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Carry Traders Getting Carry'ed Out Feet First, All Who Followed Goldman's BZL Trade Reco Now Taken To The Woodshed
All carry trade pairs (and the traders who still have these on) are getting the Friend-O treatment today. Whether the funding currency is the dollar ot the yen, the need to convert paper losses into real ones will likely hit the stops today causing a rush for the exits (if it hasn't happened already). At this point you can take Goldman's ever optimistic double down on the BZL trade and use it for toilet paper. One wonders if Lloyd wouldn't be happier not having a prop desk on days like today. Incidentally, both Deutsche Bank and Citi are actively eliminating their prop trading desks. Deutsche Bank earlier announced that "the bank has eliminated its proprietary credit trading
business and reduced proprietary trading in equity and equity
derivatives by 90 percent, Ackermann said in remarks prepared
for the bank's annual results media conference on Thursday." Thank you Boaz Weinstein. In other news, Citi prop traders Matthew Newton and Matthew Carpenter has just bailed, seeing the writing on the wall.
Back to the carry trade pain, seen here in three beautiful charts.
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Crash this pig into hell!!
Call it. Its the best I can offer.
http://www.youtube.com/watch?v=f-2E3_vfxfw&feature=related
You should admit your situation, there would be more dignity in it.
One must be very stupid to believe that the Brazilian currency will appreciate against the dollar, when the Brazilian government openly speaks that it wants a currency devaluation.
Overvalued BZL undermines Brazilian exporters, and the Brazilian government is very sensitive to the claims of exporters.
The Brazilian government wants a devaluation of at least 20% of the BZL, and take concrete steps, day after day, to encourage this devaluation. If the government wants, I would not be so stupid as to bet the opposite.
The problem is that everybody wants their currency to devalue relative to other currencies. Not everybody is going to get the devaluation they desire. The only guaranteed devaluation is the USD, and that's the one currency almost nobody wants to see devalued. The global economy was based on other countries exporting their crap to the US. We're broke and can't buy their crap any more.
Game over.
You may not get the devaluation you desire but you always get the valuation you deserve.
Goldman does not care what the BZL government wants. Goldman usually gets what it wants though. BE CAREFUL!!!!
I would like to sit Friendo down with Lloyd for a one on one chat...
they could have a discussion about God's work.
Lloyd: "you don't have to do this."
Banks pulling the HAL 9000's after a nice ride up -- nothing to see here...
Actually the third graph would be nicer if the range was from 12/1 to present for the long Eur short DXY
Yen getting samurai strength back... Gonna have some pissed off Jap exporters when they wake up to this...
Good morning, you stupid bulls! How does it feel having the Dow down 200 points? It feels real good to me. You stupid fuckers shouldn't have drank the kool-aid.
Classic. Anyone heard how Saba Capital has been doing?
We've been writing for a year stating that liquidity is gone (literally). We came back from Europe in June 2009 and was told that ALL investors have 50% LESS money to invest (i.e. either lost in the markets or redeemed). Thus, if estimates put 70% of the remainder of this money being traded by algos, props, government, and HFT's, that leaves only 15% of money left in the markets, as being "true liquidity." There are HUGE structural problems underlying these markets today. It takes very little to cause a crisis. Look for European Central Banks to announce some kind of bail-out program shortly to stablize markets. Ben did it, why can't Claude. It's coming...
At the risk of putting my neck on the chopping block... No entity can fully describe (i.e. predict) itself. As the masses wake up in the digital millennium, ever more complicated prop trading mathemagic algos will fail. There are only two paths toward aggregated long term market success 1) transactions denominated in a central bank issued fiat currency or 2) pseudo front running via HFT. Just my $0.02.
ooh ooh, I got dibs on SPIG. Someone send a memo to CNBS
BZL? BRL? I suppose buying real funded from bank of new zealand might be a carry trade
Do not trust these markets, Brazil is anticipating a much bigger fall worldwide...
I'd be ware of any long positions at the moment..
except for negative beta stocks, if they exist
El Friendo should stop by Ben "Bendover" Bernanke office too..