Friday, November 03, 2006

Blog "kinda-correction"...still fully in the CABLE short!

When I thought I was buying back £5 of cable (GBP/USD FX) the other day, with spot around 1.9080, the trade didn't actually go through, as something messed up with my connection...and since today's US payrolls number, it has dropped back to ~1.9000...better lucky than smart!
 
Am going to keep on the full position (am short £11/tick, so £1,100 per big figure, eg 1.90 to 1.89). US numbers today were very interesting, with previous months payrolls revised up again by ~100k per month for the last two months, and the unemployment rate down to a VERY LOW 4.4%. I don't think the FED will be happy with that number, and some poor inflation data over the next couple of months could result in the curve pricing in rate hikes again.
 
So, with no CUT on the near-term horizon for the FED (and yes Roubini, I've read your stuff, and kinda buy into it, but we look safe untill the next bout of weak growth data), I can see the DOLLAR holding up well, so we'll keep on the short in Cable. I feel this also supports the shorts in Gilts and Bunds, as it seems that the global rise in interest-rates has more to play out.
 
As for equities, and earnings.....well I'll keep the S&P and DOW short, and opportunistically add single-name long positions when I see any opportunities. Although the trade I'm closest to pulling the trigger on is shorting Dell.
 
More on equities another time.
 
Oh and I'm thinking that its about time for Oil to have the next leg up again.
 
Current Year-to-Date P+L is £19,900. I could do with Pipex having another penny leg up, Lloyds TSB getting a takeover bid, the market realising that Washington Mutual is gonna get CRUSHED in this house price collapse, and need to add to my short position in Gilts and Bunds to about £50/tick short in each (so about £400/basis point each) and wait for the 25-35 near-term re-pricing in bonds which is on the horizon.

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