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Why I’m Singing “Waltzing Mathilda” in the Shower

madhedgefundtrader's picture




 

If you want to participate in the global carry trade in its purest form, take a look at the Australian dollar. The central bank has been the first and fastest to raise interest rates because of rocketing commodity prices and booming business with China.

They call Australia “The Lucky Country” for a reason. I have that perfect combination of huge resource and energy exports, a strong economy, rising interest rates, a small population to support, and great looking women.

 For a start, you get a nice yield pickup of an annualized 4.75% by strapping on this trade, which is the interest paid on overnight Australian dollar deposits. Leverage up five times as many forex traders do, and that balloons to 23.75%. That’s what you make on the spread if this currency goes nowhere. If more investors pile into this trade after you, or if the yield spread widens, then you can count on a substantial capital gain on top of this. Now you know how so many traders earn their bread and butter. If you want to know how the big boys are coining it, this is the way.

There is only one thing wrong with this trade. It has been running for two years now appreciating an eye popping 75% against Uncle Buck, from 58 cents all the way up to 102.50. That gives it something of a “last year’s trade” flavor. There are hundreds of billions of dollars ahead of you from the big hedge funds, so there is a risk you could get shaken out if you get involved here, especially if you use leverage. So I would only start to scale in after a 10%-20% pull back, which we may see sometime in 2011, especially if my strong US dollar scenario pans out. So for now, just keep a pin up of the Ausie on your locker room wall.

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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Sun, 11/28/2010 - 07:43 | 758565 Praetor
Praetor's picture

Australia is no longer the lucky country. Over crowded major cities with ageing infrastructure and a lack of reliable public transport in the outlying suburbs of cities designed around the use of motor cars.

Once China no longer needs Australian mineral wealth, you can kiss its sorry arse good bye and watch the currency to fall to 50 cents US while concurrently the property bubble explodes.

Sat, 11/27/2010 - 17:58 | 757906 revenue_anticip...
revenue_anticipation_believer's picture

http://www.zerohedge.com/article/who-who-listing-countries-will-fund-imfs-bail-out-europe

Aussie/NZ fiat is pure 'commodity money' nothing 'long term' about them...the ONLY moneys that count, and upon which 'long term' is applicable is $USD, Yen/Yuan

....EURO is pure lets pretend, make believe,=> fiat based on fiat, =>based on the $USD......WHICH $USD, along with phasing-in Yen/Yua..combination..a compacted foundation of sand.......THAT $USD, "looking forward..." nominal 0-2% stable for 20 ++ years...and 10-30 year bonds holding at <3% entirely analogous to the 1873-1895 gold/silver hard-money era, long term REAL Interest rate rates holding at 5%, railroads going bankrupt, and the 'best time, ever' for the monied RICH, coupon-clipping class of England/Northeastern USA, and San Francisco..the Gilted Age....

leave the 'commodity moneys/fiat to the FOREX experts, Citi, Goldman, Morgan-Stanley...not for 'Retail Traders'

 

 

 

Sat, 11/27/2010 - 15:35 | 757716 Rick64
Rick64's picture

MHFT is very late to the party.

Sat, 11/27/2010 - 14:37 | 757634 Fat Ass
Fat Ass's picture

It's generally spelled MATILDA ... "h" would be german, or somthing.

Sat, 11/27/2010 - 14:32 | 757628 greenewave
greenewave's picture

We are about to embark on World War 3 and its starts with N. Korea. Please watch the video “Brink of War, Mission Accomplished at (http://www.youtube.com/watch?v=ZvVDt-sPQ8w).

Anonymous-

The more we can distract you from the truth and from the Great Depression II in this Country, the better!!

Sat, 11/27/2010 - 18:54 | 757973 revenue_anticip...
revenue_anticipation_believer's picture

1) dec7 attempt to pull-down the banking system....ha ha ha..so 'cute', like the failed TSA thanksgiving boycott/strike...Banks, by law, don't have to give your full cash demand, in hand been that way since about 1988, S&L USA crisis...'Junked'

2) We are about to embark on World War 3 and its starts with N. Korea

another 'false-fear mongerer....' whats your book/scam, hey, anyway??

What we are about to start is a peaceful** Political/economic Consolidation of the Entire Far East...This time, the 'great game players are impotent to screw it up, and Far East populations TOO sophisticated to allow a repeat of 1925-1945 mutual destruction, intendedly CAUSED by the European Players....

http://en.wikipedia.org/wiki/Russo-Japanese_War 

by 1904, starting with the Japanese component of the Far East Asian Block...a new conciousness, a new seeded/attitude of anti-colonialism...including a New China, recognizing the British Opium War, British Economic Violence....an understanding of never again....

