October

Carry trades flying, Equities close to pre-correction levels and the "Bernanke Collar" remains firmly in place. What's not to like but the Dollar??

This week's data:

Sunday, 30 September 2007

2350 Japan Q3 Tankan large manufacturers’ index (23)

2350 Japan Q3 Tankan large manufacturers’ outlook (22)

2350 Japan Q3 Tankan non-manufacturing index (22)

2350 Japan Q3 Tankan non-manufacturing outlook (23)

2350 Japan Q3 Tankan large all-industry capital expenditures (7.7%)

Monday, 1 October 2007

0630 Eurozone European Central Bank President Trichet speaks

1400 US September ISM, manufacturing (52.9)

1400 US September ISM, prices paid (63)

2330 Australia September AIG performance of manufacturing index (52.4)

Tuesday, 2 October 2007

0900 Eurozone August producer price index (0.3% m/m)

0900 Eurozone August unemployment rate (6.9%)

1400 US August pending home sales

2301 UK September Nationwide consumer confidence (94)

2330 Australia October Reserve Bank of Australia interest rate decision

Wednesday, 3 October 2007

N/A UK Bank of England Monetary Policy Committee interest rate meeting

0130 Australia August retail sales (0.9%)

0900 Eurozone August retail sales (0.1% m/m)

0930 UK September BRC shop price index

1215 US September ADP employment change (38,000)

1400 US September ISM, non-manufacturing (55.8)

2330 Australia September performance of service index (51.6)

2350 Japan Foreign net equities investment (-¥157.0 billion)

2350 Japan Foreign net bonds investment (-¥1.160 billion)

Thursday, 4 October 2007

0210 Japan Bank of Japan Deputy Governor Iwata speaks

0500 Japan Bank of Japan Deputy Governor Iwata speaks

1100 UK Bank of England interest rate announcement

1145 Eurozone European Central Bank interest rate announcement

1230 Eurozone European Central Bank President Trichet speaks

1230 US Weekly initial jobless claims (298,000)

1230 US Continuing jobless claims (2.551 million)

1230 Canada August building permits (-11.3% m/m)

1400 US August factory orders (3.7%)

1400 Canada September Ivey PMI (58.5)

Friday, 5 October 2007

0500 Japan August leading economic index (72.7%)

1100 Canada September unemployment rate (6.0%)

1230 US September non-farm payrolls, net change (-4,000)

1230 US September unemployment rate (4.6%)

1230 US September average hourly earnings (0.3% m/m)

1900 US August consumer credit (US$ 7.5 billion)

(Source: GCI Financial)

Good September For Risky Assets

Quite a comeback in September for everything risky. The jury is still out wrt. whether the long trend of the market is rolling over after a 5-year bull market. EM and Asia are on fire! Anyway, the noise from the financial press is reaching pathetic levels and I'm prompted to quote Wyckoff:

As always, everyone seems to be guessing while evermore impatient.

Have a nice weekend.

She really is excellent...



Love this Youtube comment: "kate knows she is "perfection" and she knows Fat American women know she is "perfection".......get a life pigs....learn to eat healthy like Kate!"

Principal Investment: EADS

Since I started writing on this blog I've confessed that my long-term portfolio remains 100% in cash simply because I couldn't see anything worth investing in.

Until now.

As you know, I trade to invest but right now I don't see any reasonable investments. That has changed recently and I'll write up the investment case over the coming weekend. At all times I aim to stay true to my investment principals and a stock has finally met my criteria: EADS (in Paris).

Stay tuned for more on this excellent company which has been beaten down for more than a year because of A380 delays and management turmoil (the latter I'll refer to as the "French Premium"). With BA's order today, EADS looks a lot better to me...

UPDATE: Long USDCAD @ 1.0060

CAD correlation to the energy complex is fading and still think parity will hold support as AUDCAD has broken higher.

Bought USDCAD again @ 1.0030, average entry price @ 1.0045.

Very busy day: German ILO, US and NZ GDP, PCE Core, Home Sales, Japanese GDP.

"Easy Ben" also speaking at 17.00 GMT.

Bought USDCAD @ 1.0060

As mentioned earlier today.

