Around the word

Spring is in the air. Blog pages need to be refreshed. A few charts from around the world.

First on rates, since I don't have much to say and will leave it to the other excellent members of MM blog, except the 5 year looks to have made and held a new range. I am assuming there are lots of players using the 5yr in their spread model, looking for the curve to flatten, though TBH that was a 2014 trade and the 5/30, 5/10 have been in a narrow range since.


5-10 spread. Hasnt done much lately.

Staying in the realm of Fixed Income, we move to Credit, where CCC bonds saw spectacular returns in 2016 and into 2017. They are about 3% off their high.


Benchmark High Yield CDS spreads have ticked ever so slightly higher, though I would caution its to early to really call it a trend change.




For those of us who are not NYC hedge funds trading the CDS contracts or buying CCC bonds (which always have some hair) BB and B bonds are a good proxy for the risk most bond investors are willing to take. Since the beginning of 2017, single B have generally been below 6%, which is not very appealing IMO, but given the alternatives, isn't the worst one can do if you are buying credits you like.



Alternatively, if you move up to BB, good luck finding anything with a 5 handle.

Indeed the BBB spread, has hardly moved. There is little worry about investment grade credits at this time.



Turning towards FX, which I will leave to the other authors in this space to be more specific. The DXY, after doing a nice break out early in the year is right at some critical moving averages now, given the strength in the Euro and Yen of late.


The consensus shorts, of Asian currencies (proxy by the Sing Dollar) show a similar trend. Though to me the LT play is still short, especially given the price of things in Singapore


However EM FX, to this author, has been strong this year, especially given the move in oil. Though to be fair, oil and EM FX wen the opposite way after the US election and are now just closing the gap.(JPM EM FX in White, Oil in Yellow)


But when the beaten down Mexican Peso strengthens for almost 2 months straight, perhaps something has changed. We saw a similar type of move in BRL in 2016. Blow off and then strong reversal.


Where your author does have some interest is in 'other' currencies, like Gold and crypto land

Gold hasn't been able to get above the 200 day recently. Though it did put in a nice 75% retracement in December which would be the maximum allowed if 2016 really was the start of a move higher, according to most voodoo.


In crypto land, bitcoin looks to have topped. Below is  chart in CNY, given that is where most of the specs are.
 Though it seems like other crypto coins, have picked up the slack recently. Your author is pretty cautious on the space here


Turning toward equities, where Europe has seen strong returns to start 2017. Even still IBEX is still far from the recent highs. My guess is we get there after the French elections.


While EM equities have reversed its losses post US election, earnings are no where near where they were 5 years ago (some of that is FX related). But the chart looks good as well.

However if you want to play the global reflation theme, you really should be looking at Asia Ex Japan, IMO. Earnings estimates have been on the rise in 2017



And dont look now, but its been positive almost every day this year.

And the EM heavy weight, South Korea (why are they still considered EM is another question) has seen EPS expectations rise and the KOSPI on the verge of breaking out of a 6 year range. 


 India has also been on your authors watch list, as the Sensex is  now near the post Modi high, though EPS haven't caught up yet.
 

 Lastly the US stock market juggernaut, proxy by the Nasdaq 100, is still growing it EPS and valuation is pretty similar to the past few years. Hard to short stocks like that.



 Happy Q1




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IPA
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March 29, 2017 at 6:29 PM ×

Out another qtr of NG (May) here, leaving the last qtr to ride to 3.30 and hoping I get that filled b4 the report hits tomorrow. Used profits to buy some CHK. Will add on p/b to 5.50 or even 5.25 if they let me. Want to ride it to 7.50-8. Started my scale into KOL short. You get my idea here: nat gas is the future, not coal.

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Harry H
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March 29, 2017 at 10:41 PM ×

Fairly quiet in equities, but still another positive day for the S&P500. While the MSM endlessly discuss the 'Trump-trade', or 'anti-Trump-trade', the real money this year has been the anti-Nico-trade'. Fading Nico's calls to short equities has returned substantial profits over the past few years, and continues to do so with amazing accuracy. I would go so far as to say Nico is our own resident Gartman :)

If we could make a Fade-Nico ETF (preferably leveraged) we would all be producing triple-digit returns ! Food for thought...

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Gus
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March 30, 2017 at 12:11 AM ×

Alright, Harry H, the question for you is: WHY?

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zh jin
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March 30, 2017 at 1:16 AM ×

Thanks Abee.

Since we talk about EM market here, may I suggest another candidate besides the usual ones discussed here?

Egypt. It does not have a lot of resources but it has a lot of labor and is politically stable for now (I have never been there so it is the impression from reading the media as no headline mentioning Egypt for a long time, so correct me if I am wrong.)

Egypt just floated its currency EGP (Egypt pound) in Nov 2016, so USD/EGP rose from 5 to 18 overnight. Of course the local stock market is now near all-time high. But the impact of this kind of huge monetary stimulus would often last months to years, so in USD term, the ETF EGPT looks attempting both in the fundamental and technical points of view, IMO. I wonder if I miss anything here.

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IPA
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March 30, 2017 at 6:20 AM ×

Markets doing some weird things here. NDX new high yet SOX did not confirm. I get it, FANG. Then retail rallies due to some analyst says no BAT and sends shorts covering en masse. Really? You just watch tomorrow's Paul Ryan CBS interview. He is sending Trump a message in a bottle. I guess the things got so bad they have to communicate through different news outlets now. This story ain't over. And after the bell LULU which is a hybrid retailer for the Ms/Mrs crapped its pants (sorry ladies for the intended pun). I guess United Airlines won't see that many leggings after all. If she ain't buying things for herself then she is probably done shopping for a while, imo. I am not letting my XRT short go on this two-day relief rally, because I think it simply retraced to backtest the broken support. This dead cat was given another short life to live.

