Arghghghghg


Is there anything more fun than doing a nice piece of work, forgetting to save it, and having autorecover claim your file is corrupted?

And then having to cook dinner for seven people instead of redoing the work?

And then getting halfway through redoing it and then realizing that you'd better spend some time with the family or else you'll be in trouble with the Boss?

That's my story, alas.

So have at it while watching to see if today is the day that the SX7E cracks...


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henner
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June 9, 2016 at 7:33 AM ×

for what it's worth I think we'll break out to the upside.
that's for equities mainly.

1) hedge fund and spec positioning is very defensive. Bloomberg has an article on this just today. But it's obvious anyway. Low beta to S&P e.g., all the comments from the Gundlachs etc., same if you read on the more informed crowd here in the comments. So if we go up, they have a problem.

Same is valid for CTAs, they should be slightly long already but according to my proxy model (pretty close to MMs one) we are just approaching buy trigger levels on the S&P.

2) real yields very very low again

3) spread between fixed income yields and dividend yields remains high. People will shift more to equties in the future. Especially high "yielders" REITS, utilities, infrastructure stocks will continue to be in demand as bond proxies.

4) CBs want it up

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Anonymous
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June 9, 2016 at 8:40 AM ×

Agree with henner - unless something breaks dramatically i think we grind up

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Anonymous
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June 9, 2016 at 9:21 AM ×

Soros now calling short.

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henner
admin
June 9, 2016 at 9:33 AM ×

yes, on deflationary pressure from China, potential collapse of the EU on the refugees crisis

http://www.wsj.com/articles/a-bearish-george-soros-is-trading-again-1465429163

but I can understand wanting to be short, just as well, and there are good reasons to be actually... I ultimately just don't see a catalyst for a crash or a major correction. Rather I believe in a low-vol slow grind higher with suddenly everyone being suprised that we're grinding up in this bad and problem rich world.

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Anonymous
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June 9, 2016 at 10:00 AM ×

soros regularly makes these punts (just google in) in the last few years, doesnt mean much

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Anon 451
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June 9, 2016 at 10:16 AM ×

"RANSquawk: Risk-off sentiment dominates EU session"
http://portal.ransquawk.com/headlines/542640

Having said we are 'long risk forever' only yesterday, I have decided to delay my subscriber signals. ;) Joking aside, I maintain my prev views.

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checkmate
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June 9, 2016 at 11:03 AM ×

"I ultimately just don't see a catalyst for a crash "
With respect ,we virtually always see these has potential options ,but we hardly ever really SEE them has probables except after the fact. Indeed SEEing them before almost always implies no crash because the market is already too prepared. Crash and overweight invested go hand in hand.
Now where's the Anon to tell us about the 100 Dax points going down today ! Yes, has I thought MIA.

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Nico G
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June 9, 2016 at 11:50 AM ×

henner, sometimes hedge funds' and spec positioning is very defensive because they are fucking good at what they do

it is hilarious to see so many folks so agitated at the 2100 door - i mean do you REALLY expect it to trade up?

as mentioned earlier yes it is the mirror image of the (probably) same folks panicking at that Thursday 1800 retest

it is just a big range to trade people, when all the talking heads would have you think otherwise

maybe save on a beer today and buy one 20% otm July put you might get double the beer money back

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Bruce in Tennessee
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June 9, 2016 at 11:55 AM ×

I deviated from my routine yesterday and watched a little Fast Money after the close. I was struck by the number of times the guys and gals used the term TINA...as in There Is No Alternative...this has been around awhile, but they were discussing this like they'd found a new penny.

Now that Draghi is buying up lower than investment grade corporates, I feel like I'm on the Enterprise, and Scotty has just sent up word..."Inna more ah this captain, and she's a gonna blow!"

...Nah. Tina indeed....

