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A Burned Goldman Says To Hell With European Trade Recos
After being mocked and humiliated (repeatedly) by various blogs, not to mention losing a ton of money (for the clients, not the Goldman traders on the other side of the firm's clients) on his most recent horrendous EURUSD reco, Goldman's Tom Stolper has had enough (as a reminder, precisely the same thing happened at precisely the same time last year - sometimes even a broken clock is never right). And not only him, but all of Goldman appears to be withdrawing from making any future recos on Europe. To wit: "The lack of predictability in Euro-zone policy developments and the high degree of volatility it has created for markets have made it particularly challenging to recommend trades around that theme. Over time, our attempts to actively trade Euro-zone-related developments have had varying degrees of success. Our long EUR/$ trade recommendation was the latest to fall victim to this broader market uncertainty. We initiated the trade under the assumption that reduced political tensions in the Euro-zone ten days ago would also help the EUR move higher, given the significant degree of negative sentiment for the currency. Despite positive developments in Italy, Greece and Spain, however, market tensions have broadened. We therefore closed the trade yesterday at close to 1.34, as we thought that further deterioration in price action was likely." This is truly sad news: it means that the one sure source of (inverse) alpha in the past 2 years, Goldman's FX "advice", has been silenced, and if anything has now turned outright bearish on Europe - and all it took was 2 weeks for Goldman's expert strategists to completely invert their opinion. Oh well, nobody ever said trading was supposed to be easy...
Full note:
Our Trading Stance: An Effort To Avoid Direct Exposure to the Euro-zone
The lack of predictability in Euro-zone policy developments and the high degree of volatility it has created for markets have made it particularly challenging to recommend trades around that theme. Over time, our attempts to actively trade Euro-zone-related developments have had varying degrees of success. Our long EUR/$ trade recommendation was the latest to fall victim to this broader market uncertainty. We initiated the trade under the assumption that reduced political tensions in the Euro-zone ten days ago would also help the EUR move higher, given the significant degree of negative sentiment for the currency. Despite positive developments in Italy, Greece and Spain, however, market tensions have broadened. We therefore closed the trade yesterday at close to 1.34, as we thought that further deterioration in price action was likely.
The difficulty of recommending trades directly linked to Euro-zone sovereign risk has compelled us to seek trade ideas with as little exposure to Euro-zone volatility as possible and focused around parallel macro themes and developments. In FX space, we recommended long exposure in the MYR and SGD against both the USD and EUR, a trade that in the past had limited exposure to risk sentiment and that was predicated on the MYR and SGD having undershot their fundamentals due to extreme market tensions in October. We also recommended long RUB vs HUF because we expected energy prices to remain resilient and the HUF to be challenged by significant external vulnerability, as discussed in yesterday’s Daily.
In rates, we attempted to position ourselves for more easing in EM economies by receiving 2yr rates in Mexico, where our forecasts were the furthest below the forwards. Finally, in equities space we were recommending a long Wavefront US GDP growth basket until yesterday, in an attempt to benefit from improving US data. We have also recommended long HSCEI vs SPX positions in order to capitalize on the potential for more easing in China.
But Euro-zone Risk Dominates & Our Trading Stance is Becoming More Negative
In reality the escalation and the severity of Euro-zone tensions have been such that the price action across most assets was dominated by the deterioration in risk sentiment. As a result, most of our recommendations have not reflected the macro themes that they were meant to capture, but rather have come under pressure due to risk aversion.
In FX, our long MYR and SGD basket has been trading a few basis points above the stop, even though the EUR has depreciated and has partly worked as a hedge to the overall position. We continue to like the rationale behind the trade and the levels for these currencies. However, it is worth keeping in mind that broader and deeper tensions in the Euro-zone are likely to lead the recommendation closer to our stop. More bearish price action meant that RUB/HUF came under pressure as well for a short period, but it recovered some of the lost ground yesterday. The choice of the pair was such that the recommendation is broadly uncorrelated to risk sentiment. We continue to expect the HUF to remain more vulnerable than the RUB and we believe there is more upside from current levels. The key risk to this trade is if Hungary agrees with the IMF on negotiations for emergency funding in the near term, which would lead to a partial recovery in the HUF.
