G. D. Young
show details Nov 10 (7 days ago)
06:56:23 *** FRIEND 1 (XXX SECURITIES (USA)) is in the room
06:56:23 FRIEND 1 : good morning
06:56:32 ME : morning
07:38:56 ME : what do you make of this
07:38:57 ME :
07:39:18 ME : i think its a related event
07:57:28 FRIEND 1 : let me take a look
08:00:22 FRIEND 1 : this is really bizarre story
08:00:43 FRIEND 1 : smells like a cover up
08:02:59 ME : seemed like we were stabilizing, what drove
the market lower here?
08:03:36 FRIEND 1 : this feels like a bond concession
08:03:54 ME : i'm getting toasted here
08:04:04 FRIEND 1 : you and many others
08:04:13 ME : yeah
08:04:24 ME : i feel like hanging on
08:04:40 FRIEND 1 : not many traders positioned for this move
08:05:09 FRIEND 1 : I think everyone is doing the same which makes
it very dangerrous
08:05:21 ME : i think the analysis from yesterday holds though
08:05:32 ME : this is a game of chicken between the
and china u.s.
08:05:38 FRIEND 1 : 126-03 is key resistance level
08:05:50 FRIEND 1 : sorry, support
08:05:56 ME : well, keep me updated
08:05:57 FRIEND 1 : in 10yr future
08:06:02 FRIEND 1 : will do
08:06:42 ME : huge back up
08:06:53 ME : so we're at 126 11 now
08:07:03 FRIEND 1 : yes
08:07:51 FRIEND 1 : 5s have backed up nearly 30bp over the last week
08:07:56 ME : yep
08:08:06 ME : totally unwinding QE2 rally
08:08:30 FRIEND 1 : yes
08:08:37 ME : what drives bonds lower from here though?
08:08:47 ME : what happens to asset prices if no QE2?
08:08:54 ME : lower, right?
08:08:58 FRIEND 1 : decent data
08:09:06 ME : i'm a seller of better data
08:09:10 FRIEND 1 : there is chance fed does not buy all 600bn
08:09:15 ME : right
08:09:22 FRIEND 1 : thats the risk
08:09:24 ME : they have no credibility
08:09:35 FRIEND 1 : and market starting to talk about it
08:09:39 ME : can’t turn around on wednesday, 1 week later!!
08:09:57 ME : Fed surprised by the G20 reaction
08:09:59 ME : has to be
08:10:09 ME : and I'm surprised at the lack of coordination
08:10:12 FRIEND 1 : and the markets
08:10:17 FRIEND 1 : as well
08:12:16 ME : you think a sustainable recovery is underway
without fed/gov't intervention?
08:12:23 ME : http://research.stlouisfed.org/fred2/series/EMRATIO/
08:13:06 FRIEND 1 : let me take a look
08:13:21 ME : just a graph
08:26:53 ME : here's the circularity
08:27:02 FRIEND 1 : go
08:27:06 ME : china sells treasuries, pulls the plug on the dollar
08:27:15 ME : cny rises precipitously
08:27:16 FRIEND 1 : keep going
08:27:30 ME : raising the cost of all imported goods into the us.
08:27:43 ME : eg, most manufactured stuff
08:27:51 ME : immediately reducing economic activity
08:27:56 ME : lower volume
08:28:01 ME : at a higher price
08:28:08 FRIEND 1 : yes
08:28:11 ME : negative 'wealth effect'
08:28:19 ME : via the currency mechanism
08:28:35 ME : casting serious doubt on the solvency of the
08:28:41 FRIEND 1 : yikes
08:28:43 ME : banks, sovereigns, et al
08:28:44 ME : no?
08:28:56 ME : ok
08:29:03 ME : maybe lets break that down
08:29:15 ME : at the very least casting serious doubt on
08:29:31 ME : changing the inflation/deflation probability ratio
08:29:56 FRIEND 1 : interesting
08:30:10 ME : the natural forces in the economy want to
reset prices lower
08:30:22 ME : median income is down in the
over the u.s.
last 30 years
08:30:27 ME : think about that!
08:30:32 FRIEND 1 : good point
08:30:33 ME : the economy has what, doubled?
08:30:39 FRIEND 1 : so asset price revert
08:30:40 ME : the technology boom
08:30:42 ME : etc
08:30:48 ME : nothing has accrued to labor
08:31:01 ME : long form narratives are resolving here
08:31:04 ME : the rise of china
08:31:08 ME : the debt boom
08:31:20 ME : the technology boom
08:31:33 FRIEND 1 : your into something
08:31:39 ME : yeah
08:32:04 ME : it needs more elaboration and refinement
08:32:20 ME : but i think treasuries have to rally
08:32:38 ME : after the inital sell off that we've seen here
08:33:40 ME : or does the fed actually come out and say
'we won;t let the bankers go out of business, we'll print as much
money as we have to?'
08:33:55 ME : literally bringing on hyperinflation?
08:34:03 ME : we have to choose between deflation and hyperinflation
08:34:09 ME : they have to choose
08:34:16 ME : the creditors want deflation
08:35:00 ME : the goldlocks 'we'll print just enough money
to offset the n atural deflation from a credit bubble collapsing' is
being met with serious opposition frmo the creditor nations
08:35:11 ME : i m ean, apparently
08:35:30 ME : remember, stocks were dropping
08:35:36 ME : pre QE 2 rumblings
08:36:05 ME : add in the European sovereign crisis issues
08:37:29 ME : time is the enemy
08:37:35 ME : given the debt overhang
08:37:57 ME : the current situation is structural deficit
08:38:03 ME : meaning the hole just keeps getting bigger
08:42:02 FRIEND 1 : yes, it does
08:42:41 ME : so what do the chinese want?
