Apparently I'm not done. Tell me riskypoo, what's your view on the market over the next year or so? And what's the basis of that view? Rearden, I'm sure others would like to hear the same from you as well. Of course, if you have no bias, would like to hear why.
-------------------------------------------------------------------------------- Quote from 2cents: makes perfect good sense for the Fed to reduce the pace to bi-monthly / quarterly review now that the 'long term' commodities uptrend has been broken... there's plenty of room to raise rates again should oil & commodities price pressures persist and the US consumer continue to prefer high gas price punishment to alternative energies options... -------------------------------------------------------------------------------- FFF i mean...
I am paid to take a bearish bias, but I remain +PnL as long as the upside doesn't exceed two sigmas on my expiration cycle. I wait for days like this to sell exotic puts and hedge with an amount which exceeds my notional option risk, through futures or option gamma. In effect the hedge becomes the primary position. I go deep otm on the upside and buy exotic calls at vols 200 basis below the atm. It's a bit more complicated than that, but I wouldn't want anyone to think I am some market cheerleader. I buy cheap volatility in listed equity options as well. If you weren't such an ass I would suggest some ideas in derivatives beyond the lottery-put. My niece has a full ride, but could finance her education through trading if she was forced to do so. She's 17yo, and doubled her account in 8 months with a Sharpe >6.00 at a max 5% DD. I see that you wrote a couple thousand word missive about your belief the current market is being manipulated. A complete waste of effort. All it does is reinforce your subconscious drive to avoid taking the loss. Take the hit, learn from it, and move on.
quick question if u don't mind... which platform(s), exchange(s) do u use? am only trading FX (incl XAU, XAG)... i've looked at Ikon, Saxo, marketindex and CME FX options, find the bid/ask spreads too wide generally...
The above was referring to index skew, but I have an account with UBS FX through an offshore account. Options are decent, but I clear spot through hotspotFXI for tighter spreads. Saxo may be OK now thet they're using d/v margining. Their options spreads are 8-10 pips regardless of durations. It obviously pays to trade longer durations.
thanks... yeah, 8-10 pips, i do find that a bit pricey for what i have in mind... but you're right, on longer durations...
BNT, I actually <b>agree</b> with most of your macro conclusions: http://www.elitetrader.com/vb/showt...032&perpage=6&highlight=midterm&pagenumber=10 http://www.elitetrader.com/vb/showt...032&perpage=6&highlight=midterm&pagenumber=11 This pig (U.S. economy) is now coated with a nice thick layer of lipstick, and will remain so until after the elections. However, I also believe your original position of long '07 SPY puts at strikes ranging from 85-105... is still crap. This isn't 2000: P/E's are not stratospheric like they were then, and nobody takes EBITDA seriously anymore. Look, it's wrong for anyone to pressure you into defending your market calls- I hate when that's done to me. All I'm asking, is that if you DO wish to discuss your positions here- just be honest, and drop the revisionist history tactics. Thanx, and good luck...