UK and US Data

Goodmornin'

We have UK GDP and US Durables today as the BOE joins the ranks of liquidity-injecting CBs. Lots of interesting subplots:

• AUDCAD breaking above 8750 and thus lifting USDCAD away from parity
• Bond market sees inflation perking up (just like XAU)
  
• Nasdaq 100 trades above pre-correction levels
• GBP remains extremely weak, subprime worries seem to center on UK not US right now.
• Canadian CP also feeling the pain - http://www.bloomberg.com/apps/news?pid=20601109&sid=as9QkuEv9Wqw&refer=home
  
• Crude must correct!

I'm flat currently but I'll consider picking up USDCAD on a 20-30p retracement. Short-term target 1.0180.

Update: Short AUDJPY @ 99.76

Took profits @ 99.16 (+60p)

Been reading about UK economics, especially their subprime industry. It looks pretty ugly and it amazes me how the BOE has turned dovish quickly. Are they better informed? Sentance was rather "scared" of what to come in a speech given in Leeds yesterday.

The market has already discounted much of the bad news...

A New Week

Totally forgot my NFL picks yesterday but you shouldn't worry about that: in weeks 1-2 I was 0-4. So, better to concentrate on speculation then. Markets are coming off a terrific week that saw the Fed cut 50 bp and equities subsequently screamed higher.

I expect a slow start to the week and then volatility to pick up Thursday and Friday with lots of important data (see below).

