Fed Post-Mortem: A Whole Bunch Of Nothing
“Capitalism can’t exist at these levels.” That’s the take from (former) bond kind Bill Gross following Wednesday’s farce of a Fed “decision.” The idea that this was a “live” meeting was of course a joke, strong June jobs print or no strong June jobs print. As we put it in a column published elsewhere, if…
Black Swan Walking
Watching the Democratic National Convention has turned out to be even more surreal than watching the GOP convention. What’s amusing is that the Democrats seemingly learned very little from the Republican primary race. Apparently, it still hasn’t occurred to anyone that you can’t call someone evil and dumb at the same time. If you’re dumb,…
Expectations Can Be A Dangerous Thing
Sometimes there’s nothing worse than “expectations.” Allow us to give you a poignant example. This is from BNP on Monday (summarized by Bloomberg): “BNP Paribas favors holding long XAU/JPY and USD/JPY positions via options heading into Friday’s BOJ meeting as the bank’s economists expect a 20bp IOER cut. Trade recommendation based on BNP analysis suggesting…
Historical Volaility on the Rise, Volatility is Still Alive!
Index products are converging with one another and this yet another example that we are about to enter into a period of extreme volatility. Let's take a look at historical volatility over the last 20 years. Notice that all of the "all time highs" in the last 20 years also had just entered a phase…
What to Expect in AAPLs Earnings
It's earnings season and we kick off with the grand daddy of them all - AAPL! Many think that around earnings you should only sell premium. That is plain old stupid advice given by those that don't know any better. Let me tell you right now that trading earnings is not a bathrobe. One size…
Common Sense Isn’t So Common These Days
Whenever you notice people have stopped applying common sense to their investment decisions, it might be a good time to go looking for an exit. Here’s something you might not have noticed today: So that’s Santander Consumer and it’s down sharply after announcing it would delay reporting Q2 results due to ongoing discussions with accountants.…
Post-Pokemon Panic, “Crude” Realities Weigh On Sentiment As Central Banks Eyed
“Monday, Monday, can’t trust that day.” Global markets are off to a shaky start in a week that includes a Fed meeting, a BoJ meeting, and some key economic data out of the US. As Deutsche Bank’s Joseph LaVorgna writes in a note from the future (note the highlighted commentary in the image below), “Friday's…
Theoretical vs Historical Probabilities
Earnings season has kicked into high gear. How do you know whether or not to sell premium on high implied volatility stocks going into the earnings announcement? The trading technology out there focuses only on theoretical probabilities. However, what if you looked the actual historical probabilities based on historical data? Would theory match reality? TheoTrade…
Don’t Confuse Your Politics With Your Trades
It’s often difficult to talk about the interplay between politics and markets without ruffling a few feathers. But you have to be able to separate your politics from your trades. You may think you’re unequivocally right in your political convictions but guess what? If the majority of market participants don’t agree with you, and if…
Your Guide To Next Week’s Fed And BoJ Pow-wows
Get ready for another week dominated by central banks. What else is new, right? We’ll get the Fed on Wednesday and the Bank of Japan on Friday and make no mistake, these are important meetings. As you’re probably well aware, the FOMC has increasingly embraced its role as the guardian of global stability or, perhaps…