This page has been archived and commenting is disabled.
A Trader's View On The French Markets Today & Overlooking The Inevitable Pan-European Real Estate Collapse
Morning trading update from Eurocalypse...
It has been a hectic time laced with a very violent market. It’s been easy to get burnt both by being bullish or bearish. A very unusual situation wherein unless armed with superior research, deft trading skills, innovative strategies and a lot of luck, your basically damned if you do and damned if you don’t. This is why option strategies are so comfortable. You have a natural stop. The recent BoomBustBlog subscriber content had some predefined targets and the good thingis to stick to them, even when the market is overshooting the target.Regarding the broad equity indexes, the call was to target the 2010 lows…
For the CAC40, it was around 3250-3300. Well, we’ve been quite wrong because we went more than 10% down from that going thru 3000 at one stage. But I wrote as well, that any significant move under that, would be an overshoot, and by taking profits at our target, we'd be the few ones able to take a short term bet on a squeeze. We are now sitting at 3240. Where from here? Well the market bounced where it should after surpassing the 3300. 3000 was the end of June/beginning of July 2009 lows. Given the speed of the move, and that nothing has changed (were all f*cked, but anyone reading BBB or ZH knew that before the move....), I dont see any fresh reasons, apart from momentum (which is enough in itself) to go much lower. The meaning of that, is that although we are in a bear market, selling without trying to time the market now, can be very painful given how far we are from the break and how the short term bottom COULD look after a bounce like a real bottom and prompt everyone for cover...
Click to enlarge...
I see no fundamental reason for a big bounce now, but in this volatile market, even an ephemeral 3450 doesnt seem impossible eventhough we already had a good
bounce. There seems to be a divergence on the daily chart ( on stochastics, MACD, RSI) and the short term pain trade could be higher prices. The ADX is very strong, and indicates as well the possibility of a further technical correction to the move. With implied vol high, fresh buying of options will probably not make money. I advise to keep some remaining gamma options and play with the delta hedge and try to take advantage of high vol and skew to position for FLY or broken flies bearish trades. I even advised buying some OTM vega calls at the lows, because they were too cheap even I had no conviction on a real bounce. Well theyve been repriced nicely thanks to the skew effect + the rally from the lows! Anyone who followed that advice should take profits cause im not sure vol will be bid and market upside is limited from here. Tech levels: if for a ST trade, be neutral at this level (3250) and opportunistic. A move towards 3450 should be faded.
On the downside, last week lows COULD hold, even if it looks ugly when we revisit them... or could very well crash... but I wouldnt give more than 50% to that, so the right thing to do is trying to play the long side below 3000 with call or call spreads to limit the downsidethus for short term trading, I advise playing a volatile new range, 3000-3450, selling implied vols, selling the skew, and waiting a bit before setting up earnestly for the probable next move. Keep your mind open, as usual.
Reggie's Comments:
CNBC reports France, Germany Ruling Out Euro Bonds to Fix Debt Crisis and the S&P 500 resumes is slow downward descent. This is simply momentum trader reaction to what is essentially a foregone conclusion. Anyone who truly condones Eurobonds is essentially asking the more responsible states to willingly accept the risks and costs of funding what could potentially become a black hole with very limited upside in return. As I said in my interview with Property EU, the EU suffers from too many chiefs and not enough Indians! In order to justify a unified, common funding vehicle (or common currency for that matter, here's to you Euro) you will need a unified common, budgetary mechanism, common financial authority, and common government. Unitl then, you will simply have too many bosses telling to few capital Euros what to do. For those who are wondering why I included the article below, stay tuned to the subscription documents coming out over the next two weeks. A stagflationary environment, excess supply and a broken bankings system that not only won't lend but has signficant CRE debt rollovers coming up - and concentrated primarily in the banks of two nations (I'll let you guess who, one of whichi will be the subject of a bank run in 3...2...1...) all add up to a virtual Pan-European real estate collapse.
Reggie Middleton Featured in Property EU, one of Europes leading real estate publicatios
Those who wish to download the full article in PDF format can do so here: Reggie Middleton on Stagflation, Sovereign Debt and the Potential for bank Failure at the ING ACADEMY-v2.
The related European commercial real estate video...
»
- advertisements -
"As always, Reggie is on top of the EU crisis"
Yeah too bad he doesn't "have" the time to look into the U.S. Dollar pandemonium. Maybe Myret Zaki's book will help?
http://www.swissinfo.ch/eng/business/Dollar_faces_collapse.html?cid=3001...
Or is Reggie hired just to push Europe into the abyss to save Uncle Sam's ass? In other words break the Euro to restore the Dollar as *the* world's reserve currency? i cannot help but wonder even though I admit your posts are deadly accurate.
