This could be one of the best trades out there...selling Dec '07 EURIBOR:

Sold £75/tick of Dec '07 Euribor at 96.25.

In case you don't know, this is trading on where 3m LIBOR will be in Dec
'07...over the long-term, 3m LIBOR has typically been 10bps higher than
base rates (and can be significantly higher during a rate hiking cycle).
Currently, Euro rates are at 3.00% and clearly going up at LEAST once
more. The ECB will be EXTREMELY relectant to entertain cuts in the
future I think due to runaway money supply growth over the last few
years. And I think Europe is slowly reforming, allowing economies to
expand faster (we can see this from falling unemployment levels in
France/Germany etc).

There is no reason that rates shouldn't be at least 4% by the end of
next year, which would mean 35bps in this trade (the rate is 100.00
minus the price of the Euribor future). And I think this has very little
downside but significant upside if the central bank gets more hawkish
and starts raising aggressively.

Would like to have this position higher, but I missed ~5 ticks by not
trading this morning, so will increase it over time.

Adding to my individual equities...buying LloydsTSB

Bought ~£43,000 of LloydsTSB, the UK retail bank. Paid equivalent of
540p per share, in £80 per share.

Why? Well mainly, 1) they pay a dividend yield of 7%, 2) I think they
could spin off their Scottish Widows insurance subsiduary, and focus on
banking, and 3) they are a properly sh*t run business that a buyer could
come in and turnaround...given increasing banking sector consolidation
in Europe, it seems credible to believe that large US or European guys
could pay up to get a UK footprint (current market cap ~$57bn).

This is a proper bellweather UK stock (lots of normal folk still own
shares from privatisation of TSB 20 years ago), and as they UK market
rises, this is one of the shares that will get bought by those retail
investors looking for equity exposure...the only way is up. Target 600p
for starters.

Buying Intel...and clarifying the blog a little:

First off...just shipped in some Intel...$19.96 was the offer, I bought
£20/tick = ~£20,000 of stock.

Why? Because lets face it, there are 2 chip companies in the world,
Intel and AMD. And Intel is the one that GENERICALLY people want in
their machines...yes I know IT geeks may say AMD is
cheaper/faster/better, but Intel marketing has made it a must have. And
Microsoft are on the verge of releasing its new Vista operating system,
meaning a necessary (probably) upgrade of computers worldwide. How can
Intel fail to make money in this scenario?

Also I continue to believe in a revolution for braodband communications,
where anyone anywhere will be able to connect wirelessly to the
'net...and that equals more computer demand = higher chip sales.

Also I am nervous on being too short the equity markets...while I think
they will go down as the US slowdown unfolds, I have played in enough
markets in my time to know they can get irrational for long enough to
make it unbelievably painful having the wrong side of the "right" (ie.
sensible) trade. At the moment, I am short ~£132,000 of S&P futures and
£111,000 of DOW futures (through my sale of 11,500 calls)...so £243,000
of equity. Against that I am now long £162,000 of individual stocks
(£51k BT, £40k Pipex, £28k IAC Corp, £23k Cisco, £20k Intel). I would
like to maintain a bearish bias, and try to outperform with individual
stocks.

And finally...I am going to simplify my description of trades...since
not all of you will be spreadbetting, I'll reference the spot price of
whatever I trade rather than the price of a certain contract date, as in
the Intel above. Although I will be keeping an exact track of my P+L.

Increasing the Bund short

Sold some more Dec '06 Bund futures...£10/tick at 117.46 (thats about
3.77% on the 10y Bund)...now have £15/tick position. Would like this to
be up to £50 at the right time...no way the ECB can stop any time
soon...see my note from a few days ago for details. ECB always letting
inflation remain too high = way behind the curve in hiking rates =
steeper and higher long rates.

As a slight aside, it does interest me that for years, the "market"
never seems to want to put on steepeners...always Bull or Bear
flatteners...but if risk premium does pick up, the curve should steepen
nicely. Think this could be the next big "thing" to happen in capital
markets.

Covered all my Oil short...

Having bought back half my Oil short the other day, I took the other
£10/cent off this evening...think the price was 63.00 exactly on the
NYMEX Oct '06 contract. Will post some P+L numbers in a few days, but my
total P+L between this and the other £10/cent short was about £16,000 I
think. Sweet. Think Crude still has long-term downside on slowing demand
from a slowing global (and especially US) economy, but let's try trading
it around a bit.

Will be looking to increase my Bunds short next week also.

