and more accommodating banking policies from the BoE and a maintained asset purchase program.
What about the other fundamental drivers you say?? Take your NFP number and your quarterly GDP and throw them in the toilet. These numbers cause market reactions only because they have influence over the fed's monetary policy.... but these numbers are manipulated and watered down at best. Fed policy is all that matters right now.... Imagine an old rope that has been taped back together so many times that none of the original rope exists anymore, only tape. The tape is the feds monetary policy, its been forced into a corner and only has one way that it can go.
Wednesday, October 23, 2013
Evaluating Bitcoin as a bubble, investment, and payment system.
Where to start. Lets start with the bitcoin as a form of currency. Fitting adjectives to use to describe bitcoin as a currency are fiat and decentralized. Bitcoin has no intrinsic value, however it does cost a small amount in energy costs to mine a bitcoin. The argument that this in itself gives the currency value or that the value should be based upon this is fools logic. Bitcoin's value is derived from confidence like any fiat currency, and thus bitcoin hardly fits the traditional Austrian value of "money".
So if bitcoin has no intrinsic value, does that automatically make it a bubble? To be technical (per definition), its a yes..... but an argument can be made that its value is relatively sustainable and thus it seems to fall in a slightly more gray area than more obvious bubbles (US treasury bonds). Besides, let me remind you that bubbles can form and build successfully over hundreds of years.
This brings me to bitcoin as an investment. As with all assets with no real intrinsic value there's a bit of risk involved with investing in bitcoin. More risk than certain high profile tech equities with little to no liquidation value? Maybe, but its all very tricky to evaluate when you get into the realms of zero intrinsic value and positive expected growth. First and foremost I would always recommend investments in things like physical silver, gold, commodities and fundamentally sound companies/bonds. That being said, the bitcoin train shows no sign of slowing and offers some great risk/reward opportunities for investors, and even more for businesses and consumers.
As a currency, or medium of exchange, it has many benefits that make it attractive in comparison to traditional centralized fiat currencies. It's instantaneous, relatively anonymous, and cannot be controlled by any one entity making it largely corruption proof. This is a huge advantage over traditional fiat currencies and one can largely contribute bitcoin's success to the combination of those three factors.
In summation,
Bubble? Yes.
Bullish? Yes.
This may be contradictory, but the bottom line is that the demand for bitcoin as both an investment and payment system is hard to argue with. I think this bubble has a very long way to go before dropping dead.
So if bitcoin has no intrinsic value, does that automatically make it a bubble? To be technical (per definition), its a yes..... but an argument can be made that its value is relatively sustainable and thus it seems to fall in a slightly more gray area than more obvious bubbles (US treasury bonds). Besides, let me remind you that bubbles can form and build successfully over hundreds of years.
This brings me to bitcoin as an investment. As with all assets with no real intrinsic value there's a bit of risk involved with investing in bitcoin. More risk than certain high profile tech equities with little to no liquidation value? Maybe, but its all very tricky to evaluate when you get into the realms of zero intrinsic value and positive expected growth. First and foremost I would always recommend investments in things like physical silver, gold, commodities and fundamentally sound companies/bonds. That being said, the bitcoin train shows no sign of slowing and offers some great risk/reward opportunities for investors, and even more for businesses and consumers.
As a currency, or medium of exchange, it has many benefits that make it attractive in comparison to traditional centralized fiat currencies. It's instantaneous, relatively anonymous, and cannot be controlled by any one entity making it largely corruption proof. This is a huge advantage over traditional fiat currencies and one can largely contribute bitcoin's success to the combination of those three factors.
In summation,
Bubble? Yes.
Bullish? Yes.
This may be contradictory, but the bottom line is that the demand for bitcoin as both an investment and payment system is hard to argue with. I think this bubble has a very long way to go before dropping dead.
Monday, October 21, 2013
FX Updates
Its been a while, but not much has changed on my front. I'm still short GBP/USD (though this trade is becoming quite a bit "out of the money"). Looking to be long USD/JPY at next dip.
