Wednesday, 29 February 2012

Wednesday market outlook

Interesting times we`re trading in. The markets are screaming for an impeding correction, but as the global printing press pumps liquidity into the markets the game of musical chairs has no choice but to continue. What will happen when the music stops and all these injections will prove they have diminishing returns? Until then, let`s take a look on what the markets did this week: gold has managed to hold the bullish channel it entered on the 22nd of February, the S&P looks like a rabid bull and the effects of Bank of Japan`s massive intervention on the yen seems to be wearing off.

Thursday, 16 February 2012

Last one out is a rotten AAPL

All good things come to an end, and the recent rally in the Cupertino based technology mammoth is no exception. Apple reversed yesterday almost $24 from its most recent highs, down to $502.08. The main culprit seems to be a piece of news according to which Apple iPads are the subject of a trademark infringement in the Chinese mainland. It seems that the sino company Proview International Holdings is the holder of iPad trademark on the Chinese mainland and is currently seeking a ban on imports and exports of Apple products.

Tuesday, 14 February 2012

BoJ sprays markets with 10 trillion Yen of liquiditity and all I got was a lousy SL

The Bank of Japan announced more monetary easing today and pumped $128 billion into money markets in a move set to reverse the appreciation of Yen against other currencies. Copy-catting the US Federal Reserve they also expressed their intention to target a 1% inflation for the period. This comes after disappointing GDP news which revealed that the Japanese economy contracted by 2.3% on an annualised basis, on expectations of a 1.8% shrinkage.

Monday, 13 February 2012

Back to the USD/JPY long trade

I`m re-entering the USD/JPY position at $77.71 with a very tight stop loss at 77.48 to capitalise on the disappointing GDP figures posted today. The Japanese annualised GDP was posted at a negative 2.3% on expectations of -1.4%. Moreover, the Bank of Japan is starting today a two-day policy meeting in which they might decide that further intervention is warranted. The risk-reward ratio is favourable.

Sunday, 12 February 2012

MF Global hole widens to $1.6 billion

KPMG, the bankruptcy administrator of the former financial services company MF Global revised upwards the estimation of the shortfall in customer custodial accounts. It seems that Jon Corzine, the CEO of MF Global authorised the embezzlement of customer funds through commingling (using the cash left in margin accounts for collateral in their own transactions).  The claims from commodity traders using MF Global accounts are now $6.9 billion, out of which 3.9 billion will be returned by the trustee in the upcoming week. It holds an additional $1.4 billion in reserve, thus leaving it with a gap of $1.6 billion in claims.

Friday, 10 February 2012

Short S&P500 @ 1339.7

I`m entering a short position on the S&P500 as of now at the $1339 level. The QE2.5, Operation Twist, LTRO and MBS repurchases are starting to wear off. Stop loss at $1360. Target at $1291.

Closing the USD/JPY trade @ 77.58

I`m closing the USD/JPY trade started a few days ago. Better leave some money on the table, than have nothing at all. I`ll wait for a move closer to 75.5 to get back in. If there is a central bank intervention at this level, then so be it. A few good pips from 76.42 will aid the bottom line.

Thursday, 9 February 2012

It`a all Greek to them!

The Greek tragi-comedy continues: an early agreement to secure an 130 billion euro rescue package from the Troika (the European Commission, the IMF and the European Central Bank) is getting less and probable. The officials failed to reach common ground on the sensitive issue of job cuts, lowering pensions and reducing the statutory minimum wage. IMF requests, or let`s say recommends Papadendreou to sack approximately 15,000 government employees and reduce primary pensions by nearly 20% in order to cut the budgetary deficit by 3 billion euro in 2012.

Thursday, 2 February 2012

Facebook files its prospectus: stay out!

Facebook`s initial public offering is imminent, as today it filed the prospectus. Just like all new age, Internet companies "that cannot be measured using traditional metrics", the focus is on the 845 million active users, 2.7 billion likes and comments per day, 250 million photos uploaded per day and 100 billion friendships. That is jolly and all, but how much is an uploaded photo, a like or a friendship worth? Wile the advertising business model seems less effective than Google`s Adsense model, there is some growth potential in the web developer (mainly apps) business model, whereby Facebook is charging 30% of all revenues. Integrating social gaming into its platform is an extremely well though out move.