Still short AUDJPY @ 99.76

Monday, 24 September 2007

0900 Eurozone July industrial new orders (4.4% m/m)

1300 US Dallas Fed President Fisher speaks

1630 US Federal Reserve official Evans speaks

1700 US Federal Reserve Chairman Bernanke speaks

2350 Japan August Bank of Japan Policy Board meeting minutes

Tuesday, 25 September 2007

0500 Japan August supermarket sales (-2.8% y/y)

0800 CH August UBS consumption indicator (2.261)

0800 Germany September Ifo, business climate (105.8)

0800 Germany September Ifo, current assessment (111.5)

0800 Germany September Ifo, expectations (100.4)

0830 UK Q2 total business investment (0.8% q/q)

1300 NZ Q3 Westpac consumer confidence (111.4)

1400 US September consumer confidence (105)

1400 US September Richmond Fed manufacturing index (7)

1400 US August existing home sales (5.75 million)

1400 US August existing home sales (-0.2% m/m)

1430 Austria European Central Bank member Liebscher speaks

2130 US Philadelphia Fed President Plosser speaks

2245 NZ August trade balance (-NZ$ 791.0 million)

2350 Japan August merchandise trade balance, total (¥666.5 billion)

Wednesday, 26 September 2007

0000 Australia July leading index (0.4%)

0610 Germany October GfK consumer confidence (7.6)

0830 UK Q2 GDP (0.8% q/q)

0830 UK Q2 current account (-₤12.2 billion)

0930 CH September KOF leading indicator (2.06)

1230 US St. Louis Fed President Poole speaks

1230 US August durable goods orders (5.9%)

1230 US August durable goods, ex-transportation (3.7%)

1510 Eurozone European Central Bank President Trichet speaks

2245 NZ August building permits (-15.5% m/m)

Thursday, 27 September 2007

0210 Japan Bank of Japan Policy Board member Suda speaks

0300 NZ September NBNZ business confidence (-33.8)

0500 Japan September small business confidence (47.5)

0600 Germany August ILO unemployment rate (6.2%)

0600 UK September Nationwide house prices (0.6% m/m)

0755 Germany September unemployment change (-15,000)

0755 Germany September unemployment rate (9.0%)

0830 UK July index of services (0.8%)

1230 US Boston Fed President Rosengren speaks

1230 US Q2 GDP, annualized (4.0%)

1230 US Q2 price index (2.7%)

1230 US Q2 PCE, core (1.3% q/q)

1230 US Weekly initial jobless claims (311,000)

1230 US Continuing jobless claims (2.544 million)

1400 US August home sales (870,000)

1400 US August new home sales (2.8% m/m)

1530 Australia Reserve Bank of Australia member Lowe speaks

1700 US Federal Reserve Chairman Bernanke speaks

2130 US Federal Reserve Governor Mishkin speaks

2245 NZ Q2 GDP (1.0% q/q)

2330 Japan August jobless rate (3.6%)

2330 Japan August overall household spending (-0.1% y/y)

2330 Japan September Tokyo-area consumer price index (-0.2% y/y)

2330 Japan September Tokyo-area CPI, ex-food and energy (-0.2% y/y)

2330 Japan August CPI (0.0% y/y)

2330 Japan August CPI, ex-food and energy (-0.5% y/y)

2350 Japan August industrial production (-0.4% m/m)

2350 Japan August large retailers’ sales (-2.5%)

2350 Japan August retail trade (-2.5% m/m)

Friday, 28 September 2007

0030 Australia September TD Securities inflation (0.5% m/m)

0500 Japan August housing starts (-23.4% y/y)

0500 Japan August annualized housing starts (947,000)

0500 Japan August construction orders (-10.4% y/y)

0600 Germany August retail sales (0.6% m/m)

0645 France Q2 GDP (0.3% q/q)

0730 Italy European Central Bank member Bini Smaghi speaks

0900 Eurozone September consumer price index (1.7% y/y)

0900 Eurozone September consumer confidence (-3)

0900 Eurozone September industrial confidence (5)

0900 Eurozone September economic confidence (110)

0900 Eurozone September services confidence (20)

0900 Eurozone September business climate indicator (1.41)

0930 UK September GfK consumer confidence (-4)

1230 US August personal spending (0.4%)

1230 US August personal income (0.5%)

1230 US August PCE deflator (2.1% y/y)

1230 US August PCE core (0.1% m/m)

1230 US August PCE core (1.9% y/y)

1230 Canada July GDP (0.2% m/m)

1345 US September Chicago PMI (53.8)

1400 US Atlanta Fed President Lockhart speaks

1400 US August construction spending (-0.4% m/m)

1400 US University of Michigan consumer sentiment (83.8)

1415 US San Francisco Fed President Yellen speaks

1700 US St. Louis Fed President Poole speaks

1715 US Federal Reserve Governor Mishkin speaks

(Source: GCI Financial)

Carry Trades

That's a very simple way to put it but she's definately on to something.

I know for a fact that trading rooms and strategists currently have a plan to "scale people back into carry". Most cite the stock market and how it has finally turned higher. So, FX operations are once again looking for the same juicy trends that's been on offer since 2005. Only problem is, nobody knows if a new regime is upon us and so this particular strategy will fail immensely if everybody loads up again only to get slammed sometime in the fall/vinter.

What most people seem to miss right now is the state of the Japanese economy. It's quite awful, infact, it's been slowly deteriorating during the summer and some economists have increased the odds of a recession there. So, long JPY positions aren't a sure thing. My best idea is to stick with CHF. From both a risk-reduction standpoint and a slowing growth theme, CHF should do very well. Add to this that the SNB is nobody's bitch. Roth (along with BOE's King) are the only CB chiefs that you can respect these days and they'll fight inflation before bailing out speculators and creating massive moral hazards.

End of the Week

Just sitting on a short AUDJPY position.

Today's data:

N/A Germany European Central Bank members Papademos and Stark speak

0300 NZ August credit card spending (7.8% y/y)

0700 CH European Central Bank President Trichet speaks

0800 Eurozone July current account (€5.9 billion)

0800 Eurozone September PMI, manufacturing (54.3)

0800 Eurozone September PMI, services (58.0)

0800 Eurozone September PMI, composite (57.4)

0900 Germany Federal Reserve Governor Mishkin speaks

1230 Canada July retail sales (-0.9% m/m)

1230 Canada July retail sales, ex-autos (-0.3% m/m)

1245 US Philadelphia Fed President Plosser speaks

1235 US Federal Reserve Governor Warsh speaks

FOMC, AUDJPY

FOMC equals "Friend of Market Committee" I guess. What a find mess we have on our hands. Bernanke is murdering the dollar, 'nuff said.

Anyway, with the 50 bp cut I decided to end my little long USD adventure (steepeners too). It was painful but not a big deal. I never get in a position where I can't fight back the next day. And remember, only a portion of my wealth is dedicated to trading. I still can't see any solid long-term investment opportunities that offer decent entry points right now and so I'll mostly trade short-term from here.

With Tuesday's risk-loving bonanza, carry trades are closing in on serious resistance levels. I like AUDJPY above key fibo 99.40, coinciding with the early August low.












Trade: sold AUDJPY @ 99.76.

That's Fast!

I'll be back with some lvls/trading templates for the FOMC.

Until then please see this

Holding USD, Waiting for the Fed

A bit of range trading today and a stampede out of Pounds. I'd like all the fucking idiotic economists to explain again how well the subprime crisis is contained. Now, we're seeing bank-runs!? Who knows what will happen to Northern Rock. If the Fed keeps rates unchanged tomorrow, it's down the toilet for this lender.