The debt ceiling debacle and latest fed chair news has got dollar weakness running rampant. This is to be completely expected. If i've said it once i've said it 1000 times:
The "debt ceiling" is arbitrary and will be continuously raised until the collapse of the dollar.
There is no recovery.
It is impossible to end QE at this point (not impossible to taper.... but we will soon see that the economy will require more and more QE to function at desirable levels.)
Despite all this, I remain on the side of dollar strength over the next year because I believe we will attempt the taper, and lets face it, many of our friends across the pond are frankly even more irresponsible than us.
The debt ceiling debacle and latest fed chair news has got dollar weakness running rampant. This is to be completely expected. If i've said it once i've said it 1000 times:
The "debt ceiling" is arbitrary and will be continuously raised until the collapse of the dollar.
There is no recovery.
It is impossible to end QE at this point (not impossible to taper.... but we will soon see that the economy will require more and more QE to function at desirable levels.)
Despite all this, I remain on the side of dollar strength over the next year because I believe we will attempt the taper, and lets face it, many of our friends across the pond are frankly even more irresponsible than us.
Wednesday, September 11, 2013
Updates ILS, AUD, GBP, EUR
I'm back from vacation and i've been fortunate enough to close out both my Australian dollar and ILS positions well into the money. While i've been gone it seems a large dollar weakness frenzy has begun to take hold of the markets. In the past couple of days I have been building positions short EUR and GBP against the dollar. This has been a futile effort thus far as the political environment seems to be driving massive dollar weakness, and we are testing strong levels of resistance. I've added enough to these positions and I refuse to either flip directions or cut losses. These currencies are fundamentally weak and borderline overbought.
That being said, there's a fed meeting next week.... so i'll probably either sell out or hedge some of my positions over that time period to avoid the chaos.
That being said, there's a fed meeting next week.... so i'll probably either sell out or hedge some of my positions over that time period to avoid the chaos.
Wednesday, August 28, 2013
ILS fundamental outlook
The Israeli Sheqel is a currency I've largely dismissed and ignored since well.... forever. I can't think of a time where I thought trading this currency was a good idea. However the game has changed. Bank of Israel intervention in May to devaluate at certain levels of strength is a very significant occurrence, essentially creating a risk-free floor around 3.5 USD/ILS that the currency cannot go under. This is very EUR/CHF reminiscent. The interventionist banker is the friend of those who understand its consequences. Logically, the opportunity lies in buying long USD/ILS as it approaches the floor rate. Previous downward momentum and demand will likely continue to push it back into the floor, so for the time being i'll only be buying into large dips. I'm a couple weeks late to the game, so i've missed some great opportunities here and I have to hope for another dip towards the floor rate of 3.5 in the near future.
On top of the "floor", it seems the Bank of Israel is likely to adopt a more western or mainstream approach to monetary policy. There's a lot of turmoil in the area, and it is probably safe to say that the economy is worse off than it is here or in much of Europe. The new monetary approach is what will ultimately drive the upside to this trade and possibly eliminate my buying opportunities in the near future. In an optimal scenario, the fed will delay the taper (or taper by less than expected), driving the dollar lower and i'll be able to enter long USDILS around 3.54. The scenario isn't too much of a long shot, we'll see if it plays out.
On top of the "floor", it seems the Bank of Israel is likely to adopt a more western or mainstream approach to monetary policy. There's a lot of turmoil in the area, and it is probably safe to say that the economy is worse off than it is here or in much of Europe. The new monetary approach is what will ultimately drive the upside to this trade and possibly eliminate my buying opportunities in the near future. In an optimal scenario, the fed will delay the taper (or taper by less than expected), driving the dollar lower and i'll be able to enter long USDILS around 3.54. The scenario isn't too much of a long shot, we'll see if it plays out.
Update 8/28 and Monthly summary
AU continuing to flirt with lows... I added to the position long around 0.90, and continue to look for some kind of reversal as we approach the RBA rate decision next tuesday and the Fed meeting in mid september. I expect both of these meetings to "shock" the market in the sense that I do not expect what is mostly priced in will take place (taper of dollar, rate cut of AUD). I will hold my position, it is rather large now and i will not add to it anymore. Rather I will wait for the rate decisions and act accordingly.
