Tag Archives: ECB

Market Sentiment Like We’ve “Never” Seen It

In 1985 I graduated High School, in what at the time, I considered the sticks. In truth suburban Cincinnati wasn’t so far from London, New York, or Paris. Ask Nolwenn Leroy, all types of interesting people pass through Cincinnati.

Me

I’ve found myself in the sticks again, I’ve left Paris for some fresh air and space. I’ve moved to a charming valley, called the Vallée de l’Eure. This change after living in Cincinnati, New York, London, and Paris is refreshing, and exciting. The trading strategies I employ have nothing to do with the stress and noise of Paris, I’m hoping to be more effective here. For those of you who have followed this blog, you’ve seen what’s probably a classic novice trader’s chemin. My interests over the last year have focused on index futures, and option hedges. This year I’ll continue with these products.

A lot has been happening since I last spent a few hours ranting here on Brandnet and I have so many ideas bouncing around in my head that this first post of March risks being incomprehensible, beware.

Here are some of the contradictions that get me thinking:

  • Europe, and it’s place in the world economy – for that matter in my economy…
    • Italy and it’s comedy, specifically
  • Youth, Unemployment, Ambition
    • Subway
  • The media’s handling of politics and the economy
  • Bitcoin, Wealth, distribution
  • Market tempered euphoria
  • Trading strategy

Admittedly the white smoke, the pope, and the historic deconstruction of how Francis will move on 4 wheels takes a certain effort to avoid, but this too will pass, as Vatican punditry fades.

2Paragraphs has a refreshing perspective.

Dow_EURUSDStarting with Europe’s Spring head fake, Europe still hasn’t paid the piper. My last post, Will Europe Find Center Stage (Again)? rings true, still. The economic numbers continue to disappoint and the European markets continue to levitate, following the US markets to recent highs. Ten straight now. The flagrant disconnect in the EURUSD defies logic. Manipulation? Obviously. This divergence is tradeable, but when? You would expect euphoria, and all you sense is apathy, as if the smart money is dumb, and the dumb money is in hibernation.

The founder of Subway, Fred Deluca claims regulation would prohibit the creation of Subway if he tried to start-up today. The spin around this story, puts me in papal avoidance mode, yet the premise strikes a chord. I’m reminded of a grandparent saying how hard they had life, wearing that struggle as a badge of honor. That tale is turned on its head today. In fact life was easy for our Grandparents, or so we’re told. Ambitious youth, educated and indebted face an increasingly difficult journey.

Yet if you compare American youth to their Italian, Spanish, Greek, French and Portuguese brethren who live with nearly insurmountable under employment (though less debt), I have to ask where and when the social impact of this horror will appear on the nightly news. What would our Grandparents say? Or what should we say to our Grandparents?

The EURUSD chart above reflects a manipulated market and a manipulated currency. The ECB and the Federal Reserve are responsable, politicians are complicit, and many argue fully justified. Yet, since we left the gold standard for a fiat currency, currency manipulation, QE or whatever lever central banks choose to employ, is fully accepted as prudent economic theory. The gold standard debate is a can of worms, lets avoid it. But PhD’s assert sans fin, the brilliance behind financial structure, and the strategies employed to manage employment and inflation. That alone raises questions. The simple idea that currency shouldn’t be manipulated by central banks is a powerful idea. Simple = Smart?

Bitcoin is constantly catching my attention, I’m trying to grasp the disruptive potential. I absolutely love the pitch, but struggle to grasp the reality. A recent ‘bug’ caused major stress in the bitcoin market. (here) On the other hand, Argentina’s capital controls are a boon to bitcoin… This  just gets more interesting. My personal experience so far is limited and a ‘wallet’ that just never seems to be synchronised. It’s going to take some work to understand the utility, but the fact that we can buy cupcakes, and trade bitcoin as a unmanipulated currency keeps my attention. (One of my recent posts on Bitcoin.)

Good Trading.

Pre-Market Indicators - PMI050912

Pre-Market Indicators September 5th, 2012

Good Morning NY,

Solidly red this morning but feeling flat. ECB Thursday and  Eurozone spin is ON. Even silver is taking a breather.

  • EURUSD (1.2540)  0.18%
  • Gold Futures (GC)   0.20%
  • Oil Futures(CL)  0.40%
  • S&P Futures (ES)   0.28%
  • CAC40 – 0.21% 
  • FTSE  0.28%
  • Asia (NKD)  1.48%
  • Copper Futures (HG) – 0.20%
  • Silver Futures (SI)  0.93%
  • Gold Futures (GC)  0.22%
  • VIX: Close 17.98

Continue reading

Pre-Draghi Post-Draghi

This is irressistable and an ironic reflection of the last pre-draghi post-draghi conference (here) where he would do ‘whatever it takes to save the Euro’.