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checkmate
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March 30, 2017 at 12:10 PM ×

Seasonal loss of momentum in equities. Whilst that's relative picture because there as been a clear attempt to buy European equities (presumably a reflection of trying to buy political risk off) the story really is Indices probably peaked earlier this month amid profit taking. Typically this becomes a good time for anybody wanting to get short and wait for seasonal weakness to increase.
HH, no more polite. You are just nasty. Guess your anger that the world still fails to recognise your superiority is hard to control. News for you, it never works out. The problem is with your own lack of confidence and we cannot fix that for you.
If Nico was comfortable being short earlier this month there is no reason why that shouldn't still be the case.
And HH no one with any real relevant experience stars chanting about intraday moves and macro directional themes in the same sentence unless they enjoy having egg on their face. Now fuck off and be a nuisance elsewhere. No one here is interested in your delusions.

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Tim Schulace
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March 30, 2017 at 1:08 PM ×

HH,

With regards to your comment in the last thread, you said,
"As for my posn I am long 500cts ES M7 @ 2335 following the CC beat. I unloaded 400cts into 2350 for a +15pt gain. I will run the rest to ATHs with stops at BE."

What was your stop on the 500? If you were willing to take profits with just 15 handles, then I have to presume that your stop loss should have been only about 7-8 handles if your risk management isn't absolute sh!t.

Strikes me as odd that a permabull such as yourself leaves your P&L to chance as 7 or handles is a rounding error in terms of S&P movements. Genuinely curious about the mentality of the trade.

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IPA
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March 30, 2017 at 5:52 PM ×

You laugh at the fact that a simple procedural issue like a meeting of the president's cabinet on tax reform plan today gets news headlines until you realize that they are sending a loud message to the House. We have a full-fledged fiscal policy crisis brewing, and I say it's no longer just behind the scenes. Take Trump's anti-FC 2018 election tweets (pretty much a war declaration on a faction of his own party) and Ryan's CBS interview today and add the following article to it and you have a total confusion an discontent in the markets about to ensue. Give it a week or so, let the players' political analysts get the scoop. Or just tell them to read our blog ;)

http://www.politico.com/story/2017/03/house-gop-tax-reform-donald-trump-236691

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AB
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March 30, 2017 at 7:00 PM ×

Sigh, more bickering about equities.

Any thoughts on a yield curve inversion anywhere in the 2s-10s range in the next 12 months? Rosengren says 3 more hikes in CY2017 should be the baseline. I would think we could get some kind of inversion in 1Q2018 if cash rates were a 1.75%. Anyone have any good sources for CPI and PCE forecasts for the rest of the year?

Grains have had a volatile month since macroclown's 3-8-17 post. Have grains been correlated to the USD movements in recently or is it just me? Farmers need to produce cash flow given the level of rents and land prices and crop insurance gives them a one-way bet... I would anticipate a lot of planted acreage despite the low prices for grains.

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checkmate
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March 30, 2017 at 7:16 PM ×

AB
You totally missed the point. This is not 'bickering about equities'. It is about an arsehole who thinks this blog is a place to indulge his personal attitudinal problems.
There are so many other sites out there where this kind of base personal interaction is the norm I don't even know why HH feels a need to come here and display his issues.
It would help however if the blog still got policing to send him back to the nursery he sprang from.

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IPA
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March 30, 2017 at 8:09 PM ×

Guys, did you read Mester's speech today? She warned on weak GDP growth in Q1. I guess all those who doubted GDPNow model may come around when advance estimate is released (a whole freaking month from now). Anyway, here it is below in paragraph #5. Gotta love how the market does not care, yet.

https://www.clevelandfed.org/en/newsroom-and-events/speeches/sp-20170330-updates-on-the-economy.aspx

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washedup
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March 30, 2017 at 8:24 PM ×

@checkmate - pretty obvious HH is actually short and taking it on the chin - think of him as the homophobic gay dad in American beauty and you will get the idea.
@AB not sure I have better sources than anyone, but given monetary velocity and M2 growth, not to mention loan growth, I doubt we come even close to last year's nominal growth rate of 3.9% - at this point (LB's made some posts on this) the oil baseline is out of the picture, so the inflation is all going to have to come from OER and healthcare on the demand side. This is as consensus as it gets, but I doubt the Fed would let things get to the point where 2-10 inversion is even close to possible. I am thinking 75 bps as the low point on 2's/10's unless oil spikes and the economy turns south at the same time, which is unlikely.

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Harry H
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March 31, 2017 at 9:40 AM ×

Hopefully the others here will bear with checkmate and washedup, who are having a little hissy fit :) The market is a tough taskmaster, and along with nico, they've both repeatedly been on the losing end - I guess that takes it's toll emotionally.

Whilst some here get upset when I point out the many losing calls/incorrect views, the reality is the market is doing what it always does (to the chagrin of the doom-mongers & those who can't understand the basics of financial markets). Thus money is taken from the many and distributed to the few.

HH, your "gay dad" signing off ;)

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Tim Schulace
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March 31, 2017 at 10:01 AM ×

HH,

You didn't answer my question. Not a hard question at all. You should be able to formulate an answer in less time than your last response took to craft.

Trading is all about risk management. Without it you eventually get stretchered out. LMK how you treat risk or LMK that you don't give it a second thought. Either answer will do.

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Tim Schulace
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March 31, 2017 at 10:06 AM ×

Washed,

2yr/10yr in the forwards has already inverted. 10's/30's in swaps is at about 25 bps. Think it will be hard to get spot curve to invert because the fed will not be able to push rates up enough before they get scared. 10's/30's is the most likely spot where inversion might occur.

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Tim Schulace
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March 31, 2017 at 10:19 AM ×

There is an issue with the market that has not received the air time it should. CTA's and risk parity funds are loaded to the gills. Most of the trend followers are max long in equities (1.5 to even 2x NAV at the expense of other asset classes and risk parity keeps buying because the vol crash forces the model to continue to add.
https://mobile.twitter.com/Lockhart121/status/847164049976647684/photo/1

Monthly vix ocilator is as low as 2008 crash and stocks have decoupled. Market breadth continues to narrow. If/when vix breaks 15, those program buys turn into sales. The top of the impulse sell off candle from early last week would be a good level to set stop losses if one is inclined to try and fade this market.

