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Goldman Tells Soft Dollar Paying Lambs To Go Long AUDJPY With A 90 Target
With Goldman having recently downgraded its outlook on China, it was only a matter of time before its FX team came out with a completely nonsensical and inverted call on the first derivative of a Chinese slowdown: the AUD. As of tonight Goldman is advising clients that its prop desk has a lot of AUDJPY to sell up until 90, and will buy everything below 84, in other words Thomas Stolper says to go tactically long the AUDJPY until 90, with an 84 stop. Of course, this makes all the sense in the world if China is slowing down. As a reminder, Stolper is the same guy whose call track record in 2010 was about 0 out of XXX. On account of it being a long day we refuse to even attempt to deduce how many level of reverse psychology are involved in this call. Needless to say, any time a hedge fund tells you to buy a bridge it probably has one to sell.
Go tactically long AUD/JPY on normalization of rate expectations and recovering risk appetite
As Dominic Wilson highlighted in his latest Global Market Views, we have largely avoided taking new directional risk in FX recently, as US data have disappointed relative to consensus and uncertainty around Greece has pushed up volatility across markets. As expectations for US growth have come down however, and with a view that tensions around Greece will be resolved positively in the coming weeks, we are starting to put on risk again, most recently with Francesco Garzarelli’s short 5-year UST recommendation.
In this context, one particular focus of ours has been Australia, where the economy is especially levered to global growth. As consensus for growth has come down, we think the potential for positive surprises has grown. Indeed, some recent growth indicators, including Japan industrial production, US durable goods orders, and Germany’s IFO survey have already pointed this way. We think the AUD is uniquely positioned to benefit from this, especially given that the Australian rates market is still pricing 11bp in cuts by year-end and a similar amount 12 months out. Moreover, our proprietary IMM positioning score (see our regular IMM emails over the weekend) shows that positioning is currently very long JPY (against USD). We therefore think that long AUD/JPY is a compelling cross as risk appetite continues to normalize in the weeks ahead, on potential positive growth surprises and a calmer picture on the Euro zone periphery.
Go long AUD/JPY for a target of 90 with a stop at 84.
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The CEO of Honda has his doubts about this prognosis I'm sure.
http://finance.yahoo.com/news/Honda-CFO-says-profit-rb-1764711929.html?x...
What? I can't figure out their hedge techniques. If anything short AUD and short the ASX200, hedge buying a GLD call in AUD. China slowdown will also take out Aust banks, so short that index too. Going long in Australia is crazy.
GS are morons, the Australian house value index shows "Crash!" Plus 'other'banks are now fixing shorts on the 3yr AUST bonds.
ah f#ck em, I hope the hedge funds devour Goldman on the primed liquidity crunch coming...remember no bailouts this time!
..ok, maybe a bailout "lite" for youknowho..
..but yeah, gold & silver going back on track nicely
Hedge techniques?
Taxpayers and pension fund managers.
Maybe the odd SWF.
Why hedge when you have marks?
How dare you to take their name in vain?
How dare you write "GS are morons"?
How dare you to write "f*ck em" (I thought it's spelled fuck them)
The ways of The Squid are inscrutable, you may not question them (this includes their customers)
To something only slightly related:
Listen to the words of THOSE WHO DO GOD'S WORK
http://www.youtube.com/watch?v=UpBfhhrsFXM
Some notes to this piece of modern gospel (all hail to the Great and Holy Squid)
- some good could come from crisis (hehehe)
- now it's the time for an EU Finance Ministry, even if it's unpopular in the UK (they will do as told)
- Policy Makers don't have any imagination (so GS has to step in)
- UK has to close the ranks with a Union of States (EU needs more centrality!)
- how can you have a monetary union if the single credits are treated differently (reminds you of CDO's?)
- why didn't they (stupid EU countries) agree to a common bond?
