You may find this interesting. Since the UK left the EU, there has been increasing security and intelligence distancing too.
1 Like
The way we turned our backs on the commonwealth when we joined the EU is tragic - New Zealand suffered tremendously.
We are quite rightly restoring those friendships - while your point is about defense no reason why we should not be having a commonwealth trade bloc.
I’m certain it’s coming, and actually believe (maybe I am deluded) that sterling at some point is going to experience massive inflows.
Where do you to put your money? The Yuan - no thanks. The dollar - hmmm. The euro - fugittaboutit.
That only really leaves Singapore dollar, or the UK post brexit (Singapore on Thames) - so I expect a strong GBP - I think its already beginning.
1 Like
Gold, silver, BTC? I consider these are places to put your money, and the others are currencies.
i was referring to large institutions and corporate treasurys - who are the real deep pockets in the FX markets - maybe I should have made that clearer
There is very little choice when it comes to FX holdings - seems to me GBP has a brighter future than the Euro or the USD longer term.
And shorter term from a technical perspective gold looks weak, silver positively negative.
I remember it was silver leading the waterfall declines when they let Lehmans fold, is it happening again right now?
Ed Yardeni you are far too complacent! Think commodities rout and dollar hyper bull me thinks! Think global contagion and emerging market fallout.
It has been talked about, I believe Boris Johnston and his Australian counterpart, Scott Morrison, are both in favour of ‘CANZUK’
1 Like
“You’re a better man than I am - Gunga Din !”
2 Likes
Not so much interested that crypto crashed, more the comments from Gary Gensler. A big oops on the part of crypto bulls, to think he was one of yall!
It never ceases to amaze me why crypto enthusiasts insist on ignoring both regulators AND central banks when they make their bullish prognosis for the sector.
It will be really interesting to see how BTC handles the Evergrande contagion, can’t help but think the last thing the smart money will be doing is moving into crypto when it all comes falling down.
Only two places to be, the dollar (crazy as it seems) and short-term US government bonds for big pockets playas.
I went long both copper and silver last night and this morning (in Asia).
I don’t think these trades will make money, there is too much bad news for that. But…when you get a signal you take it - no matter how much you believe it’s wrong - this cognitive dissonance is something most cant handle - they’re wrapped up far too much in their own opinions.
2 Likes
I think its because the majority of crypto traders are not driven by real-world economics. They are mostly either get rich quick merchants looking for an easy 1000% and who are now in way too deep - or privileged anti-establishment under-achieving whiners who think it would be OK and justice for all of society’s institutions to be imploded.
1 Like
Hmm… if I had to choose which one I were, it would have to be the former. Except that 10 years ago I gave up on get rich quick schemes, now preferring to call them “get rich slow schemes” because none of the get rich quick schemes got me rich quickly. Having foregone a 26X by selling out 1.5m BTT tokens mid December, I could have been one of the 1,000% brigade, but alas it was not meant to be. 
1 Like
Naturally I was generalising - which is always fun but generally speaking its also too general…
In the same way we’re all traders, but the traders who can survive in the game for year after year are not typical of traders (generally).
The run-up after the initial collapse was quite expected. Some participants are already moving past this event - in my view wrongly.
Is this rally going to sucker in all the suckers who bought the dip, only for a much larger decline in October?
Note October is often the month big declines occur.
Blind belief in an investment story is a sucker move of the highest order. I have made one or two of them myself. I have one gold mining stock that I have held for nearly 20 yrs - hoping that one day it will become good.
It started off as an intermediate-term trade but became an investment as I could not quit it when all the signs were there.
Those signs were Mexico government crackdowns on the resource sector, along with increasing violence from rival drug cartels.
One of the reasons I got in that stock was because of the smart money who had taken large stakes, when they got out I refused to, and that trade has been an investment ever since - the word investment being a derogatory term meaning refusing to sell even after the facts have changed.
A Bitcoin HODLR suffers from a similar delusion, only revolving around government regs. It’s likely to get worse as wise Ron Insana of CNBC fame points out.
Maybe the BTC moon shot will happen, but it certainly won’t be due to some amazing fundamental utility value - it will be nothing but the greater fool theory in operation.
1 Like
All seems really well in the markets right now. Remember the great financial crisis started like most avalanches do - with a couple of bits of snow falling.
It wasn’t till later a true avalanche began.
I really don’t think the fallout from Evergrande has even begun yet albeit in small pockets of China.
1 Like
For the complete geek - here is a quick primer on how waterfall declines and market routs occur from an article I read many moons ago.
Hi @Johnscott31,
So I just read the entire article about fingers of instability, as it related to the 2008 financial market crash written about in 2006. I also note that since 2008, the collective memories of individuals and institutions seem to grow shorter and shorter, as if the financial crisis never happened.
I spend more of my time being concerned about the unknown unknowns than the known unknowns, as Donald Rumsfeld so eloquently put it in regard to the weapons of mass distraction.
Do you have a specific part of your investment and / or trading strategy that acknowledges the increasing likelihood of the avalanche, and how that part of the strategy is intended to protect you more than it protects those who are either oblivious to the increasing likelihood of the black swan event, or who choose to ignore it with their head buried in the sand?
1 Like
I think that is an amazing question and would probably take quite a while to answer in any real depth. So I will make it brief.