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Jens
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March 31, 2017 at 11:12 AM ×

Anyone knows what's going on with USD front-end? 3m LIBOR hasn't really moved up in line with the March rate hike (unlike with the Dec'16 and Dec'15 ones) and is actually slightly coming off in recent days. 2017 fra/ois spreads tanked from low- to mid-30s in late Feb to 23-ish now, in line with recent moves in realized 3mL and effective fed funds.

Any thoughts? I always thought that if anything fra/ois would widen out as the hiking cycle gathered pace. It's now below pre-summer levels, before the money market fund reforms kicked in (leading to a large move away from prime to treasury-only MMFs).

Really don't understand this one, so any insights would be much appreciated.

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abee crombie
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March 31, 2017 at 5:02 PM ×

Hey Tim, how would one see the 2/10 forward curve on Bloomy?

zh jin, Egypt is pretty frontier in my view. Frontier markets I like are Vietnam and Pakistan but very hard to invest there. No good ETF's IMO.

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March 31, 2017 at 6:26 PM ×

Abee, fwcm or the like... Select usd swaps

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Tim Schulace
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March 31, 2017 at 6:26 PM ×

Abee,
Didn't run it on bberg, but my guess is 2yr2yr 10yr10yr HS go.

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IPA
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March 31, 2017 at 6:37 PM ×

So Dudley pretty much confirmed what Mester said yesterday about weak Q1 growth. It's a race down to 1% and below from all the updates I saw today. We'll have to wait and see how close to 0% we will have to be in order for market players to start worrying. Who cares about GDP anyway when you've got tax cuts and repatriation on your mind? Now, take those away or delay them considerably and you've got a problem across all assets and not just equities. So all those who say the fate of Trumponomics doesn't matter are just kidding themselves. And how about the consumer spending # this morning? We should see XRT below $40 sometime next month.

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checkmate
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April 1, 2017 at 1:10 PM ×

"The market is a tough taskmaster"
Oh Sensei your wisdom is so all seeing. How may we mere mortals compete with superheroes like you. I am humbled to be allowed to read your words.

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abee crombie
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April 1, 2017 at 1:34 PM ×

Ipa, i hear you, xrt is leading lower. Autos starting too along with your transports..but global growth is in good place right now, will keep this gogo market afloat. Plus large cap growth stocks are still taking share, growing earnings...thats all ppl care about. However iwm setting up for decent risk reward short. If that breaks the range we could see hy move with it...then things get interesting.

We should know if oil bottomed or not by end of next week imo.

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IPA
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April 1, 2017 at 9:03 PM ×

abee, my take on oil (and more XLE)... Strongly think we are trading 2010 May-July scenario. Really feel adamant about a bottom here and some kind of consolidation while overall market pukes for 10-15% lower (Trump/no Trump/don't care). Pull the monthly up and plot SPX over XLE for overall picture to see how SPX is not even close to where the 2010 reaction low was (I think puking still coming, it's like finding gold in your back yard right in front of your nose, just can't see it yet). Then pull up XLE alone and add slow Stoch and Williams%R and you'll see what I mean. 2010 May/July Slow Stoch went to oversold and W%R scraped bottom while the price went sideways for three months (will coincide with June continuation of production freeze/cuts). So no rush on buying for those who did not catch this week's low, as I think we get multiple entries here +/- 5%. Just pick your spot and pull a trigger on multiple scales into it. So, short SPX long XLE until both start going up. Then add XLE like crazy. Will outperform SPX by much into the end of the year. Also, I hear way too many people too bullish on oil this weekend, almost feel like I am in a crowded trade still, I want to see blood, people puking their positions up, I want some confusion, I want to be surrounded by wounded warriors who got many deep cuts in this CL chop (still to come) in $45-52 range and bought everywhere in between. I'll be one of them as we hold on the way up to $60. Prepare for more turbulence, stay strong. My 2 cents...

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koolbong
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April 3, 2017 at 10:27 AM ×

@abee... Frontier markets I like are Vietnam and Pakistan but very hard to invest there...

imho, very different stories in those two places...
Vietnam is booming... there's a construction boom happening as global players rush in to take advantage of the tourism opportunity that's opening up... new flight routes, favorable demographics.... unless you foresee an escalation in South China Sea tensions (I don't) there's everything to like about the country...
Pakistan is struggling... the economic corridor with China is getting increasingly bogged down by local controversies... the domestic economy / infrastructure is in bad shape... if you really want a frontier market in region, look to Bangladesh...

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IPA
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April 3, 2017 at 5:03 PM ×

Exiting last nat gas long here. Strong resistance @ 3.25 and below 3.15 things get a bit iffy. Mild weather b4 hot temps kick in keeps a lid on it. Accumulating CHK instead.

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abee crombie
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April 3, 2017 at 5:49 PM ×

IPA, why CHK? why not go with the best (ie lowest cost), EQT?

Thanks Tim/Universal for the swaps tip but still couldnt figure to find an inverted swap curve. Anyways, I agree with your main points Tim. http://imgur.com/a/8sWgL

@ koolbong. You have any knowledge of how a punter can invest in either? I've been trying to get into Vietnam for a while but of the few options listed on my Bloomberg, (closed end funds in UK) nothing really caught my eye.

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Tim Schulace
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April 3, 2017 at 5:51 PM ×

Abee,

I was incorrect in my forwards reference last week. It was not 2's/10's fwds that inverted, but 2's/10's B/E that have gone negative.

Sorry for the screw up.

