The market went in long but the rinsing probably won’t last
RWE, 1803-1882
If you are hankering for some intellectual stimulation, this 45-minute essay…
…might be just what you’re looking for.
Indirect hat tip to Bose Stereos via this essay by Neal Stephenson
Long EURGBP 0.8676 + 0.8666
(50%/50%) Limit Orders
Stop loss 0.8589
Long 26AUG 1.8050 EURAUD call
Cost ~36bps Spot ref. 1.7790
Long 26AUG 0.8760 EURGBP call
Cost ~33bps Spot ref. 0.8680
Yesterday, I showed a chart with 26 economist forecasts for the Bank of England vote and nobody had 4-4-1! Forecasting is hard. The first vote by the BoE this morning was 4: no change, 4: cut 25bps, and 1: cut 50bps (Taylor). Then Taylor switched his vote to 25bps to get the thing over with.
The kneejerk is GBP stronger, but a stagflation setup with a more-hawkish-than-expected central bank is not really bullish for the currency, is it? People went into BoE looking for a dovish home run and didn’t get it, but by the time the dust settles, I think EURGBP will still end the week above 0.8710.
Yes, there is a mild positioning problem as the market was certainly leaning dovish, but I think you can buy EURGBP at 0.8676 and 0.8666 with a stop loss at 0.8589 and make money. I am adding that to the sidebar, even though I also have a 26AUG 0.8760 call in there. I just think this is a nice dip / opportunity to get involved.
You can see in the chart that all the trendlines joining the late July low come in around 0.8650 and the weekly point of control (main equilibrium point) for EURGBP has been right around 0.8650/60 for the past three weeks.
I was wondering if there was a way for me to play it and I found one! CORX is the 2X corn ETF. It’s horribly thin, charges a 198bps per year fee, and… probably grody tracking error.
But it does exist! Beggars, choosers and so on.
This is what a chart looks like when volumes are absurdly low. Have a philosophical day.
Ralph Waldo Emerson comments on the state of Twitter and politics in 1841…
If I know your sect, I anticipate your argument. Most men have bound their eyes with one or another handkerchief, and attached themselves to one of these communities of opinion. This conformity makes them not false in a few particulars, authors of a few lies, but false in all particulars. Their every truth is not quite true. Their two is not the real two, their four not the real four; so that every word they say chagrins us, and we know not where to begin to set them right. Meantime nature is not slow to equip us in the prison-uniform of the party to which we adhere. We come to wear one cut of face and figure, and acquire by degrees the gentlest asinine expression.
https://archive.vcu.edu/english/engweb/transcendentalism/authors/emerson/essays/selfreliance.html
