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The Scariest 50 Hours
There was a four year stretch where I was responsible for big currency spec positions. I was regularly over a billion dollars long short in either USDJPY or USDDM (this was before the Euro). This happened many years ago. I don't things are any different today, there are plenty of folks making mega-billion dollar currency bets in April 2013.
The numbers back then were surreal. Daily P/L changes were regularly $5m. It was not unusual to make or lose $25 million in a week. There were a number of us involved in this effort - trading at this level requires a 24/7 effort. We all had a percentage due to us based on the annual results. Of course we tracked what our share of the daily gains and losses were. At one point someone started to measure the personal results in cars, not money. It was either dark comedy, or a way of obfuscating the big numbers we were confronted with on a daily basis. I can understand how some readers will find this repugnant, it's the way of fast money.
How'd I do today?.....You lost a 7 series BMW.
What was your weekly nut?.....Three Corvettes.
I did if for four years, it wore me down more than you can imagine. I had to give it up. The FX market doesn't owe me a thing, but I still have the tire tracks on my back. The money was one thing, the stress was a different story.
The markets were very liquid. To buy or sell $1b was a few phone calls; it took only a minute or two. From 6pm Sunday in NY, to around 4 on Friday there is an active FX market someplace on the globe. If you had to turn-and-run on a position, you could do it. But after 4 PM on Friday, you were dead in the water. For the next 50 hours you were stuck with what you had. And of course, these are the hours when big things happen.
To be "square" on Friday night meant you could sleep through the weekend. But you didn't make money that way. We were paid to take big risks. I sweated through dozens of those weekends.
I bring this up as I was reminded of those times with the 4:30 pm Friday release of information by Treasury Secretary Lew (Link):
There are two potentially market moving sections in the report. The Treasury Department planted a "dirty bomb" at the Bank of Japan, and tossed a grenade at the Swiss National Bank. I'm thinking of all the folks who are big long USDJPY. They are going to have to sweat the next 50 hours. They have to hold their cards and wait. I suspect that quite a few FX players will have their weekends ruined.
The key words on Japan:
We will continue to press Japan to adhere to the commitments agreed to in the G7 and G 20, to remain oriented towards meeting respective domestic objectives using domestic instruments and to refrain from competitive devaluation and targeting its exchange rate for competitive purposes.
A more subtle approach was taken by Treasury with regard to Switzerland and its currency peg. In prior reports, the Treasury has said that Switzerland should return to a true floating rate, but only when "Conditions in Europe have been stabilized". The latest report omits this language. The clear suggestion is that Switzerland should normalize its exchange controls sooner versus later.
The 4:30 PM timing of the Treasury announcement was done to minimize the market consequences in the US. It does set up for an interesting opening in Asia Sunday night. Having been in this situation a few times, I'll hazard a guess on how this turns out. In the early hours Sunday night, when it's just Australia that's awake, the USDJPN will set a low of about 98.00. By the time the Tokyo, Hong Kong and Singapore markets are up and running, USDJPN, will be closer to 99.
I think the "lasting" market effect of Mr. Lew's statements will be measured in hours. I don't think the Bank Of Japan will stop printing money, in fact I think they will make an affirmative statement that will weaken the Yen. Nor do I think that the Swiss National Bank will pay any attention to what Lew has said.Some headlines will come that will read something like:
BOJ not targeting any level for USDJPY.
BOJ not attempting devaluation of YEN in FX markets
BOJ committed to QE policy set forth on 3/14/13.
BOJ to maintain target of 2% inflation.
BOJ policy is not inconsistent with G20 or G7.
SNB says 1.20 peg will be maintained.
SNB reaffirms it will intervene in unlimited quantities to maintain Peg.
SNB says USA is manipulating global markets more than Switzerland.
SNB say US Treasury Secretary does not understand FX markets.
We have an interesting setup developing. Japan has gotten a warning from its biggest trading partner (and military ally). And Japan is going to completely ignore it. When the rebuke to Jack Lew comes (it will) it will be the clearest sign you could get that the door is open for another big up move in USDJPY. Japan Inc. is going to thumb its nose at Jack Lew. And there is not a damn thing that Jack Lew can do about it.
In my forecasts for 2013 (December 2012, well before Lew was nominated) I said:
- Jack Lew will replace Geithner as Treasury Secretary. This choice will be driven by Lew’s knowledge and experience with budget matters. But Lew knows nothing of the capital markets and this will be a problem when a non-budget crisis emerges. Lew will say something about the currency markets that causes a big flap. There will be calls for his resignation as a result.
I think we just had the Jack Lew moment that I was anticipating. I believe that Jackie Boy has made a mistake. He picked a public fight with Japan that he can't win. Having picked the fight, he can't back off. When the BOJ and the markets make him look silly (USDJPY = 110+) there is going to be pressure on him. Jackie has set himself up for a fall.
In all my years of watching (and participating) in the FX markets I have never once seen a situation where "talk" accomplished a damn thing. In fact, idle talk often creates the opposite reaction to what was intended. So for those who are having sphincter problems this weekend over a long USDJPY book, and the 50 hours you have to wait to find out what happens, I say relax. By the opening in NY on Monday, you will be okay again. In a few weeks you'll be buying hot cars and houses.
Jack Lew, on the other hand, is in for a jolt. He probably thought he could talk, and markets would obey him. Some egg is going to hit Jack in the face. The "rule" in these matters is that you don't pick a public fight that you can't win, and that is exactly what Lew has done.
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As far as I've ever read, ZH has advised everyone to stay away from banks as much as possible. For the reason you mentioned - security.