- surely Germany does not want it (the common bond) but they might have no choice (hehehe)
- Germany has some highly complex internal politics (we will find a way to get rid of those hurdles)
- time for an EU Finance Ministry, with someone with a powerful, influencing voice (of course a GS Alumni would be perfect, he can shop-talk with the next ECB head Draghi)
- then the screen blends the EUR Chart, with the title: "Some Nations Want Euro Weaker Than Dollar Parity" (EUR currently shown at 1.44, up 18%)
- then the screen blends in the subtitle: "Low Probability of Euro Break Up"
- China will soon be more important to Germany than all other partners
http://www.youtube.com/watch?v=UpBfhhrsFXM
Amen.
Goldman's just trying to squeeze a few last droplets of dumb money into this pair before the upcoming Q3 yen and USD rallies.
Mind if I sit this one out? My ass is still sore from all that good Goldman advice over the last two quarters.
I am long this though.
I'm having a hard [no pun intended] time with the visual here: is it just Stolper or is this more of a group gangbang?
Long yen.
If you want to get long usd/jpy I would watch out for a potential headfake around that 80.3 level. The area just below 80. would be my choice.
Aussie yen has such a asymmetrical risk profile that it is scary. Everyone is in it to pickup the carry (Same thing could be said about AUDUSD as well) Folks I know the Buck is doomed, but when you get such a one-sided bet the risk/reward start to shift.
Follow the money
http://databank.worldbank.org/ddp/home.do?Step=12&id=4&CNO=1174
The AUD is right now way too high, the economy can't take it, manufacturing exports are smothered and Tourism gave up the ghost long ago. But we got dirt-cheap imported consumer electronics and not much else out of it.
The high dollar is simply hiding and mitigating the effects of inflation, but as the dollar comes off expect consumer and retailer screaming, and banks discovering a rash of defaults, and the RBA to collapse rates ASAP.
Plus Japan and China, and all the rest of Asia, is getting smacked from the AUD induced inflation in our exported energy and minerals, as a factor of whatever the Fed's week-dollah policy does.
It ain't helping anyone, except Oz engineering and mining companies buying heavy equipment from US and Europe. Which is fine, but the rest of the economy is porked, and the mortgage bubble has topped out.
Sans a new subsidy package for first home buyers it's going to be last one to leave turns out the lights in 'burbville.
AUD could be down to 60 cents by the end of this year, as the global thing hits the wall. It was 62 cents in late Dec 2008 and it's been far lower in the recent past.
I don't think the Asian growth excuse for the AUD level is a convincing tale anymore, with Japan's mess and China's banks and inflation issues.
Good comment element. The aussie is high because of that ponzi Greek eur/usd bounce.
What if the AUD, the EUR, the CHF, the SKR, etc. etc. are "just right" and the only strangeness is in the current level of the USD? Just a tought...
I've had that same thought on relative levels, as it seems the best explanation of this level and bouyancy. At this point a rate fall looks likely, sooner than later, but AUD is less responsive.
Seems to be a function of US Sovereign Risk thinking, so the AUD is still 'less ugly', whatever is happening to the Aussie economy, it can't be worse than almost anywhere else.
And that's right, for some time to come. The Oz economy will go bad, but not yet, there will be a bounce in the coming months, so probably not a declared recession (yet), but for most sectors it already is a recession. There simply isn't the unemployment of a recession as productivity has fallen to fit with that weird picture. The mortgage collapse is a slow burning fuse, give it 12 to 18 months and things will be looking a bit sadder.
But I'm fairly confident the polit-ticks will cough-up yet another mortgage asset-price subsidy.
Basically, Australia has a case of really shitty political leadership that's managing to stuff-up a 'no-brainer' economy, low population, high resources and demand, massive reserves of f'n everything you need, sitting right beside an overheated Asia.
It takes truly dedicated incompetance and serial bad advice plus half-arsed policies to mess that up.
And so it is.