"I read that RE on southern France was running $5,000 USD per sq foot back in 2007......what a Bubble! Of course, this was before 300,000 uneducated, unskilled, North African refugees invaded southern Europe which is so dangerous now that even Embassies warn their people not to go outside after dark....Paris burns at night.....
Are you F"king mad? Soutern France is a small Switzerland for rich Russians and Saudis : a place to invest into when times get incertain at home. Casinos, private harbors, expensive shops they have the lot at arm's lenght. No bubble there : what you buy at index 100 you'll sell at 300 in five year's time. It's the Lac Léman area with an access to the sea.
"this was before 300,000 uneducated, unskilled, North African refugees invaded southern Europe" LOL! That's a damn news to me. Never heard of this one : you have maybe 3000 refugges on the island of Lampeduza and that's about it. Unlike America we have a natural fence that proctects us from the poor masses coming from the South : the Mediteranean Sea. Thousands drown in it trying to come to us (alas).
Did you mean "300,000 uneducated, unskilled refugees invade southern America"? Sounds more plausible. Believe me I'd rather live in an Italian or Spanish town than in Alburquerque.
"Paris burns at night" Oh yeah? I live there and it's pretty harmful to live there... cos it's gotten so damn posh expensive and boring! Burning? Another news to me, but you must know better than me right? (sarcastic comment).
Some say ZH ain't what it used to be. After reading your "analysis" I tend to concur.
"what you buy at index 100 you'll sell at 300 in five year's time".
I take the opposite bet, [because you seem too much] "chauvin"!
Buy HSBC--"it's the big one!"
Bunds are bid again, means DAX will be down again, same old, US markets need a wake up call.
and another thing, loved the "brown roots/green shoots"; that was ready-for-prime-time pithy. you'll be hearin that everywhere soon enough. (the pdf article is well worth readin, folks)
Reginald!
?Que pasa, hombre?
well, brace yourself, you can expect to see a lot more of janus round here. i've decided to hazard my foolish pretend plays on some things (mainly dow/s&p futures and maybe a currency now and then) on your blog (but only here on ZH; i'm sort of a ZHealot -- there you combine the greek terms zealot and helot, which both have particular resonance for ZHers (yes, i just coined an AWESOME term, "ZHealot"...janus rocks!!!)). not, mind you, to show off...quite the contrary.
you really impressed me the other day with that humble display -- takes a big man and all the rest... since i'm signing up for that CME thing where you get to play fantasy trading, i can keep score on my thoughts with commodities (in this part of the world, you get to know a lot of people intimately connected with things like cotton, sugar and soybeans (and i do get some scoops on that stuff), and i think i'll try to tinker with oil a little). but as for the rest, i'll have to look at my folly lookin back at me here, in full display for all to see; the pain of which will hopefully disipline my own analysis.
in the meantime, i'll be stealing lots and lots from you. i like buying and holding physical pms for now; i feel like it buys me time to learn and get all comfortable and adept with your craft. right now i'm thinkin i'll play an agressive defense -- like the university of alabama plays football (DEFENSE WINS CHAMPIONSHIPS, BITCHEZ!). i see sentiment driving fundamentals. i see big cues in cds spreads and retail bond markets. there are other things of course, but i want to keep this short as possible.
i like the idea of starting at an idea conservatively, focusing on it if i believe it's right, adding to it if it starts to play out as expected, and backing out quickly if it looks and feels bad. i want to assume always that i'm making a huge mistake at some point in my tihnking; and i want to expose as many of those flaws as possible before i start putting real money in this stuff.
besides that stuff i've said about traders being kings because they rule the pulsing immediacy of NOW -- in a philosophical sense, the present tense is soverign over past and future no matter how you slice the alalytical apple; not that past and future don't deserve their due consideration -- i like the idea of trading because, if we're being anonymous and all that, i've always reckoned myself smarter than 99.something percent of the folks that surround me in this world (standardized testing will testify on behalf of janus), and moreso because i truly recognize how wanting my faculties are. in other words, now i can really start keeping score in life...money is money -- everything else is subjective.
but, reginald, you idiot! i've been to your website...you're just givin away all kinds of valuable stuff. i'm gonna rifle through all your goodies, keep the best of it, have my name engraved on it and pretend like i knew it all along; and once i've used all that up, maye i'll be payin for a password to raid the rest of your stash. i'm a taker, and i don't really give a damn what anybody thinks about it.
First boom/bust/janus play for tomorrow, the 17th of august, in the year of Our Lord, 2011: i called a 300 point drop for yesterday (i guess in central time still officially "today"), i see no reason for this to not continue to fruition tomorrow. it stopped at 80 down today, i think it'll see an immediate drop; and when it drops 150 from the morning's open, i'll back out, not absolutely certain of my bottom. i see the dollar strenghtening. gold is up overnight, but i wont try and guess what it'll do tomorrow...i thought it would pull back a little this week; but if europe sees this sarkozy/merkel meeting as an exercize in banal futility (which they probably will), gold is likely to continue to spike through the week. i'll leave the euro markets to you, my wiser compadre.
hasta manana.
vaya con Dios,
janus
Reggie
You are approaching these conclusions from a technical approach. Lindsey Williams, a Christian pastor, who is getting his information directly from the illuminati, is stating the same conclusions from talking directly to the POWERS. Different approaches, same conclusions.
