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Unwinding The Zero Hedge "Great QE Unwind Trade" At 18%+ Relative Return

Tyler Durden's picture


Back on May 17, Zero Hedge proposed a simple trade idea, something what we called the "Great QE Unwind" trade. The trade consisted of two legs: "long Utilities and Consumer Staples while shorting Industrials and Consumer Discretionary, leaving Financials alone." We unwind this trade today, one day ahead of the announcement of QE3, as it has since returned an absolute +3.7%, and a whopping return 18.7% over the broader S&P index. Obviously this is for the less than three month period the trade was held, and not annualized. We now unwind the trade. To those who piggybacked on this trade that not only protected capital, but generated absolute return, congratulations! To everyone else, better luck next time.


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Mon, 08/08/2011 - 15:09 | 1538507 spiral_eyes
spiral_eyes's picture

that's one great unwind. here's another: 

great unwind of british society, bitchez.

Mon, 08/08/2011 - 15:12 | 1538530 ZeroPower
ZeroPower's picture

Its basically the dirty scum here rioting. Aka: uneducated, low class, mostly immigrant, peasant chavs. They should have their state benefits cut to negative (they pay to be able to live here) and any sort of privilidges they have revoked. Or juvy for life, whatever.

Mon, 08/08/2011 - 15:16 | 1538543 JohnFrodo
JohnFrodo's picture

It is assymetric warfare urban style, you lock us up it costs you more ha ha.

Mon, 08/08/2011 - 17:36 | 1539540 gmrpeabody
gmrpeabody's picture

Perhaps they were thinking of something more permanent.

Just saying...

Mon, 08/08/2011 - 15:16 | 1538552 spiral_eyes
spiral_eyes's picture

i'm more bothered specifically about the situation on the ground and police response. the real question is: will they bring the army/martial law in when the politically correct and constrained police fail to control the problem. 

water, canned food and homes in the countryside, bitchez. 

Mon, 08/08/2011 - 15:31 | 1538619 reload
reload's picture

You are correct but I noticed how quick the media (BBC) and a few lame politicos needing airtime were to blame `modern media communications` by which I assume they imply that facebook and twitter were used by the `organisers`. As if the British police needed anything else to make them look lazy and inneficient at everything except taking bribes. Which of us will be suprised if these seemingly bottom feeder riots are not in fact an excuse to further curb freedom and expand the police state. Afterall we have not seen any taxpayer unrest yet and that is what our overlords must fear the most. So far unrest has been confined to the `hand out` class, Government empoyees (many of whom have non jobs anyway) and welfare recipients. What I wonder is being discussed that would lead to unbridled anger of the taxpaying classes?


p.s - noted Tyler says QE3 will be announced tomorrow.

Mon, 08/08/2011 - 15:26 | 1538623 PaperBugsBurn
PaperBugsBurn's picture


no wonder you get on so fabulously with the redneck scum dabolina

wish I could run into you and teach you some manners biatch

wth you'll be dealing with plenty of zombies soon!

Mon, 08/08/2011 - 15:31 | 1538650 d00daa
d00daa's picture

he lives in an ivory tower, they are sub-human to him.

Mon, 08/08/2011 - 16:32 | 1539171 ZeroPower
ZeroPower's picture

I guess you enjoy working and paying taxes to directly support such scum. Or perhaps you don't work, in which case that would make more sense.

Whether its the anti-globalization hippies in the US, the stanley-cup losing winers back in Canada, or the low class hipsters in the UK, it doesnt matter. All the same pile of shit.

Mon, 08/08/2011 - 16:49 | 1539286 vib
vib's picture

You are being paradoxical.

The anti-globalist hippies are actually trying to ameliorate the socioeconomical conditions back in the "scum's" homelands so that they wouldn't have to leave.