I've closed my short NZDUSD position well into the money and opened short EURUSD which seems to be topping out.
I don't plan on closing too many more trades before next week so I will post monthly results now. As is evident, I've had a rather rough month in AUD... while looking for a move lower i was frequently stopped out, eventually missed the break lower, and then when looking for a bullish rebound it continued to push lower giving me further losses. This aside it would have been a great month. The month is net loss of $596, and I have some additional unrealized losses in AUDUSD sitting open in my account... but those will likely have to wait until next months statement.
I've closed my short NZDUSD position well into the money and opened short EURUSD which seems to be topping out.
I don't plan on closing too many more trades before next week so I will post monthly results now. As is evident, I've had a rather rough month in AUD... while looking for a move lower i was frequently stopped out, eventually missed the break lower, and then when looking for a bullish rebound it continued to push lower giving me further losses. This aside it would have been a great month. The month is net loss of $596, and I have some additional unrealized losses in AUDUSD sitting open in my account... but those will likely have to wait until next months statement.
| Symbol | Volume | Date | Sold | Bought | Net P/L | Condition |
| USD/CAD | 100,000 | 7/31/2013 16:25 | 1.02764 | Mkt | ||
| 8/9/2013 12:45 | 1.02789 | -7.58 | SE | |||
| AUD/USD | 60,000 | 7/31/2013 20:00 | 0.89530 | LE | ||
| 8/2/2013 8:30 | 0.89473 | 29.16 | SE | |||
| GBP/USD | 40,000 | 8/1/2013 9:34 | 1.52003 | Mkt | ||
| 8/1/2013 10:00 | 1.51497 | -202.40 | SE | |||
| GBP/USD | 50,000 | 8/1/2013 10:16 | 1.51429 | SE | ||
| 8/2/2013 8:30 | 1.52220 | -396.40 | SE | |||
| EUR/USD | 50,000 | 8/5/2013 7:56 | 1.32624 | SE | ||
| 8/8/2013 10:11 | 1.33891 | -633.25 | SE | |||
| AUD/USD | 60,000 | 8/5/2013 10:34 | 0.89101 | LE | ||
| 8/6/2013 0:53 | 0.89752 | -395.28 | SE | |||
| GBP/USD | 40,000 | 8/5/2013 19:49 | 1.53490 | LE | ||
| 8/6/2013 4:30 | 1.53921 | -172.40 | SE | |||
| EUR/USD | 30,000 | 8/6/2013 7:18 | 1.32746 | Mkt | ||
| 8/14/2013 2:00 | 1.32824 | -23.16 | SE | |||
| USD/JPY | 60,000 | 8/6/2013 7:20 | 98.114 | Mkt | ||
| 8/6/2013 8:30 | 98.154 | 24.45 | Mkt | |||
| AUD/USD | 40,000 | 8/6/2013 8:27 | 0.89692 | Mkt | ||
| 8/7/2013 13:31 | 0.89933 | 97.88 | Mkt | |||
| USD/JPY | 50,000 | 8/6/2013 8:32 | 98.151 | Mkt | ||
| 8/6/2013 15:45 | 97.722 | 219.50 | Mkt | |||
| GBP/USD | 30,000 | 8/6/2013 8:44 | 1.53503 | Mkt | ||
| 8/6/2013 21:04 | 1.53200 | -90.63 | SE | |||
| AUD/JPY | 70,000 | 8/7/2013 13:34 | 86.856 | SE | ||
| 8/8/2013 15:33 | 88.171 | -968.56 | SE | |||
| USD/JPY | 60,000 | 8/8/2013 7:42 | 96.312 | Mkt | ||