In rates, after an initial move lower in Mexican 2yr swaps, the market has eroded most of the tentative profits as outflows boosted risk premia in local fixed income. We forecast monetary easing in Mexico, which should ultimately offset the build-up of risk premia in local fixed income unless FX outflows become so disruptive that the central bank decides to postpone easing in order to avoid an intensification of such disruptive flows.
Our equities recommendations have also seen significant shifts over the last few days. On Tuesday we closed our long Wavefront US growth basket recommendation with a potential loss. Although US growth data continues to surprise in a broadly positive way, the pricing of better growth news in the US equity market has not improved. The transmission of Euro-zone concerns has dominated other factors here too. Our long HSCEI vs SPX trade has also come under significant pressure and is trading close to our stops, and our macro-equity team are reviewing the balance of risks at the moment, which has clearly deteriorated.
With most of our pro-cyclical trades closed out, our bias has gradually turned more negative on balance considering that our credit strategy team continues to recommend short positions on the iTraxx Europe Crossover index since the end of the October rally (the position was opened on November 7). We are not far from the target of 850bp (the market is hovering closer to 840 at the moment) but there is risk of further widening.
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Thank you europe for fucking this lowlife around
its a shame they couldn't do the same with their precious metals desk isn't it?
After all, it's a lot easier to be right about that one since the market is so much smaller (for now) and therefore much easier to manipulate, and be right...
Smart people these guys, best in the world.
If Europe shits the bed, you'll have massive deflation.
Gold and silver will lose value.
Don't kill the messenger.
http://fucklloydblankfein.blogspot.com
Careful with the goldbug sacred cows there, paarsons...
All is genuinely deteriorating with velocity. Merkel and Germany are going to be torn apart at the seams given the deeply contentious intra-Germany debate on whether to scrap the EU or reduce it to a more feasable size or give the blessing for the ECB to absolutely crush the purchasing power of Europeans, including the Germans (and that doesn't even take into account the significant legal poison pills baked into the EU's birth certificate that act as a hurdle against allowing for this, or creating some sort of civil war in Germany).
Buy gold and silver with the notion of passing it on to your children, not flipping it for a fiat based profit, only to find that the amount of fiat you received post-liquidation is likely to buy you less replacement of that which you sold over any relatively short period, and will definately buy you far less replacement of that which you sold over any period of time that could be deemed a long term time horizon.
Why would any rational human being sell gold, especially at this incredibly tumultuous time in history, unless they found themselves in dire straits, needing to raise funds due to some sort of immediate crisis, given the objective manner it retains real purchasing power historically?
Gold and silver are things to accumulate to ward off the pernicious, destructive plan of currency debasement, not to trade for the very fiat whose inevitably falling purchasing power gives stability of real purchasing power to gold and silver in the first place.
--Alan Greenspan, 'Gold and Economic Freedom' (1966)
Well said again.
Christ killer.
I know thanksgiving has passed, but seeing how, I've been very much enjoying your posts I'd like to express my gratitude.
Thank you.
As long as physical gold/silver prices are attached to the paper spot/fractional reserve/heavily manipulated ponzi price, there will be a ceiling on it's value.
Some sort of shock in confidence of futures markets bigger than mf global or supply shock is necessary to decouple the physical price. When that shock happens, the physical gold/silver owners will watch their net worth sky rocket in fiat terms
another fucking gold expert..........oh boy.....just what we need...........
How/why is anything I wrote incorrect, and can you point to any significant period of history that undermines the fundamental points that I made?
Relax T_I_S
He was replying to paarsons.
I should have seen that with the whole indentation thing - my bad, HPD.
Thanks.
Bonus for those who may not have seen it, well, just because:
Trying To Buy a 99¢ from Taco Bell with a 1 ounce gold coinFiat Paper Money: The History and Evolution of our Currency by Mr. Ralp T. Foster is an excellent read on the subject. It proves beyond a reasonable doubt that precious metals such as gold and silver are life savers during times of severe economic and political distress.
Gold and silver, perhaps oil and most likely copper may lose value indeed.
But will they lose as much "value" as NFLX, GRPN, etc?
And where will the money go, into the USD and traesuries? They are 2 of the worst investments in history but, I suspect the sheep will go there till the US finally implodes which is coming in 2012.
