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Taking Another Shot at the Garlic Eaters
If you have to name one beneficiary of QE2, the collapse of the dollar, and a seemingly never ending “RISK ON” trade, it has got to be the euro.
All of this strength has come from an interest rate differential of a measly 25 basis points over the dollar, the result of a modest snugging the European Central Bank executed a month ago.
Never mind that outside of Germany much of Europe is bankrupt, their banks are engaging in accounting acrobatics to obscure their negative net worth, and there is a giant crisis brewing in the widespread crossholding of sovereign debt. Did I mention that the EC may split into rich and poor halves?
So I am going to start taking shots at the euro from the short side once again. The markets are much more extended than they were before, so this time it should work.
If you can’t do forex options, you might consider going short the (FXE). If you can’t, or don’t want to go short, you might consider the (EUO), a 2X short euro ETF. A lower risk option would be to buy the (UUP), a non-leveraged long of the dollar against a basket of foreign currencies. Look at the chart below and you will want to salivate. The initial target should be the old break out level of $1.425.
UPDATE: Since I wrote this piece days ago, a lot has happened. The ECB did not raise interest rates as expected, Greece threatened to withdraw from the euro, and the “RISK OFF” trade found the euro with a vengeance. The European currency collapsed from $1.49 to $1.42 in a heartbeat. We are now overdue for a snap back rally.
I would sell into this. I think that the low for the year is in for the dollar. The change in market sentiment is that the Europeans have quit raising rates and will hold them level, while the US will continue doing the same. This has broken the euro’s upward momentum and is hugely dollar bullish.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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This is a site to visit if you are interested to know the tumble in the global
economy and the drop of the US dollar and the Euro. A subject oriented site
which should be helpful for stock brokers and investors. Should keep the big wigs
busy on knowing where their dollars go! http://www.natureexports.co.in/
Ye olde MHFT, whose wisdom respects ye olde natural miracles of the garlic plante, who wishes to scalpe hand-some profits from ye who would work for a living, herald faith in ye who testifies to the miracles of the dollar, who mercilessly flails one fiat currency at the iconoclastic expense of another, who doesn't undestand the meaning of the word differential, who perpetuates calls for the purchase of various copulating chip-improving condiments, and who remains uber-bullish on all forms of torture, who wishes to contemplate what happens to the souls of those who benefit most from QE2, and shockinglye enough, whose divined winner is ye olde central bank, thanks to thy lowest interest rates in history, is "taking shots". Score a farthing for mankind. Thanks MHFT, you've made thine world a better place.
If he had a Business Model that was value added he would not be percieved as the dead wood as they are Capital Investment. Make your own investments we are tired of the leeches already.
So Ebwhorthen:
What makes FX different than any other market? None are free, all to my knowledge contend with 800lb Gorillas. FX is a specialization. Unless you are some kind of freak genius who can juggle eightballs while singing a lullabye at your mothers funeral, you will need to specialize.
Each market, just like every crazy ass bitch you have ever seen or dated requires time and attention if you want to get what you want, and hopefully what you want is some sort of mutually agreed upon outcome. I'm drunk today, so give me some space, but I would posit that the market is a Woman. She really does want you to be happy. That is her nature.
Here is the tricky part....
She wants you to be happy as the result of making her happy.
In other words, just follow the fucking rules and keep it (as best you can) simple. And ALWAYS appreciate the market.51
Anymore shit folks? Now I've no less than the trifecta of MHFT, Mother Earth, and George fucking Washington behind my down EUR.
How 'bout you?
Hey, at least he got the text to show up on ZeroHedge this time.
"Forex" has always sounded like a pornographic term to me, "foreplay" and "sex" shortened or four ex's or something like that.
Everybody loves foreplay and sex but dicking around in the currency markets always seemed like unprotected sex with a prostitute or playing craps to me.
Unless you have an inside wire to the central bankers and politicians, any position beyond a couple of hours is laying your neck out for those who do.
