New Direction

I'm planning to move this blog in a new direction. To all my loyal readers out there, I know you were disappointed not to see a market commentary post last night, but I have decided to stop posting these as I see little value added in doing so. My plan going forward is to post less frequently (perhaps weekly?) with a more analytical tone about my thoughts on global financial markets. Hope to start this next week, have a great weekend everyone!

UK Labor Market Recovery?

Equities: Stocks continue to rally, finishing up for the 7th odd day in a row. Stocks seem on a permanent high, with nothing in the way to push it down. Hoping we are in for some kind of correction on the horizon, but now way to really predict the timing of this.

Currencies: Pound once again rose, on good UK jobs data showing unemployment fell. However the true picture was masked by the fact that many workers have dropped out of the labor force, and the actual number of people employed has fallen. This is a case of workers becoming discouraged and leaving the job market. Euro and Yen both held pretty flat against the Dollar today.

Commodities: Oil continues its upward trajectory, similar to stocks, nothing seems to be in its way. Gold was pretty flat today.

Hammered

Equities: Stocks up across the board about half a percentage point. Fed rate decision came in as expected. Building permits and housing starts both fell, however the fall was expected, so not a real market shaker.

Currencies: Lots of Dollar selling across the board today, got hammered on my Short EURUSD & GBPUSD positions as they have massively risen against the Dollar. Can't explain this very easily for the Pound, other that general Dollar weakness. Dovish comments coming from the Fed probably contributed to this.

Commodities: Oil reversed previous day's gains, although no longer holding any oil positions. Gold up about 20 bucks mainly on USD weakness (however it never seems to fall on USD strength)

One problem I'm finding is that my P&L tends to be extremely volatile because I am holding positions that are correlated. E.g. short gold and long USD, they tend to make and lose money at the same time. Need to find a way around this.

Some Risk Aversion Returns

Equities: Another fairly boring day for stocks. They opened lower then pared losses to finish the day slightly up. No real drivers of the market today. Looking ahead to the week, we have the Fed rate decision, although no movement is expected, so the impact of it will probably be muted.

Currencies: The Dollar rose against both the Euro and the Pound. Euro fell due to ministerial disagreements over Greece, and the Pound fell due to concerns over UK economy and prospects for a hung parliament. Nothing new here, just a continuation of a trend already in place. Some chatter on Moody's warning on the potential downgrade of US & UK AAA credit ratings, although nothing enough to move the markets. The Yen was pretty unchanged versus the Dollar.

Commodities: Oil fell sharply today. Sold off my put, taking a massive loss on it, however I didn't feel it would cross the strike in any significant way over the next two days so might as well pocket whatever remaining time value was left. Lesson learned: Don't make a long term bet on oil on a one month option. Gold rose today, as risk aversion today increased demand for the safe haven asset.

The Roaring Pound

Equities: Stocks once again finishing slightly higher on the day. Good retail sales numbers were offset by worse than expected consumer confidence figures, overall meaning that stocks were lacking direction and fluctuated between gains and losses throughout the day. Slowly rising through the week, stocks have ended the week considerably higher.

Currencies: The pound was the story of the day, got absolutely killed on my short GBPUSD position. It rose to at above 1.52 before later closing just below that level. Not fully sure what drove this, think it was a just due for a rise given all the recent falls. Euro also finished higher against the USD, so not a good day for my overall currency trades. USDJPY was pretty flat.

Commodities: Oil and gold both trader lower today, unfortunately for my oil put is it too little too late, as this is increasingly looking like it will finish worthless. Meanwhile, gold is drifting back towards the $1100 level, could we see more falls to come in the near future? Lets hope so for the sake of my June gold put. Thats all for now, have a great weekend all!

Yearly High for the S&P

Equities: Stocks spend most of the day flat then had a late rally to finish up half a percent or so. No real economic data coming to justify this. Volumes continue to remain low. S&P hits the all important 1150 mark, this could be a bullish signal going forward. US retail sales out tomorrow, should move the markets somewhat

Currencies: The Pound and Euro both rose today. The Euro rose on sentiment that the Greece crisis is now over and its problems will be contained. The Pound rose on UK inflation expectations coming in above market consensus. The Yen fell slightly against the Dollar. Overall risk sentiment improved data, hence the lower Dollar and Yen. Pretty slow in terms of news, otherwise.