| 8/8/2013 15:13 | 96.569 | -159.68 | Mkt | |||
| USD/JPY | 90,000 | 8/8/2013 15:13 | 96.570 | Mkt | ||
| 8/8/2013 17:11 | 96.683 | 105.28 | Mkt | |||
| AUD/JPY | 20,000 | 8/9/2013 10:34 | 88.520 | Mkt | ||
| 8/11/2013 19:50 | 88.192 | -67.57 | SE | |||
| GBP/USD | 10,000 | 8/9/2013 11:17 | 1.55090 | Mkt | ||
| 8/12/2013 1:18 | 1.54899 | 18.92 | LE | |||
| EUR/JPY | 10,000 | 8/9/2013 11:18 | 128.562 | Mkt | ||
| 8/9/2013 11:26 | 128.358 | 21.21 | LE | |||
| EUR/CHF | 10,000 | 8/9/2013 12:10 | 1.23004 | Mkt | ||
| 8/9/2013 12:32 | 1.23074 | -7.59 | SE | |||
| USD/CAD | 100,000 | 8/12/2013 1:22 | 1.02915 | Mkt | ||
| 8/12/2013 11:40 | 1.02989 | 71.85 | Mkt | |||
| USD/JPY | 40,000 | 8/12/2013 7:24 | 96.764 | Mkt | ||
| 8/12/2013 17:18 | 96.888 | 51.23 | Mkt | |||
| EUR/USD | 30,000 | 8/12/2013 7:26 | 1.32921 | Mkt | ||
| 8/14/2013 2:00 | 1.32824 | 29.16 | SE | |||
| AUD/USD | 40,000 | 8/12/2013 7:30 | 0.91659 | Mkt | ||
| 8/12/2013 11:38 | 0.91740 | -32.40 | Mkt | |||
| GBP/USD | 50,000 | 8/12/2013 11:37 | 1.54780 | LE | ||
| 8/13/2013 4:29 | 1.54428 | -175.55 | SE | |||
| AUD/USD | 60,000 | 8/12/2013 11:39 | 0.91727 | Mkt | ||
| 8/12/2013 18:23 | 0.91248 | -285.42 | SE | |||
| USD/JPY | 80,000 | 8/12/2013 17:18 | 96.888 | Mkt | ||
| 8/12/2013 17:46 | 97.046 | -130.25 | SE | |||
| USD/JPY | 60,000 | 8/12/2013 19:41 | 97.285 | Mkt | ||
| 8/13/2013 7:38 | 98.029 | 455.38 | Mkt | |||
| EUR/JPY | 50,000 | 8/13/2013 7:42 | 130.271 | SE | ||
| 8/13/2013 13:26 | 130.266 | 2.54 | SE | |||
| EUR/JPY | 40,000 | 8/13/2013 15:27 | 130.190 | LE | ||
| 8/13/2013 18:27 | 130.385 | -79.47 | SE | |||
| NZD/USD | 70,000 | 8/13/2013 21:16 | 0.79594 | Mkt | ||
| 8/14/2013 6:26 | 0.80103 | -356.30 | SE | |||
| EUR/JPY | 50,000 | 8/14/2013 0:21 | 129.872 | Mkt | ||
| 8/14/2013 1:35 | 130.512 | -325.22 | SE | |||
| AUD/USD | 50,000 | 8/14/2013 7:58 | 0.91198 | Mkt | ||
| 8/15/2013 9:56 | 0.90818 | -184.15 | SE | |||
| GBP/USD | 40,000 | 8/14/2013 7:59 | 1.54964 | Mkt | ||
| 8/14/2013 9:00 | 1.55050 | 34.40 | Mkt | |||
| EUR/USD | 50,000 | 8/14/2013 10:55 | 1.32700 | Mkt | ||
| 8/15/2013 8:30 | 1.32707 | 2.75 | SE | |||
| AUD/NZD | 40,000 | 8/14/2013 18:32 | 1.13499 | LE | ||
| 8/15/2013 10:34 | 1.13100 | -128.11 | SE | |||
| GBP/USD | 50,000 | 8/15/2013 4:30 | 1.55621 | LE | ||
| 8/15/2013 4:30 | 1.55826 | -102.50 | SE | |||
| GBP/USD | 30,000 | 8/15/2013 8:53 | 1.55356 | SE | ||
| 8/16/2013 8:35 | 1.56552 | -359.34 | SE | |||
| GBP/USD | 10,000 | 8/15/2013 8:53 | 1.55356 | SE | ||
| 8/27/2013 21:07 | 1.55382 | -4.58 | Mkt | |||
| AUD/USD | 30,000 | 8/15/2013 11:24 | 0.90895 | Mkt | ||
| 8/16/2013 7:50 | 0.91698 | 242.07 | Mkt | |||
| AUD/USD | 20,000 | 8/15/2013 11:24 | 0.90895 | Mkt | ||
| 8/27/2013 21:07 | 0.89475 | -275.42 | Mkt | |||
