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Mercenary Trader  

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  • Central Bank Policies Help The Bubble By Holding Back The Economy [View article]
    Not tripe at all. "Deflationary" applies in the sense of having a lowering effect on prices. Second and third order effects are harder to discern and more situational.
    Jun 10, 2015. 05:40 PM | 1 Like Like |Link to Comment
  • U.S. Shale Producers Caught Between A 'Fracklog' And A Hard Place [View article]
    The Saudis can't eliminate potential production from existing wells. But they can discourage future investment in new production, while accelerating the shutdown of projects with poor economics at currently low price levels.

    Also keep in mind that, for the Saudis, cutting their own production here would be the irrational thing. Cutting production used to make sense because it was a management tool that influenced the oil price at the margins by bringing supply / demand back into balance. In today's world, cutting production simply brings in lower revenue, without necessarily boosting price.

    So the Saudis are incentivized to discourage future investment in non-economic production and maximize revenue in the short-term simultaneously, by not cutting back even if the oil price stays weak. The point is that their game-theory-optimal set of choices has changed.
    Apr 29, 2015. 03:46 PM | 1 Like Like |Link to Comment
  • American Investors Are 'Extraordinarily Optimistic' Possibly At The Worst Time [View article]
    Here's a fine example of a throwaway insult, without proper backing or attempt at logic-and-evidence based justification, that demonstrates ham-fistedness and a lack of civility on the part of the drive-by comment poster. Do you generally prefer to intro new dialogue by acting like this?

    What does "proficient traders and dividends" mean? Your comment can generally be summed as, "Greater fool theory may continue to temporarily prevail"... which is pretty much a "No s-- sherlock" type observation...
    Apr 23, 2015. 12:52 PM | 4 Likes Like |Link to Comment
  • American Investors Are 'Extraordinarily Optimistic' Possibly At The Worst Time [View article]
    “It’s easy to be a long-term investor during a bull market. Everyone’s making money and it feels like you can do no wrong. It’s when things don’t go as planned that this group loses control.” - Ben Carlson

    http://bit.ly/1K9vLMZ
    Apr 23, 2015. 12:49 PM | 1 Like Like |Link to Comment
  • Bulls Lose Their Nerve As The Strong Jobs Report Throws 'Patience' Out The Window [View article]
    Latest views are here:

    http://bit.ly/1AkhiGP
    Mar 11, 2015. 03:00 PM | Likes Like |Link to Comment
  • Bulls Lose Their Nerve As The Strong Jobs Report Throws 'Patience' Out The Window [View article]
    Eh, not really... we closed the TBT position for a modest loss when it gapped the other way. Flat there now with threat of extended "risk off" safe haven buying. Bonds are back in the too hard bucket.
    Mar 11, 2015. 02:59 PM | Likes Like |Link to Comment
  • Bulls Lose Their Nerve As The Strong Jobs Report Throws 'Patience' Out The Window [View article]
    We liked GDX for a confluence of reasons as it drifted into general 50 day moving average support. There was potential for a volatility surge higher on a narrative favorable to gold stocks and unfavorable to the dollar, namely if US economic data weakened and/or if interpretation of the Federal Reserve leaned more toward a dovish narrative.

    The rise in GDX in late February was enough to suggest a breakout from the downward drifting countertrend. A healthy move would have built on that breakout, possibly accelerating on a favorable gold stocks / weaker USD Fed narrative. But that breakout reversed and GDX again slumped below the maginot line of the 50 DMA, prompting us to view the breakout attempt as a stall even as the USD picked up strength.

    We saw that as enough confirmation to get out as GDX both failed to confirm the narrative and hit our tightened risk point, even as our longstanding bullish USD forex positions went from strength to strength. We were thus out of GDX prior to the bloodbath of the jobs report, and maintain substantial bullish USD positions against Aussie, euro, yen, Canuck, etcetera.
    Mar 10, 2015. 02:47 PM | Likes Like |Link to Comment
  • Germany's Outlook Is Terrible, Gold Could Be Playing Possum, And Multiple False Trends Look Good [View article]
    Nope, we aren't deeply angered by anything, just lightly sarcastic at times in keeping with the occasional quality (or lack thereof) in Seeking Alpha comments.

    As for "casting aspersions," no, we did not do anything as fancy as that. Your reading skills are simply lacking if you took from the piece that we think "the world is going to end." Would we be willing to get long risk assets if that were the case?

    And as for "Yours is the poorest article I have come across in many years of using Seeking Alpha," thank you for that. It was worth a burst of laughter.
    Mar 5, 2015. 12:08 AM | Likes Like |Link to Comment
  • Germany's Outlook Is Terrible, Gold Could Be Playing Possum, And Multiple False Trends Look Good [View article]
    Why would we need to "decide" to take an economic "or" a political view? That's an arbitrary requirement that doesn't make any sense, especially when the two are as deeply intertwined as they are in Europe right now. We understand European politics just fine -- to a large extent the politics of the situation are driving the serious risks in play here. As for lack of substance, most of your reply was a combination of non sequitur and ad hominem, whereas the substance of our view is embedded in awareness of the risks as clearly stated. As for what is a "good idea" or not for us, how would you have any clue...?
    Mar 5, 2015. 12:04 AM | Likes Like |Link to Comment
  • Germany's Outlook Is Terrible, Gold Could Be Playing Possum, And Multiple False Trends Look Good [View article]
    Re Germany and Grexit, it is true the Germans said that. I doubt they actually believe it.

    Or rather, the dumber German politicians may believe it, but the smarter ones do not. Either way, it is like a poker hand. Germany has a vested interest in convincing Greece they do not care about Grexit, in the same way a poker player has a vested interest in convincing an opponent he is not bluffing.

