Monthly Archives: March 2013

cool avatar

Bitcoin Virtuality – Who Owns My Avatar?

cool avatarVirtual objects, virtual pets, virtual lives have been common gaming currency since the inception of MUDs and MMORPGs (massively multi player online role-playing games). Virtual property has been around for even longer. But, who owns my avatar? In 1999 Linden Lab’s were on to something, when Second Life recognised a gamer’s intellectual property. They even invented Linden Dollars. Warcraft in 2004, Flyff, and dozens of other games have created virtual economies by exchanging virtual goods in the context of a ‘game’.

Avatar chasers, lawyers, the tax man and gambling regulators have been observing these economies for over 10 years, yet rest well behind the curve. And the secondary market for virtual objects within the context of these games has been largely ignored. If you can’t transfer your objects to other players for a fee, it seems you’re safe from big brother, but that’s no fun. Where are my bragging rights? On the other hand if you start selling what you earned, things start to look more like commerce/gambling. Still the secondary markets for virtual game currency is alive and well. Do a search for World of Warcraft Gold. It looks like I can get 10000G for about $10 in 5-15 minutes (I’m not sure why the time element is important). The site I’m looking at even as live 24/24 help in 4 languages.

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EUR-USD Chart

Russia, Cyprus, Syria

EUR-USD ChartThe biggest looser (after Cyprus) today has been the EUR.USD. This was the dream-fade-trade for Forex traders. The news flow from early Monday morning when the agreement was reached was handed easily to “Europe”. All is well, Cyprus is fixed. Then as often happens one of the members didn’t play by the script. The Eurogroup head and Dutch Finance Minister, Jeroen Dijsselbloem, says Cyprus is a Template for restructuring… That sent the market into a downward directional tizzy which it has yet to recover from. He’s since recanted, clumsily.

The bailout-bailin looks like this: Cyprus’s 2nd largest bank will be shut down and those insured depositors of <100k Euros will be moved to the Bank of Cyprus. Anyone with >100k Euros is looking at a nice big loss. Cyprus will have to find 4.2 billion euros from the uninsured.

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CAC40 Divergence

Is Cyprus Risk Being Under Rated?

It’s Thursday evening and we’ve been watching the drama in Cyprus play out for nearly 1 week. There are 2 camps, debating Cyprus risk:

  • “Cyprus’ represents only a small proportion of the EU, throw them under the bus, no big deal, let’s get on with the bull market.”
  • And the, “this is just the tip of the iceberg, one domino ahead of reigniting Greece, Italy, and Spain, buy gold” camp.

 

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Ryan Air

Airbus is to Lion as Boeing is to Ryan

Ryan AirIs it me or do airlines plan news releases in a tit-for-tat fashion?

Just this morning Ryanair Places $15.6 Billion Order for 175 Boeing 737-800 Planes.

Not to be outdone, Airbus gets record $24 Billion Order, Indonesia’s Lion Air Is Customer.

Cyprus

Cyprus Depositor Haircut – Europe…

CyprusThis weekend a scary thing happened to Cypriots and anyone keeping money in Cyprus (think Russians). If you have under 100,000 Euros before the banks open on Tuesday you will donate 6.75% to the bailout of Cypriot Banks. In return they’ll give you stock. Now if you have over 100,000 Euros you can count on donating 9.9%. Solidarity…

What should you expect on Monday?

Lots of very pissed off savers and empty bank machines. Think how you would feel coming back from a weekend 10% poorer, because the government, the ECB, and your trusted bank decides to confiscate your savings.

Backpedaling might be on the agenda, in either case, this is sending some fear into the markets, it’ll surprise me if the markets shrug this off. As little as Cyprus is for the EU, the precedent will put fear into the Italian, French, and Spanish markets. Today the parliament was presumably going to ratify the money grab. But they’ve just postponed the debate until Monday, which probably means there is dissension in the political ranks… If the measure is rejected The Question will resurface. How does a country exit the Euro Zone? Presumably, Cyprus is the least painful to throw under the bus but that question has a consistent habit of killing the buzz. And that’s what’s going to happen this week. Buzz Kill.

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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.