Again, I don't see anything close to 50 bp tomorrow. How could they possibly defend such an action? Bernanke can either get it incredibly right tomorrow or incredibly wrong. If it was my decision to make I'd send a message to speculators once and for all: the party is over?

What a minute, "you're a speculator", you say. True, only I think I'm a bit more true to the game than all the carry-trading idiots out there. A bubble, like the one in credit or Chinese equities, is an opportunity to speculate in a collapse. Being massively long such risky assets and and then demanding that central bankers spike the punch bowl again is simply ridiculous.

Long USD vs. CAD and EUR (entered @ 1.0431 and 1.3888 respectively). Continue to hold steepeners.

Tuesday's data:

N/A Japan Bank of Japan interest rate decision

0130 Australia August imports (-4.0% m/m)

0310 Australia Reserve Bank of Australia Governor Stevens speaks

0715 CH Q2 industrial production (-4.7% q/q)

0715 CH Q2 industrial production (7.3% y/y)

0800 Spain European Central Bank member Ordonez speaks

0830 UK August consumer price index (-0.6% m/m)

0830 UK August consumer price index (1.9% y/y)

0830 UK August consumer price index, core (1.7% y/y)

0830 UK August retail price index (-0.6% m/m)

0830 UK August retail price index (3.8% y/y)

0830 UK August RPIX (2.7% y/y)

0900 Germany September ZEW, economic sentiment (-6.9)

0900 Germany September ZEW, current situation (80.2)

0900 Eurozone September ZEW, economic sentiment (-6.1)

1230 US August producer price index (0.6% m/m)

1230 US August producer price index (4.0% y/y)

1230 US August PPI, ex-food and energy (0.1% m/m)

1230 US August PPI, ex-food and energy (2.3% y/y)

1300 US July net long-term TIC flows (US$ 120.9 billion)

1300 US July total net TIC flows (US$ 58.8 billion)

1700 US September NAHB housing market index (22)

1815 US Federal Open Market Committee interest rate decision

(Source: GCI Financial)

NFL Picks

Finally the weekend is here after a less-than-stellar five days of trading (I'll recap tomorrow).

On to much more important things, i.e. the NFL. "The Patriot Act" or "CameraGate", at least one has to admit that sports writers and the blogosphere are on fire these days. So many angles to cover so little time. I like the Pats but this ordeal still worries me. I think this is Belichick's last year as a head coach because come January he'll be fed up with the booing and comments like "sure, you won, but you're a damn cheat!" Quite a shame, of course, but why on earth carry on with the signal stealing when warned?

Anyway, on to my picks. I've decided on a fixed format after week 1, meaning I'll only pick two games and respect the lines (using Bodog). So, after last week, I'm 0-2 (W-L). Phew!

So, who do I like this week? Well, for some reason, bookies aren't that sure Seatlle will win their division. Considering the state of the Rams, Cardinals and Niners, that's a mistake. Jets stand to get a boost from a new QB while facing a depleted Ravens team...

Week 2 Picks
Seatlle (-3) over Arizona
Jets (+10) over Ravens

Last week/season: 0-2.

Can't wait for the Pats-Chargers game, just imagine all the subplots.

Friday The 14th

BOE bailout of Northern Rock (the chart had been pointing in that direction for months) and Greenspan didn't really get how subprime lending could hurt the economy. Jesus! "Easy Al" finally opens up, just in time for his book launch.

GS' Alpha Fund down 22% in August. Apparently, these rocket scientists were long AUDJPY for most of last month. Again, I don't care what "disruptions" occured - losing 22% in 20 trading days is pathetic and I bet the whole crew over there is ashamed. At least that's what I'm hearing.

Crude oil holding near $80, another good day in equities but volumes remain low. Everybody's waiting for the Fed on Tuesday. Only retailers throwing darts right now.

Remaining long USD vs. CAD and EUR along with steepeners throughout the curve.

US retail sales coming up today.