As if I needed one more word in the quasi-English language to evoke distracting mental pornography. thanks a lot ebworthless.
wise words...even Soros would approve.
Had to clear my throat, (cough, coughed again damnit. FUCK)
Fine now.
You don't say my good man?
EUR wins eh?
Well F.Y.V.M for the brilliant 'INTEL'
Marvelous darling. Head and shoulders bitches, with wide stops. Maybe even 146 before 127, but the fucking rattrap EUR will hit parity. Wide stops and emotion/money management are the key. You will not likely hit payday for quite a fucking while, so calm down and THINK!.
Crude example?
$1000 USD = 100,000 USD between Sundays open and 1.31 if you prepare and make (mostly) the right moves.
I'll let ya know.
And yes, I get it that we might well yet see the squids 1.50 before parity. It is likely to be an intense ride.
We will see 1.35 or less first though.
I.M.R.A.H.O
Whatever dude. So if its just us B grade tools left alone on the set... What timeline are you framing? I can't debate you on the price of EUR/USD 5/25 if you are talking EUR/USD 9/25.
Online saves a lot of blood, but it sure as hell makes for a dull conversation.
Having observed the massive relative strength of the Euro against the dollar and the pound over the last few years,I can only think the mere bankruptcy of a few countries once dealt with, will be seen as a massive positive for the currency,the poor relations might even leave or get kicked out,ask yourself how weak would a currency of the strong northern countries be against the economic basket cases/politically straightjacketed economies of the UK and USA?.
Precisely,it will be the safe haven,currency of choice for anyone seeking to avoid the endless debasement of the $ and £. The Chinese have been big buyers of Euros and PIIGS bonds,with that kind of momentum,the MHFT could find his options moving from profit to loss very quickly.Of course he is a trader,and by using options he is prepared to lose the entire stake in order to make multiples of it if it goes right.The danger is for those shorting Eur/$ or Eur/GBP with a FX account at 10-50 to 1 margin.They will probably blow up before they know it.
Nope. Not for now. I give myself the weekend to get fucked up and view the prior week from a different angle. You could call it "market participation"?
Seriously, I suppose that of all the lovable qualities so transparent within ZH is the embracing of individuals who exhibit the courage to speak what they find to be true, VS. the Borg/leviathan of common thought.
So I thank you and implore you to something before you write.
(appreciate the advice from you though :)
"If you want to go short the euro, buy gold.
If you want to go short the dollar, buy gold.
If you want to go short the (state your fiat currency), buy - you guessed it."
Excellent one! And yes I did buy gold some time ago ;-)
Lay off the bottle before for a little while you write something
I 100% agree that gold is the ticket long term (silver is even better). This is short time though Bro'. Currency pairs are relative and the EUR/USD play will provide lots of gold if you follow it well. Not for 'dabbling', you need to live it and know it. FULLTIME.
Look at the freaking chart!! Hundreds of pips a day if you learn it. Sentiment dancing with fundamentals on the technical beat. I know shit about investing but even my ignorant ass can play EUR/USD. Who the fuck cares if its fake money as so long as you can trade it for real stuff? (for now right?)
If you want to go short the euro, buy gold.
If you want to go short the dollar, buy gold.
If you want to go short the (state your fiat currency), buy - you guessed it.
Every currency has terminal cancer. Who cares about Greece? Maybe the rest of the euro zone cares more about the euro and they just carve the cancer out? Then your short will get reamed. All currencies suck.
well there aint enuff gold for all that fiat...so you better invent another metal!
Ever here of supply and demand? Demand goes up against a fixed supply, price rises to balance the demand. There is PLENTY of Gold to absorb fiat, the only question is at what price?
well lets see...we have a 100 trillion world economy....lol, I know its only paper value...but for gold to be liquid ...that makes it necessary for it to be transportable in small like big amounts. What is the total gold qty currently in the world?
All the gold in the world is 160,000 tonnes or 5.17 billion ounces. Central banks hold about 30-35K tonnes.
All the gold in the world would fit in the cube the size of a tennis court. It could ALL be transported on one ship.