Commodities: Oil and Gold both finished moderately higher today, with no real drivers of market action. Last couple of days have seen little movement, with low volatility expected to follow low volatility.

Nothing Exciting

Equities: Another flat day for equities, though they finished marginally higher. US inventory data came out positive, and borrowing came in worse than expected. Some conflicting data is still providing a lack of direction for stocks. Wonder what the implications of a large US deficit will be going forward. As this seems to be the norm across developed countries, we could see double dips around the world due to fiscal tightening.

Currencies: The Pound well today but pared most of its losses as the trading day went on. The Euro rose slightly, still trading around the same level over the past few weeks. Some words coming out that the Greek crisis is no longer an issue, but I don't believe it frankly. Looking like the politicians are trying to sweep the issue under the rug, but lets see if it resurfaces in the future.

Commodities: Oil was pretty flat on the day, inventories rose but less than expected. Gold was also flat on the day. Nothing exciting on the commodities front today, hopefully we some more action later on.

Marginal Return of Risk Aversion

Equities: Stocks finished marginally higher today, well of their intraday highs. Again, nothing much happening in terms of news or any fundamental drivers. Should get more exciting later in the week when retail sales and trade balance come out.

Currencies: Risk aversion returned to the currency market today as the Dollar rose against the Pound and the Euro, and the Yen rose against the Dollar. Respective gains were pared somewhat as the day progressed, but again so significant events to drive the markets today. UK trade balance came in worse than expected, a sign that the weak pound has yet to have the desired effect on exports.

Commodities: Oil traded lower on the day, nothing fundamental as a driver except perhaps Dollar strength. Inventory reports out tomorrows should provide more direction for the market in the short term. Oil is being pulled in different directions, with strength in equity markets pulling it higher, but Dollar strength and inventory buildups pulling it down. Gold was pretty flat on the day, unmoved by Dollar stregth.

Sideways Movement

Equities: Stocks finished the day flat, nothing exciting happening today. There is not much meaningful economic data coming out in the next couple of days, so I'm not expecting any significant moves. The VIX index is also trading at a low level, so implied volatility must be low, perhaps a good time to go long vol, either through option buying or the index itself.

Currencies: The Pound fell against the Dollar and the Euro held flat, again nothing exciting happening today. The Dollar was initially down early in the day but pared losses later on. I have taken on a new long term position, long USDJPY. Some interesting articles on the structural problems in Japan, it will be interesting to see how this plays out. Potentially we could see Yen weakness on a renewed interest in the carry trade

Commodities: Gold fell moderately today, nothing in particular as the driving force. Crude oil edged upwards, continuing its bullish trend. Likelihood is now that my option will expire worthless, it has already lost most of its value.

Labor Market Recovery

Equities: Stocks had an excellent day today as non farm payrolls and unemployment rate both came in better than expected. Without the weather effects, the pundits analysis was that jobs would have been gained in February. The fact that the unemployment rate held constant at 9.7% is good news for the labor market, we could easily see further falls in the future. Market mood is still bullish, lets see how long this lasts.

Currencies: The Dollar fell against both the Pound and the Euro on the good economic news. The Yen also fell against the Dollar as risk aversion seems to have completely left the market. I made a comment yesterday on whether good news coming out of the US could be Dollar positive, and it appears the market is still deciding which way to go on this. I believe in the long run, it should be Dollar positive as growth and economies of the US and Europe begin to diverge further.

Commodities: Oil continues to track the gains in equity markets, rising another buck and change on the non farm payrolls data. Think my put on oil is likely to expire out of the money, looking back I'm not sure it was a good trade for the following reason: the only available oil option was a month long which wasn't long enough for fundamentals to fully play out. Gold was relatively unchanged on the day. Gold seems to rise on bad news and stay flat on good news, implying a bullish market mood.

New trend for the Dollar?