I read that RE on southern France was running $5,000 USD per sq foot back in 2007......what a Bubble! Of course, this was before 300,000 uneducated, unskilled, North African refugees invaded southern Europe which is so dangerous now that even Embassies warn their people not to go outside after dark....Paris burns at night.....London police cannot control their north african and hooligan and skinhead rioters (talk about diversity!) and almost every street in Italy is a crime zone after dark.
BTW, Canada and OzLand Housing Bubbles are about to meet their pwn Big Pin and Burst in an ugly way.
GL!
well done, really enjoy reading your reports.
Good stuff Reggie! Kinda felt that the Eurobond fiasco was going to be flop, was watching CDS spreads widen pre-europe open.
Europe 100% can go lower, the bounce on the Dow and S&P (should have closed lower) was another false break-out or bulltrap. We get global stagflation will be interesting to see if equities make new highs, since comp profits will collapse across the board
i don't think we're gonna get near 3450 on CAC40 for some time - today was probably the closest to that level we'll get, down from here it goes
Reggie, where's the fucking COUPON???? Subscribe everybody, I'm a Chest Thumper....
Hello? Hello? Is this thing on?
check your banana, I don't think it's plugged in.
All that matters is IYR and its yield. Get a fucking grip. And Google will buy Clearwire next if they have any brains.
Who fucking cares, its Europe.
I can hardly keep up with the spy and IWM to drag fucked up France into my watchlist. Plus govt manipulation as desperate as Frances makes it doubly difficult. GLTA
http://www.cote-sun.com/
Cote Sun Immobilier
11 avenue de France
06190 Roquebrune Cap Martin
Them's sum purdy shacks.
Just a quibble, but we really aren't heading into stagflation (high inflation and high unemployment), but into biflation (high inflation in some areas, high deflation in areas of liquidity traps, and high unemployment). Of course, stagflation is the word everyone uses, but it is a little dated given whatwe are experiencing. http://www.futurnamics.com/biflation.php
The word that everybody uses is the word. Language is a kind of agreement amongst people as to what word they use. Stagflation is what we're getting now, and will be getting. One can only hope that an ugly word like be-flation doesn't gain currency. It would represent typical internet wisdom if it did; since prices and their movements are always very distinct in different sectors. Bi-flation would be a word to express what educated people already understand about inflation-stagflation.
I forget who it was but years ago someone on this site used the term masterflation. I think this term best describes what is going on.
Perhaps you'd rather "shit-out-a-moneyflation" or "ur-screwedflation" or "ur-fuckedflation"???
Financial "transaction" tax the real news. Good luck exiting your trades. Buy gold and buy silver. Once the two headed eagle is torn apart "Spain" will meed to recapitalize and will only do so with silver.
Reggie, you're the man!
YOU'RE GURU REGGIE MAN!!
I wish I could clone your brain and put some in my head!
Reggie is the man ...
... btw, he has an mighty impact on the ladies . I witnessed the strange look on their faces watching Reggie's videos :-P
?? Good Heavens.
How´s Dexia coming along?
You Could try just eating some of it.
"Mm, Brainz good on waffles…!"
ARE YOU CRAZY?!
NOBODY EATS BRAINS ON WAFFLES!
Toast. You eat it with toast.
and with sweet shopped unions...
"Fried Grits, and Hog gravy". Yum Yum.
EPIC MEAL TIME- SHEEP HEDZ - "Puzzle of the Lambs"
http://www.youtube.com/watch?v=ZGw5ip2EokY
France has huge housing bubble and it's financed mostly by issuing covered bonds. Recently they created yet another law to make room for including guaranteed loans to the covered pools to go around the restrictions in the traditional Obligation Foncieres. Too low rates and too loose financing has created another leg up in the household indebtness. People never learn...
As always, Reggie is on top of the EU crisis. The EU banking crisis is bigger than the 2008 U.S. banking crisis and more likely to
get out of control because of, as Reggie mentions, a lack of clear leadership in Europe. With the CDS liabilities, the EU crisis will
surely be the most severe financial crisis since the Great Depression and will have a huge, negative, worldwide impact. PM's seem
to be the only safe place to park money for now as markets could start to deteriorate rapidly. Thank you Reggie for keeping us at
ZH focused on the important issues.
Personally, I would say they have plenty of clear leadership. There's about three Chiefs for every Indian, and they're all pointing in different directions and shouting at once.
Reggie, you are amazing.Keep up the excellent analysis.
And I like the Heisman pose on your web site!