Mon, 08/08/2011 - 18:07 | 1539656 ZeroPower
ZeroPower's picture

Are you kidding me! They are "fighting" for NOTHING, they are simply looting thieves. Turn on the TV youll see what i mean. Unless you think theres a bigger problem with the Carphone Warehouse.

Mon, 08/08/2011 - 18:06 | 1539648 Pay Day Today
Pay Day Today's picture

You may think yourself an aristocratic elite, but perhaps you should review the French Revolution and rediscover the road you want to head down.

Mon, 08/08/2011 - 16:34 | 1539188 vib
vib's picture

It's not as simple as you'd like to see it be. Those who have less cushion will be hit first when financial crisis deepens. If you ask any poor fellow in any country what they'd like the answer is work and education, a better life. Some of those people actually do the big leap and move to a country with better possibilities. It's not their fault if a financial crisis hits and jobs go away. Funds then go to protect the needs of the state rather its citizens, who are left to fend themselves.

It's always "the dirty scum", no matter where or when. Back in the dirty factory days the cities were built so that the "scum" lived downwind. It's rather poor decision if you think about it, because of the sicknesses and other counter-productive phenomena which would drag state economy. It's actually beneficial to care for the people.

The world you are living in has been mostly built by "scum", so you should actually be grateful. Of course we agree that criminal acts should be avoided, and by burning properties and causing havoc some of the people on the streets do not appreciate the very work of their kind. There's a lot of frustration and anger that blinds reason.

Mon, 08/08/2011 - 16:50 | 1539297 ZeroPower
ZeroPower's picture

Yes, it never is so simple. Yes, situations are mostly a shade of grey. But this wasn't about any sort of financial calamity and only about continuing their silly riots from the past 2 days. 

As you have placed your point rather eloquently as opposed to other socialists posting otherwise, i have no beef at all with your understanding.

Mon, 08/08/2011 - 17:51 | 1539593 Pay Day Today
Pay Day Today's picture

Zero. Your peasant civilians once kicked the Roman Empire off your shores. Do not mess with them.

Mon, 08/08/2011 - 15:19 | 1538565 Tom Servo
Tom Servo's picture

The DJIA "Stick Save" appears to have started at 3:15 EDT.


MUST CLOSE OVER 11,000!!!1one


Mon, 08/08/2011 - 15:42 | 1538711 Flakmeister
Flakmeister's picture

Looks like the puck ended up going through the 5-hole....

Mon, 08/08/2011 - 16:07 | 1538919 Tom Servo
Tom Servo's picture

The goalie got taken out behind the net.... :)

Mon, 08/08/2011 - 15:09 | 1538509 Westcoastliberal
Westcoastliberal's picture

Now going long on collapse:

Mon, 08/08/2011 - 15:09 | 1538515 falak pema
falak pema's picture

maybe paulson will ring you up for advice.

Mon, 08/08/2011 - 15:26 | 1538620 trav7777
trav7777's picture

Tyler Durden doing the endzone dance lol

Mon, 08/08/2011 - 15:10 | 1538518 Agent P
Agent P's picture

Does this mean we should go "balls to the wall" tomorrow?

Mon, 08/08/2011 - 15:10 | 1538519 Transitory Disi...
Transitory Disinflation's picture

London is also unwinding... It is complete chaos here.  Fires going on left right and center.


I just cannot keep up with the DOOM today... insane.

Mon, 08/08/2011 - 15:10 | 1538520 Roi
Roi's picture

Why trade, when you can stack?

Mon, 08/08/2011 - 15:10 | 1538522 Larry Darrell
Larry Darrell's picture


Generating alpha amongst a sea of levered beta momo chasers.

Truth and Knowledge bitchez.


Mon, 08/08/2011 - 15:11 | 1538523 HelluvaEngineer
HelluvaEngineer's picture

What time is the fed statement tomorrow?