Yes, the Japanese, were tricked...by the British/USA Morgan Bank conspiracy (the Fed..), along with Germany....1940 tricked into total 'desouling-submission'...to destroy Korea and China....

Just now, finally...the Far East has matured, evolved, is unstoppable, and the West Crippled by its own inherent culturally ingrained self/others destructive cruelty....Roman Law being the essential meta-framework...the cultural 'unconscious mind' finally coming to its own self emolation...

Nope, no war, and the USA needs to get its ass 'out of there'...the Korean Issue is a local issueTrust China to NOT allow that N.Korea too far...great manpower source, market, too...

any further attempts to play 'the great game' of the East India Company, Maltus the mouthpiece from 1801-30, the East India preparatory school he ran...the Indian civil service, Indian Law virtually written from scratch, by Bentham...he fully aware of the concept of 'legal fictions' knowly employing self-same 'fictions' in that Indian/Pakistani law...

NO WAR, not THIS TIME, the great game is finished

**peaceful here meaning occasional Klauswitzian application of force supplemental to diplomatic agreements...FYI, mostly along the line of China surfacing a properly competently militarily engineered SUBMARINE right in the middle of a so called 'Modern USA Aircraft carrier Task Force...including its accompanyment of attack submarines....WHO MISSED TOTALLY..'

China doing a 'Demo' analogous to Russo-Japanese 1904...or the USA Hiroshima/Nagasaki diplomatic 'demo'....

http://en.wikipedia.org/wiki/Carrier_battle_group

http://stevenmcollins.com/WordPress/?p=1577

http://www.conservativerefocus.com/blog5.php/2010/11/10/us-navy-red-face...

 

Sat, 11/27/2010 - 13:41 | 757530 IQ 145
IQ 145's picture

 Mad Hedge Fund Trader; "another wanna be FX trader with a newsletter".

Sat, 11/27/2010 - 13:35 | 757519 apberusdisvet
apberusdisvet's picture

 

 

Has Australia become China's resource bitch?

Sun, 11/28/2010 - 07:35 | 758562 Praetor
Praetor's picture

Yes, and we allow our sales reps get imprisoned on false charges as well.

Sat, 11/27/2010 - 12:53 | 757444 rocker
rocker's picture

So, now he tells us. Isn't this like GS. Tell us where you made your money and sell what you tell others to buy.

Isn't the dollar looking like a small rebound. Only because everything else looks even worse off.

Sat, 11/27/2010 - 11:57 | 757337 beastie
beastie's picture

Martin Armstrong has some words of wisdom about the Aussie dollar. Google.

Sat, 11/27/2010 - 11:40 | 757310 Rogerwilco
Rogerwilco's picture

So life's good in China's coal mine? The Chinese version of TARP was 25% of GDP. Of course none of that hot cash made its way into the Australian economy...

Sat, 11/27/2010 - 11:38 | 757307 GFORCE
GFORCE's picture

I believe we've reached a top in Chinese growth and the Aussie will depreciate alongside. China are great to deal with during periods of win-win growth. I don't expect it to be the case and zero sum.

Sat, 11/27/2010 - 03:45 | 757118 Mentaliusanything
Mentaliusanything's picture

Keep it Quiet - its been a good run but you have to know the horse. Its only good for 2 miles. The economy is Booming beyond what was expected. Pity its Borrowed. But at least they are building Infrastructure that can be used to speed up the amounts being sold. All this Foreign money coming into the country is a big worry when you have small exit. If the SHTF you can drop 7% hard in one day.

Best you watch China/ India/ Taiwan/ Japan. If any get a cold AUD currency will pass out cold. Best you hedge for that.

And It Matilda not Mathilda - and it is a story about stealing from the wealthy.

Sat, 11/27/2010 - 14:03 | 757406 blindman
blindman's picture

i think it is a story about being accused of "stealing"

a free range goat or sheep that actually had no rightful

owner.   so it is a story about being prosecuted by the wealthy

for the crime of waltzing.  the only thing that was stolen in that

story was the traveler's freedom and life,( and the life of the sheep)

so in that sense it was about stealing from the wealthy.  check it out.

http://en.wikipedia.org/wiki/Waltzing_Matilda

"jumbuck 

a large, difficult-to-shear sheep, not a tame sheep. Implies that the sheep was not 'owned' by the squatter or regularly shorn, thus not able to be stolen by the swagman."
.
but that didn't make any difference, they came after the poor bastard
anyway, then he was persuaded to take his own life and haunt the
world for hundreds of years in this song,  and by the billabong.
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