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Oriental Trader's  Instablog

Oriental Trader
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Spent many years swimming in the markets. Think I've finally noticed a few things.
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  • Closing In On Emerging Currencies

    India's interventions and stimulus plans yesterday did nothing, Rupee plummeted and keeps falling.

    US sentiment is still complacent and policymakers do not seem to want to act to assist in any meaningful way... yet.

    Ineffective domestic intervention + lack of interational assistance = nothing to support drops in these currencies.

    Sell all emerging market stocks(EEM), the problem will only get bigger for now.

    Long USD/ZAR at 10.44. This is not going to go away quickly or soon. SA Trade balance on Friday, may remind the markets how SA is still running a $1 bn/month trade deficit with only $47bn forex reserves.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Long USD short South African Rand, I think all the bounces and retracements are over, time to move in for the main entree

    Tags: EEM
    Aug 28 12:52 AM | Link | 1 Comment
  • Fedwire Will Come To The Rescue And Other Matters

    Busy day, might not have time to write a full post so I'll blab here.

    South Africa in the doldrums, though I wrote about it 2 months ago, I did not expect it to move so fast.

    Bernanke's comments were directed at the froth in the bond markets, prevent searching for yield from becoming searching for disaster. Does not mean he wants to exit linearly or at once.

    Fedwire will probably come to the rescue today, either a Fed governor or Hilsenrath writing/saying "Fed's worries over financial stability are symmetrical... sees risks on both up and downside.. need to take all factors into account and balance both directions...blah blah"

    Gold (GLD) might soar on risk off and "safe haven" purchases again, $50 in one session if Hilsenrath comes early.

    Aussie doing better, though New Zealand kiwi doing worse on intervention rumors. ZAR crash might hold down commodity currencies for now, but I think Aussie will bounce. Not betting on it, but more importantly, not betting against it yet.

    Yen (FXY) flying all over the place, will prolly strengthen significantly, especially if Fed gives up QExit for now.

    Market will be soothed more by Bernanke/Fed QE assurances than spooked by ZAR crash, for now. So we might see some new highs before ZAR gets serious and the you-know-what hits the you-know-what..

    <End blab>

    Tags: FXY
    May 30 8:39 AM | Link | Comment!
  • Near Term Outlooks

    Sorry, I think I'm sick or something, might be out of action for a while.

    Without having fully developed my ideas, I'll just blab on instablog.

    (1) Gold will bounce soon. Too many bears, institutions and market players. Markets don't go down in a straight line except in 2008 (and even then, all assets ranged a long time before finally plunging). Long term not bull for gold, but short term bounce is likely. No reference point for gold price (no P/Es, supply curves w/e), once bounce happens, short sellers will cover out of panic.

    Look for <1> Eastern european/south African financial crisis. Asian financial crisis saw lower gold prices in 1997. <2> QE expectations:If gold is stronger this time, might be due to QE expectations + safe haven motive.

    (2) GBP likely to bounce. Way too many bears, strong PMI services on Thursday a very good sign. BOE MPC not as dovish as expected a month ago. GBPNZD false breakdown a few days ago, should do well. Signals a comeback for the GBP.

    (3) Looking for chance to go long USDHUF. Prolly false breakdown, will continue uptrend soon. Looking for catalyst. Might be shorting this one from the operations room!

    Hope to recover soon, if not, these are my calls and a few disconnected thoughts. Making them on the record.

    Disclosure: I am long FXB.

    Additional disclosure: Long a little GBPUSD (FXB closest I could find), looking to buy a regional non-US gold miner, looking to short HUF or ZAR in coming weeks

    Apr 05 10:43 AM | Link | Comment!
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