I agree paarsons.. I got a call from Monex.. they said they expect a sharp fall in prices and want to know if I want a call when it happens.. I laughed and told him that "you guys couldn't possible be informing me of something i'm not kept abreast of".. But seriously, if there is a sell off, PM's will get hit.. I will promptly spend whatever I have on silver at that time..
The "lack of predictability"? Anyone with half a brain knew that the Euro was going to go on an inexorable slide to USD parity. Put away the econometric models and do some basic arithmetic, you fucking overpaid dumbass.
they didnt lose...they just feel bad you did...on to the next grift.....
And those "positive developments" would be what exactly? Seeing the world through the clouded muck of derivatives had altered their perceptions.
Right there with you...I stopped reading at that point. The economic situation for those countries hasn't changed...the underlying issues still remain...just more debt accumulated. The lack of debt clearing (either via default or deleverage) means the situation is unchanged to getting worse.
A strategist is someone who changes his mind every couple of days ... no wait, never mind.
Postive developments being they are getting their "technocrats" in place.
Correct
i'll illustrate your point for you.
Goldman are in calling the shots in europe and this article details it.
http://www.ritholtz.com/blog/2011/11/is-goldman-sachs-the-new-master-of-...
Just like DC. You couldn't make this up... its the evil empire for all to see.
positive development = we got Goldman cronies installed in all levels of governance, and sovereigns.
God's work bitchez!
Goldman sees those countries being ruled by fascist banker criminals as positive for the economy. When the reality is those countries are now ruled by fascist banker criminals not positive for the economy. More fascist corruption less free market trade.
To the Batcave Lloyd.........
Now you know what trading in the US is like for us retail traders goldman... Sucks doesn't it.
Just go long..
I mean like, how much worse can it get?
Put me on the Bernankie QE mailing list and I will know when to short and when to go long. Give me 0% loans then pay me 3% to loan it back and I can make money all day.
damn, who am i going to go inverse reco now...
mea no culpa. Ho hum.
Well you know the ship is going down when you see the rats jumping, and swimming for shore......not much longer now...
hahahahaah Goldman EUR longs, what idoits. Oh what you though your white knight China BS was for real? C'mon, China has a liquidity crunch from hell looming.
No one is saving anybody. Just the pure pain trade. Go hedge funds, short Goldman now.
...and this time no free money for Wall Street.
Forget about the Euro and European stock indexes.
Nobody.
I mean nobody, predicted the monstrous, epic rally in U.S. Treasuries the last 3 months.
Truly spectacular losses for those who thought that huge deficits would crash the Treasury market.
Well Robo titties, I think your a shit bag but If I recall back as far as march and april you said money will flood to treasuries.
I hate I had to say that lol.
Ya, until his charts told him to short Treasuries........
I thought Treasuries could rally this much but only if the SPY was down around 800 to 900, but nowadays it seems like the slightest selloff in stocks triggers a monstrous rally in Treasuries.
Now it is assured that if we go down to 900 on the SPY, we'll see 1.5% 10-year yields and world record prices on the 30-yr. for sure.
Ya, you're bound to get one call right- can't go 0-for-56 and get too discouraged, even if what you say is as obvious as the sun rising tomorrow.......
EZ bond dump.
u.s. 30yr chart looks like late 2010 on the weekly before it dropped 10%.
Oh and Robo Titties, fuck off and die banker lover bitch.
Wait till word leaks that we ain't paying those fuckers...It will make the ISDA ruling repercussions look like a Tip Toe through the tulips. Note to World: You may buy our debt, but I ain't fucking paying it back...So stop buying our worthless crap...
What's new? There has been nothing to make on the short side on the 10-yr future regularly since mid-2008. ZIRPing savers and the PROjected deflation thrown out far ahead as a result of this wanton and flagrant disconnection of real, human-supplied Capital.
Accident waiting to happen?
http://www.bloomberg.com/news/2011-11-24/swaps-boost-yen-debt-demand-as-s-p-joins-imf-warning-to-noda-japan-credit.html
Everyone is on the tight-wire. One minor tremor and it'll be a total disaster.
Oh, yeah. Nobody saw this coming.... Sure thing. This won't be a black swan, it'll be the elephant in the room.