DJIA, Spooz etc are flying... condolences to all the slaughtered bears... i still see odds rising for a 25bp hike SOON! http://bloomberg.com/apps/news?pid=20601109&sid=aEeMfVJg_oGY&refer=home Goldman, JPMorgan Split on Rates, Investing Strategy (Update1) By Michael R. Sesit Oct. 16 (Bloomberg) -- Goldman Sachs Group Inc. says the Federal Reserve's benchmark rate will fall from its current 5.25 percent during 2007, ending the year at 4 percent. The economic gurus at JPMorgan Chase & Co. see it rising to 6 percent. The difference means billions of dollars of investor money may be headed to the wrong place. On the basis of its economic forecast, Goldman recommends equities. JPMorgan prefers cash as a defensive strategy. ``It's not unusual for firms to have different views, but the difference in magnitude and direction between Goldman and JPMorgan is unusually large,'' said Nicholas Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, which has about $30 billion under management. ``What matters is that investors should understand the logic behind each view and then decide whichÿview is right.'' The focus of the debate is arguably the world's most important interest rate. The federal funds rate, which banks charge each other for overnight loans, is controlled by the world's most powerful central bank in the world's biggest economy. The New York-based firms' projection of that rate is key to the investment advice they give institutional investors and wealthy individuals. Housing Slump Interest-rate futures show that traders expect the Federal Reserve will lower its benchmark rate next year, though not as far as Goldman projects. The yield on the December 2007 Eurodollar futures contract is 5.00 percent. Goldman bases its forecast on the slumping housing market, which it says will drag down the U.S. economy enough to persuade the Fed to lower short-term rates. The firm sees U.S. consumption growth slowing from an annualized 4.8 percent in the first quarter of 2006 to 1.8 percent in the second quarter of next year. All of that will come from a declining housing market, said Jim O'Neill, Goldman's head of global economic research in London. ``The big difference between us and them is that they see little consequence of the housing slowdown, whereas we see significant consequences,'' he said. Prices of existing homes in the U.S. fell in August for the first time in 11 years and purchases declined 0.5 percent. Goldman forecasts U.S. gross domestic product growth will slow to 2.3 percent in 2007 from 3.4 percent this year. By yearend 2007, O'Neill also projected 10-year Treasuries to yield about 4.5 percent, compared with 4.80 percent now. Cheap Credit JPMorgan, by contrast, says U.S. growth will be buoyed by the continued flow of cheap credit from abroad and falling oil prices, said Bruce Kasman, JPMorgan's chief economist in New York. Companies are benefiting from the weak dollar and profit margins are at a 40-year high. Though falling housing prices will buffet the economy, U.S. growth will average about 3 percent in 2007, Kasman said. Oil prices that stayed near the current $59 a barrel would boost U.S. growth by 0.75 percentage point during the next two to three quarters. He also noted that the 4.6 percent U.S. unemployment rate hasn't risen even as housing contracts. ``We're seeing the economy getting hit by a sectoral shock but not being hit by a spillover into other sectors,'' he said. Corporate profits rose to $1.75 trillion in the second quarter, equivalent to 13.3 percent of gross domestic product. Profits' share of GDP was the highest since a record 14.1 percent in the last three months of 1950. Defensive Stocks As other evidence of U.S. economic strength, Kasman forecasts that core inflation, which excludes food and energy prices, will remain in the mid-2 percent range. JPMorgan economists see 10-year Treasury yields peaking at 5.75 percent. Goldman's O'Neill noted that JPMorgan was one of the few firms that remained bullish about the economy. Indeed, Goldman has some big-league company in the bearish camp, including Merrill Lynch & Co and U.S. Trust Corp. -- and outside the U.S., HSBC Holdings Plc and BNP Paribas. For his part, Kasman said: ``To get the Fed to ease by over 100 basis points during the next 12 months, you have to get something that feels and smells like a recession, which we don't see.'' The Fed raised borrowing costs 17 consecutive times to 5.25 percent between June 2004 and June of this year. The Standard & Poor's 500 Index has risen 9.4 percent so far this year. Underweight JPMorgan advises that clients protect themselves from rising interest rates by investing less in stocks and bonds than the amounts dictated by portfolio benchmarks. In a report earlier this month, they recommended allocating 55 percent to stocks versus a benchmark weight of 60 percent and 25 percent to bonds, compared with the benchmark's 30 percent. Instead, JPMorgan recommended that 20 percent of a portfolio be parked in cash, twice the benchmark weighting. The report favored so-called defensive stocks, companies with high dividend yields and secure earnings. Favored sectors were telecommunications services, consumer staples and health care. An investor purchasing stocks now would be buying an asset that had already benefited from very favorable circumstances, said Abhijit Chakrabortti, JPMorgan's New York-based head of global equity strategy. He noted the peak in corporate profit margins as well as bond yields at relatively low levels and investors who showed a high tolerance for risk. Cash is King Meantime, anyone buying bonds at this point would be buying after prices had already discounted anticipated 2007 rate cuts, essentially turning a blind eye to rising inflation pressure. With short-term rates higher than long-term rates, an investor wouldn't be compensated for the risks associated with investing in longer maturities, such as 10 years. ``Against this backdrop, cash remains our preferred asset class,'' said Chakrabortti. Unlike JPMorgan, Goldman strategists advise overweighting equities, while underweighting bonds and cash. ``Bigger-than- expected U.S. rate cuts next year and relative global de-coupling from a U.S. slowdown provide the foundations for strong equity market returns over the coming months,'' the firm's European equity strategists told clients in an Oct. 6 report. Favorite sectors include pharmaceuticals, basic resources and insurance. Goldman also likes capital-goods, software and oil and gas companies. Meanwhile, the firm is underweight auto and chemical companies and consumer-staple stocks, such as beverages, food producers and tobacco. So where does Fort Washington's Sargen -- who once worked as an economist at JPMorgan of 6-percent fame -- come out? ``My call would be that fed funds is headed for 4.5 percent to 4.75 percent,'' he said.