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IPA
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April 3, 2017 at 8:40 PM ×

abee, I am closely following a previous CHK chart pattern for entries/exits (which made me a lot of money last year). I already have EQT in the back of my truck via XOP (as well as CHK of course). I hear you on the cost but one can't compare the two as CHK simply has infinitely more assets to shed in case crap hits the fan (I believe EQT even bought some from CHK). The exposure to southern part of the country vs just north for EQT makes CHK a bit more interesting to me when Trump's clean water rule repeal helps frackers go after the new fields that were on hold. Some folks just fell off of their office chairs as I positively mentioned Trump. Also, CHK has one more major exploration innovation up its sleeve, just waiting for that "special time" to tell the market about its success. I hope to be lucky and be in it when that happens.

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johno
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April 3, 2017 at 10:33 PM ×

Hey Jens @ 11:12AM Mar 31. Here's excerpts from something JPM wrote 3/14/17. I'd summarize if I actually understood it all properly, but maybe you can take a crack at it:

... a large and apparently growing excess of USD funding this week. Initially, this was most apparent at the very front end, as GC/FF spreads headed negative and T-Bills richened substantially versus OIS. Since that time, however, this has spread across the curve, with 2-year notes in particular trading flat at times versus OIS for the first time in quite a while. Though levels have come off somewhat for T-Bills in particular, repo and longer tenor Treasuries remain very rich on a historical basis. This has since reverberated into other markets, including sizeable moves in FX forwards, bank CP/CD rates well below Libor, and a rather dramatic collapse in FF/Libor spreads on both a spot and forward basis.

This dynamic can be blamed in large part on negative net T-Bill supply owing to constraints placed on Treasury by the mid-March end to the debt limit suspension period. Generally speaking, such a drawdown in investible government assets at the front end should put pressure on other short-term rates such as repo. And the marginal impact is arguably greater in the post-MMF reform world, in which a nearly two-fold increase in government fund assets has not been met by anything approaching commensurate supply, exacerbated by structural changes in the tri-party market itself.

In FX, we have seen rather dramatic moves in short-dated forwards, particularly in major funding currencies and led by shorter tenors. For example, 3-month cross currency basis in EUR, JPY, and CHF are all wider by 30-40 bp since early December with smaller moves in GBP and CAD. At the same time, FF/Libor spreads have collapsed in the front roll and the forwards, essentially unwinding the widening that occurred into MMF reform despite no substantive shift in prime fund holdings.

Taken together, these effects all suggest a more significant reallocation of U.S. dollars that cannot be explained solely by the government MMF bid for scarce T-Bills.

Rather, we believe that impact of a supply/demand imbalance in front-end Treasuries has been magnified and broadened via the cross-currency basis market. Consider, for example, an asset manager or bank looking at a range of USD cash management instruments and with access to derivatives and foreign markets. As Tbills richened over the course of 4Q16—first with the growth of government MMFs and later when negative net supply set in—they might look to the crosscurrency basis market to construct synthetic highquality sovereign assets. And with most major crosscurrency bases still quite negative towards the end of last
year, the yield pick-up on such trades—including EUR, JPY, CHF, GBP and others—would look increasingly attractive as an alternative. As this flow picked up, the basis moved less negative across these currencies at the same time as T-Bills were richening relative to Fed expectations.

Though this can have a number of effects, we think the most important consequence is the transformation of demand for high-quality short-term assets into more fungible —and increasingly less expansive— U.S. dollar funding.

All else equal this reduces the need for foreign banks to fund their dollars via CP issuance, which combined with a light maturity schedule in original 3s explains in part why unsecured short-term bank funding is trading through Libor and the recent collapse in FRA/OIS spreads. The cross-currency basis market therefore likely acted as an important conduit, significantly enhancing and broadening the impact of a more localized supply/demand imbalance at the front end.


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April 4, 2017 at 6:19 AM ×

Forex Trading Platform Italy | Forex Trading Platform Albania

The contents are really cohesive and makes sense.
I really appreciate.
Thank You.

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checkmate
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April 4, 2017 at 12:41 PM ×

All eyes to the USD/Yen. Technically it's broken down from a range and retested it ,but is poised now at that 110 . If that breaks there doesn't look to be much below it down to 104/5 area. I couple that with bond yields and the seasonal loss of momentum in equities and we could be on for our first serious risk weakness of the year. Yes, we know traders in pampers can macro grab that 15 pts whilst getting buried.

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Jens
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April 4, 2017 at 3:32 PM ×

johno - Many thanks for this, extremely helpful. As a retail punter these days I have limited access to broker research and bloomberg, so haven't been able to follow the dynamics of the usd front-end / xccy basis as much as I would have liked.

The explanations from that JPM piece do certainly ring true. I'm not particularly worried about debt ceiling impact on T-bill supply and broader funding rates, as this should revert back after ceiling is extended. My position is mainly in late '18 fra/ois wideners so should be fine in that regard. The increasing appetite of US banks/investors to buy synthetic USD assets through xccy basis swaps is much more worrying though as this could be something more structural.

Then again, there are some drivers pointing the other way too of course. I would imagine that as hiking cycle proceeds even more cash will move from prime to govt-only MMF as the pick-up in yield is simply no longer worth it. Also, in principle this trade should be a cheap and effective hedge for renewed EU banking angst (triggered by le pen/italy/...), especially as forward curve looked a bit too flat to begin with. Then again, with hindsight, perhaps this was exactly because people smarter than me were betting on xccy basis coming in over time :-).

Oh well, you live and learn. Think I will hold on to my position for now, but will be a bit more trigger-happy about stopping out if trend towards lower libor setings continues.

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IPA
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April 4, 2017 at 5:30 PM ×

Jens, "you live and learn". Totally agree. Being schooled on nat gas today. Highway robbery...

Really want to sell AVGO. The NVDA downgrade is sending some interesting warning signals on the sector. I mean it's not the same niche but the parabolic structure of SOX will end badly at some point. I am going to short on a break below 216 and target 200, 185, and 170 with a stop @ 230.