Mon, 08/08/2011 - 16:13 | 1538971 Catequil
Catequil's picture

expected as usual @ 14:15 US time

Mon, 08/08/2011 - 15:12 | 1538531 HedgeAccordingly
HedgeAccordingly's picture

BRING THE PAIN.. on wait.. the PAIN Is here.. good work tyler on covering this great 'unwind' cheers.

Mon, 08/08/2011 - 15:13 | 1538534 FoieGras
FoieGras's picture

Another QE2 unwind idea: Long-Term bonds up 12% during same timeframe.

Mon, 08/08/2011 - 15:26 | 1538616 d00daa
d00daa's picture

hahahahaha someone has been getting their face ripped off over the last week, u mad?  why not throw in the complaint about tyler not posting about crude's pole-axing, and other assorted pedantic bullshit?

how much are you down? 20%??  more???  trolololololololololol

Mon, 08/08/2011 - 15:13 | 1538536 JohnFrodo
JohnFrodo's picture

I have a better one for todays market, learned it after losing my modest fortune through stupidity and Nortel. Buy beer, you will enjoy the beer and the empties will be worth something.

Mon, 08/08/2011 - 15:13 | 1538539 DormRoom
DormRoom's picture

QE3 will not be announced tomorrow.

Mon, 08/08/2011 - 15:28 | 1538576 slewie the pi-rat
slewie the pi-rat's picture

shhh.  if someone is gonna drink as much as tyler, there are times to just let him rave.

tyler called QEIII after the budget deal he nailed, and the market drop, which apparently came dropping to his specs, today.

so, QE III = tomorrow.  of course. 

at this point, let's just buy tyler the next bottle, together, and maybe a freaking case, tomorrow, if the tooth fairy flies outa his ass, too!

Mon, 08/08/2011 - 15:59 | 1538856 SeverinSlade
SeverinSlade's picture

Well just to show how much respect I have for Tyler Durden and ZH I just closed out my positions in SPXU, SQQQ, and SDOW.  If Bernanke DOESN'T announce QE3 tomorrow then I'm going to be a little pissed.  But hey, I can always buy back into those shorts.  As it stands I walked away with a 60% profit.  Not bad for about 2 weeks.

Mon, 08/08/2011 - 16:09 | 1538925 slewie the pi-rat
slewie the pi-rat's picture

shorting?  thru ETFs? 

who could have seen this coming?

+ for your + for t.d. & ++ for using someone who would blow a 3.0 for a trading indicator!

Mon, 08/08/2011 - 16:15 | 1538995 SeverinSlade
SeverinSlade's picture

Haha.  Well TD and ZH have proven to be as accurate as it gets over the past few years.

As soon as I saw TD say QE3 comes tomorrow the warning balls started ringing in my war room.

Looking at the charts if QE3 isn't announced tomorrow all of the gains of QE2 will be erased by the time Bernanke is done speaking.  August 26th is almost 3 weeks away.  Based on how equities have been dropping like bricks, the S&P would easily be under 1,000 by then.  Could be under 900.

Mon, 08/08/2011 - 16:29 | 1539145 DormRoom
DormRoom's picture

QE2 forced a portfolio rebalancing into equities, and commodities. But as soon as it ended, everyone rewound that trade.

QE3 will be useless, unless they don't disclose how long they will operate it for.  That way, you have a harder idea  when to unwind.

Mon, 08/08/2011 - 16:12 | 1538955 Snidley Whipsnae
Snidley Whipsnae's picture

Kudos for Tyler! Great calls, especially considering the roller coaster they were called on.

Of course, if one happens to be long physical PMs they haven't done too badly.

Mon, 08/08/2011 - 15:27 | 1538626 SeverinSlade
SeverinSlade's picture

That's what I'm thinking too.

Didn't Tyler say repeatedly that QE3 would be announced at Jackson-Hole on Aug 26th?

Mon, 08/08/2011 - 15:16 | 1538548 dwdollar
dwdollar's picture


Mon, 08/08/2011 - 15:16 | 1538550 JuicyTheAnimal
JuicyTheAnimal's picture

......Now is it time to short treasuries?

