Happy Ending On New Year’s 2013

What a nice start to the year with the end of the fiscal drama. I feel like Hollywood has gone to Capitol Hill and Wall Street these days given how enamoured the world is with reality TV these days.

On Singapore shores too we have GDP that missed recession. But is that a reason to get bullish ?

I confess I do not know. But I get paranoid when the year starts with a concerted bang.  Because nothing in life is ever Up, Up and Away even though there is no law of gravity in finance. And in finance, the law of inflation ensures that prices will only get higher.

2013 THE END

Take a look at the table of December vs the entire 2012. It does not look like the new normal. Shanghai gaining 15% and Nikkei 10% vs Silver -10% and Nat Gas -8%.

I dragged out the old correlation tables.


Observe :
1.  EUR has de-correlated with the S&P500, Silver and Gold.
2. USD increased it correlation to S&P500, Silver and Gold.

It is back to basics and could USD be the new risk-on currency ?

My personal superstitition is for happy endings at the end. And right now, in my opinion, we are seeing a false start, abeit a Hollywood inspired one. Will it be enough to carry us through ? Will a Japanese election win (pivotal turn point), holding off the fiscal cliff, Greece securing the bailout payment and slightly positive Chinese data, be enough ?

I will sell some more EUR/USD at 1.3250. Called the double top wrong last week but I suspect the correlations will start to change. US is no longer the problem and if u observe the 2 tables below. Correlations are unravelling.

Conditions are such that you cannot take your eyes off the screen for 5 minutes or you could miss out by a mile. Funniest quote i heard is out of Dr Ed Yardeni “The market has ADD. It gets obsessed with one distressing issue, until that gets boring and investors move on to another.” Central bank policies are creating more confusion than giving comfort, mostly adding uncertainty as they sell their Hollywood punchlines and the “happy ever afters”.

I say now that the “cliff” is over, we can move back to EUR bashing. No sense in wasting all the negative headlines of early December.

Citigroup sentences to Europe to faster economic death via @Telegraph
Euro-Zone Jobless Rate Highest Since Records Began
Euro area unemployment rate at 11.7% and EU unemployment rate at 10.7% in October 2012 #Eurostat
The Amazingly Scary Depth Of The EU Recession
European Stocks Start Catch Down To European Credit
Another day, another European downgrade.
Moody’s downgrades euro zone rescue funds, keeps negative outlook
“The euro is a currency with a state”, says ECB’s Coeure
This Goofy Diagram Does A Remarkably Good Job Explaining What’s Happening In The Eurozone
Next Up For A “Recovering” Europe: A 30-50% Collapse In Wages In Spain, Italy And… France
In 2011, 24% of the total EU population, or 120 million people, were at risk of poverty or social exclusion #Eurostat
Eurogroup’s Juncker to step down
Franco-German rift hampers plan for banking union
FLASH: EU Finance Ministers fail to reach deal on banking supervision, to meet again on December 12 – EU official
E.U. Financial Ministers Clash Over Banking Supervisor Plan
Latest EU talks on banking union come to nothing.
Markets Are Rallying Again In Europe
The Defeat Of The Euro Bond Vigilantes?
ECB depicts bleak 2013 after leaving rates on hold
ECB Sees Weaker Outlook in Germany, France and Netherlands
Brussels says it would block independent Scotland automatically joining the EU
BUNDESBANK CUTS GERMAN 2013 GDP FORECAST TO 0.4% FROM 1.6%. Call it a recession.

Publishing this a day late. Sorry for the EUR/USD level. I shorted some more at 1.3185 just now and will look to add. The downside target is still 1.30.
Have taken off my final USD/JPY tranche yesterday at 87.20 and am looking to buy only at 83.50 level.
Shorted WTI Crude at 92.70 and am looking for a correction to low 91 levels as a punt.
Will be adding the correlation tables later because I cannot seem to upload from here.