| USD/CAD | 30,000 | 8/15/2013 21:02 | 1.03000 | LE | ||
| 8/23/2013 14:05 | 1.05136 | 603.41 | Mkt | |||
| USD/CAD | 30,000 | 8/15/2013 21:02 | 1.03000 | LE | ||
| 8/27/2013 21:03 | 1.04858 | 522.88 | Mkt | |||
| GBP/USD | 10,000 | 8/15/2013 23:05 | 1.56306 | Mkt | ||
| 8/27/2013 21:07 | 1.55382 | 90.60 | Mkt | |||
| NZD/USD | 40,000 | 8/16/2013 11:40 | 0.81271 | LE | ||
| 8/23/2013 14:05 | 0.78158 | 1,225.40 | Mkt | |||
| NZD/USD | 40,000 | 8/16/2013 11:40 | 0.81271 | LE | ||
| 8/27/2013 20:59 | 0.77797 | 1,362.24 | Mkt | |||
| EUR/USD | 70,000 | 8/20/2013 6:30 | 1.34004 | LE | ||
| 8/20/2013 9:39 | 1.34503 | -349.30 | SE | |||
| USD/JPY | 40,000 | 8/27/2013 13:48 | 97.133 | SE | ||
| 8/28/2013 7:27 | 97.390 | 105.59 | Mkt | |||
| -596.61 | ||||||
Wednesday, August 21, 2013
Fed Minutes, GBP
Fed comes out with minutes today, I expect them to be quite boring. Aka, I expect no hint that they will not taper.... which still (and quite possibly inaccurately) seems to the slight belief bias driving dollar based action right now. Technically and fundamentally I expect USD to continue on a strength kick until we approach the next Fed rate decision in which we will either unwind taper expectations or exacerbate them. As far as the GBP goes, it keeps inching higher slowly carving out new tops in the 1.56 and 1.57 (while the euro is acting similar around 1.34). I do hold a small GBP position short still.... its quite a bit out of the money right now...but the current price action is setting up for a great short opportunity. Euro already seems to be coming into some significant resistance. 1.345-1.36 represent strong resistance and i'm looking to sell into 1.35 if we can make it there. GBP is moving up towards June highs at 1.575, an area where I will be looking to add to my short. The run up in GBP strength has been great fun and all.... but at some point we need to start pricing in the next step up in QE, its due (see my previous post for a bit more explanation on that).
Meanwhile the AUD/USD is screaming lower. My entry long in this pair could have been a lot better, and i'm paying the price for it. I was astute enough catch NZDUSD at obvious technical highs (a fundamentally overbought currency with large potential downside).... and its negative run has been offsetting my AUD losses. However, I do expect the AUD to move towards strength here at some point despite USD action. Both my AUD and NZD positions are "full sized", though i'm definitely not afraid to add if I feel the opportunity presents itself. We are at good or close to good technical setups favoring the fundamental direction in a variety of currencies, so late august is looking to be full of opportunity.
FWIW.... My "fundamental" direction on some major currency pairs. We'll see where this is in a few months.