“My remarks in London Weren’t Misinterpreted”. Really?

  • EURUSD (1.2284) + 0.47% -> -0.27%
  • Gold Futures (GC) still holding over 1600 ($1602.60)  0.07%  -> – 0.37% and falls under $1600
  • Oil Futures(CL) + 0.28% -> – 1.83%
  • S&P Futures (ES) + 0.29% -> – 0.97%
  • CAC40 + 0.11% -> – 2.18% 
  • FTSE + 0.37% -> – 0.84%
  • Asia: (NKD)  0.29% -> – 1.50%
  • Corn Futures (ZC) – 0.22% -> – 1.37%
From Green to Red…

Closing Clues for the Opening Zeal

I noted the surprising strength into the closing yesterday with surprise. No news was good news, but I’d expected a tail off towards the end of day, which never came. London has been closed for the last 2 days traders have come back to work today, and I think this plays into the early enthusiasm. No market moving headline news has come across the wire.

Europe is waiting for ECB news at 12:45 GMT. There’s also some potential market moving indicators at 8:30 EST ( Productivity Rev.) and the Fed’s Beige Book at 14:00 EST.

Assumptions:

  • We’re at the 50% fib levels on this bounce, so it’s a breakout or breakdown period. I’ll have to pick a camp and/or look at vol trades.

Plan:

  • Add some June 129 Puts after the opening vol fades.
  • Watch the June 125 Puts for a short entry. Will there be an ECB effect?
  • Looking for $2.36 on Natural Gas $QG_F
  • Reassess strategy if $ES_F starts passing 1306.

Truth:

  • Spin has a half-life

SMP – Securities Markets Programme

Managed by the ECB, the SMP is defined as follows (link):

Interventions by the Eurosystem in public and private debt securities markets in the euro area to ensure depth and liquidity in those market segments that are dysfunctional. The objective is to restore an appropriate monetary policy transmission mechanism, and thus the effective conduct of monetary policy oriented towards price stability in the medium term. The impact of these interventions is sterilised through specific operations to re-absorb the liquidity injected and thereby ensure that the monetary policy stance is not affected.

Missed Trade

Suffering from a lack of inspiration and a little voice in my head which says: “Don’t trade today, don’t trade today, Monday’s aren’t good for you…”

So I’m analyzing the short $ES_F trade I didn’t make but thought about making. Here it is, I’ve circled it. My targets were well placed, and I still ignored it. “Don’t trade today, don’t trade today…”

S&P Futures

The headline effects were limited with nothing on the calendar in the US. Only fear and loathing here in Europe, so the set up was perfect.

Here’s a quote I like from ZH this afternoon. (You can find the full piece here.)

For the moment we appear to be in limbo, where stocks and other risk assets will rally no matter what?  The view seems to be that if European sovereign debt improves, then risk will do well.  There is little fear right now, as the assumption is that if sovereign debt does poorly, Germany will relent and the ECB will officially begin printing money (we say officially, because it is getting harder and harder to believe they are truly “sterilizing” their purchase in a true market neutral fashion). So that seems to be the idea out there, be long risk because if Europe improves, you will win, and if Europe gets worse, it will print, and you will win.  That just doesn’t make sense to us, as we think Germany is further from capitulating on printing than the market seems to have priced in.

ECB Pomp n Circus Stances

Welcome to a schizophrenic morning. The headline moves in the market today are being put in place this very minute and the future is spoken by only one of the many little foggy voices whispering in my head this morning. I picked him out on the $ES_F early than stopped him out for no good reason! Again…

[update] As I look at the close now, I’m reminded of Harry Potter’s House-elf, Dobby.

Fighting for top-spot is Mr. George Papandreou who after offering to resign, has just finished lunch in Cannes and is running back to Athens for an emergency cabinet meeting. The popular (and unpopular) press is waiting for the news conference. I think the BBC was the first to report this little twist.

At the same time and fully ignored were the initial claims numbers which came in under 400k. Relatively good news but the running soap opera that is the G20 has all but hijacked the positive earnings and unemployment numbers.

Another contendor is Mario Draghi (Super Mario as he’s becoming known), who after 2 days as the head of the ECB has surprised the markets by lowering it’s key lending rate to 1.25%. This runs contrary to his mandate to fight European inflation but he needs to pee in the garden and with essentially no growth coming from Europe he’s marking his territory. His press conference has just finished, and I have to say he speaks eloquently.

So between those three little tidbits, and the whispering voices in my head, the markets are now off to the races.

Good trading.