I'm waiting for quivering lip Bernank, as well as Timmay summoning his inner Hank 'Tanks in the Street/Martial Law if Congress doesn't give me a blank check for friends of the New York Branch of the Fed' Paulson, to give some ominous, dire public warnings and briefings of the important members of CONgress & TOTUS in order to get that 2 page (or was it 1 page?) legislation passed authorizing the printing of an amount of debt TBD at some later time.
Goldman Squid, JP Morgan & other alleged TBTF BSDs that are without a doubt exposed to the beat down that's coming partly as a result of the EurodebtApocalypse, are so 2008 (again), while The Bernank & Geithner, given the seismic political, economic and social shift that's occurred underneath their feet are going to find themselves so 2000andLate.
FTMF
Varying degrees of success? Omg no wonder he is payed millions
I personally don't like things I don't understand. Pretty simple investing advice. I think Warren Buffett follows the same methodology in some fashion, yet Munger says "they invest in what is available".
Riiiiight- that's why they're killing it in that BAC trade right now- that 6% coupon will offset the 40% drop in principal nicely..........
Where would uncle buffett be if he didn't get FED the 13 Billion out of AIG air = 100%.
As in 83 Madison Avenue (BSC crown jewel) = Zero.
Everything going on in Europe now, all the 'lack of predictability' and general mayhem is because there is an all out war on the continent. On one side are the Euroglobalists trying to save their Euro dream - supported by Timmy and The Bernank (and unborn US taxpayers). Their opponent is Reality, which is a most despised adversary - much loathed by neolibs and neocons alike. All the freaky stuff this gentlemen Stolper is complaining about are actually explosions - when the Euroglobalists strike Reality with their political and financial weapons of mass destruction. Reality strikes back from time to time with reality weapons which bend space around Sarkozy's head, making him even smaller.
They were serious about those calls? I thought that was just what they told their clients.
"Lack of predictability"?
Are they serious? Even a retarded monkey could predict that short euro was a good bet. Only problem is finding something somewhat reliable to short it against. I was short against the CHF until Hildebrand did his dance. Shorted against the USD subsequently but when QE3 rolls out in the manner I think it will, both euros and dollars will be getting flushed out into the system by the Fed and ECB (and Yen too no doubt). When it happens I might just go 100% PMs.
How the hell does Goldman still have clients? Are people really that dumb? Of course they are, they're not investing their own money.
I have a suggestion. How about managers lose a finger for each 10% they drop of their clients' money? There's an incentive to do some goddamn due diligence and it sure makes screening of managers easier in the future: "show me your hands".
They'd probably wear mittens.
"Lack of predictability"?
Are you fucking serious? And the gentleman farmer, rancher, trader, owner, etc. us sitting idle while these fucker's purge the world economy?
It is time for some serious correction world. Enough of this you against them. This is the people against the banking elite period.
Goldman was right there with Corzine cozying up to Geithner who reassured them the ECB would cover all the Greece bonds.
maybe its time for Whitney Tilson to start making Fx calls....so we can fade those as well!
So having spectacularly fleeced their clients with this fx pair they turn to market makiers in the same...when they win they win, when they "lose" they win. Call me cynical.
Goldman cries uncle? What a pity
Don't worry the E.U. politicrats ain't hurting.....http://heavenbounf.blogspot.com/2011/11/corruption-in-eu-watch-busted.html enraging but funny ..
EURUSD headed to parity on its path to 0.00. Good thing Goldman decided to cut its losses early. Next thing you know, they'll be ramping up their investment in PMs.
Reality has a way of biting you in the ass one way or another.
awww, poor GS, they cant take the pain no more, bless their fragile little ego's. They should not give in so easily though, after all, its not they're money. (are Goldman employees getting paid danger money yet?)
ASSuming anything in this 'market' makes an ass out of you Goldie and not me.
I guess these guys never look at charts.
That was my reaction too. Hell Im not even a college grad, but an ability to read a chart and noticing the MAs pointing down in a bearish arrangement was all it took for me to out trade the squid on this forex call. I learned years ago that the prices going sideways dosent mean a reversal is coming. Let the MAs cross and the charts get bullish FIRST before speculating on a bullish Euro.
That and noticing the EU implosion was accelerating and Italian bonds are going parabolic.