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IPA
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April 4, 2017 at 9:28 PM ×

Just wondering what the trader had to drink to do this:

http://dealbreaker.com/2017/04/you-havent-lived-100-million-trade-cell-phone/

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abee crombie
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April 5, 2017 at 3:24 AM ×

Jens/johno, i see a lot of private wealth money buying eu hy and hedging back into dollars to pick up another 150 bps or so. But this is real money and all hedged with forwards. What do u see as the side effects/risks.

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abee crombie
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April 5, 2017 at 1:16 PM ×

IPA, I was just reading the Pacific Crest note summarized from Fly on the wall re:NVDA. Not sure their call has much implications for sector, as they upgraded SWKS at the same time. But I agree with your assessment of SOX. SOX always corrects in a big way at some point. But EPS growth is very strong for the index. Would need to see some high profile names missing estimates for the party to really start

http://imgur.com/a/L2pte

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Harry H
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April 5, 2017 at 1:28 PM ×

Great to see USDJPY buying through the European open, allowing those in the know to front-run leaked ADP numbers. US equities are obviously also surging, the SPX etc heading back to ATHs.

Watch Nico and his pals lose another few million $ by day's end ;)

Funny as hell to watch the "macro" guys trying to figure out these markets, when we have a Fed governor admitting they have leaked info to third parties over the past several years, other leaks in the Fed still at large, multiple leaks from other CBs, and the SNB, BOJ etc still buying equities by the billion etc. "Free markets" lolz.

Happy days :))

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Tim Schulace
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April 5, 2017 at 2:00 PM ×

HH,

With regards to your comment in the last thread, you said,
"As for my posn I am long 500cts ES M7 @ 2335 following the CC beat. I unloaded 400cts into 2350 for a +15pt gain. I will run the rest to ATHs with stops at BE."

What was your stop on the 500? If you were willing to take profits with just 15 handles, then I have to presume that your stop loss should have been only about 7-8 handles if your risk management isn't absolute sh!t.

Strikes me as odd that a permabull such as yourself leaves your P&L to chance as 7 or so handles is a rounding error in terms of S&P movements. Genuinely curious about the mentality of the trade.

Trading is all about risk management. Without it you eventually get stretchered out. LMK how you treat risk or LMK that you don't give it a second thought. Either answer will do.

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checkmate
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April 5, 2017 at 4:10 PM ×

Yes Yen bought (at this point) so no trigger for me to enter (yet)on any correlated position. Just keep watching it because seasonal weakness in risk is still my probability play, but the when doesn't come with a label that says 'today' is the day it will become transparent. That's where the discipline comes in ,being willing to wait for what you need to see to enter. Might as well be talking different languages when it comes to HH.
Tim,
That's the 3rd time you've asked that question. What do you think are your chances of getting an answer?

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Tim Schulace
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April 5, 2017 at 4:56 PM ×

Zero chance. Simply proves the point.

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IPA
admin
April 5, 2017 at 5:19 PM ×

abee, I hear you on semis. I don't mean to pick on the strongest guys, will probably get my a$$ kicked. I like the AVGO entry on the break down below 216/15 though as I think by then there may be overall weakness in the group as it trades in bunches on herd mentality. Here is my take on why... Not much thought has been given to what may be happening with lower auto sales and the customer revolt in data center and mobile biz possibly developing. Chipsets that go into smart "connected" cars are not necessarily the same ones that will go into driverless. With auto SAAR absolutely cratering in March it's a warning of things yet to come. Peak auto may be somewhat like peak PC for some of these chip makers. Driverless biz not there yet in meaningful numbers to replace the immediate lost revenues. On data center... AMZN and GOOG are building their own in-home solutions more and more, even trying to acquire chip co's now, Toshiba comes to mind as a scary template for chip OEMs selling to that space. Mobile... AAPL going after their own mobile chip in-home gig as well (also trying to bid for Toshiba). AAPL suppliers must be losing their sleep over this.

Quickly on oil... We have a defined range on WTI to trade now 47-52. Looking at XOP as a guide even more than XLE, it gave a nice heads up today about 45 min b4 EIA report hit.

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Harry H
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April 5, 2017 at 5:38 PM ×

Shoeface, I ignored your puerile questioning because the exact stop on a single day-trade is unlikely to be of interest to anyone here - there have already been criticisms about discussing short time-frames, thus I refrained. I only mentioned the trade initially because Nico directly asked. Re: that trade, your assumptions are naive because you know nothing about our strategies (many algo-driven). You have no idea if this particular trade utilized a momentum, mean-reversion, or other strategy, or numerous other variables... if you're so keen to opine about risk management, please educate us all about Nico's risk management on adding to his massive losing short position on ES.

Talking of ES, Nasdaq has made new ATH's today, with the other US indexes following closely behind. If any of you here wish to sell some more, there's plenty of buyers on the other end of your (losing) trades.

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Tim Schulace
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April 5, 2017 at 6:02 PM ×

HH,

You are right. I have no idea which strategy was employed. I would like to think the purpose of this board would be to share strategies and styles in an effort to improve trading acumen rather than simply yelling "scoreboard" from the top of one's lungs. I'm sorry you don't share my vision.

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Harry H
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April 5, 2017 at 6:18 PM ×

TS, If I "shared strategies" I may as well hand over our firms profits to the competition. As for sharing more generic advice, I have done so by repeatedly lambasting people here for being f*ckwits and shorting the strongest market of our lifetime. I have been proven correct over-and-over, whilst several others here are either broke or have blown their pretend accounts for the umpteenth time. This is not to pretend that I am clever, I just don't short asset classes in a massive bull-market, that rise every week, and that seem to have every central bank in the world supporting them directly, or indirectly. Ok, I'm done here, have fun.

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Leftback
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April 5, 2017 at 6:46 PM ×

Yawn…. rather than discuss Spoos we will point out something truly shocking.

