Saturday, June 30, 2007

The I-Phone has arrived

At long last the I-Phone is here. Hundred's ....make that thousands stood in line in excess of one week (what about using the bathroom/shower's ??)to be one of the first in line. Others got to the front of the line the old fashion way, they paid for it. Up to 400 dollars was paid to move toward the front of the line in an effort to secure the right to purchase up to two I-Phone's. Here is the story (and Picture) in USA Today. I must admit carrying one devise is very appealing, so once the crowds die down abit, I will be making my way to an Apple store to see what all the excitement is about.

Good Luck and Good Forex Trading



Thursday, June 28, 2007

Fed Meeting today

Federal Reserve Meeting today and all expectations are for no change in rates and basically unchanged in the commentary. This article from Trader Daily gives a good expectation.

Good Luck and Good FX Trading.


Saturday, June 23, 2007

Up and Down goes the Market

I was looking over my last few blog entries and I see that one week I an calling for the melting down of the markets and the next that the "Party" (yield party that is) is back bigger and stronger. This tells me that the markets MAY be in a holding or revering situation. I know from my own trading that I have been paying the top and selling the bottom more then once this week. This requires me to take a step back. I have cut all of my non core positions. I still have small interest rate risk in Brazil, Mexico, and Argentina and this I will keep (for now) but I feel it prudent to cut the risk down where possible. We are heading into the summer. July 4Th holiday's will be here soon. This means vacation's, staff leaving early, basically complacency. If there will be a lack of market changing information, like I think will occur) then market will begin to grind sideways and yield will once again reign supreme. I could be wrong and that is why I am calling for a more cautious approach but time will tell.



Wednesday, June 20, 2007

Global Interest Rates continue to climb

Today Sweden surprised the markets by raising rates 25bp and coming out with a quite hawkish commentary. This rocked the market sending the currency from 7.0090 up to 6.8920. This is a very big move. On top of this a major Canadian bank came out with a forcast for not one but two future rate increases in Canada. One on July 10 and the other on September 5. I certainly do not doubt it and I see rate rises in the future of the Fed also. Inflation is a concern (Globally) and growth seems quite strong. It makes sense. These markets have been complacent for some time. Although I will not reverse my positive carry positions, I am going to be more caustious and will not add for the time being.



Tuesday, June 19, 2007

Yahoo Co-Founder Yang becomes CEO

Under the Catogory of IMAGINE IF I DID A GOOD JOB.....comes this story from today's USA TODAY. Terry Semel, the former Warner Bros Executive, stepped down under mounting pressure from investors over a poor stock performance and a reported 71.7 million dollar pay package for 2006. I for one am a big believer in paying for performance but for 71.7 mio dollars something good better be happening.



Saturday, June 16, 2007

Yield Monkey's get ready to party

Once again the Stock market rallied and closed within 50 points of an all time new high. This occurred after the previous week in which stocks were under perssure (should I say Tremendous pressurre?)as fixed income prices were sent into a tailspin. Emerging Markets, as you can imagine, had a very positive week. Is this to continue? Well why not!? It seems to me that the Fed will not be changing rates for some time (look at Fed Fund futures they at at 94.73-75 all the way to May 09), as such we should be approaching a bottom in Eurodollar futures (as I believe these will trade range bound).Therefore Yield players should (and have been) be jumping back into the pool. I have maintained my short rate view in both Mexico, Brazil and Argentina. These plays have turned out very well. I continue to hold these positions but will look to cut down on Mexico (not out down!). As I have said in my posts many times Iceland and Turkey continue to have huge potential to apprciate.

A couple of things I have gotten wrong and have confused me.

1. China: I have been long dollars against this currency and the apprciation of the currency has been greater then I antcipated. I am currently square here and will sit on the sidelines until I can get a better handle on how quickly the currency will strengthen.
2. Euro: This is a currency I have had no luck with in recent months but one which I continue to battle. I have been both long and short and have managed to lose money both ways. From here I am long, seems to me that if EM does better the market will be selling dollars once again as earlier in the year. This is a currency I really want to correct. I will continue to have small positions in it until I crack this nut.

Also remember we are heading into vacation season. As such Yield will play an even bigger role. I will continue to attack my trades from a positive yield perspective and let the chips fall where they may. Let the Party begin!!!!



Monday, June 11, 2007

Stocks once again refuse to trade lower.