Equities: Stocks finished higher today, on good job data and productivity gains, and despite pending home sales falling 7%. The market mood is still bullish hence the gains despite the mixed news. Tomorrow will be an interesting day as the jobs data approaches. There is a wide range of predictions, and some are expecting a large loss due in part to bad weather. Hopefully we'll see some action on the markets on what has been a surprisingly dull week:

Currencies: The Dollar reversed its losses against the Euro and Sterling. ECB and BoE both held rates constant today as expected, and their currencies fell. Once again we are seeing a reversal of the usual trend where strength in equities leads to weakness in the Dollar. Could good economic news start to become Dollar positive? We'll need more evidence to say if this is a new reality or just off shoots.

Commodities: Oil and gold both fell today, likely on the Dollar rising. Oil should continue be supported if equities continue to rally. I'm wondering if the inventory data coming out over the past few weeks will eventually catch up to the oil price, lets hope so

Up Up and Away for Black and Yellow Gold

Equities: Stocks finished the day flat, rising initially on good ADP jobs data and ISM manufacturing data and falling later on the Fed Beige book report. Should see some more volatility next two days with non farm payrolls approaching and some news coming out of the Eurozone on Greece

Currencies: Pound rallied against the Dollar on good data coming out of the UK, and Euro rallied against the Dollar on news of Greece's austerity plans for budget cuts. First day of trading using dbfx saw losses on my short EURUSD and short GBPUSD positions. These are longer term position trades, so I'm expecting them yield profit over the next 3-6 months.

Commodities: Oil rose dramatically today despite a rise in inventories. Refiners increased their production, however I am thinking oil could be on a higher barrage despite any negative news. This was seen when oil rose to $147 two years ago, despite increasing supply and falling demand. Worried that my 78.50 put will expire worthless ,its only got 2.5 weeks until expiry, but will hold to the end as its now too low to bother selling. Gold continues to rise, beginning to worry about this put as well.

Optimism Abound

Equities: Stocks finished the day marginally higher, nothing too exciting to talk about. Rumors of a Greek bailout in the works are helping to support equities and helping them to rally. Stocks are now in positive territory for 2010. Should see some more volatility as the Non farm payrolls data approaches, until then have to wait this out:

Currencies: Dollar rallied in the morning but later pared gains and eventually lost modest ground to the Euro. Again, continued speculation on a bailout for Greece helped to support the Euro. The Pound continued to fall, this time more moderately, against the Dollar. There is talk of a dramatic fall looming for the Pound on the back of poor public finances and the possibility of a hung parliament.

Commodities: Crude oil rose on the back of rising equities and a falling Dollar. Optimism on the recovery helped to rally crude prices march towards the $80/barrel figure. Currently have an April put on crude, I am thinking it may not be a long enough time for oil to move down as I have forecasted it to do based on the fundamentals. I'm expecting heavy losses due to time decay if oil continues to remain in the 78-80 range as it has the past week. Gold rose by $16 today, again on EURUSD stregth and rising equities and commodities.

Divergence of Past Correlations

Equities: Stocks finished up over 1% today, the rally coming from an improved outlook for Greece and further speculation of some sort of bailout this week. Consumer spending came in above estimates further contributing to the rally. This friday will be the US non farm payrolls and unemployment rate, always a market mover. Last month the market moved down heavily in the two days preceding the report, in anticipation of bad data. The data turned out to be on the good side, sending stocks up. This month the expectation if for a significant loss of jobs due to the bad weather in february, but that this should only be temporary. Unemployment is expected to inch up to 9.8%. We could see some falls later in the week if last month's situation repeats itself, so will keep a look out.

Currencies: The Pound plunged today against the Dollar, on UK election poll results showing the possibility of a hung parliament. This is only the beginning of further downward pressure on the Pound. As the election gets closer, and the fiscal picture continues to worsen, the outlook for the Pound is not good. The Euro fell against the Dollar, this is a reversal of the usual correlation with stocks. Whether we'll see the Dollar continue to strengthen while stocks rise is anyone's guess, but this could be indication of the divergence between US and the Eurozone economies to come.

Commodities: Oil fell today, against diverging from its previous correlation to the equity markets. The stronger Dollar was the primary driver of the oil price today. Oil will probably be moved by the US non farm payrolls report so we'll keep a watch on it closely in the run up to it. Gold was flat today, unmoved by the Dollar's rally.