0000 NZ August PMI survey (54.6)

0430 Japan July industrial production (-0.4% m/m)

0430 Japan July industrial production (3.2% y/y)

0430 Japan July capacity utilization (105.8)

0600 Germany August consumer price index (-0.1% m/m)

0600 Germany August consumer price index (1.9% y/y)

0600 Germany August consumer price index, harmonized (2.0% y/y)

0800 Italy July industrial production (-0.1% y/y)

0900 Eurozone August consumer price index (-0.2% m/m)

0900 Eurozone August consumer price index (1.8% y/y)

1230 US Q2 current account balance (-US$ 192.6 billion)

1230 US August import price index (1.5% m/m)

1230 US August import price index (2.8% y/y)

1230 US August advance retail sales (0.3%)

1230 US August retail sales, ex-autos (0.4%)

1230 Canada Q2 labour productivity (0.7% q/q)

1230 Canada July manufacturing shipments (-1.8% m/m)

1315 US August industrial production (0.3%)

1315 US August capacity utilization (81.9%)

1400 US September University of Michigan consumer sentiment (83.4)

1400 US July business inventories (0.4%)

(Source: GCI Financial)

Enough USD Weakness For Now!

Tuesday's Fed announcement coming closer so let the second-guessing begin.

I've sold 1m USD calls and added some steepeners (2/5, 2/10). Fair prices all the way through the curve, if you must know.

USDCAD daily chart: certainly bottom of the range and everyone being short because of the 2-month H-S pattern would need to cover if today's session posts a hammer. This is what I think will happen.












I'm the most leveraged I've been since starting out as an independant trader.

Impact of August's Macro Data

I have no idea who Mr. Schlossberg is but this report is useful if you're trading breakouts (which I do from time to time).

Thursday

Weak internals of the market as crude oil breaches $80. Vols are winding down again in FX as we await the 800 pound gorilla to enter and kick the bulls' teeth in. I've gone from denying any links to 1987 to actually seeing some sort of pattern. The trigger, of course, will be the Fed's rate announcement on Tuesday. Anything short of a 50 bp cut will severely beat up the tape and hurt carry trades.

Still long USD against EUR and CAD. Having a look at GBPCHF intraday.

Today's data (GMT):

0030 Australia September consumer inflation expectations

0130 Australia Q2 dwelling starts (1.3%)

0400 Japan August Tokyo-area condominium sales (-10.0% y/y)

0600 Luxembourg European Central Bank member Mersch speaks

0630 France August Bank of France business sentiment

0645 France August consumer price index (1.1% y/y)

0645 France August consumer price index, harmonized (1.2% y/y)

0645 France Q2 non-farm payrolls (0.0% q/q)

0800 Eurozone September European Central Bank monthly bulletin

0800 Italy August consumer price index (1.6% y/y)

0800 Italy August consumer price index, harmonized (1.7% y/y)

0900 Eurozone Q2 employment rate (1.4% y/y)

1200 CH Swiss National Bank interest rate decision

1230 US Weekly initial jobless claims (318,000)

1230 US Continuing jobless claims (2.598 million)

1230 Canada Q2 capacity utilization (83.0%)

1800 NZ Q2 manufacturing activity (0.8%)

(Source: GCI Financial)

I hope I never make it on to this list: http://northxeast.com/blogging/nxes-fifty-most-influential-bloggers/

In the words of Joseph C. Lewis: ''I really feel that if one is successful, one of the rewards of your success is the quiet enjoyment of it,''

Sold EURUSD @ 1.3888 (+ position update)

Enough with the USD weakness! Several USD majors appear exhausted. And I know Bernanke won't cut more than 25 bp next week (trust me).

USDCAD: still long but the pain is close to unbearable.

Closed risk reduction basket this morning at a very decent profit (CHF, JPY, VIX calls, Eurodollars).

Quite a juicy trend in crude oil. A lot of oil services names to like: NOV, PTEN, GLF, HAL and APA (GS upgrade today). Saipem, SBM Offshore and Subsea in Europe.

Abe To Resign

Just in: Japanese Prime Minister Shinzo Abe announced Wednesday he would step down, ending a year-old government that has suffered a series of damaging scandals and a humiliating loss at the ballot box.

Well, should be good news for JPY but let's see.

The broader market was positive yesterday as everyone trusts in Bernanke. I'd consider loading up on vol plays as I'm sure the market will go spastic should the Fed not cut or only by 25 bp next week.