But also because of hypothecation, seizure of depositors' accounts, refusal/difficulty in getting your money out, total loss of all bank-held capital should the economy collapse, the chance of safe deposit boxes being raided by DHS, etc., etc.
I would be hard-pressed to tell anyone banks are a good idea after what Corzine did last year and what just happened in Greece and Cyprus.
The only thing I see banks as being any good for are keeping a little money stored there for bill paying and other small transactions.
Couldn't agree more Bank Guy. In addition, most people don't realize that the gov't can just go into your account and take your funds, although I think they are now catching on to that fact. The gov't can freeze your account for any reason and does so all the time. I opened a swiss account so that I could sleep at night knowing it was going to be safe from the U.S. gov't or some agency (IRS, family court, etc) unilaterally and without a legal hearing, going in and confiscating my assets. This animosity against foreign accounts is largely because the whole argument is set up around a class warfare and tax evasion claim. It was always illegal to commit tax evasion and it's done all the time in the underground/cash markets here in the U.S., yet that isn't any reason to support doing away with cash. It's baffling that these folks will argue to get rid of one of the few places in the world that a U.S. citizen can go and have assets safely out of reach of the U.S. gov't. I can only surmise that they've never had a U.S. agency play god with one of their accounts yet.
Your funds aren't there. The bank spent them already.
Stockholm Syndrome - it's everywhere
I always wondered what the Swiss were pressured with.
The US government - since fighting the ridiculous War on Terror - can invade any country by simply blaming them to "harbour terrorists".
Since 70% of swiss GDP is finance and insurance, and since they offer those services globally to whomever is willing to pay ("money don't stink") I imagine the US government might have pressured the Swiss with a possible large scale smear campaign...
Not American government.........American regime.
The American people, despite their crippled and diminished current condition are essentially as with other creatures lovely enough.
Don't blame the victim. The affliction is more well equipped at offense than we are defense.
Not to worry though.
We shall rise again-:)
Just gotta take a serious beatin' first (for educational purposes of course).
Creative destruction on the macro scale bitchez
A financial system based on a lie, fiat money, can not last.
Get out while you can.
I just read some stuff by Chamish on what happened to Sephardic Jewish kids at the hands of Israel and I feel sick. I had also heard that certain Jewsh leaders had aided and abetted the holocaust and reading further details now makes you wonder about many things that are going on.
Thank you for your post. An eye opener.
Wasn't familiar with Barry Chamish and his claims so I took a look, and after reading about him, and following some related links to the like of people like David Icke, I find it surprising that even the consspiratorial-minded on ZeroHedge are giving this crap any credence.
Here's a rationally-written article debunking Chamish's claims of an intentional plot to irradiate Sepgardic children at the US's behest: http://plancksconstant.org/blog1/2007/03/ringworm_hoax.html
I was already going to point out that back in the 50s, they didn't know about the effects of x-ray radiation: my mother, now dead from cancer (go figure) told me about how shoe stores used to have fluoroscopes (x-ray machines that output live images to a CRT) for sizing your feet, and how people, herself included, would hold their feet under these things and contentedly wriggle their toes while watching them move on the screen. Now unless shoe stores in Montreal in the 1950s were part of a grand conspiracy to conduct nuclear experiments on people in echange for money from the US government, it would seem that we just didn't now any better back then.
I was also going to point out that the alleged overexposure to x-rays claimed by Chamish would have killed the majority of those exposed within weeks, if not months.
Anyway, the article I linked to above makes both these points as well.
betrayal of jews by hofjuden and shtadlans
and as i have had commented elsewhere, the hate for jews in general is misplaced and unjust
http://www.youtube.com/watch?v=c1Qr7TnWG74
Yes, when the big Swiss banks went global they opened themselves up to US pressure.
And. like everywhere else, the big Swiss banks own their government, so when the US makes demands of them, they in turn make demands of 'their' politicians.
But it's all for the good of the children, you understand. Why would you want to offshore your assets if you hadn't been very, VERY naughty?
> "Why would you want to offshore your assets if you hadn't been very, VERY naughty?"
Because you live in a kleptocracy?
Big thing in the USA is the DEATH tax. You die and they rob your family. It's simply double taxation. Which begs the question Why would you not simply put your money in gold and put it in private storage in Switzerland? I mean if you were doing that over the last 10 years you would have made out insanely well and there would be no one "reporting" you to Uncle Sam.
Yeah, BESIDES that, obviously :-)
You know the end is near when the G7 is unravelling.
No happy ending for you!
Shouldn't those two pictures have been reversed and said "Jack Shit"?
He changed the sequence as to not be so vulgar
Get real.
Just using the word SHIT made it vulger.
Rearranging the position didn't make it less vulger.
It would have been funnier as in:
"Jack Lew don't know Jack Shit about Global Capital Markets"
You know what's really vulgar? The markets.
Lew also wanted to put forth new policies to isolate the Iranian economy but even Bernanke could see they were nonsensical. He talked Lew out of them, concluding, "You don't know shiite from shinola!"
Jack Lew, you break my fucking heart...NOT! Go sit in the corner loser.
ShiZ, bitchez.
China wanted a few things from the US to go along with the new harder line on North Korea.
http://www.bloomberg.com/news/2013-04-13/china-agrees-to-join-u-s-to-end...
One of those things was for the US to tell Japan to stop devaluing the Yen. The US got China's backing regarding NK. China got its statement out of the US.
Done and done.
Thought the same thing.And JPN goes along with it because they also want NK to stand down and shut up.