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Nico G
admin
June 9, 2016 at 12:08 PM ×

15% of CORPORATE euro-denominated debt now has negative yield

you read that right

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henner
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June 9, 2016 at 12:18 PM ×

Nico G - I actually just bought 10400 September DAX calls. i think there's value in there given the low vol levels and high put-skew

yields look weird, i agree but to me negative interest is not necessarily a sign that something is screwed up and cooking... I firmly believe we're still in a proper balance sheet recession with ordinary people as well as companies saving but not investing much. saving rates in the EU are around 6% of GDP, the states only run deficits of 3-4% of GDP which means there's an overhang of money and interest rates have to be low accordingly. what the EU should do is use that and lever up but as long as they don't we'll have this low rates environment which is the new normal but not something one should be scared of... comments welcome.

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Nico G
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June 9, 2016 at 12:46 PM ×

output like yours on those public forum is simply dangerous

there is no new normal, only temporary abnormality i.e they are trying to fight natural laws of bankrupcy and/or savings

Draghi buying the debt of his friends at Telecom Italia - you must be kidding. Those companies are toast.

if CBs want to confiscate households' cash ok but since it cannot be done worldwide it invites those poor sods to take ridiculous risks in ridiculous countries/assets that still offer a yield

the unwind of all this is DEFINETELY something you have to be scared of - i cannot believe noone took a hint from the great commodities unwind of last year into February. With so much leverage, they took no prisoners. Equities and bonds are next trust me we are much worse off than in 2007.

if you need more calls on Dax i am happy to write them privately. Have you heard of a company called Deutsche Bank?

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Bruce in Tennessee
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June 9, 2016 at 1:14 PM ×

"but as long as they don't we'll have this low rates environment which is the new normal but not something one should be scared of... comments welcome."

...Well, if the low rates occured more or less normally, and weren't backstopped by increasing debt/credit, you'd be right. Back in the 60's, home mortgages were in the 4% range, but the backstop wasn't a managed economy by central banks. I understand your thinking as a trader, but citizens should be careful. Pension plan problems, longer working lifetimes, fewer millenials out of the house, serial devaluing of currencies, stock buybacks, housing bubbles, and boom-or-bust markets....all these things relate to being "saved" in 2007...(or earlier)...

...I doubt this ends well for all of us...but Soros and Icahn need to be sure they are really good at timing the market..

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Anonymous
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June 9, 2016 at 1:15 PM ×

... and on that bombshell, in the interests of balance now we need jbtfd to step up and give the bull case :D

seriously, we could have years before/if that happens, cant just go into a cave and hug your gold bars/ak47.

in the meantime, lets talk about whats next rather then the inevitible

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June 9, 2016 at 1:21 PM ×

Macro aside...eu banks are toast, unless ECB starts buying their stocks soon. Take a look at Intesa, Unicredit.. oh lord they aint pretty. DB is hurting as well, yday they had to pedal a "research/sales piece look-alike" (motivation was not what it seemed), saying ECB reverse course now! They are crying out for help.

I do not want to get into rationalizing or debating the current affairs of CB policy. Sure it is evident they want eq to stay elevated but it is pure nonsense. Gravity and common sense macro linkages will prevail. Let spx trade at 2200 it makes no difference. We seriously need macro miracles within 6-9 months to turn this global dynamic around. Btw, apart from spx, other g10 eq indicies have been trading like crap.

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washedup
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June 9, 2016 at 1:37 PM ×

@nonrandomwalker I was struck by the coincidence of the DB piece coming out yesterday with Draghi's comments this morning.
I see Draghi as the most conniving CB of the lot - he may just shock everyone and pull a Jeff Skilling one of these days - sayonara, beaches...

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Macro Man
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June 9, 2016 at 1:41 PM ×

As i wrote the other day, it's always easier to say HOW something will end than WHEN it will end.

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washedup
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June 9, 2016 at 1:51 PM ×

@MM - if you had even a passing interest in cosmology, you would realize the error in that statement!
For markets, no doubt.

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Booger
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June 9, 2016 at 2:06 PM ×

Speaking of hugging gold bars, the gold/antidollar trade is going well and it actually makes sense unlike SPX. The latter looks like it is setting up at basecamp 2100 for a good shot at the summit and who knows where. Sometime, probably in the next month, it will probably peak out but why short it now.