suspense suspense... http://www.bloomberg.com/apps/news?pid=20601087&sid=a2kuGG_WJrPw&refer=home U.S. Economy: Housing Starts Jump, Inflation Eases (Update2) By Bob Willis and Joe Richter Oct. 18 (Bloomberg) -- Housing construction in the U.S. rebounded in September from a three-year low and falling energy prices led inflation to slow, suggesting growth may pick up while letting the Federal Reserve keep interest rates steady. Housing starts increased 5.9 percent to an annual rate of 1.772 million from a 1.674 million pace in August, the Commerce Department said today in Washington. In a separate report, the Labor Department said the consumer price index dropped 0.5 percent from August, the biggest decline since November. The figures, along with the most recent reports on retail sales and the labor market, diminish concerns that falling house prices will cause the economy to stagnate. At the same time, the slide in gasoline prices may also signal the worst of the inflation threat is behind Fed policy makers after 17 consecutive rate increases. ``The real economy is going along pretty much as the Fed wanted to see it,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, referring to inflation. ``Indicators continue to point to moderating housing activity, just not a melting down or collapsing.'' Stocks advanced and bonds fell in the minutes after the reports were published, before erasing their decline and trading little changed at 12:12 p.m. in New York. A Standard & Poor's index of 16 homebuilder stocks, including D.R. Horton Inc. and Centex Corp., rose 1 percent today and is up about 19 percent from a two-year low in July. Incentives Builders broke ground on more homes last month after cutting prices and offering incentives to clear out inventories of unsold homes. An index of homebuilder confidence increased this month for the first time in a year, led by rising sales expectations for the next six months. Stepped-up construction in the Midwest and South made up for declines in the Northeast and the West. Building permits dropped for an eighth straight month, to the lowest level in almost five years. ``We're nearing the end of the slowdown, but we're not quite there yet,'' said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York. Countering the tame overall reading on inflation, so-called core prices that exclude food and energy rose 0.2 percent for a third month. The report also showed the biggest year-over-year increase in core prices in a decade, suggesting the slowdown in inflation will be gradual. Core Prices Core prices rose 2.9 percent from a year ago, the biggest 12-month jump since February 1996, after a 2.8 percent gain. The 12-month increase is ``OK for a time as long as policy makers are confident that growth will moderate enough to allow core inflation to come off soon,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. ``However, if growth reaccelerates in the fourth quarter, as we expect on the back of lower gasoline prices, then the Fed's patience will be tested.'' The economy grew at an annual rate of 2.5 percent last quarter and will maintain that pace in the final three months of the year, according to the median forecast of 82 economists surveyed by Bloomberg News from Oct. 2 through Oct. 10. The worst housing-industry downturn in more than a decade has reduced economic growth this year. Economists polled by Bloomberg News forecast housing starts to fall to a 1.64 million unit pace from an originally reported 1.665 million rate in August, according to the median of 61 projections, which ranged from 1.58 million to 1.74 million. Permits Starts, which increased for the first time since May, are down almost 18 percent from a year earlier. Building permits fell 6.3 percent to an annual rate of 1.619 million from 1.727 million the prior month. Not since April to November 1974 have permits declined eight straight months. Sales of new homes unexpectedly rose in August, after the prior three months' figures were revised down, and inventories of unsold new homes edged down from a four-decade high, the Commerce Department said on Sept. 27. The National Association of Home Builders/Wells Fargo index of builder confidence rose to 31 this month from 30 in September, when it reached its lowest level in 15 years, the group reported yesterday in Washington. Single-Family Homes New construction of single-family homes increased 4.3 percent in September to a 1.426 million rate, the Commerce Department said in its report today. Starts of multifamily homes, such as townhouses and apartment buildings, rose 12.7 percent to an annual rate of 346,000. Starts increased 14 percent in the South and 3.4 percent in the Midwest. They fell 