I like your work, son!
not sure going long AUD is such a great idea. Aussie economy in recession now with an interest rate cut immanent. economy shedding jobs at fastest rate since 09, business and consumer confidence back at GFC levels and the housing market falling at the fastest rate since the 90's recession. March q saw 1.2% GDP contraction also biggest drop since 90's recession. Economists have put it down to "floods"
Yeah ... and the slide was on before the floods occurred.
The AUD is bid due to the interest rate differential and risk trade. Very irritating currency, you know the trend is wrong, but you go broke waiting for the down turn! Futures money market rate cut at 12% from 5%, Australia is a weird economy, mining investment boom biggest in the world, yet GDP is trending down and a bullish central bank = bizarre. Shorts on the AUD are expensive, so it's 6mth puts.
the current AUD meltup is funny, a lot of clueless Japan/Asian margin traders are piling in, a certainty that the assassins on Europe's open will start to sell.
That's China, fade.
yeah Asian sovereign buys, bizarro trades...this market is running on mania vapors.
market is now on a short term bubble implosion after Greece, dunno when, maybe on open molotov getting thrown
Tyler, go get some sleep. We need you tomorrow.
Good night all. :)
Goldmans can't find a direction! Just like the rest of the FX market. Just stop hunting pukes trying to find their next move. (G/S) that is. Trade super small, or better yet stay flat until the holiday ends! Yen .
I just read a post that inspired me to donate (again) to ZH. I've been advocating for a couple years now to my friends/family that they should pull their money out of wall st and #1 save it themselves; #2 buy PMs; #3 invest in themselves (hobbies, personal companies, side projects); #4 invest in their local community; #5 grow a garden; #6 invest in what interests you.
The poster's comment made me realize that I should give some more money to ZH as I hit f5 on this site daily. It wasn't a large sum but it was something. What shocked me (and hence the reason for this follow up post) was that my transaction ID was #2116. That seemed too low for me... I donated another $1 to check. Sure enough, the ID was #2117. That lead me to believe one of two things... one, they started over the transaction IDs (or have a different format); two, even worse, only 2115 people (I've donated 3 times) have ever given money to ZH even though this site gets a ton of traffic. Now I know that they get money from the ads they are running all over the screen but that can't be a fortune. What I'm getting at is this... if you find yourself using a site often (and I know a LOT of you do), you should either increase their ad revenue by clicking the ads or you should DONATE. It's a simple as that. Don't take ZH (or any other site you visit regularly) for granted. Put your money where your mouth is. This site has a great thing going for it and the more WE donate the less they are dependant on outside funding.
Fade that call.
Getting pretty damn funny, the AUD and NZD charts are completely whacked out.
Near or at all time highs with EZ on the brink, US and UK staring stagflation in the face, China running out of fingers and toes to plug the leaks.
Hilarious, 2008 will look like a picnic.
Just waiting for the first tv bobblehead to pull the retarded decoupling spiel out their ass.
AUDJPY is a proxy for S&P500, it's the almost the same as going long the S&P (until it's not...)
http://finance.yahoo.com/echarts?s=AUDJPY=X+Interactive#chart6:symbol=au...^gspc;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Aud/Usd is a proxy for the SPx. The euro is not a proxy, but a risk on trade, as it is a primary currency. technically you are correct! However the crosses often have a mind of their own. I'm sure you see the heaviness in GBP and AUD reflected on USD/JPY.
You should always pay attention to EUR/GBP! I'm still dancing with YUAN. It has 10 years to go @ least! I'll buy old Deutch Marks over that trade. best wishes. yen
We are grossly over indebted for housing, and gas prices are really starting to hurt. Yesterdays local prices:
10% ethanol 91 octane is ~$AUD1.34 per litre = $US 4.84 per gallon.
98 octane premium is ~$AUD1.53 per litre = $US 5.51 per gallon.
In general we have poor public transport infrastructure & commuters from the suburbs are hit hard.