Today's data:

0030 Australia September Westpac consumer confidence (-8.1%)

0400 Japan August bankruptcies (15.6% y/y)

0500 Japan August consumer confidence (44.6)

0600 Japan August machine tool orders

0830 UK August claimant count (2.6%)

0830 UK August jobless claims change (-8,500)

0830 UK July average earnings (3.3% y/y)

0830 UK July ILO unemployment rate (5.4%)

0830 UK July manufacturing unit wage cost (0.4% y/y)

0900 Eurozone Q2 labour costs (2.2% y/y)

0900 Eurozone July industrial production (-0.1% m/m)

0900 Eurozone July industrial production (2.3% y/y)

1100 US MBA mortgage applications (1.3%)

2100 NZ Reserve Bank of New Zealand official cash rate

2245 NZ July retail sales (-0.4% m/m)

2245 NZ July retail sales, ex-autos (-0.5% m/m)

2301 UK August RICS house price balance (12.6%)

2350 Japan Net foreign investment

(Source: GCI Financial)

Update: Long USDCAD

"Don't fall in love with your positions"

I promise, I won't.

Long @ 1.0550, bought more @ 1.0462.

Let's see the greenback make a move!

9/11

SPX Rebound, Everything Else Still Looks Bleak

Financials found buyers today and energy sectors got a boost from yet another wicked rally in futures markets. Commodities in general are powering higher.

FX: JPY soft all day after horrible data overnight. Exited short USDJPY at 113.50, entered Friday @ 114.80. Retaining long exposure to CHF and JPY along with Eurodollars and VIX calls (all doing well).

Main focus on the upcoming Fed meeting on September 18th. Everyone seeing a cut, most even 50 bp. Absolutely absurd, I believe. Had the Fed seen August's price action as so severe that a 50 bp cut would be needed, chances are they probably wouldn't have waited for the 18th to come around. Accordingly, I've bought USD today against CAD (@1.0550) and intend to increase my USD holdings go into next week.

Data on September 11th:

0130 Australia August NAB business confidence (12)

0130 Australia August NAB business conditions (20)

0830 UK July visible trade balance

0830 UK July total trade balance

1215 Canada August housing starts (215,600)

1230 US July trade balance (-US$ 58.1 billion)

1230 Canada July new housing price index (0.7% m/m)

1230 Canada July international merchandise trade

1400 Eurozone European Central Bank President Trichet testifies

1430 UK July leading indicator index (0.2% m/m)

1430 UK July coincident indicator index (0.2% m/m)

1500 Germany European Central Bank member Weber speaks

1500 Germany Federal Reserve Chairman Bernanke speaks

2200 Italy European Central Bank member Draghi speaks

2245 NZ August food prices (1.2% m/m)

2330 Australia Reserve Bank of Australia annual report

2350 Japan August domestic corporate goods price index (0.6% m/m)

2350 Japan August domestic corporate goods price index (2.1% y/y)

2350 Japan July current account (Â¥1.520 trillion)

2350 Japan July trade balance (Â¥1.352 billion)

(Source: GCI Financial)

Next up: Monday Night Football!

UPDATE: USDJPY & USDCAD

JPY longs being squeezed so far. My stop @ 113.50 was triggered (+140 p)

Bought USDCAD @ 1.0550. I have to get involved with the greenback this week. Still not sure if or how much the Fed will cut. Simply don't see a 50 bp cut - too dramatic for a guy like Bernanke.

Please read this: https://gm.bankofny.com/Research/FXComment.aspx?ReadMore=Yes&ContentManagerID=6573

Monday Morning Thoughts

Goodmornin'

Plenty of things to consider, unfortunately I didn't get to read much over the weekend. Still, I like how I see the ball right now and my theme remains the same: more trouble is coming. Wall Street earnings this week and next will provide some real evidence of how the credit crunch has impacted financials. Whatever rubbish they spin off their results (BSC and LEH will surely tell us about the vast number of "opportunities") investors might finally spot the enormous mess in everything from mortgages to quant funds.

Horrible data out of Japan overnight and Goldie said in a note that there's a 64% chance of a recession there. Well, no shit. I'm not buying the JPY because of economics in the first place. I'm buying the JPY because I see further risk reduction ahead. That said, I'm very happy to maintain my basket of JPY, CHF, VIX calls and Eurodollars which I entered on Thursday. If anything, I'd add to this basket.

UPDATE: short USDJPY @114.80, target open. Stop now at 113.50. Overnight low @112.60.

Not looking for new trades right now but who knows. I'll simply play it slow as the week begins.