14 percent in the Northeast and 2.2 percent in the West. The number of homes under construction fell 1.2 percent in September to a 1.328 million pace. Housing completions rose 11 percent to an annual rate of 2.084 million. The number of housing units authorized, but not yet started, decreased 11 percent to 202,600. More than half of U.S. homebuilders, 55 percent, are offering extras such as fireplaces, hardwood floors or garages to entice buyers, up from 37 percent a year earlier, said Gopal Ahluwalia, director of research at the National Association of Home Builders in Washington. Four percent are giving away cars, he said. The housing slump and mortgage rates that have risen from four-decade lows in 2003 are making it more difficult for Americans to borrow against their home equity, a source of funding in the recent expansion, economists say. Growth may slow to an average 2.5 percent pace in the second half from a 4.1 percent average rate in the first half, according to a Bloomberg survey of economists. Mortgage Rates Still, recent declines in mortgage rates, as well as steady income gains and rising consumer confidence, may help revive sales, economists say. The average rate on a 30-year mortgage fell to 6.37 percent last week from 6.8 percent in late July, according to Freddie Mac, the nation's second-largest buyer of mortgages. The Fed will hold its key rate unchanged next week at 5.25 percent, and keep it there until the second quarter of 2007, when it may cut it to 5 percent, according to the median estimate in a Bloomberg survey of 80 economists. The Fed in June ended a two-year string of 17 consecutive rate increases that brought the overnight rate up from a four-decade low of 1 percent and slowly pushed up mortgage costs. Toll Brothers Inc., the largest luxury builder, reported a 19 percent drop in fiscal third-quarter profit, its first decline in four years. ``There's no doubt that real estate is down but certain markets are doing well,'' Chief Executive Officer Robert Toll said on Oct. 12, as he opened sales at the company's first condominium project in Manhattan. ``I can't say that the worst is behind us and I can't say that it's not.''
I agree with most of what you're saying and have said pretty much the same things, although not illuminated so extensively, in other threads. I've said in many threads this whole rally seems totally delusional. http://www.elitetrader.com/vb/showthread.php?s=&postid=1230768&highlight=delusional#post1230768 The thing is though, I just trade the market as it presents itself. If it's in an extremely bullish mode, which it obviously has been, I buy dips and breakouts. If it's bearish, I short rally attempts and sell breakdowns. That's all. As you're mentioning, I feel there's a lot of manipulation behind all the elements creating and propping up this rally. The election I'm sure is a big factor if not the biggest. I don't trust anything this administration says. They've proven themselves time and time again to be megaliars. Many, many times about everything under the sun. So I find it hard to take a long term position because of this and thus just do shorter term trades. It will be interesting to see how this plays out in the markets and in the world. I was thinking this morning about Iran and the possibility of us bombing Iran after the elections. And I was remembering how things played out in Vietnam in 1970. Under severe growing pressure from the public, which finally came to understand the stupidity of the war, Nixon had promised to begin withdrawing troops. But what happened instead was Nixon and Kissinger, who by the way is advising Bush on strategies for Iraq - sheesh!, decided to bomb the hell out of Cambodia instead and thus escalate the war. What idiots! The public, especially students, myself included, went ballistic. This was what brought about the killings at Kent State and here in Santa Barbara, where I was going to school, the Bank of America in Isla Vista, next to UCSB, was burned to the ground. And one student, Kevin Moran, who was just trying to calm everyone down, was shot and killed by a national guardsman. And now we're mired in an equally stupid, winless war looking for an exit strategy that will enable us to save face, just like Vietnam. With Kissenger advising Bush that withdrawal is not an option, doesn't it seem reasonable to see they might resort to bombing Iran, just as Nixon and Kissenger had bombed Cambodia years ago under similar circumstances? How do we get rid of all these delusional, hateful, old retreads creating the same destructive foreign policy, especially when an election win is just a hacked black box away? The Kissingers, the Rumsfelds, the Cheneys, etc.