EURUSD...Bear
GBPUSD...Bear
AUDUSD...Bull
NZDUSD...Bear
USDJPY....Bull
USDCAD....Bull
As you may be able to tell, most of this is USD driven with the exception of AUDUSD right now. This makes the trade a good "hedge" against my other positions during dollar event risk which is all too frequent, and the root of all evil.
Also, current open trades:
long AU, short NU, long UC, short GU
Meanwhile the AUD/USD is screaming lower. My entry long in this pair could have been a lot better, and i'm paying the price for it. I was astute enough catch NZDUSD at obvious technical highs (a fundamentally overbought currency with large potential downside).... and its negative run has been offsetting my AUD losses. However, I do expect the AUD to move towards strength here at some point despite USD action. Both my AUD and NZD positions are "full sized", though i'm definitely not afraid to add if I feel the opportunity presents itself. We are at good or close to good technical setups favoring the fundamental direction in a variety of currencies, so late august is looking to be full of opportunity.
FWIW.... My "fundamental" direction on some major currency pairs. We'll see where this is in a few months.
EURUSD...Bear
GBPUSD...Bear
AUDUSD...Bull
NZDUSD...Bear
USDJPY....Bull
USDCAD....Bull
As you may be able to tell, most of this is USD driven with the exception of AUDUSD right now. This makes the trade a good "hedge" against my other positions during dollar event risk which is all too frequent, and the root of all evil.
Also, current open trades:
long AU, short NU, long UC, short GU
Thursday, August 15, 2013
GBP
I refuse to believe that the pound is has a bullish outlook relative to the dollar. They have introduced forward guidance, maintained an asset purchase program, maintained an inflation target of 2%, and maintained low interest rates... all very similar to the fed. They have set very specific level of 7% unemployment as a threshold for a positive change in the interest rates, and while they won't break this threshold anytime soon, it puts additional focus on the jobs number. The linchpin to the GBP strength and British economy is the assumption that the policies enacted will lower the unemployment rate. This unfortunately is not a valid assumption. Here's the unemployment chart straight from the BoE:
Interest rates were last lowered in 2009 while the employment rate was still blasting higher. Since that time BoE has been in a rather consistent asset purchasing program that has gone up throughout the years from approximately 125 billion in 2009 to 375 billion today in 2013. GDP is not growing at a particularly effective rate, and without QE it would be quite negative. Inflation is already running a bit over target at up to 2.5%... which brings me to the question of the day: How would the BoE respond to both high inflation and high unemployment? They are currently running both over the inflation target and over the unemployment target.....Do they have a "tool" in their toolbox for that? The realistic answer is obviously no, and the worst of two evils will be dealt with. From the government perspective, from the voter majority perspective, and from the government-appointed BoE chair, the worst evil is certainly going to be the unemployment rate. The economic rules, theories, and strategies to combat such a program fall in line with raising the scale of what they are currently doing. The decision process to QE is even self correcting.... if the BoE ever decides to "taper" it will have an absolutely direct effect on government borrowing and thus have a direct effect on government supplied jobs. This has a very instantaneous effect on the job numbers.... which will drive BoE to opt for further QE despite inflation because of the severity of unemployment. BoE is going to hit this cliff before the Fed. The dollar as a safe haven stands to benefit from the economic disparity in England, the GBP stands to devalue as it embarques on more QE or as general economic conditions of the world grow worse and people flee to the dollar.
FX or Casino?
Recent event risk has gotten the better of a lot of my positions, hitting stops and bouncing back. I entered long AUDUSD and short GBPUSD. Smallish positions, wide stops... As was the plan in previous posts, i'm looking to short EUR/USD and add to GBP/USD on runs higher.
Thursday, August 8, 2013
EURUSD
Bad 8 hours for all of my positions, half my euro position actually got stopped out.... I'll let it blow some steam and hopefully i'll get the opportunity to add to the position around 1.34-1.35
Wednesday, August 7, 2013
Current Fed Predictions
Taper vs no Taper, Yellen vs Summers vs whoever.... everyone seems to be hung up on this. I do not believe that the market can withstand the so-called taper nor do I think it will happen in September. It is clear that tapering isn't something that is on Bernanke's agenda, and I frankly just don't think hes prepared to do it just yet with the CPI where it is. I also predict that Summers will take the Fed position over Yellen or anyone else. I think this because I do not believe Obama has the economic insight to know the extent in which the Fed drives the market.