08:43:11 ME : deflation collapses the financial sector, doesn;t it?
08:43:49 ME : meaning they don't get paid back
08:44:23 ME : hyperinflation collapses the dollar
08:44:29 ME : meaning they don;t get paid back
08:44:51 ME : isn;t the fed attempting to pursue the
strategy of preserving the creditors??
08:44:58 ME : meaning what's best for the chinese??
08:45:11 ME : but they want more
08:45:20 ME : feel like they should get some equity
08:45:31 ME : so they actually want a restructuring scenario
08:45:41 ME : making moves in a different game
08:45:46 ME : so... what?
08:46:01 ME : bloomberg reporting more power in the imf
08:46:18 ME : china wants/is getting
08:46:31 ME : probably resource availability
08:46:42 FRIEND 1 :
08:46:43 ME : pipelines/oil servicing contracts?
08:47:00 ME :
08:47:04 ME : you'd think
08:47:25 FRIEND 1 : yep
08:47:43 ME : imf gets involved in sovereign crisis scenarios
08:47:58 ME : which will be focused on western world in
the foreseeable future
08:48:08 ME : so china wants power in that body
08:48:10 ME : makes sense
08:48:20 ME : imf and world bank have always been tools of
08:48:35 ME : they are asserting their claim to leadership
08:48:48 ME : which in turn puts the rocket launch in perspective
08:48:51 ME : here
08:49:03 ME : doesn't it?
08:49:09 ME : am i crazy?
08:49:16 FRIEND 1 : nope
08:49:33 ME : we're saying - you can sell as many
treasuries as you want
08:49:41 ME : you don;t have any real power
08:49:48 ME : you don;t have the weapons systems
08:50:08 ME : nor the troops positioned around the world
08:50:21 ME : in a world where fiat currencies collapse
08:50:30 ME : what else matters but control of the
08:50:39 ME : checkmate
08:51:04 ME : so go ahead and collapse the dollar
08:51:19 ME : which throws all fiat currencies into play
08:51:28 ME : it doesn;t matter from a global power positioning
08:51:46 ME : they are a loong way away from usurping the u.s.
08:52:05 ME : its laughable when you remove the financial
microcosm viewpoint we inevitably have
08:52:27 ME : so its stupid for them to overplay their hand here
08:52:30 ME : are they stupid?
08:52:33 ME : i don;t think so
08:56:51 ME : the CNY has rallied 20% since 05, hasn;t
materially changed the structure of trade
08:57:24 ME : whats the big deal over 5% more right now?
09:08:22 ME : so what happens at 126 03??
09:08:58 FRIEND 1 : next stop is 125-16
09:09:10 FRIEND 1 : these are technical levels
09:10:21 ME : catch a falling knife
09:10:33 FRIEND 1 : yep
09:10:38 FRIEND 1 : its very dangerous
09:11:36 ME : what flows are you seeing / hearing from cb's?
09:12:45 FRIEND 1 : rumor of selling however don;t think they
would sell ahead of g 20 meeting
09:13:36 ME : weird weird action
09:13:42 ME : dollar up
09:13:45 ME : gold down
09:13:49 FRIEND 1 : yep
09:13:55 ME : bonds crushed
09:14:01 FRIEND 1 : seems to be proft taking
09:14:18 ME : inflation down
09:14:24 FRIEND 1 : on trades that performed well over the past month
09:15:43 FRIEND 1 : this can all reverse once the fed annocues buy
back at 2pm
09:15:52 FRIEND 1 : can some say wipsaw
09:16:01 ME : Hoenig to speak tio house republicans
09:16:04 ME : its already happening
09:16:22 FRIEND 1 : we know where he stands
09:16:28 ME : and Bowles, Simpson to release Debt Panel Proposal
09:16:36 ME : bloomberg TOP stories
09:16:46 ME : its like scripted
09:16:56 ME : creditor nations complain
09:17:09 ME : roll out the 'fiscal responsibility theme' stuff
09:18:36 FRIEND 1 : everyone talks a good game
09:19:07 ME : we're at 126 03
09:20:26 FRIEND 1 : and for you, a new set steak knifes
09:20:40 ME : great
09:20:48 ME : my old ones wqere getting pretty dull
09:20:58 ME : very hard to 'cut that meat!'
09:22:21 FRIEND 1 : yep
09:22:35 FRIEND 1 : haha
09:41:00 ME : in what scenario does a sustainable dollar
09:45:04 FRIEND 1 : increased economic growth in the
and the US
fed stopping QE2 earlier then expected
10:03:01 ME : doh
10:04:47 FRIEND 1 : ugh, everyone is running through the door at once
10:59:08 ME : right on effing cue
10:59:09 ME :
10:59:17 FRIEND 1 : let me take a look
11:03:02 ME : what a day
11:03:10 ME : grit your teeth and hold on
11:03:54 FRIEND 1 : here come the whipsaw
11:04:00 ME : I'm long!!
11:04:02 ME : woohoo!
11:04:08 FRIEND 1 : nice
11:54:06 ME : "in a surprise move"
11:54:07 ME :
11:54:22 ME : makes the above chat pretty priescent, no?
11:55:04 FRIEND 1 : it sure does
11:55:25 ME : and i can't buy my way into a strategy seat...
11:55:28 ME : crazy
11:55:33 FRIEND 1 : hhaha
11:55:53 FRIEND 1 : you have had some good calls