First of all best to get a couple of things out the way.
It’s not like I stay up all night worrying about market crashes – quite the opposite – it doesn’t generally pay in this world to bet against mankind’s progress.
That’s also part of the reason I rarely short – I have been burnt more times going short than anything else.
On the flip side, the best and quickest money I ever made was on the short side – in particular certain episodes like the Euro debt crisis and the flash crash.
But most of the time it does not pay to be a bear. Let me make a point here, I don’t mean people who short markets cannot make money – of course, they can.
I am more referring to being a bear in the general sense – don’t bet against progress.
Having been a gold bug a long of time, I have grown to believe they have it wrong MOST of the time. Multiple times a year they predict some cataclysmic market event is going to take place – and it never does – really what they are doing is talking their own book and/or completely biased in their opinion.
And being biased in your opinion is a recipe for disaster in the markets.
The great financial crash of 2007-2008 taught me a lot, and it was the start of when I started to wake up as a trader.
I lost a lot of money that year – and mentally it took me a full year to recover – It was traumatic – and I spent much of my year drowning myself in a drunken stupor.
But the one thing I learned is
- gold bugs are mostly wrong
- The dollar is the go-to currency in times of extreme crisis
- everything (except the dollar) falls as liquidity is drained from the system
- if you know what you are doing you can make a ton of money quickly
I am a short-term system trader by nature – those systems rarely change. If I followed the crash indicators and used discretion on a regular basis I would be wasting my time. Crash events are few and far between.
Mostly all you really need to do is keep abreast of the main eco headlines – but occasionally big events happen that could turn into rare events with potentially huge profits.
Yield curves are the general indicator of choice for predicting recessions. I am no expert in yield curve analysis (but getting better) so I do try to follow them.
On a day-to-day basis, I think following them is good for FX traders anyway even for us short-term ones (it makes you sound cleverer than you are around people who you want to impress - lol)
The other one would be the spread between High grade and Junk Bonds.
Junk should always offer a higher yield than good quality. If yields on junk are falling as high grades are rising, it means money is flowing out of riskier assets into safer ones.
You could say the same between sovereign bonds like the German Bund (which I have traded for many years) and peripherals like Greece, Italy, Portugal.
While stock investors are often wrong, bond investors are generally the savvy ones. It pays to follow them.
You don’t need to become like Bill Gross, or Mohammed El Erian to follow these markets. If you switch on Bloomberg each morning they will devote much of the time to them making it easier for you.
All you need to know is that when the likes of an Evergrande takes place, start taking a more active interest in the bond market.
Sentiment
I am sure you know much about market sentiment already. The only thing I really follow these days is the COT data.
COT data is fascinating and I have been following it for a long time. If you can subscribe to even the cheapest COT base subscription it’s well worth your while.
While extreme market crashes don’t happen all that much – there are many extreme COT position events that can make you money if you know how to trade them. For those with a portfolio of investments to manage for themselves (I know you do) then the COTS are a great way to gather all that fundamental data that you’ll never get your hands on; but the movers and shakers - the Cadbury’s, the BPs, the Cargills, the Newmont minings of this world, do.
Following the smart money with the COT (no not the COT day trading indicator) gives us a good idea of what is likely to happen months in advance.
If you see the smart money getting excessively long the dollar index, and you see the news coming out of China of an event like Evergrande, and all chaos in the local bond market – then it’s worth paying even more attention.
I dare say if I had been following events in the Nat Gas markets six months ago I could have made some great money, but I was oblivious – I don’t follow the energy markets that closely.
It’s worth pointing out that markets go from extreme optimism to extreme pessimism that’s how market crashes occur. If let’s say the stock market is just meandering higher, sentiment is balanced then even with an Evergrande type event the likelihood of a spectacular market crash is slim.
Extremes in sentiment are just one more piece of the puzzle.
One way to measure market sentiment is r200. That means the % a market is stretched above its 200 day moving average. Take bitcoin (I know a favorite of yours) – which was stretched 200% above its 200-day average before its last major pullback.
Crypto r200 metrics are wild – silver (another volatile market) can only muster up an r200 of around 40% before it corrects.
Profiting
None of this stuff can be taken isolation, and most of the time none of it even matters – but if there are flashing signals going off everywhere it pays to pay attention.
OK so how to profit from all this?
Maybe under these circumstances, I would start taking short trades– maybe. I would have to think about it.
But I would be ramping up my dollar long trading. I’d stick to my short-term strategies and just increase trading size.
I am a pretty bold trader when I want to be – and if events merit I am quite happy risking up to 5-6% of capital on any one trade
That is most likely what I will be doing in the months ahead if this whole scenario starts to pan out.
However I stress that much of the time its all just an intellectual exercise if anything just to keep me in tune with the markets.
2 Likes
Maybe it’s bitterness for missing much of the crypto BULL, sour grapes, or jealousy that it took me so long to be profitable.
But when I see headlines like the one below I really start to cringe.
I truly believe in a free press, but can’t help but think headlines like this only hasten the number of lemmings who jump off the crypto or day trading cliff.
Not saying you can’t make money trading crypto or day trading, but I do believe an article like this attracts many who should not be getting involved for whatever reason in the markets.
2 Likes