This chart (2 year Greece minus 2 year S.A.) should quite literally be upside-down. But it isn't. Something is though. It's called the world. I'm off now to go hide under my desk.
Tuesday 27 April 2010
MEUM DICTUM PACTUM
Not sure I need to say much about today's chart du jour. But let me put it this way; If I were locked in a room from some point last year, and, emerging blinking into the beautiful EC4 sunlight this morning, were presented with the following chart (labels removed) and asked to guess which one is a horror show Sub Saharan economy held together with duct tape and the residual goodwill from the 1995 Rugby World Cup and which one was a Eurozone economy I'm pretty sure I'd have guessed wrong.
This chart (2 year Greece minus 2 year S.A.) should quite literally be upside-down. But it isn't. Something is though. It's called the world. I'm off now to go hide under my desk.
This chart (2 year Greece minus 2 year S.A.) should quite literally be upside-down. But it isn't. Something is though. It's called the world. I'm off now to go hide under my desk.
Friday 23 April 2010
GREECE ME UP.....
So, after what must be potentially the shortest bridging loan since the kids hanging round outside my local newagents gave an old tramp a few quid to nip in and buy them some marlborough lights, it looks like Greece is finally going take the free goodies from the nice gentlemen at the IMF. Well you know what they say about taking sweets from strangers. Not generally advisable. This time will be no different.
While the single currency has of course had a kneejerk rally on this, longer term I don't personally see this as a huge positive for anyone, not even Greece.
How to play this is of course the million dollar question. Having been scouting around this mornig, I have to say 3m EUR/JPY vol looks cheap to me. Gamma should aid the pain of the premium, with short term realised vol indicating that the nimble will do well regardless of overall direction. Add in all the usual caveats about having Yen exposure and it starts to make sense to me. Plenty more scenarios see this trade higher than those that see it trade lower and short term implied / realised correlation indicates a dislocation (of sorts....)
While the single currency has of course had a kneejerk rally on this, longer term I don't personally see this as a huge positive for anyone, not even Greece.
How to play this is of course the million dollar question. Having been scouting around this mornig, I have to say 3m EUR/JPY vol looks cheap to me. Gamma should aid the pain of the premium, with short term realised vol indicating that the nimble will do well regardless of overall direction. Add in all the usual caveats about having Yen exposure and it starts to make sense to me. Plenty more scenarios see this trade higher than those that see it trade lower and short term implied / realised correlation indicates a dislocation (of sorts....)
Tuesday 20 April 2010
Bouncebackability
Well post the initial reaction to the volcano (and the carnage it caused, not least to the travel plans of both Pascoe and Mrs Pascoe), BA shares seem to be exhibiting a surprising resilience. The "glass is half full" part of me says that this is a good thing, and that their statement, made yesterday, regarding the fact that they have cash reserves sufficient to enable them to withstand a more prolonged period of disruption was a positive not only for BA, but for the downstream UK economy as a whole.
The cynic in me however does wonder about how it can be a good thing for any company to be losing £15-20m per day and be relaxed about the long term impact of this. Especially one in as precarious a position as I think BA is right now. Strike related loss of goodwill suddenly risks becoming a much bigger problem once the whole of the country, forced to actually do something about the total lack of air travel, suddenly rediscovers how nice the trains can be when they're working well. So why so relaxed?
i) Quite probably they have to put a brave face on things precisely to avoid their share price taking a battering.
ii) How much is it a situation where they claim 'Force Majeur' over some (if maybe not all) of the cancellations, rebookings etc, in which case the metrics of a grounded fleet become very different. Like I said, cynical......
Nevertheless, looking at a longer term chart I have a feeling some will see value here. Adding volume into the mix definitely makes for interesting viewing. Daily chart looks a screaming buy to me if you were a pure technician (which I most certainly am not). The only question is (and of course, it's the $6m one); is everything currently reflected in the price?
The cynic in me however does wonder about how it can be a good thing for any company to be losing £15-20m per day and be relaxed about the long term impact of this. Especially one in as precarious a position as I think BA is right now. Strike related loss of goodwill suddenly risks becoming a much bigger problem once the whole of the country, forced to actually do something about the total lack of air travel, suddenly rediscovers how nice the trains can be when they're working well. So why so relaxed?
i) Quite probably they have to put a brave face on things precisely to avoid their share price taking a battering.
ii) How much is it a situation where they claim 'Force Majeur' over some (if maybe not all) of the cancellations, rebookings etc, in which case the metrics of a grounded fleet become very different. Like I said, cynical......
Nevertheless, looking at a longer term chart I have a feeling some will see value here. Adding volume into the mix definitely makes for interesting viewing. Daily chart looks a screaming buy to me if you were a pure technician (which I most certainly am not). The only question is (and of course, it's the $6m one); is everything currently reflected in the price?
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