Mon, 08/08/2011 - 15:22 | 1538584 mind_imminst
mind_imminst's picture

Maybe for a short term bounce. Otherwise the FED and US Treasury will conspire to keep rates low. They will never never never never allow rates to rise anything close to what we see in Europe. The FED will print to infininty and buy US Bonds until a complete hyper-inflationary collapse happens.

Mon, 08/08/2011 - 15:16 | 1538551 max2205
max2205's picture


Mon, 08/08/2011 - 15:17 | 1538554 zerohandle
zerohandle's picture

Are we so sure QE3 will be announced?

Mon, 08/08/2011 - 15:17 | 1538556 Jean
Jean's picture

Unwind into what?

Mon, 08/08/2011 - 15:18 | 1538560 lolmao500
lolmao500's picture

The next good trade? Buying TNX if they announce QE3.

Mon, 08/08/2011 - 15:18 | 1538564 Doyle Hargraves
Doyle Hargraves's picture

PPT springing into action DOW back up over 11,000 S&P going towards 1150...

Mon, 08/08/2011 - 15:20 | 1538574 LawsofPhysics
LawsofPhysics's picture

11,000 is the new 12,000

Mon, 08/08/2011 - 15:24 | 1538603 Doyle Hargraves
Doyle Hargraves's picture

They are even recissitating BAC from the dead towards $7 despite the do not recissitate order

Mon, 08/08/2011 - 15:19 | 1538571 Sudden Debt
Sudden Debt's picture

After the Downgrade another QE will really start to panick the markets because NONE of the companies really showed a increashe in earnings/profits.

So stocks are worthless, banks are worthless....

I don't think everybody will run back to the stock market like when QE2 was launched. Sure it will rise again but not as strong as QE2 did.


Mon, 08/08/2011 - 15:30 | 1538648 unununium
unununium's picture

As long as it rises a tiny bit, they got their return on investment in printing. Not hard when your costs are zero!

Mon, 08/08/2011 - 15:31 | 1538653 dwdollar
dwdollar's picture

I doubt it.  Give the algos a day of FED induced liquidity and they'll be back to pumping equities.  Give the MSM and eCONomists a week of algo pumping and they'll be back to squawking green shoots.

Mon, 08/08/2011 - 15:20 | 1538572 Nate Taggart
Nate Taggart's picture

Go PPT Go!!!!  MUST....   CLOSE.....   GREEN......

Mon, 08/08/2011 - 15:22 | 1538581 No Bid
No Bid's picture

seems the great qe unwinding trade is still taking place and is a bit simpler: levered shorting of the s/p.

this is also the great EU unwinding trade however.

Mon, 08/08/2011 - 15:23 | 1538587 Spitzer
Spitzer's picture

Cant they shovel some QE to Canada ? The RB of Canada is a primary dealer. Im short BTW

TSX is dash 500 but the DOW is climbing.

Mon, 08/08/2011 - 15:23 | 1538589 Temporalist
Temporalist's picture

I am losing track of how many pundits and institutions have been out the past week saying "buy stocks now they are cheap" or "don't miss out on this opportunity" or some other snakeoil bullshit.

Talk about everyone on one side of the boat. 

Mon, 08/08/2011 - 20:19 | 1540091 SamuelMaverick
SamuelMaverick's picture

WTF, everytime some pundit starts with that cheap stock nonsense,my head wants to explode. The last market downturn in 2008-2009 lasted almost a year. Idiots.

Mon, 08/08/2011 - 15:23 | 1538593 whisperin
whisperin's picture

When will the margin calls really start to bite?

Mon, 08/08/2011 - 15:24 | 1538602 Scalaris
Scalaris's picture

Will the real Fed Chairman please stand up?

