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Today's market forecast: "A giant carry trade enforced to all asset classes by every quant fund out there"
Zero Hedge's prediction for our 4:15 pm headline:
The market traded in absolutely synchronicity with the EUR-JPY carry trade. Volume breadth was non-existant. Bad news were spun as good news. HFTs gunned whatever was greenest on the heatmap. Consumers purchased nothing as Obama was contemplating Stimulus 2 and Bernanke did the same with QE 2. The SEC did absolutely nothing to restore any confidence in the market.
Nic Lanoir of ICAP's prediction for the market:
We will save the discussion concerning a global currency and how ludicrous this poject is for a slow afternoon, probably today, and for now focus on what the market has in store for us.
Trading keeps being dominated by a completely binary dynamic pro-risk/anti-risk, which is nothing more than a giant carry trade enforced to all asset classes by the correlation matrix used by every quant fund out there. And it can be summarized by how the USD is trading.
A quick look at the USD index makes me think we are forming an ending diagonal. I was wondering about that looking at EURUSD yesterday, and it seems other Elliott Wavers out there are making the same observation about the Dollar index. The attached chart shows the ending wedge we are forming, and would indicate that the DXY is going to chop lower, a process that apparently could last another month and a half if we are out of luck... And then we would have a brutal reversal and USD strength. To get a good idea of what an ending triangle looks like take a look at AUDUSD last year, it's as textbook as it gets. And don't forget that there is often times an excess on the last leg past the support before it reverses!
The other possibility is to have a sharp reversal here. The chart for gold makes me think this is a possibility, after we rejected a close above 1,004.8 yesterday, and we could possibly be drawing an evening star. Look on the chart where I highlighted a perfect example of evening star which occured last March when we first failed to close above 1,004.8. However we would need to see a rapid drop over the next couple sessions to confirm this scenario.
So there you have it: slow painful grind before the storm or a quick reversal. Given that I expect a very sizeable move the other way, I think it is much more likely that with the use of propaganda, revised data, and 10th derivative arguments on the business cycle, the eternal utopists or evil carry-traders will try to hold this status quo and push the market a little further into risk appetite territory before all the retail accounts can get properly wiped out.
Good luck trading,
Nic
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76s ... wake up you guys
all the SEC attorney dildos read this site. ALL without exception ...
how you doin DILDOS?
They don't/won't do anything because of their hope to get a job in NY (gs,jpm) when their stint at the sec is over. Funny thing is though, those jobs won't be around anymore due to their complete lack of oversight into those same companies. One can only hope that they suffer worse than the population they're supposed to protect.
I don't think retail has been buying recently... need another 20% up before they jump in.
Everybody I talk to (retail) in the US and Canada is extremely bullish. More bullish than I recall from 2007.
Love this post, Tyler. Keep them coming.
If the dead dollar isn't enough to light the fire higher, a few thousand nasdaq futures contracts will do the trick.
When Chrysler got in trouble the first time. It was pretty easy for management to rape their pension funds. I guess raping all of america's pension funds is bit tougher.
Gee and I was hoping for armageddon just in time for Christmas. ;)
A SHOW OF HANDS:
How many out there think equities tank hard within the next twenty trading days (no more), and how many think we continue at worst moving sideways through the autumn, with no harm, no foul?
sideways at worst. there are still too many people predicting the 'tank hard' scenario.
If there's one thing the dot com bust, and the housing bust taught me it's this: When the crash is 100% obvious to you, and seems unbearably imminent, sit back and take a deep breath. It'll happen in a year or two.
Sideways to up , until heath care is settled.
It's really up to the robots.
I'm am still of the opinion that we establish new lows by eoy.
If not in nominal terms then in S&P/Gold.
After 10/01/09, which is China's national day.
Do the math. The dollars falling too fast. Trying to do things slowly and disruptively is not working. Eventually the sprint will begin. I can't see how it can last past sept 22nd.
There will be dips but thanks to inflation, green shoots, and robot trading, I don't see any real chance of ending the year lower. Slow forward progress with some potholes along the way.
TD,thanks.
Looking forward to your global currency discussion. Many thanks.
GS just rated outperform by JPM. Reciprocation should follow by end of week.
But aren't you just a wee bit nervy about calling the whole thing the wrong way?
In my heart of hearts I know the markets going to tank but ...
None of this matters anymore. Technical analysis, fundemental analysis, all of it is useless. We have supercomputers concurrently trading F/X, exquities, and bonds at 1/1000th of a second. They hold all the keys, they control all of the gates. The entire system is gamed on two trillion dollars of cb money.
And that is guaranteed to work perfectly right up until it doesn't...
Reciprocation, or circle jerk?
perfectly stated
watchout. 9/9/09. turn that upside down. no only that ... it's 9 am
Not that I was in the market in 1987, but doesn't this feel like 1987? It seems that most people are even acknowleding the elephant in the room, but then change the conversation. Is it the threat of mutually-assured destruction that is keeping the market afloat? Surely we will see the circuit breakers used to prevent a slide this Fall.
I traded since 1976 and I have been saying since June that this feels EXACTLY like 1987. All asset classes were bought and then one day, the levee broke. The Fed has "saved the world"....they actually said it. That will be included in the next edition of "Manias, Panics, and Crashes."
This market is never going down again. Give it up.
Bullion banks desperately trying to hold the line at $1000 in Gold.
G-G, I always like your short and sweet comments. Thanks.
Never underestimate them, they may succeed.
trojan horse Barrick sells hedge book
I just saw this spun as a green shoots story... 'easing liquidity in the equity markets' ... hilarious!