And my equity individual name longs are working out nicely...Cisco, IAC
Corp (Ask.com) and BT (British Telecom) al continue their upward
trajectory...am going to hold on for now, especially since I have hedged
my market risk by shorting S&P, and putting on some bearish DOW option
trades out to December.

Any thoughts of other good trades out there appreciated.

Setting up more bearish equity market trades:

Bearish option trade on the DOW...~ flat premium:

I sold December 11,500 call @ 335 in £10/tick (ie. I receive £3,350
premium)
I bought December 11,000 put @ 115 in £30/tick (ie. I pay £3,450
premium)

Taking £10/tick risk above current levels, I get exposure to £30/tick on
the way down, in exchange for missing the first 500 points of the
move...which is less than 5%.

I think there is a decent chance of an equity rout as the slowdown
unfolds this year. Risk I see though is that the equity market takes FED
cuts (or the pricing in of FED cuts) as a positive for
equities...although I disagree with the usual reasoning touted around.
Rates go down because economy slows down = bad news for corporate
profits.

We'll see how this unfolds. I like it.

Opening up a short in Bunds...3.80%...YOURS!

Sold £5/tick of Dec '06 Bund futures at 117.26, corresponds to about
3.80% yield on the 10 year Bund. Nuts.

ECB at 3%, not happy with rates so low, clearly going up, money supply
way above target, inflation above target for 5 years in a row indicating
that the ECB is consistently BEHIND the curve in controlling inflation,
which should hurt longer bonds. The talk in the market place seems to
like the 2s/10s inversion trade, but that should only happen if the ECB
hikes too fast, and clearly with inflation consistently above their
target, I don't see why you would think they would over-tighten.

ECB will probably be at 4%-plus a year ahead, and the economy will
continue to expand in Europe. I think Bunds should easily get to 4.50%.
I'll add risk onto this trade as the move gets underway. Happy to risk
£10k, and think 3.30% is a worst case scenario, so need about £500/basis
point which is ~ £60-£65 per tick on futures (duration around 8).

Get involved.

Don't worry, traderboy is still going! Taking profit on half of my Oil short, and adding Pipex:

Just bought back half my Oil short...paid $65.57 to buy back £10/cent of
the October contract (I had originally shorted the Jun '06 contract on
June 12th at 71.89, I paid to roll it a couple of times, I'll work out
the P+L and post it shortly. But looks like I should have made 500-600
points in £10/point, so £5000-£6000 pounds...and I am still short
another £10 from June. I really think Oil could collapse back to $40 on
a US-led global slowdown, and the fact that OPEC can still pump Oil for
probably $15 a barrel so aren't going to be cutting back on pumping the
stuff. But felt the need to take half my position back, as when it was
up at $80 and I was down about £15,000 I was REALLY concerned and began
to doubt my position...so maybe the size of it was too big relative to
my other trades.

And a new trade today...I bought £40/penny of Pipex Communications, a UK
telco (PCX LN on Bloomberg off the top of my head)...this company is an
ISP, and has been buying some broadband services such as Bulldog and
Toucan, so building a broadband subscriber base. No big deal, and that
wouldn't usually appeal to me, buying customers like that, BUT this
company has a joker up its sleeve...it has one of only TWO Wi-Max
licences in the UK (I think BT has the other but I'm not sure on
that)...if you don't know what Wi-Max is, you should search for it on
Google.

This is going to revolutionalise the world in a couple of years. It's
like Wi-Fi, but instead of the few hundred feet that Wi-Fi can
broadcast, Wi-Max can broadcast up to 30 kilometres (about 20 miles for
you imperialists). So to blanket the world in Wi-Max, in the same way
mobile operators covered the globe, should be fairly easy. And then you
can connect to the internet from ANYWHERE, and its superfast broadband,
faster than the line into your home. You could just turn on your
computer anywhere and be instantly connected (to, say, PIPEX)...or you
can get a "mobile" phone which just connects to the internet and allows
you to make free calls over the 'net, just as easily as your mobile
works now. This is going to DESTROY Vodafone.

Market cap of Pipex today is £250mm...isn't this the type of company
that could just as easily be worth £5bn if they get their model right
(to put it into context, BT is worth ~£20bn and Vodafone ~£80bn, again I
think that's about right, without checking it on bloomberg). Get long
now. I may take this position up to £100,000 notional (so about
£95/penny) but want to mull it over for a few days, and see ow the
position evolves.

Now the dull summer is over, the posts and the trades should become more
regular. I put on no trades for the last few months, so every trade is
still fully documented in the blog. I will do a P+L update soon.