Mon, 08/08/2011 - 15:26 | 1538617 baby_BLYTHE
baby_BLYTHE's picture

yeah, Ben will only announce QE3 when the Rothschilds are good and ready.

Mon, 08/08/2011 - 15:29 | 1538641 Count Laszlo
Count Laszlo's picture

Move it ALL to the shinny stuff, hide it in your teeth, lace your cakes, land on the moon and don't look back.

Mon, 08/08/2011 - 15:29 | 1538643 Whatever
Whatever's picture

Alan Greenspan: We can always print more money

Start up the printing press!

Mon, 08/08/2011 - 15:31 | 1538655 HpDeskjet
HpDeskjet's picture

QE cant happen and is not necessary => Cant happen because FED does not have the political back up to do it. Not necessary since without QE, everybody runs to treasuries and there won't be more stimulus that has to be financed by QE. The downgrade of US debt has been discussed over and over behind the scenes and will be used by Obama to put pressure on the republicans to raise taxes.

Mon, 08/08/2011 - 16:21 | 1539057 Snidley Whipsnae
Snidley Whipsnae's picture

"Not necessary since without QE, everybody runs to treasuries and there won't be more stimulus that has to be financed by QE."

Exactly, give HPDeskJet a ciigar!

I said a long time ago that when it became necessary equities would be thrown under the bus to prop up treasuries. Now it's happening.

Where is that paper trader that was giving me crap just prior to the downgrade? Got your PMs bud?

Mon, 08/08/2011 - 18:06 | 1539649 HpDeskjet
HpDeskjet's picture

:) No PMs for me (yet). I stick to corporate bonds in this deflationary depression + short equity ETFs. I respect the analysis at this site and the comments of most readers, but i prefer to play the game differently. Maybe i will switch to PMs later. My scenario is: 1) I feel there wont be more QE in 2011 and maybe not even in 2012 2) Europe will collapse + ECB will be forced to undo his recent rate hikes. This combined can cause a sharp rally in the dollar, to maybe parity with EUR and will cause PMs to take a serious hit as well. Then i have to see. OR the FED will really loose it, and make US a third world country by printing the dollar to death => buy PMs... OR those fuked up children in congress finally grow up and start to the right things and take the pain => this will create the buying opportunity of a lifetime in equities when valuations become attractive (= dividend yields on the S&P above 6% + Shiller PE < 8)

Mon, 08/08/2011 - 15:33 | 1538666 fuu
fuu's picture

Anyone seen Robo today?

Mon, 08/08/2011 - 16:01 | 1538879 steelhead23
steelhead23's picture

As a bull blowhard, I'm guessin he's licking his wounds down at the local bar.  Maybe you should buy him a round.

Mon, 08/08/2011 - 16:02 | 1538886 homersimpson
homersimpson's picture

He's sleeping with the fishes or finding a new career with his constant stream of bullish stock picks.

Mon, 08/08/2011 - 16:15 | 1538993 slewie the pi-rat
slewie the pi-rat's picture

i had a thought abt RT earlier, f_uu

acknowledged in the breach.  i thought perhaps he was doing the laundry, today, and the bra wasn't dry, yet

Mon, 08/08/2011 - 16:11 | 1538947 Caveman93
Caveman93's picture

Freakin awesome job ZH!

Mon, 08/08/2011 - 17:38 | 1539552 The Intrigued Trader
The Intrigued Trader's picture



Damned Guido Mantega that struch with the new IOF tax and got me out of the [short Ibovespa (1x) / short USDBRL (1.4x)] trade that I had on just a few days before this huge leg down.

Mon, 08/08/2011 - 17:50 | 1539594 theotheri
theotheri's picture

Time to buy fellas.  I just loaded up on some GS.

Mon, 08/08/2011 - 20:12 | 1540062 Lord Koos
Lord Koos's picture

3.7%?  I'm happy with my AG at 28%.

Wed, 09/14/2011 - 05:10 | 1667521 chinawholesaler
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