    The actual consequences of Grexit amount to a huge risk, and anyone who says definitively otherwise is guilty of wishful thinking. It is possible that a Grexit is handled by the system with minimal blowback. It is also possible that everything unravels completely. If there were only, say, a 25% chance of occurrence "X" happening, but X represented the destruction of the entire financial system, would that be acceptable? "Oh, there is only a one in four chance -- or maybe one in three, or one in two -- that the reactor goes into meltdown." How is that logical or okay? It is not.

    The actual logistics of a Grexit could lead to a huge legal traffic jam, or a snag on a small technicality of the Lehman variety. Attempts of Greece to run two currencies at once, e.g. defaulting on debts yet somehow staying in the euro, could lead to domino effects among much larger periphery players. A Greek exit followed by an emergency cash stabilization from an outside supporter, e.g. Russia or China, could turn NATO upside down and enrage other periphery populists. Or a full Grexit could simply add kerosene to the fire, again, for said populists in Italy, Spain et al, who absolutely could not be quietly ignored if they threatened to leave the euro (as their economies are orders of magnitude larger).

    In short, the idea that Grexit would be "ok," or easily absorbed, is laughable. It is political theatre for the Germans who say it, idiocy for those who believe it, and terrible analysis to think a risk as large as casually breaking out a euro member from what is supposed to be a non-breakable currency union, already under severe cultural and political strain, would simply be no big deal.
    Mar 3, 2015. 02:52 AM | Likes Like |Link to Comment
  • Germany's Outlook Is Terrible, Gold Could Be Playing Possum, And Multiple False Trends Look Good [View article]
    If you think we said the world is going to end, you should work on your reading comprehension skills. As for what will happen "by this time next year," what a laughably vacuous statement. You might as well state with finality who is going to win the next Superbowl.
    Mar 3, 2015. 02:42 AM | Likes Like |Link to Comment
  • Germany's Outlook Is Terrible, Gold Could Be Playing Possum, And Multiple False Trends Look Good [View article]
    Projecting our own faults on others? That doesn't even make logical sense, unless you are suggesting we accidentally endorsed a currency union for ideological / idealistic reasons that was doomed to fail because it never made economic sense.

    Schaeuble's track record is not relevant to the severe risks created by antagonizing a group of populists here and now, in humiliating them verbally after beating them down, when other, stronger, much more dangerous populist groups are watching and taking careful notes; as for his ties to the chancellor, they don't matter either in respect to the extremely foolish danger created by his actions.

    You don't understand this situation at all. Your perceived understanding of the technical dimensions actually detract from the most important elements. The heaviest weighting has nothing to do with debt-vs-debtor morality or "contracts" either at this point, except to the degree such are individual chess pieces. It is all about risk, as in, risk of potentially catastrophic outcomes, of the sort which have already occurred in Europe in the 20th century.

    To say "the answer is fiscal discipline, easy regulation and free trade" is to say nothing at all, because it does not answer the relevant questions. The more important questions to ask run along the lines of, what is Europe going to do if and when, and far more likely when, populist parties like Podemos in Spain and the Five Star movement in Italy, and possibly later the National Front in France, take over and openly revolt.

    An understanding of history, and the nature of democratic populist movements under perceived fiscal oppression and serious economic hardship, would inform the observer as to the very real risks present in Europe, the dangerous manner in which things are unfolding, and the ways in which Germany's blindness makes things worse. Too much analysis, especially that of the "sober fiscal prudence" variety, simply handwaves away all that, which is the geopolitical equivalent of playing Russian roulette.

    In thinking you understand, and blatantly missing the key points, and risks, of the matter, you fall on the side of the Neville Chamberlains, and other small-minded technocrats in general, who provide observations that are defensible on their face but fall so wide of the mark as to what matters as to be more dangerous than helpful. And this may apply on the trading and investing side too, because it is non-imaginative, non-historically aware types who are surprised blindly, and find themselves losing a great deal of money, when a gray swan risk they did not even acknowledge existed blows up in their face, their exposure profiles having left them woefully unprepared.

    This is chess, not checkers.
    Mar 3, 2015. 02:38 AM | Likes Like |Link to Comment
  • Germany's Outlook Is Terrible, Gold Could Be Playing Possum, And Multiple False Trends Look Good [View article]
    Do elaborate as to what we supposedly don't understand about European politics. The fact you call our position on Greece "whining," when we have no emotional stake in the matter, suggests that you take a moralistic debt-vs-debtor view on the dimensions of what is happening in Europe, which is not helpful at this point (in terms of assessing likely outcomes and their dangers) and may in fact be actively dangerous.
    Mar 2, 2015. 08:23 AM | Likes Like |Link to Comment
  • Germany's Outlook Is Terrible, Gold Could Be Playing Possum, And Multiple False Trends Look Good [View article]
    We aren't "betting against them" either, which is kind of the point... that's why the major European indices (barring Greece) are at runaway highs as we acknowledged... but if you recognize that QE is more psychological in effect than salutary in real economic terms, and further that euro crisis has only been post-poned, e.g. can-kicked into the Summer, you will see why the outlook beyond the short-term (three to six months) still remains quite ominous, perhaps even more so via inflated expectations in the runup...
    Mar 1, 2015. 04:14 PM | Likes Like |Link to Comment
  • Germany's Outlook Is Terrible, Gold Could Be Playing Possum, And Multiple False Trends Look Good [View article]
    Are you the personal defender of gold's honor? We don't care about the reputation of any asset, we just observe and trade. Gold has not been doing the job in USD terms, which is the main benchmark... and yes we're aware that debasing trends are in place for everything other than the USD, which is a key part of why we turned constructive on gold in the first place:

    http://bit.ly/1E7beXX
    Mar 1, 2015. 04:12 PM | 1 Like Like |Link to Comment
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