ADP printed a red-hot number today and bonds…. did NOTHING. We are probably seeing a combination of shorts covering on any decent economic data (fearing there may be no more) and new buyers arriving armed with refreshed skepticism regarding the success of the Incredible 2016 US Reflation Con fostered by the Con-Artist-In-Chief. [I refer of course to the wondrous reflation, tax revamp and infrastructure rebuild package spearheaded by POTUS and facilitated by Paul Ryan and Mitch McLump].

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IPA
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April 5, 2017 at 6:56 PM ×

HH, what's the rush to leave? Really? Are you an immediate replacement of Jeffrey "Leaker"? When you start out by using expletives and speak like a five year old and then follow your endless childish bravado by trying to look smart and using words like "our firm's profits" you once again defy the holy grail of trading - humility. The only one with a "pretend account" here may be you.

BTW, when you say "signing off" and "I'm done here, have fun" and then come back on the next up day to tout your genius "algo-driven momentum and mean-reversion trading strategies", you exponentially add to the amount of people you literally turn off here. For once, have some adult in you and the guts to call the addiction help line! You can reply to this comment (and I don't doubt a single second that you will) but I will forever ignore every word coming out of your mouth from here on.

MM, there are latest blog techniques out there to place an "ignore" button in comments section. Not sure you want to waste the time on the research though ;)

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Harry H
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April 5, 2017 at 7:49 PM ×

IPA, I left to prepare for FOMC - some of us have a job (no doubt a novel concept for you). As I said above I wasn't trying to sound smart, nor are words like "momentum"/"mean-reversion" genius ideas, in fact they are some of the most basic ideas ideas in finance - which is likely why you don't understand them. Now f*ck off.

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washedup
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April 5, 2017 at 8:25 PM ×

Really nice discussion gents - as long as you guys realize HH is actually short and engaging in a cathartic exercise - won't stop you from providing the public service of course - this is all highly entertaining.

@Left Here is what bothers me - Cushing at 69.1 MM BBls from today's EIA - I am open to ideas and new insight on the matter, but I am hard pressed to see how 72+ doesn't start posing capacity constraints. That gasoline demand better show up because the current refinery utilization aint cutting it - my tiny brain additionally says that if the front of WTI is pressured by contango and the backs are pressured by producers, someone would have to have a real hard-on for crude 3-6 months out to keep the record setting spec length worthy dream alive.

I'd be curious to see how the wage gain data turns out Friday - in the short run thats where the inflationistas get their mojo - I wouldn't hold my breath.

Curse you Leftback - I do not like being a long end bull, but sometimes the evidence is simply overwhelming. MM had an interesting thought out on red eurodollars that seems like the trade of the year the more I think about it.

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Tim Schulace
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April 5, 2017 at 8:29 PM ×

Stops below 110.20 JPY and 2.30 US10's. 2340 is SPX line in the sand.

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Harry H
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April 5, 2017 at 8:49 PM ×

washedup, if HH is short US equities, then he's just made +250 points on the Dow in under 2hrs... if only some of the others here could time markets this well ;)

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IPA
admin
April 5, 2017 at 9:13 PM ×

Looks like a few children lost their "jobs" and will be bagging groceries tonight at a local store. Better get that bike chain repaired.

Leftback, it is a classic flight to safety in bonds today. I don't think the Fed scares me more than a combination of US ground troops in Syria and unilateral attack on North Korea. POTUS has a job to keep ;)

abee, AVGO longs are protecting 216 like their mother. I am drooling while waiting to get filled on my short.

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Leftback
admin
April 5, 2017 at 10:57 PM ×

A lot of the children don't seem to remember the history of Fed balance sheet expansions and contractions. Let's review the playbook:

1. QE (balance sheet expansion) ahead = buy bonds.
This is simple, you know it's coming, so front run the Fed/ECB/BoJ etc.

2. QE ongoing (balance sheet expansion) = sell bonds, buy risky assets.
Now sell the bonds, trouser the profits and buy risky assets.

3. QE taper talk (balance sheet slowing, rate hikes coming) = sell bonds and rate-sensitive assets, buy dollars.
Sell the rate-sensitive assets to institutional punters at inflated prices.

4. QE off (balance sheet reduction, rate hikes etc...) = sell risky assets, buy bonds.
Sell risky assets to clueless retail punters and buy bonds.

Class dismissed. We are currently moving out of stage 3 and embarking on stage 4.

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hipper
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April 6, 2017 at 12:46 AM ×

IPA: Funny that Washington based MSM claiming to represent half of the world is jumping within hours knowing what happened in Syria. We do know that a similar event occurred in 2013 when US backed "rebels" used chemical weapons shipped from Turkey and it was likewise blamed on Assad but quietly dismissed at the UN. A US attack almost occurred on the same basis then as well. Ultimately I think the end goal is to partition Syria under the Kurd pretext to allow Israel attack Iran without resistance, can't do it with standing Syria. USA already building military bases there, effectively annexing land. The proxy puppets are being dropped off now. These institutions continuously need more land, population and war to consume or the stage built on nothingness might collapse and keep the focus out of home. The last 5-6 months have basically been nothing but Russia Russia Russia in USA. The land of 318mln people has nothing else to talk about, really..? Personally I think this is a test for Trump as well it was for Obama back then which he didn't fall for. Trump doesn't need evidence because he has Fox News. Another story circulating is that it was a rebel chemical warehouse blown up spilling chlorine, used to built shells for the chemicals. Or perhaps straight attacks. I don't know but this all is on really shaky ground but of course so was Iraq and didn't stop anything.

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IPA
admin
April 6, 2017 at 3:02 AM ×

hipper, I really hope Trump does not repeat Bush's WMD mistake by simply putting all his faith in intel. But knowing his bad rap with them he probably won't. This being said, his love affair with "generals" will probably lead us to being involved in a major ground incursion. I just hope this is not our second Vietnam. Syria is so much more complicated than Iraq and with Russians deeply involved there this smells bad. I seriously think that afternoon selloff began much earlier in the day, things were looking iffy after 10 am and while children were reading FOMC minutes and scrolling through the dictionaries it just gave major longs that extra push towards the exits. Volume was heavier than usual.