Now Where Was I...
USDCAD long and EURUSD short still active. The former well into the money (not quite at my targets) and the latter pushing me in the red towards that 1.34 level. I will not be closing out the EU trade lightly, I am willing to take losses and even add to my position as long as we don't continue and break above the 1.342 swing high from June. Fundamentally EURUSD should be pushing lower, and we are at/near technical resistance levels. I'm looking at these trades with a 3-5 week kind of time frame. I don't fancy holding these through September and getting shell-shocked if the Fed decides not to taper. While the general consensus is that the Fed will taper... I believe the actual decision is very much still up in the air. That being said, i'm currently positioned to favor pro-taper sentiment and rumors, so bring the fire. I've also opened a short AUDJPY position.... something I really should have been in a bit more since early 2013... its the ultimate "we are going to hell" bet, and if we get a taper driven panic i'll be ecstatic. Some people just want to watch the world burn... because well.... it seems logical that it would happen.
Those are the only positions I have opened right now, I don't recall what happened with some of the previous trades that I never mentioned closing, but it will all be detailed in my monthly results.
Those are the only positions I have opened right now, I don't recall what happened with some of the previous trades that I never mentioned closing, but it will all be detailed in my monthly results.
Monday, August 5, 2013
Price Stability
Inflation, as calculated by government from the 51 year period before leaving the gold standard completely (we devalued a number of times against it during this period as the buying power may reflect), and below it, the 42 years we've spent off the gold standard. Charts are calculating buying power X number of years later. Which one better represents "price stability", and who are the benefactors and losers in each case?
Random Commentary
Summing up my open positions right now: AU short from .891, currently +6 pips, EU short from 1.3262 currently +4 pips, and USDCAD long from 1.0276, currently +93 pips. I look to hold all of these through the aussie rate decision. I'll tighten up my stop losses such that unexpected hawkish news from the RBA won't destroy the positions.
*Note: My longer term outlook on AU is certaintly bullish. I certainly do not intend to hold this position for a long period of time. I'm merely looking to ride this trend down into what I believe is a certain outcome from the RBA. On a risk/reward or EV basis, it seems to be easily +EV.
In other news, China recently made a comment about wanting to hold another "bretton woods" conference to discuss and push for redefining the reserve currency. I don't blame them. The events since the last bretton woods conference have been a farce. The USD was backed by gold, and was originally made a reserve currency with that in mind. Every other word currency was de-facto backed by gold because they were exchangeable for USD. In 1971-1976, we removed ourselves from that gold standard, giving the world's currencies a big "f-you". The joke is that we almost single handedly removed every currency of the world from the gold standard and replaced it with a "dollar standard" based on money that we can print at will. We got largely got away with this heist without serious consequences from other nations.
*Note: My longer term outlook on AU is certaintly bullish. I certainly do not intend to hold this position for a long period of time. I'm merely looking to ride this trend down into what I believe is a certain outcome from the RBA. On a risk/reward or EV basis, it seems to be easily +EV.
In other news, China recently made a comment about wanting to hold another "bretton woods" conference to discuss and push for redefining the reserve currency. I don't blame them. The events since the last bretton woods conference have been a farce. The USD was backed by gold, and was originally made a reserve currency with that in mind. Every other word currency was de-facto backed by gold because they were exchangeable for USD. In 1971-1976, we removed ourselves from that gold standard, giving the world's currencies a big "f-you". The joke is that we almost single handedly removed every currency of the world from the gold standard and replaced it with a "dollar standard" based on money that we can print at will. We got largely got away with this heist without serious consequences from other nations.
TGIMonday
Holding Long #USDCAD, pending short AUDUSD. RBA cut looks all but certain and its mostly priced in, and I expect this pair to continue trending to the downside.
