Peanut Butter Carry (Unwind) Time
The EURUSD 50 DMA of $1.41 is fast approaching, just as Goldman predicted. The dollar is now back to early September levels, as the predicted unwind of the carry trade is among us. Was the European implosion really all that unpredictable? With equities lagging, once the reality of the move is comprehended, look out below in stocks.
Will the 23.6 on the Fib be broken shortly and provide the new support level or will this be the mythical 1,115 on the S&P that just can't be broken. We may get the answer today.
(4 votes)
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on Thu, 12/17/2009 - 07:32
#167243
Seems to me that the carry trade is taking a breather, rather than being unwound. That is some established resistance for the dollar, and the SPX is about 35 points higher than where it was in Sept. That means there is still a positive trend in terms of that relationship.
Either way, I doubt we will get the answer today, or ever. The market will play with our souls until every last pixelated dollar dies.
on Thu, 12/17/2009 - 08:25
#167281
Thanks, just the words I need to keep my short euros, pounds and AUD. SPX we'll see tomorrow whether its still up 35 vs Sep. Don't forget to give us your excellent views dice.
on Thu, 12/17/2009 - 11:02
#167490
You're shorting those against the dollar? If so, I would agree with your short pound play 100%. Britain's troubles will require more printing than the US. Shorting the Euro seems like a short term trade, especially at the moment, with the dollar resistance seemingly broken, but I wouldn't recommend holding it for too long.
If you're into shorting currencies, I would recommend buying commodities intead of playing the paper paper paper game (a variant of the RPS) for the longer term time horizon.
on Thu, 12/17/2009 - 07:42
#167245
speaking of carry trade unwind
When Donald Trump Showed Up To Nouriel Roubini's Holiday Party
http://www.businessinsider.com/nouriel-roubini-holiday-party-donald-trump
and then there is this
WaMu filing: JPMorgan had inside info
http://portland.bizjournals.com/portland/stories/2009/12/14/daily16.html
on Thu, 12/17/2009 - 07:42
#167246
Stocks aren't going anywhere. They are going to trade just the way they have been trading. The GS machine will make sure of that.
on Thu, 12/17/2009 - 07:49
#167251
I don't think it's a carry trade breather. Profit taking to year end has caused some of the move. Too many cockroaches appearing in europe, dubai etc for 'risk' to go full steam again in the new year.
on Thu, 12/17/2009 - 07:58
#167254
ES kinda needs to hold 1096 flat here and now. after a rather clear subdivision, ESH10 1/2 minute is showing its very first + divergences. 1096 is a prior inflection point and at the moment all the session VWAP is up at or above 1099. most likely gonna see a large buy program step in here and now to 'save' the day, 'randomly', lol. 1st baby buy signals are plotted on the 1 minute w/o confirmation. DX / $USD overnight subdivisions are just beautiful and crystal clear.
peanut butter jelly DX carry time: http://tinyurl.com/ygvuztl
on Thu, 12/17/2009 - 08:44
#167296
well played, good sir!
http://www.youtube.com/watch?v=s8MDNFaGfT4
http://www.youtube.com/watch?v=n_1rSm2MDM4
"it's peanut butter jelly time! peanut butter jelly time! where y'at! where y'at! where y'at! where y'at!"
great. now i'm gonna have that song in my head all day. eh, could be worse...
on Thu, 12/17/2009 - 11:02
#167491
I agree... I'll have the jingle in my head all day today.
Tyler -- that was one of your best title postings yet. ROTFLMAO!
on Thu, 12/17/2009 - 16:09
#167985
...peanutbutterjellywit'a base ball bat!
on Thu, 12/17/2009 - 07:54
#167256
Duh, GS recommend EUR/USD LONGS(!) yesterday at @14550 targeting 15500 early next year.
Guess they flogged there stale longs to sucker clients and are now short? What happy horseshit!
on Thu, 12/17/2009 - 11:55
#167588
There were for the short EUR (down to ~1.41ish @ 200DMA) before they against the short EUR to retail clients... But there was a good 12 hours difference between the two recommendations.
on Thu, 12/17/2009 - 08:31
#167267
I agree with Nic Lenoir's assessment that equities can fall even with DXY falling, just the same as they have held flat while DXY has risen.
In other words, the correlation is broken, and common equities can do anything here.
on Thu, 12/17/2009 - 08:16
#167270
The question is: When do the equity markets take notice?
on Thu, 12/17/2009 - 08:25
#167282
It's not difficult to figure out that the party appears to be over. Europe is on the verge of a total meltdown, but we all knew this....right?
It will be fun to watch as everyone heads for the exit.
on Thu, 12/17/2009 - 08:38
#167297
8:34a
Citi shares fall passes 10% in pre-open trade
lmao
on Thu, 12/17/2009 - 09:01
#167318
Anyone notice that the skyrocket rise of the USD index is not nearly matched by any equivalent reduction in the price of gold? Yes, gold is down a bit, but not proportionately as much as the USD index is up.
on Thu, 12/17/2009 - 09:20
#167333
Yes, I've been watching this the past couple of days. It seems to be decoupling as well.