Speaking of which, since kids are bagging groceries tonight we can have a nice discussion about the market w/out being interrupted and having to read every second word starting with a letter f. Today marks the first R2K close below 100 dsma since the Election Day. CTAs are going to jump all over this. Also, DXY had a daily engulfing. The last time this happened it put on a show for 10 handles. This time around JPY probably will not cooperate and we will have a true flight to safety. I think EUR gets dumped along with commodity currencies. I'll continue to stay short Canadian banks and KRE. Even XLF is now looking like it can take a serious dive as well. Look at GS and JPM. Folks thought JPM would hit a 100 mark soon, I say it sees 80 first.

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IPA
admin
April 6, 2017 at 6:22 AM ×

Possibly one of the reasons behind today's XLF weakness. Find the "leakers" :)

https://www.bloomberg.com/news/articles/2017-04-06/cohn-backs-wall-street-split-of-lending-investment-banks

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checkmate
admin
April 6, 2017 at 7:24 AM ×

Harry H, you couldn't count to 250 nevermind magically take every point of the day. Simply surprised you didn't tell us you then turned on a sixpence to scoop every short point of the day to go with it. Your problem is this. There's just too much market knowledge and experience on this site that you can get away with fantasy trading your self image into some form of accepted reality. personally , I really don't have a problem with people who lack experience although I usually prefer them not display the ignorance too often as it shows a lack of learning ability whereby they might morph from that state to another. What I really do mind is ignorance coupled with an obnoxious personality that poisons everything it touches. You ight not have noticed ,but here you will find many people who make no bones about taking a losing position or getting on the wrongside of a trade. It's expected because that is the reality of this business. No one expects anybody to get it right all the time or even most of the time. It's much more about how you manage the process than about being a successful crystalball reader.

LB,
So far this year, it's been noticeable that government bond markets have been telling a very different story to risk.

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checkmate
admin
April 6, 2017 at 8:27 AM ×

Unfortunately embattled politicians like nothing more than a good armed conflict to distract unhappy electorates. In that sense, after declaring himself not to be President of the world, Trump in the role of world policeman jumps allover the Syrian issue on the next day like a drowning man clutching a life raft. Call me cynical ,but Trump looks like he's found a gimmee gimmee issue to try and rebuild some popularity.

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Harry H
admin
April 6, 2017 at 9:09 AM ×

checkmate, just read your comment, "There's just too much market knowledge and experience on this site" - thanks for the laugh, that one made my day :) No doubt your knowledge of finance & markets is on a par with your political commentary posted above (8:27 AM)... Anyway, I've forwarded your post to Bloomberg's political editor, no doubt your job offer will be forthcoming forthwith, and who knows, if you ask nicely maybe they'll let you take your boyfriend IPA along with you ;)

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IPA
admin
April 6, 2017 at 11:16 AM ×

checkmate, too bad Trump can't issue an executive order to cancel the recess and keep the congress in session. He is going to have two lonely weeks during which to start something. Hold on to your seats as equity market decides just how deep the pullback should be in order take the only winning streak from the president in his first 100 days. Earnings can't start soon enough for players to decide wether to dump now or next week. Then you have Xi Jinping's golf game to worry about. I would prefer they play chess at Camp David instead. Just want to see Trump put on a thinking face for once while costing taxpayers $3.3M less every time he takes a hike to Mar-a-Lago. I am so freaking proud of my president donating his Q1 salary to the dept he is about to drastically cut funding for. When he ordered them to stop tweeting about his yuuuge inaugural crowds turnout you knew right then poor fellows would be extinct soon. But then, as we embark on building beautiful concrete walls, the parks will have to yield to other great things to be admired. The climate change is a myth, clean water rule is to be soon repealed, carbon emissions are back en vogue, and education cuts will result in more children staying home and commenting here while displaying zero intelligence and regard to human decency. It's all in a plan to make America great again, I am sure.

While my intention is to sit back and let the administrator police this place, I urge all those who have ever come here to read to be less shy and document their thoughts, no matter how embarrassed they may feel. When the bar has been set this low, you fellow traders can't mess up. Let's drown the naughty child's comments in our adult conversation and show that we are indeed still in charge. Nico G and all those who are lurking to see if the pesky pet has left, you are dearly missed and should come back to help us rescue the blog from stupidity which resides all around us. But really, hasn't it become the routine in our workplace (yes, you idiot, I have a job too) and all other facets of our daily life to deal with people who are simply unable to emanate coherent thought process, interact with others in a respectful way, and contribute to a worthy cause?

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Unknown
admin
April 6, 2017 at 11:17 AM ×

Harry H,

Nico may have been wrong. Sometimes...

Anyone who has ever loved you has been wrong. Always...

Let people express and further themselves, you're a jerk!

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Jens
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April 6, 2017 at 11:24 AM ×

washedup - can you share some more background on the red EDs trade you mention (without giving away MM's IP of course)? I do think there may be a positioning-driven washout in this part of the curve (arguably already happening actually) given heavy short interest, but I guess that's not what you are referring to by "trade of the year" :-).