These pompous overpaid douchebags write those long winded opinions yet a monkey pushing buttons would still beat their track record on average.
"Varying degrees of success"??? WTF! Their Eur/USD calls are worse than a coin toss ergo there is no "sucess". The degrees go from shitty to really shitty.
When bonus time comes the standard defense of "we have to pay for talent" really chaps my ass.
Crocodile tears?
Poor bastards---and they still have to pay all that bonus money.
I wonder what they will have to unwind next----probably after new year's eve.
Shit, and they still have those criminals in the street hazing them---all ragged, filthy, lice-ridden, diseased, and POOR!
and a lot of us silent majority people supporting the ragamuffins
What a fucking shame, huh?
Maybe karma is simply the universe's way of squaring the books when it notices our planet and, especially, our species.
Can you feel an oldman's pain?
None of this shit is personal, folks om
Maybe........
Eat a shit pie Goldmanite,FuckHead.
Bansters, if this was for this oldman-----it is ill-aimed.
Actually,
I left the US because that is all that is served there
Eaten by all everyday
One of the things that is not so interesting in my native land is that so few people understand sarcasm that is impersonal and even fewer understand that irony is the highest form of humor.
Now, I'd just like to point out that this has been coming for a long time
And I don't know what any of us are going to do; the illness has spread to all corners of the earth, so there's no where to run to, no place to hide
We are all going to be on a 'shit pie' diet until this madness runs its course
I am only 'thankful' to be living in good health at this time in human history
Thanks for forcing me to be more precise---sarcasm is not my best suit and I gave up smiling forty years ago om
"the illness has spread to all corners of the Earth"
Seems so, oldman. Today I saw a report regarding a survey carried out in China. It found that the average amount of personal savings amongst those under 32 years of age in China is 0.00, in whatever currency you choose. But many do have faux Louis Vuitton bags, multiple cellphones and at least one A&F t-shirt.
Our long EUR/$ trade recommendation was the latest to fall victim to this broader market uncertainty.
Yes, the shittiness of your reco was all the market's fault. Douche.
200 West.
I've seen it all now. I guess all the rumors about the squid were true. If they don't have the edge, they don't want to play.
How pathetic:)
Euro-ulogy
Euro-ulogy
Personally, I like my vampire squid pie served a la mode.
Maybe we are missing the point of the communique. In a normal world, if a entity changes it's view on an asset class, they will recommend taking the opposite positions. Yet Goldman did the former, and yet does not do the latter. Interesting, and maybe telling. Maybe there are other reasons (read monetary) why Goldmand doesn't want to issue a negative reco on Euroland. Just getting this out there....
It will correct tonight...
Fuck you goldman!!! Hank Paulson can't save ur stupid Ass this time.
fuckin cheaters can't trade for shit...nice glossy literature though...
i laugh your power and his who sent you here
to lowest scorn - pour forth the cup of pain
Re ...Goldman Says To Hell With European Trade Recos!
And in other Breaking News - Jeffrey Dahmer closing his Specialty Deli store... going vegan.... blocks offending "Are you sure that's chicken you're serving?" Facebook messages...
...stop press....Typhoid Mary de-friends detractors in copycat Facebook protest.... stop....Sport... NY Giants 213 - Phila.....
Wot?? No more octopoid-sourced Euro-mirth?
'Twas the highlight of the month to read specious Goldbumm FX twaddle, have a good belly laugh, and setup to do the opposite.
Lucrative too.
They'll be back though, the lure of bilking their suckers /clients is too powerful a drug for these degenerate lifeforms. Just wait.
lloyd you better hire a fucking army. Cause I don't think you're long for this world.
at least they have the balls to commit they where dead wrong.
Goldman only get its "right" when they cheat. Oh well fuck'em!
This is what I have been saying for a year. If you play in currencies during times where every central bank is either pegging or printing, you are just asking for losses. The exchange rates for paper are being rigged beforehand to achieve economic outcomes, they are not reacting afterwards to economic developments.
We initiated the trade under the assumption that reduced political tensions...
What the fuck? What a bunch of fools raping their clients accounts. Why don't you react to market changes instead. Those who attempt to predict get their ass handed to them. Fuck you Goldman suckers.