Stocks had a flat day in the States after watching Asian and European sessions, for the most part, closing up on the day. As I have said in the recent past stocks are abit worrisome to me. I think that higher rates globally are going to have to be a drag on the markets at some point. As I pointed out in yesterday's post, higher rates have caused lower GDP numbers every other quarter (approximatly) for the last few. So although I think everyone needs a good portion of thier money in stocks, I think for now I sleep better with slightly less in the "kiddy".

Good Luck to all.



Sunday, June 10, 2007

Is the market begining to meltdown....

This was certainly an interesting week for Fixed Income. New Zealand and Europe decided to raise rates and it seems that the U.S. market got spooked. 10 year yields got to about 5.25% from 4.8% just a week or so ago. Friday morning Fed Governors were out making sure that everyone was aware that they had no intention of raising rates anytime soon. This seemed very interesting to me.

Speaking with a few friends in the market the "theory" goes like this. As goes the 10 year so goes the economy. Every other quarter GDP has been up and then down. When rates are high (as they are now) the next quarters GDP (in this case the 3rd Quarter) will be lower. When it is low, as was the 2nd quarters, growth will be on the higher side. This as more and more of our economy is tied to variable rate debt and as such our cash flows suffer and benefit from the variable rates. This could be why the Fed Governor's were so quick to speak out about not raising rates ? They are aware of this correlation and do not want to risk pushing Fixed Income over the edge. It seemed to provide some stability to the market on Friday. Amazingly Emerging Markets rebounded quite nicely and Stock's closed up on the day, regaining most (if not all) of the previous day's losses.

For now I am staying the course and remain Short Brazil rates (they cut 50bp this week and more cuts are on the horizin). Short Mexican rates, as they did not move rates at thier last meeting (after an unexpected rise the previous month) and short Argentinian Rates. I expect a bit of a retrace lower in U.S. rates but I think I will play that in the spot market and go short the dollar against the Euro (currently I am short Euro's but I will cover that on Monday).

Thse markets certainly have not been easy and most people I am talking to are trying to stay nimble and see where the chips fall. If you have a strong conviction I think there will be some over shoot in these markets and you can have opportunity to fade the markets. But be careful.



Wednesday, June 06, 2007

Rates heading higher Globally......

Here is a very good article from Trader Daily. I think it has a lot of merit. Investment houses have been changing thier calls on U.S. rates recently, from cuts this year to now looking for those cuts next year. I am thinking that the next move will be higher as I see investment into the U.S. as increasing due to the exchange rate differencial particulally in the housing market (more on this later).

Good Luck and Good Forex Trading.


Tuesday, June 05, 2007

Soros speaks...and the market listens.....

Soros who has a rather large investment in Brazilian Ethanol was quoted as saying today that the Brazilian currency was "Overvalued". At first there was little reaction to the news, but coupled with a weak stock market and othe EM markets underperforming on the day the currency set out on a weakening pace. Tomorrow night is the rate announcement with the market strongly split over 25 and 50 bp. I think either way we are looking at a re-trace trade as there is alot of money in EM and I think we need a bit of a break.

Two other reasons why I feel this way:

1. U.S. rates continue to head higher


2. Moody's upgraded South Africa today and the Rand weakened considerably.

Two signs which are not good for EM in general.



Sunday, June 03, 2007

Brazil rates to hit 8% by end of 2008??

Some talk this week at the EMTA meeting in New York that Brazilian rates could hit 8% by the end of 2008. This might me a little optimistic but it is certainly within reason. There was talk 2 weeks ago of another upgrade in the debt of Brazil. It is the goal of the Brazilian government to achieve investment grade status. Once that happens Pension funds and the like will be able to add the debt of Brazil (and its high yield) to it's portfolio's. As such a new, and quite possible, a more aggressive round of buying will occur. This week, the CB of Brazil is expected to cut rates again. The market is not sure whether it will be 25 or 50bp. I expect 50bp as the currency is strengthening at to quick of pace. Will we see Wednesday night what the outcome is.

The U.S. economy continues to tick along. Any hope of a rate cut in 2007 has all but been eliminated (by me at least). Inflation is clearly a concern. Look at your own life... gas, groceries and most other day to day cost's are up. I know for myself it cost me more to get threw a week that a few months ago. Under these circumstances rates cannot go lower (maybe higher??). All other countries seem to be leaning on the side of caution in rate moves these day's. Risking a slowdown to ensure that inflation does not get out of control.

This week few substantial numbers are due out, so I look for more grinding markets and Happy Yield Monkey's everywhere.