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Harry H
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April 6, 2017 at 12:02 PM ×

Unknown, awww that hurts :)) As you say Nico was sometimes right, and sometimes wrong (like everyone else) with ONE exception: his losses (based on posts here) were/are SIGNIFICANTLY bigger than his wins, and more frequent, thus his eV -ve. Not sure how my pointing that out stops people expressing themselves; several of you seem to be having a fun time expressing your dislike of me :)

IPA, you seem upset, maybe I should make it up to you? How about this as a gift?
https://www.etsy.com/listing/178260134/couple-t-shirt-his-and-his-gay-mate
The linked item is a "His & his t-shirt featuring checkmate", apart from my genius play on words, the blurb says it's ideal for 'strategic thinkers'. Quite apt dontcha think? ;)

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checkmate
admin
April 6, 2017 at 12:46 PM ×

"several of you seem to be having a fun time expressing your dislike of me :)"
Actually, trying to be diplomatic with an immature personality like yours doesn't work very well as we have found out. Hence, being more transparent about one's antipathy is the obvious next step.
Seriously are you really blissfully unaware of your communication style? How obnoxious it is? Did no one ever tell you growing up that before you get into a dialogue think about what you are trying to achieve? For example, if you are trying to inform this blog about your views and what market activity you think is interesting do you think they are going to listen closely when you enter spraying epithets like 'f..wits' etc etc at everyone who might have a different view?
If you want to contribute here why not first start by rethinking your approach. Even now you might find most engage civilly with you IF you engage civilly with them.

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washedup
admin
April 6, 2017 at 1:27 PM ×

@IPA - thanks for the Gary Cohn link much appreciated - I am frankly blown away by this - wonder what Baldy's playing at - he is definitely the savviest of all the operators there, and been there long enough to conclude that Trump's analytical skills and instincts roughly match that of a tarantula - now with Bannon banished to the Janitor's closet, he has Trump's ears more than ever.
This does have a ring of (future) furious denial (what who me? never), but very interesting nevertheless - what would this new animal , which does away with Dodd frank and re-instate glass steagal, lets call it Gloss Stank look like? Is it possible Baldy was a man of the people all along? Did he turn into one after unloading GS at tippy top highs tax free, and now wants to pay the taxpayer back? Did he say it because any other comment would mean getting into a painful debate with Elizabeth Warren?
Very very interesting.

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IPA
admin
April 6, 2017 at 2:10 PM ×

washedup, Dimon has been having a love fest with Trump. Let's see how this development affects their relationship. You know he won't keep his mouth shut for too long with enormous JPM synergies to protect.

checkmate, we need to make sure we hold on to our minds while trying to engage in a conversation with insane people. This being said, I really think obnoxious child's work has finally come to fruition. I previously proposed MM keep the imbecile's remarks involving equities making new all-time highs intact, no matter how many expletives were used in between, as they may mark the top once. I believe his Nasdaq comment @ 5:38 pm yesterday may have done just that. He has provided us with some useful service, at last :)

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checkmate
admin
April 6, 2017 at 3:38 PM ×

Actually, over time I would have liked to see more of a bullish equity view here if only to help keep me 'honest' and questioning why I was taking particular positions regarding balancing my portfolio. It's a shame that such a view couldn't have been framed in a more reasonable manner that invited discussion. To be derided by a would be day trader for being risk cautious 8 years on is a tad irritating. I bet when I was loading risk in October/November '08 amid 'the world is ending' I would have been getting it from the other perspective.

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IPA
admin
April 6, 2017 at 5:36 PM ×

checkmate, I believe abee and johno have been somewhat bullish on equities on numerous occasions. I am hard-pressed to immediately come up with other names.

I am short 1/3 AVGO position as of this am and will add more on the break below 215. It's time to man up and truly ignore the "child" by suppressing my desire to move a brick wall. I will let the record speak for itself. Many here know my positions as I was open and willing to share on almost daily basis with precise entry/exit updates.

For now I am going to take a hiatus from the needless shouting exercise as I turn to administration on how to deal with verbal abuse which has been taken to a new low level of sexual orientation (apparently a hot topic among teens today). My wisdom and age both tell me to go quiet and let the other side self destruct. I also don't want to be seen as a nuisance as a result of my latest comment frequency, especially if I can take the child with me to the quiet chair. Not counting on that too much as he'll simply recycle the commenters to pick a fight with.

Muzzle on. Good luck!

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LM
admin
April 6, 2017 at 9:36 PM ×

Just wanted to say please ignore the HHs comments. Your market views are really appreciated. Unfortunately I'm relative new to the markets in order to contribute significantly to this blog.
-LM

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Tim Schulace
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April 7, 2017 at 12:21 AM ×

Almost all the discretionary macro funds I cover have some semblence of short US rates, including some who tactically traded rates from the long side since just before the fomc, leaning against the 2.30 level or the equivalent level thereof with some other tenor.
Price action on Wednesday had pain Trade characteristics. After the super strong ADP, which the bond market shook off, what happens if some of the warm weather Feb hirings get worked out this month? Calculated Risk thought that factor plus a worse than expected initial claims number in the survey week had them leaning towards disappointment. The 50 and 100 day are about to cross on 10's. 200 Dma is currently at 2.02% for those keeping score at home.

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zh jin
admin
April 7, 2017 at 3:51 AM ×

well, here it is, guys. The sudden military action on a middle east country.

You have to give credit to Trump for this decision, he chose the timing of the bombing smartly, right when Xi was having dinner with him, surprise and leverage. Of course, north Korea is a totally different animal. But, domestic voters would love a strong show of military strength.

Now after initial quick trade of shorting USDJPY, my question is: what next?

Apparently if Trump was to do a regime change, then it is really risk off IMO, possibly a repeat of Iraq and Afghanistan.

Right now, my thinking is that this is it, a one-off action. Trump is likely to call it a success if Assad gives in in some form under Russia's pressure (a big if). Then it is just a blip. Otherwise short USDJPY and long gold are the trade of the month.

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checkmate
admin
April 7, 2017 at 9:29 AM ×

They will be trying to run some popularity numbers quickly to identify whether this action gave Trump a lift. If it did then we should expect more of the same given where his popularity level is starting from.

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hipper
admin
April 7, 2017 at 10:19 AM ×

Nice coordination:
https://southfront.org/isis-launched-offensive-in-homs-province-following-us-missile-strikes-against-syrian-forces/

This is just like Iraq and Libya in the beginning.

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