Wednesday, July 31, 2013
Long USD/CAD
Opened long USD/CAD as we clear the FOMC and prices bump the bottom of long term daily chart channel. I remain convinced that what the ECB does tomorrow will be bullish USD, or at any rate not dollar-negative enough to push this below the strong technical support. I look for this to be longer term position, targeting levels 300+ pips to the upside.
July Results
July has come and gone. I didn't have as much trading volume as normal as market conditions were largely volatile and in states of consolidation. My most successful trades of the month were with USD/CHF (+$1893), and least successful were in EUR/JPY (-$1686). Net positive $1,106 for the month. While i'm not entirely satisfied with this result, the month largely lacked significant trading opportunities. Full results detailed below. For a fun fact, the volume sum, or sum of dollars exchanged back and forth in the market to fill my trades totaled $1,950,000 for the month. Current account value $12,180
| Symbol | Volume | Sold | Bought | Net P/L |
| EUR/JPY | 50,000 | 127.919 | ||
| 130.050 | -1,069.62 | |||
| EUR/JPY | 30,000 | 128.001 | ||
| 130.050 | -617.08 | |||
| USD/CHF | 90,000 | 0.94424 | ||
| 0.94610 | 179.64 | |||
| USD/CHF | 70,000 | 0.94720 | ||
| 0.96559 | 1,333.87 | |||
| USD/CHF | 20,000 | 0.94720 | ||
| 0.96553 | 379.89 | |||
| EUR/USD | 50,000 | 1.30156 | ||
| 1.28497 | 829.60 | |||
| USD/JPY | 100,000 | 101.134 | ||
| 100.917 | -215.03 | |||
| AUD/USD | 80,000 | 0.91181 | ||
| 0.91330 | 119.20 | |||
| USD/JPY | 80,000 | 101.200 | ||
| 99.594 | 1,288.44 | |||
| AUD/NZD | 40,000 | 1.17186 | ||
| 1.16498 | -218.16 | |||
| EUR/USD | 100,000 | 1.29992 | ||
| 1.30503 | -511.00 | |||
| GBP/JPY | 50,000 | 150.224 | ||
| 150.693 | -236.11 | |||
| GBP/USD | 50,000 | 1.50934 | ||
| 1.50914 | 9.40 | |||
| GBP/USD | 50,000 | 1.52113 | ||
| 1.52112 | 0.50 | |||
| USD/JPY | 80,000 | 100.461 | ||
| 100.702 | -191.78 | |||
| EUR/CHF | 50,000 | 1.23835 | ||
| 1.23594 | 127.71 | |||
| AUD/NZD | 50,000 | 1.16010 | ||
| 1.15698 | -124.32 | |||
| GBP/USD | 80,000 | 1.52629 | ||
| 1.53299 | 536.48 | |||
| EUR/JPY | 80,000 | 131.709 | ||
| 131.529 | 143.95 | |||
| GBP/USD | 40,000 | 1.53320 | ||
| 1.53158 | 64.08 | |||
| AUD/USD | 50,000 | 0.92494 | ||
| 0.91313 | -588.50 | |||
| AUD/NZD | 100,000 | 1.15470 | ||
| 1.14963 | -407.42 | |||
| EUR/USD | 80,000 | 1.32221 | ||
| 1.32501 | -224.00 | |||
| AUD/USD | 80,000 | 0.92244 | ||
| 0.92494 | 203.20 | |||
| USD/JPY | 80,000 | 99.289 | ||
| 98.900 | -314.66 | |||
| AUD/USD | 80,000 | 0.92591 | ||
| 0.92582 | 7.20 | |||
| EUR/CAD | 70,000 | 1.36456 | ||
| 1.36455 | 2.01 | |||
| GBP/USD | 30,000 | 1.53444 | ||
| 1.53443 | -0.24 | |||
| NZD/USD | 60,000 | 0.79900 | ||
| 0.79899 | -4.08 | |||
| USD/JPY | 80,000 | 97.599 | ||
| 98.341 | 603.61 | |||
| Total: | 1106.78 |
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