Today's data (GMT):

0130 Australia July home loans (1.1%)

0130 Australia July investment lending (14.8%)

0500 Japan August economy watchers’ survey, current (44.7)

0500 Japan August economy watchers’ survey, outlook (46.7)

0600 CH Central bankers meet at Bank for International Settlements

0645 France July industrial production (-0.8% y/y)

0645 France July manufacturing production (-1.0% y/y)

0830 UK August producer price index, input (-0.5% m/m)

0830 UK August producer price index, input (0.1% y/y)

0830 UK August producer price index, output (0.2% m/m)

0830 UK August producer price index, output (2.4% y/y)

0830 UK August PPI, core output (0.2% m/m)

0830 UK August PPI, core output (2.3% y/y)

0830 UK July DCLG house prices (12.1% y/y)

1230 US Atlanta Fed President Lockhart speaks

1500 US San Francisco Fed President Yellen speaks

1700 US Dallas Fed President Fisher speaks

1900 US July consumer credit (US$ 13.2 billion)

2245 NZ Q2 terms of trade (2.0% q/q)

2330 NY Federal Reserve Governor Mishkin speaks

2350 Japan July machine orders (-10.4% m/m)

2350 Japan July machine orders (-17.9% y/y)

(Source: GCI Financial)

Key Data Next Week + NFL Picks

Source: Bank of New York Mellon
https://gm.bankofny.com/Research/FXComment.aspx?ReadMore=Yes&ContentManagerID=6570

Equally important, the NFL kicks off for real tomorrow. Naturally, I consider my market operations as speculation ("intelligent foresight") whereas the NFL is a chance to outright gamble!

I like Atlanta (+3) over the Vikings and Broncos (-3) beating the Bills. Throughout the season, I'll be keeping score with my picks which I aim to post no later than Saturday each week.

UPDATE: short USDJPY @ 114.80 & Risk Reduction Basket

I discussed my overall view yesterday, how most charts conveyed the same message and that you have to act when opportunity comes around.

Well, here's me blowing smoke up my own ass: I've cleaned up massively today! On top of my USDJPY short, I own JPY against other currencies, I own CHF, I own Oct Eurodollars and I own VIX calls. All four parts were entered yesterday and I'm absolutely thrilled to be holding this basket into next week.

Odds of a recession keeps increasing yet Wall/Main Street still can't fathom it. During the last 48 hours I must have screamed at all my college buddies who've been saying everything is OK. They are reckless not me. Of course, the biggest bulls among them work at prominent hedge funds. Go figure...

I'll shut down my terminal and head for the beach - I'll gather my thoughts on Sunday.

Have a nice weekend everybody.

Awful NFP, Sold USDJPY @ 114.80

...doom & gloomers getting a boost ahead of the weekend.

UPDATE: in & out of GBPJPY

231.90 was breached in early London trade but absolutely no follow-through. The market keeps within ranges before NFP at 12.30 GMT.

I covered at 232.25.

Keep your powder dry for the afternoon...

Boooooooooring day - NFP Tomorrow

Not much to add, did nothing today. Awaiting breakouts in JPY crosses.

Retaining a basket of JPY, CHF, Eurodollars and VIX calls.

Data on September 7th:

0500 Japan July leading economic index (72.7)
0500 Japan July coincident index (80.0)
0600 Germany July trade balance (€16.5 billion)
0600 Germany July current account (€16.6 billion)
0730 Germany European Central Bank President Trichet speaks
0730 Germany European Central Bank members Weber and Papademos speak
1000 Germany July industrial production (5.1% y/y)
1000 Germany July industrial production (-0.4% m/m)
1100 Canada August unemployment rate (6.0%)
1100 Canada August employment, change (11,300)
1230 US August non-farm payrolls, change (92,000)
1230 US August unemployment rate (4.6%)
1230 US August average hourly earnings

(GCI Financial)

Cheney's Got Class (phew!), GBPJPY @ 231.90

From Melduke: Dick Cheney has ordered top Neo-Con media outlets, including Fox News and the Wall Street Journal, to unleash a PR blitz to sell a war with Iran from today, according to Barnett Rubin, the highly respected Afghanistan expert at New York University. The New Yorker magazine reports that Rubin had a conversation with a member of a top neoconservative institution in Washington, who told him that "instructions" had been passed on from the Office of the Vice-President to roll out a campaign for war with Iran in the week after Labor Day.