I'm not sure what that shake-out last week was all about, but gold seems to be showing a lot of strength at this point. Anyone think it it can hold stable if equities take a dump?
on Thu, 12/17/2009 - 09:42
#167356
imho: not a snowball's chance in hell.
eurjpy leads is the leading risk metric barometer for equities.
gold et al are extremely vulnerable here.
swissie (chf), aussie (aud), loonie (cad) and euro are each leading indicants of the commod complex as whole as well as other majors / crosses ... and, while confirmation via price action is still realistically a full week away, they are all strongly implying that a major multi-month (if not multi-year) DX / $USD bottom is in the making.
again, NO confirmation, yet ... just a whole helluva-lotta coincidental secondary confirmations shaping up for uncle buck.
on Thu, 12/17/2009 - 09:14
#167334
Just so. After a move from 1.50 to 1.45 you would expect a much steeper decline.
Any day that the DXY moves lower and Gold holds, is a day where gold is moving higher.
on Thu, 12/17/2009 - 19:12
#168213
I'm just glad i ditched all my gold/silver speculation portfolio, just about 30% phsyical and the rest cash, looking to short miners of course after the next bounce. Negative 3m treasury yields definitely give me a feeling of security so as I'm long the dollar.
My level of confidence in a dollar rally is the same level of confidence I had when buying HL CDE and UEC back in Feb-Mar
on Thu, 12/17/2009 - 09:12
#167328
Equities just lagging now don't you think.Making a rounded top before the waterfall.
on Thu, 12/17/2009 - 09:56
#167371
major indexes dont consolidate (like we have seen the last month) and then drop. They go higher. This is not a "rounded top". This is a consolidation which will lead to higher prices.
on Thu, 12/17/2009 - 09:27
#167343
"New jobless benefit claims rise unexpectedly"
Well, hoocoodanode? I don't watch CNBS, so I'll wait for ZH to post the usual Liesman/Santelli UFC showdown that CNBS has become.
on Thu, 12/17/2009 - 09:32
#167345
Am I reading this right? DXY heading to 72 in a week or so? Or if it keeps going up more 66 in a couple weeks?
on Thu, 12/17/2009 - 09:32
#167346
what is happening here is a smaller slice of what happened last year about the same time.
Most of the world's debt is in dollar-denominated assets; there is and always has been a "dollar carry trade" of a sort as it is the reserve currency.
What occurred was simply demand-side dollar needs due to deleveraging to pay off those debts. Ukraine, Latvia, Greece, Dubai are all just symptoms of that. But now we have FX swaps. Any dollar strength will be crushed through those means.
As the dollar slides into the depths, these bounces should become less and less. In a bear trend, you sell the 50DMA touch. Any dollar strength will crush dollar debtors all over the world, including the USG
on Thu, 12/17/2009 - 09:42
#167358
There has to be some kind of revolving junk going on end of calendar year that is doing this. But what I don't know. Could be something to do with holiday inventories but it's ALOT of dollars.
on Thu, 12/17/2009 - 09:45
#167363
It's funny, everyone is waiting until Jan. 4 to sell, but I think the haircut one might get between now and then may outweigh the tax payment delay benefit.
on Thu, 12/17/2009 - 11:34
#167553
+100
on Thu, 12/17/2009 - 10:24
#167408
If the carrytrade is unwinding(or reverting to YEN), then there's no free money and no rush into equities or other arbitrage plays. The USG was giving banks free loaner money to go buy stocks with(or recapitalizing with casino plays against other CB's.
If unwinding begins, then everyone will need a bit of USD cash to reposition back to YEN or trash FIAT du jour.
Surprisingly, the stock markets have been fighting a reversal for months. The chart is pretty topped out and volatile. A bad sign for longs
on Thu, 12/17/2009 - 11:11
#167511
I think the Euro crisis is something that U.S. policymakers were expecting (hoping) as we went into 2010. For some, I think the disarray in the sovereign debt markets have arrived late and a little too close for comfort.
Now is the time for the Treasury to start ramping up the new issue calendar-- these events are exactly what the doctor ordered, as foreign investors will now seek safety and an advancing currency. Perhaps they will be more bold on the 10 and 30 year auctions.
As long as the sovereign debt crisis in Europe stays in the forefront, there will be dollar carry unwind.
That being said, banks are making the final push to bolster their balance sheets for the losses that are sure to come. We are quickly approaching ground zero.
on Thu, 12/17/2009 - 11:42
#167567
I love being right......
on Thu, 12/17/2009 - 11:55
#167587
Haha, love the Family Guy reference