We are in the final stages of this 6 year bull market. Europe appears to have already set her highs. World indexes also appear to have topped out. The wild card is the US where the Fed continues to talk rising rates and pipeline ever improving data. The US$ is at her supports and on a technical basis appears a buy. I am long US$ cash at present as well as gold which sit as strange mutual longs in the account. No matter. As correlation ratios between gold and everything are so low i have no problem holding this historically off setting position.
As we are in striking distance of the end of Q2 its time to review performance. In terms of personal ratios of return on capital for the year on the world wide macro fund i’m back to 15.5% for the calender year from an April high of 18.5%. The euro has strengthened and the last wave of euro equity rises was weaker than anticipated. Its steady as she goes.
A glass half empty view would be i’ve worked for several months for a negative return, in spite of strong divis and fx day trading. The macro trades missed were the Nikkie and JPY weakness which did appear a “tap in”. I instead chose to shoot for renewed euro weakness and euro equity longs. The trade worked but in the end less well than the second wave of jpy weakness and Nikkei strength.
FX day trading has been a net contributor so the numbers above would have been worse otherwise. A glass half full perspective would be that a 15.5% return is about 20 times most average “dm” ten year rates. If the performance continued for the rest of the year I’d achieve 31%. That would be the best annual personal return in 15 years. Lets see.
As summer has truly arrived here in the Balearic islands i’ve called time on the FX day trading activity until September. If the three rules to property investing are location location location the three rules for fx trading are discipline discipline discipline. You either commit to the practice 101% or better not at all.
Here below the Swiss team’s latest comments:
Note the team are on holiday next week. I notice so is Fitzpatrick so I may take the opportunity not to release an update next week or, depending on events in the next week, issue a cut down release.
Here GS with a new conviction three rating long trade on the Hong Kong Index.
Recall their trade rec is not a forecast of the future. It is simply a trade rec. If the trade fails you get out but for technical probability reasons the trade is set up.
And here Fitzpatrick with his latest take on the markets.
Note the 7.2% correction in the US$. And macro wise we have the Grexit underway with capital controls already in place, surely an end game milestone firmly in place. Given the ECB’s relative slow expansion of balance sheet vs the BOJ, FED’s and BOE’s its a fair assumption that any excuse to expand money supply to “smooth” volatility in the markets will be seized on by the ECB. Whether now is the positional entry as Fitzpatrick’s chart’s suggest or later at around the 1.22 mark is a matter for each trader to decide and i suggest a matter of setup and stops.
Finally I notice the bulletin boards are a little quiet. I assume participants here are, like me, buying a little time waiting for positional direction here and enjoying the summer. Direction and volatility is certainly coming in my opinion. Better to be patient here and take the obvious trades when direction emerges.
Here RBC on the macro
All the best guys
Rich