If you take out a rule and measure a cube 40cm x 40cm x 40cm you would have one tonne of gold valued at todays price at about 49million dollars. That same tonne of gold would be priced at about 617 million dollars if gold were 19,000 per ounce.
100 Trillion divided by 5.17 billion ounces = about 19,000 per ounce.
You would not have to constantly transport gold so long as the paper issued can be redeemed for gold. For example you may balance your financial account quarterly or yearly.
Any dollar rally will be short lived. By the end of this year, QEn will have already been baked in on the road to hyperinflation. Other than Bush, Obama is the most malleable puppet the elites have ever had. His re-election must happen. Any perceived to be strong opposition candidate will be ridiculed, derided and slammed on a daily basis by the enabling media.
Events, however, have a way of derailing the best laid plans. A PIIG default; flying nukes; the truth about the Fukushima fallout over North America; even the "big one" hitting California.
For 3 years now Greece's collapse is announced to be imminent.
Still hasn't happened until today.
This story is starting to get boring.
And I don't think the strength of the Euro is stemming from the 0.25 % = 0.0025 interest,
but from heavy buying by China.
They want to keep their Yuan weak.
For those who purchased silver in 2003, the story was also boring for a long time.
Didn't make it any less true.
The reality is that the short-Euro trade is going to be mad fun when this game heats up.
When? Well that's largely up to policy. But one thing is for sure: The Euro is toast.
"This story is starting to get boring."
Just wait, it'll start to get exciting soon enough.
U still have the "long dollar/short stocks (or vice versa)" mentality dude. That ship sailed in Feb, all markets started to decouple from one another
Here's a few scenarios for Greece's demise:http://themeanoldinvestor.blogspot.com/
Hey...This guy is a TRADER. I submit that you not forget that. Is he mad? Politically, yes. But this isn't politics time, it is trading time and MHFT'er is a rich mutherfucker because he knows how to trade profitably better than 50% of the time.
EUR/USD is going south to 1.35 soon. It's just in the cards. Make a buck off it or not, your choice. No mention even of Spains elections Sunday? The fakers presently in charge of lying/stealing/pretending are about to get their asses tossed and the replacement liars/thieves/pretenders will expose the previous placeholders as a device to gain some street cred.
EUR down.
The USD is the least ugly girl at the dance.
Have another drink, they will all start looking better.
What a white, padded room we now live in.
Garlic protects you from cancer, you MHFT dick!
Pasta with garlic sure beats a greasy burger you retarded primitive under-educated low-life gourmet... :-)
Whatcha afraid of with garlic? Bad breath? But you have mental bad breath!
HEY, I LOVE GARLIC!
Try it RAW, DICED into tiny pieces,
with MOZARELLA melted on fave gourmet BREAD.
MMMM...some Red Wine.
You would make a great yoga class teacher. The contortions and loops you can imagine to justify what you just previously said was heresy, and is now seen as a surprise contrarian play with a gilt edge, takes my breath away.
Next step : You'll be teaching us the Kama Sutra! All 35 basic positions!
Good God, falak:
Don't give him any ideas!!
This is no Kama Sutra, it is pretty straightforward. The speculators are still heavily all in this euro trade against the Dollar. As the author suggests, it wouldn't take much to unwind this trade, regardless of the true merits of the Dollar.
Euro COTS:
http://snalaska.net/cot/current/charts/EC.png
If it was as straight forward as you make it out to be it wouldn't be moving like a yoyo since beginning of year. The mad currency war, the huge PD and HF speculations from Yen, to Euro, to USD, is an indication that hot leveraged money is as nervous as a virgin filly corralled in a pen of stallions. Any allusion to current events very appropriate.
As for the level of this unwind...its like the next move in a love dance...and it won't be ending soon...
he will invent his own positions, after he teaches the basic 35.
that was the most tenuous series of rationalizations I've read in quite a while.
Ouch!
were you tickled or pinched?
Shit, I can't even touch my knees.