I don't trust ANYTHING that Barrick does. Not a place to go into detail about their level of corruption but I still wish they'd never been able to buy out Placer.
No way to spin this. Barrick got caught without the gold. They have to raise money to cover.
http://www.gata.org/node/7773
I've noticed few people wanting to understand the carry trade. Here's a good source of information.
http://www.youtube.com/watch?v=wFzUR1k3ku4&feature=related
Thanks... Max is as always very entertaining yet clearly resonates with great understanding of the facts.
Morning Minny...
Hi...
How's the day in Montreal... is the CRE market in Canada struggling when loans need to be rolled over like in the USA... or were you guys more prudent and don't have to wait on pins and needles for the CRE bomb to drop? Are CRE developers in Canada continuing to build... or are a lot of projects on hold... only ask because that is what our company does in the USA.
Montreal is actually next week... and exactly how did you know that?
CRE is struggling but prices have not yet adjusted to any degree. We are 90% leased. Yes the bomb will drop.. and since 'we' pretty much shut down acquisitions about 3 years ago we are in an enviable situation. Projects under way are being finished but very little new development is occuring. We have two new major (for us anyway) properties under contract that will be completely equity financed. I still have a couple of months to decide wether or not to pull the trigger. It's not my money, but it is my call... apparently I have a good track record.
I never figured you for an R.E. type Minnie.
P.S. How's the Mall of America lookin these days?
Mmmm... you mentioned Montreal and calamari in the same sentence... so I assumed you must live there... maybe not though :-)
A few years ago I got involved with CRE developers who really liked a business model that I created... so we entered into a partnership... it took off... and we build and develop across MN. Fortunately, in addition to now knowing just about everything there is to know about site selection, site development, building, contractors, and many other less desirable sides of construction... we also own the business model that goes into these projects... so you could say I 'saute the calamari' in addition to owning the 'bricks and morter'... which has been a godsend so we can protect our financial interests and not rely on someone to lease the space from us... however it would be nice to sell the business at some point while retaining the real-estate and the associated tax advantages.
My partners also do other commercial development where they are reliant on unrelated tenants... and it has been pretty nasty... banks calling in huge lines of credit... and they just finished building some big projects just this year... so are trying to lease lots of space.
Mall-of-America... was just there a couple of weeks ago... and traffic appears to be light... easy access to restaurants when there used to be a big wait... seeing shoppers with only one or no bags... I am really glad I don't own a speciality store in there like the one that makes only gourmet dog biscuits by hand in their own bakery... can't imagine that they are sleeping well at night :-)
Mmmm dog biscuits... for dogs?
Trapped equity... know all about it. Looks like you are now going to have to go along for the ride.
Oh... and sleepless nights? Bin there done that and will be doing it again. The chief is a triple or nothing kind of guy... but his fearlessness is contagious thank goodness. It also helps when you have set aside more for acquisitions that you owe in mortgages.
Actually it was Toronto... (Am I going Crazy?)
Yep... for dogs... so you better steer clear of there... you are probably rooting for it to go out of business :-)
Oops... it was Toronto... my bad... I get a pass though since you spelled calamari wrong :-)
Yes... trapped equity it is... but when I sensed the upcoming storm in the end of 2007... I was smart enough to make my partners buy my share of the first building/business we built... so I could ride out the recession in comfort.
Comfort is good... catch you on the next thread!
Die, Bullion banks, DIE!
this computer-guided market action is so sickening
like a guided missile, it will blow up when it hits the target
this shit shouldn't be legal, but obviously Team T3 is involved
scumbags
Whew, I managed to get the channel changed off CNBS at 11 o'clock to Bloomberg before that prick Kudlow could open his whiny, green shooting mouth and ruin my day.
"The chart for gold makes me think this is a possibility, after we rejected a close above 1,004.8 yesterday..."
Who is this "we" white man?
Gold was dumped all at once in a giant paper raid at 11:40 yesterday afternoon and then squatted on like a bar stool at a pie-eating convention.
"We" did not reject gold, but somebody did. I'd hate to ascribe any broad market insights from a paper raid undoubtedly conducted by an extremely limited number of market participants.
Fortunately, someone forgot to tell silver.
Of course, a sharp reversal or any drop is not completely out of question. But I really need a strong convincing argument as to why it is possible when we all know that the big guns have access to unlimited supply of money. And when shorting has become way too difficult.And when I believe that the agreement between the FED and the tbtf is;you keep the market high,and you stay in business. And the most important part,they have to convince the general public that everything is just back to normal and this was just a blip on the radar,and this way they can draw in whatever left of people's pension funds. Having said all that,a big catalyst of course would bring the market back to its senses. Absent that, I see the next crash coming in about 5 years(the function of greed and dishonesty is increasing,therefore time between crashes would be decreasing.87-2000 thirteen years,2000-2008 eight years. And 2008-? should be less than the 8 years.
Watch RUT ramp. No one guns a index higher on no volume. Up 6% since Thursday on no news.
The volume in tza was getting pretty high. I guess jpm bought a bunch more iwm. Maybe tyler can confirm this. Like bankrupt deidrich's coffee with a p/e of infinity wasn't high enough. At least someone these days has a sense of humor.
So the market will either go up, or it will go down. Got it.
it will not go down
because it is no longer a market. it is just a show.
"I think it is much more likely that with the use of propaganda, revised data, and 10th derivative arguments on the business cycle, the eternal utopists or evil carry-traders will try to hold this status quo and push the market a little further into risk appetite territory before all the retail accounts can get properly wiped out."
Priceless and precise commentary.