With the dollar trade, there are 2 lots of campers, the first in LB's camp of one or more fed hikes by year end before eventual recession. The other camp, which I favor is the idea that due to this being a deflationary cycle (and you just have to look at FFR at 0.5% to check on that), fed tightening will not cause the recession, because they know it is a deflationary cycle and they will not tighten further. Yellen knows recession is less than 18 months away. Maybe some of the other fed members may object to being pimps to wall street, but it's too late ! They already created a bubble thanks to Bernanke not normalizing rates in 2011-2014. So now the egg is scrambled and cooked, no point trying to uncook it and raising rates when many of the macro indicators are rolling over - new housing construction spending, corporate profits, temp employment, PMI's. What is the point of raising 0.25% or 0.5% in the next 12 months, so it can be supposedly taken away when TSHTF, and then getting unflattering tittle of moron who hiked into a recession ?

It is not the consensus, but the dollar correction is indicating this is a one and done cycle. And if it is not, and Yellen actually hikes, it is likely to cause an even more disorderly decline in SPX and risk, which is a very high probablity that it will experience gravity at an inopportune time, like when they hike. I think Yellen is too smart to take the bait. Maybe she will.

The rise in gold, commodities and SPX/risk and the rally in bonds makes sense with the dollar correction. The latter is due to perception this is the end of the rate hike cycle. The former will come to a nasty end when the dollar correction is complete. Players who confuse the rise in gold/commodities/SPX with a new bull market will likely get a nasty surprise. But I think the dollar correction has further to run, probably to the end of the month. Long gold here, entirely due to the dollar dynamics.

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Nico G
admin
June 9, 2016 at 2:11 PM ×

MM on HOW/WHEN

many things have already ended and you can trade continuation pattern or rallies in those bear markets

too much intellectual time is wasted on spoos anyway - they are not a real market. The day those end too, you will have one scary daily candle and one will need the courage to short 35/40 points from the top the next day

if you are too afraid to miss the signal, jump in now and size according to your worst grind up scenario.

meanwhile there are so many other markets on which to make money

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Anonymous
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June 9, 2016 at 2:47 PM ×

The more I read "there's no way this ends well" from the various peanut galleries the more I'm inclined to fade the hyperbole. The one thing evolution has yet to solve is that humans are notoriously bad at prediction.

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Anonymous
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June 9, 2016 at 2:54 PM ×

What if you're a hman anad we're AI bots trying to see what the humans are doing?

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Anonymous
admin
June 9, 2016 at 3:17 PM ×

Gross: Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day

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washedup
admin
June 9, 2016 at 3:18 PM ×

@anon 2:47/2:54 splendid - a mate in quant trading did tell me recently they had a beta for extending sampling of opinions, through bots troll posts (my interpretation) to well known chat rooms, but the challenge was to treat the average zero hedge reader in the same vain as a CNBC tweeter etc etc. That said, in a few years we will definitely be there. In any case, in my humble opinion this blog gentry is too complex to lend itself to robotic sampling.

@Boog good thoughts - you have nailed it recent weeks and I hear you loud and clear, but can you really time it that precisely? Why the next month as opposed to say aug or sep? I think what you are saying is that Left is right but early (a malady he's known to suffer from occasionally per his own admission!) - to Nico's point, I feel like its about proper scaling more than anything.

I do think crude, which has been the mother of all drivers for this move, has a tendency to rally to July 4th led by gasoline, so that ties with your scenario, but this oil rally has been a bit different in that it hasn't been driven by anything on the product side anyway, so I don't know if we are looking at the same idea. I also noted that the causality between oil and dollar has been flipped recently, with the former driving the latter instead of the usual relationship.

Interesting times..

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johno
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June 9, 2016 at 3:30 PM ×

HOW/WHEN -- the interest rate borne by debtors rises because credit spreads blow out (due to recession or the credit cycle getting too extended) and/or inflation goes well through 2% forcing the Fed to tighten aggressively. Until then, it's perhaps easier to make money trading cattle futures than trying to time shorts in the SPX.