Feel like buying more Eurodollars...

Have placed order to sell the break of 231.90 in GBPJPY.

Dear Cathie (email)

2007/9/5, Cathie

You wrote "please hesitate to email me" and you meant "please _don't_ hesitateto email me" I think.

Reply:

Dear Cathie

No, that's exactly how I planned it. I'm open for comments via the "comments" functionally only.

Regards,
Through The Swings

The Thursday Calm

Striking how some days you see all charts in FX, Equities, Commodities conveying the same message: a big move is coming. Credit markets are still paralyzed, people I know in that area of the game are still shocked and nobody wants their bloody paper. Hedgies have been instructed to up the stakes in order to make back (some of) August's pathetic losses. Admittedly, my network in the HF community isn't big but who the hell takes care of risk management in this industry!?

Here's what I don't like: the picture is too perfect right now. Everybody's waiting for the house of cards to fall and as even junior traders know, "the second wave is always bigger". Whatever, a lot of people also say that the next plunge will only lead to a retest of the lows. Never really understood that sort of prediction. It's only a macro trade now and SPX doesn't give a damn about 1375 if we go there again. It'll probably pierce through it with ease.

I Have bought Eurodollars, JPY, CHF and VIX calls today. No details, I regard the basket as an overlay. If the boat starts rockin', I'll clean up, naturally.

"When opportunity comes along, he is afraid to seize it without asking his neighbour’s opinion."

-Richard D. Wyckoff

(don't be that guy...)

Dow Down 143 p

...surprised not to see more downside on a day like this but whatever. Had a great day: 11 points in SPX, 190 pips in GBPJPY. Judging from the tape, next couple of days could bring about some dire moves. The Beige book once again said that the real economy isn't effected by the subprime mess. So why cut rates, Bernanke? Thought so!

Trading template going into the weekend: JPY break-outs everywhere.

• USDJPY @ 114.99
• EURJPY @ 156.52
• GBPJPY @ 231.89 (this lvls is massive!)
• CADJPY @ 109.03

Also EURCHF @ 1.6427, a break here would set off further risk reduction across asset classes.

Data on September 6th:

0130 Australia August employment change (21,800)
0130 Australia August unemployment rate (4.3%)
0300 NZ August ANZ commodity price index (4.7%)
0545 CH August unemployment rate (2.5%)
0600 Japan August machine tool orders (18.8% y/y)
0830 UK July industrial production (0.1% m/m)
0830 UK July industrial production (0.8% y/y)
1100 UK Bank of England MPC interest rate decision
1145 Eurozone European Central Bank interest rate decision
1500 US Federal Reserve Governor Kroszner speaks
1500 US San Francisco Fed President Yellen speaks
1600 UK St Louis Fed President Poole speaks
1625 US Richmond Fed President Lacker speaks
1800 US Dallas Fed President Fisher speaks
2301 UK August NIESR GDP, estimate (0.8%)
2330 Australia August performance of construction index (48.8)

Crude oil still rallying, full retracement toward $79 seems reasonable.

Until next time...

How About That Bottom in Housing?

Reuters: NAR said its pending home sales index fell 12.2 percent to a reading of 89.9 in July from a reading of 102.4 in June. Economists had been expecting a much more modest decrease of about 2.0 percent.

Standby for the US recession - coming soon to a theater near you...

UPDATE: Short GBPJPY @ 234.19

Taking profits on the balance of the position at 232.17. Adjusted exit price is 232.285 (+190 p).

SPX futures indicating a notable rough start to the US session. What's interesting, is that the market sold off in the last half hour yesterday on a big chunk of volume. Let's see if sellers continue today.

Please read this: http://news.bbc.co.uk/2/hi/business/6979577.stm

UPDATE: Short S&P 500 @ 1495

taking profits here at 1484.

I'm left with a modest short position in GBPJPY entered @ 234.19. Just a while ago, the pair bounced off yesterday's low 232.93. Fun stuff...

UPDATE: Short GBPJPY @ 234.19

Very nice follow-through as cable takes out a couple of lvls to the downside. Nikkei getting slammed overnight, SPX futures down 15 points from last night's high. The influence of the "Punchbowl Caucus" is fading...

Took partial profit at 232.40. Will sit on the balance for now. Yesterday's low 231.93 to provide support intraday, a break of this lvl and the chart begins to look ugly again...I smell a big payday coming up :)