Western Australia is still going OK, the east coast is a basket case, significant increase in real estate on the market and falling prices. As soon as commodities exports slow, it will all implode.
Nah, dont worry the Chinese will save you.
If not them then the Indians.
Or if all else fails I'm sure the carbon tax will create jobs too.
Haha...
Whats going on with average time houses are on the market and selling prices in austrailia. Anyone got some good data that trends and is up to date?
talkfinance Kangaroo House prices has some good threads. http://www.talkfinance.net/f32/
http://www.talkfinance.net/members/156-sim/ (SIM = SuitablyIronicMoniker) has the best data on that forum.
I haven't been following it that closely since I sold out last year, but the local paper in a rural area close to Sydney with "weekenders" for the wealthy shows a increase in stock on market & falling prices.
Also can anyone post some short trades that do not use ETF to short Austrailian banks while hedging a currency fall happening at the same time with falling interest rates in Austrailia. I would like to short this without a fall in AUD value killing the trade. Please post feedback. Thanks.
I invest with Euro Pac and have some Australian Gold stocks, you guys think it is a good time to be moving on??
As a former Europac investor I would add caution to your statement. Europac is deep in China. Europac's lack of PM emphasis(for smaller investors) and heavy stock, paper, etc. is a significant risk. China will tank as paper burns worldwide. With a massive manufacturing base, China "should" recover first, excluding destructive revolution. Secondly, importation of financial gains is, and will become more difficult. Again, for the smaller investor.
Possession is 9/10ths of the law.
A call to buy AUD is insane. There are huge problems Downunder. The worst of them are the very bad government with its new taxes, the massive property bubble and the $1.2 TRILLION foreign debt.
The AUD always take the stairs up, but the lift down.
Lift?
Try window.
+1
I think that part of Chanos' big China short is positioned in AUD fx, AUD interest rate curve and Aussie miners/banks.
Dunno bout Chanos, but i do know super stevens has talked himself into a corner with the raate rise spiel.
When he is forced to eat his words, the resulting stampede will be absolutely spectacular.
But watching how house price reporting is openly manipulated, this ponzi could go on for a while longer.
Doesnt make it any less interesting to watch tho, as evidenced by the yahoo whipsaws over the last week.
All said and done gentleman. Rates have only 1 way to go! The minute that carry gets bumped! Sayanara! Ask Gulia the carbon lady!
In gold & silver and gold & silver stocks here.
Been waiting for an AUD correction for a long while.
USA more than doubled its cash supply since AUD was at 0.75, so AUD should be at least 1.50 right now.
Fundamentals, bitchez.
Lets look at the Fundamentals. At parity an iPad was 25% cheaper in the US than in Australia. At 1.06 it is about 30%. Result, retail in Australia is now done on the internet from overseas e-sellers and Aussies retailers are dead in the water. At 1.06 few want to holiday or study in Australia. The RBA cannot see that its high interest rate is killing the Australian economy and Australia has a severe bout of the Dutch Disease. What if the lenders of the $1.2 TRILLION loans from overseas that is propping up the lifestyles and property bubble in Australia starts to feel that maybe 15% on a Greece bond is more attractive than5.2% on an Aussie bond?
meta trader is locked down un us accounts right now. Good thing I have my others.
Crude is dropping but the spx and dow are holding in the futures market.
The Aussie is overvalued but I believe Russia and China are ready to take 30% haircut on some of their dollar holdings, and that is why the Aussie is going to stay strong ( Except for the odd flash crash here and there ) And Yen has BOJ working against it as well as the Japan government. Other reason is that it costs a lot to hold a short position in AUD.
They lie and deceive. They know they lie and deceive. We know they lie and deceive. They know we know they know they lie and deceive. Now all we have to do is figure out what level of awareness comes next to determine whether this could be the one time in 50 they are actually telling the truth.
Goldman enjoys taking the other side of all their reco's and is always ready to deal