I share some of Booger's enthusiasm for gold. Mentioned I bought calls (and shortly after some futures) after NFP, thinking if we get unsatisfactory data in early July, there could be a rush of "the Fed is never going to hike" sentiment taking gold through 1300. Also, BoJ and Brexit could work for the trade. With FFQ6 now 99.575 bid, I have started re-entering a short however. I just don't know what the NFP for June is going to look like. Unless Fed rhetoric has taken July off the table by then, I will certainly be out of my delta-one position in gold before the release.

I have some short GBPCHF as a Brexit scare bet on here .. have lucked out on selection of the long leg. Look at EURCHF the past four days. Why is it moving like this now? Didn't move when EURGBP was ripping higher on the swing towards Leave last week, so perhaps Brexit isn't the answer? Or is it? Curious.


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Anonymous
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June 9, 2016 at 3:57 PM ×

A number of hedge fund managers have been raising concerns about liquidity, or the lack of it. The idea is that if the market sells off, there won't be enough participants to take the other side of the trade, exacerbating the falling prices.

Leon Cooperman of Omega Advisors said that he thinks the market is not well:

“My observation is the market is reasonably fully valued, but the market is broken. The market structure that my father dealt with is different from the market structure I’m dealing with,” Cooperman said. He placed blame for the lack of liquidity on the Volcker Rule, Dodd-Frank, the elimination of the Uptick Rule, and the demise of the specialist system in the financial markets.

“I tell my people they should charge a million dollars for a marriage license and get divorced for free,” Cooperman said. “So before we do anything and buy anything we’ve got to really know what we’re doing because it can be very hard to get out. It’s a different environment.”

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EuropeanBull
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June 9, 2016 at 4:09 PM ×

@Nico:

on HF performance it is a measurable fact that HFs in agregate are not "fucking good at what they do". At least in my hometurf - equity markets.

How can you measure it? Calculate the rolling beta of HFRX returns to the S&P 500 and you get a contrarian indicator with a better hit ratio than than most common sentiment indicators.

As the carnage at the start of the year has shown, many HFs are not doing much more than levering up pretty simple momentum strategies and try to combine them with S/L automatics...
true fundamental skill and alpha is as rare as everywhere else...

(I talking about HFs in aggregate. Obviously there are some brilliant teams out there)

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Anon 451
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June 9, 2016 at 4:24 PM ×

At this juncture I'd like to point out that my timing has been 100% accurate, altho the trade directions are 100% wrong. Still you can't have everything... ;)

(Long risk forever, except Thur)

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abee crombie
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June 9, 2016 at 7:18 PM ×

Interesting Johno.. Grants was talking about buying some $30 calls on silver. hmmm .. I agree trying to time a short in Spoo's is fools game. Wait for vol to pick up first but for deep out of the money options gotta buy when no one is watching. I just feel like I lose a lot of money on those small/longshot bets, so not sure.

Nat gas moving today as well, but damn UBS downgraded IPP's ;-( .. and my utility short on fire. Great.

If i was going to short US markets, i'd shoot QQQ first

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abee crombie
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June 9, 2016 at 7:41 PM ×

Also, its seems many ppl here and in the market in general talk about Fed Fund rates as somehow driving the dollar. I am not really sure if ppl were buying USD hand over fist last year bc of an expected 1 or even 3 rate hikes. Seems to me that US vs Global growth is more a driver of USD rather than if the Fed hikes a couple of more times.... certainly in 2014 and 2015 correlation between Fed Funds and DXY wasnt so high

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Anon 451
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June 9, 2016 at 8:53 PM ×

Amending previous post with help from my friends 330RampCapital & the BOJ. Timing is 100% accurate, trade direction now 100% correct (ie up) for US equities. Crude will follow later once the correlation algos kick in.

Long risk, forever!

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hipper
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June 9, 2016 at 9:17 PM ×

Is there a practical limit on how much debt CBs can buy? I'm beginning to think since they've all been in DEFCON 2 for a long while now any potential event blow ups will be quickly contained by buying anything necessary.

The real elephant in the room might be the slow withering of the real economy, not necessarily any sudden death event which are getting an increasing share in the "how is it all going to end" debate. Everyone (governments and corps) are now so used to cheap money they throw it away to unproductive investments like bread crumbs into the wind. Anything related to structural reforms are now further away than ever before. As the debt piles up faster than interest rates go down (I think ZIRP/NIRP increases growth rate), interest payments go up (which is what matters), taxes get continuously jacked up every year and everything is stagnating except for asset prices slowly grinding up mainly as a result of real rates falling. Then this leads to a loop of lower growth and to compensate more debt needs to be taken and spent unproductively. Healthy growth in living costs resulting from rising housing prices and increasing regulation conveniently isn't regarded as inflation, but it's another source of household income decay further eating away potential demand growth. US companies have no viable investment options other than buy stocks. ZIRP exposed banks are hurting. It just seems the real economy is getting crushed by a thousand cuts, and while it's not completely QE's fault, it continues to aggravate it.

DB and the next potential source of panic: sovereign debt. Well, not very shocked considering sovereign spending is getting less bang for the buck. And Europe has additionally the migrant crisis, Soros just called all previous cost expectations to be way below reality and it to be an existential EU crisis.

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washedup
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June 9, 2016 at 9:23 PM ×

@anon 451 - u seem a tad smarter than the usual troll, perhaps your time may be better spent figuring out a way to circumvent the porn lock?
Abee, US and Japan are marginal providers of risk capital to the world - the overarching driver of the dollar (and for that matter yen) rallies is capital flows - one day martians may invest here, but till then, the scenarios where the dollar rallies will be 1) orgasmic delight over the goings on in silicon valley or 2) panicked exits from the playground, toys in hand, with a rush to buy US treasuries - things like balance of trade stopped mattering in the 90's, and central bank divergence, while it creates a nice accompanying narrative to 1, or 2 above sometimes, is just that, a trailer.
I don't think utilities are a short here at all - they always top out much after risk off has already started, and clearly thats not yet the case - I am looking for XLU to get to 52-53, before risk/reward becomes compelling to the downside.

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Anonymous
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June 9, 2016 at 9:35 PM ×

Leading indicators and money trends point to potentially very large upside surprise later this year.

EZ has still a lot of unemployed to burn through before labor market tightens and rates rise. Possibly 2 years worth. USA has low participation rate and more slack than unemployment suggests.

This isn't 2008. It's 2005. The writing is on the wall, but we need to see capitulation and blowout euphoria. This is probably the least liked rally ever.

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Anon 451
admin
June 9, 2016 at 10:55 PM ×

@washedup - lol point taken ;)

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Bob
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June 10, 2016 at 6:57 AM ×

Nico G - Its tiring reading your offside bearishness day in day out but let's not get in to slating other peoples opinions yeh.

As for what's going to happen, surely you'll be right in the long run. What does that matter, Positioning drives markets, that and CBs these days. S&P is going higher. This is not the top of a range, it's the base of a sustained breakout rally.

I'll check back with you in the future and you can tell me you're still holding your perpetual short. Until then, let people have a view. Cheers

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Nico G
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June 10, 2016 at 7:35 AM ×

Bob

i am running 370 lots short on ESTX50 September

very much in the money

i do not trade spoos.

just ignore my posts if you don't agree, and stop whining

you are an idiot

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MOOSB
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June 10, 2016 at 12:49 PM ×

Hello all,

I am new to commenting this blog, but a big fan since I begun working in finance a year ago (please do show some compassion with me..).

It is my [noob] opinion that equities have a long way down: Spoos near all time highs, P/E above 2007 levels, corp earnings falling, Fed about to increase rates, US elections, Chinese goals diverging from overall global ones... (VIX at current levels??). It doesn't add up.
There may be some further upside potential, but gravity will win this round.

I agree with @Nico (please let me be your mentee), in his short view. Everything looks overvalued atm, including FI. Markets forced to run into equities.

Besides, it would be nice to see a major correction so I can jump into the markets safely, at the moment it appears to be a suicide! And I don't think I am the only one who sees it this way.


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