A Caveman’s View of Frexit

By | April 23rd, 2017|Economy|

I am not going to pretend to be any type of French political expert.  But sometimes, not being so immersed can give you a different perspective.  I put on my CArock, the Unfrozen Caveman Curve Advisor, hat on to give you some non-standard takes: The market reaction should be interesting on Sunday.  I discuss a few trade thoughts in the next section.According to the betting markets, the following are the odds of the various Final Two pairings.[1] Yes – I realize the bookies have had a terrible 12 months with political odds.  But, just because something is 10 to 1 [...]

Potpourri II

By | April 16th, 2017|Economy|

I’ve been a bit punch-drunk for most of this year by all the headline bombs we have been a little behind the markets on.  There are a lot of things we have no competitive advantage trying to guess (since others in the markets have some insider information or just better leading information sources).  I wasn’t sure why the Fed was in such a rush to hike in March, when they are gradual and data-dependent and there was no pressing data.  I wasn’t sure why the Fed is in a rush to normalize the balance sheet by “later this year”, when [...]

Potpourri I

By | April 9th, 2017|Economy|

[Not one of my more inspired posts, but this goes to show you why directional trading is not always the best approach.] I have a lot of mixed thoughts about rates right now.  The best course of action was to jot them all down, take a step back and evaluate them. BULLISH THOUGHTS Later Non-Quarterly meetings. “Later this year” does not just mean Dec.  It could mean Nov (and Sept is a remote possibility).  This means that the Nov non-quarterly meeting year is not looking great for a hike, if you are in Dudley’s camp that the Fed takes a [...]

Widen Your Trading Horizons

By | March 13th, 2017|Basics, Featured|

One of my pet peeves about trading is how the general trading population can only think in terms of “up or down.”  As a result, people tend to under-appreciate market commentary that is not related to correctly predicting/forecasting/guessing “up or down.”  I wanted to discuss the various forms of analysis that you can make use of: Correct directional analysis. This is unquestionably useful when correct, but very few people are right significantly more than about 55-60% of the time.  Very few.  If you take a longer time horizon, that number could be higher.  But it would be unrealistic to think [...]

Six Pillars Update

By | March 12th, 2017|Economy|

That article I wrote was finally published.[1]  The hard copy should be out some time next week.  I’m supposed to be getting a distributable pdf copy at some point that I will forward to you.  The important takeaway from the article is to understand when the regime is about to change.  “Understand the current regime we are in relative to the historical data and understand what regimes we are likely to progress towards.”  We are a few steps from getting to a regime change now… Remember the “Six Pillars of Long Rates” [2] article from last quarter?  We are starting [...]

Calendar Thoughts

By | February 26th, 2017|Economy|

I saw an interesting interview last week with Chris Cole (Artemis Capital).  He gave an example of the Cold War, where we had peace (low volatility) however any number of things could have happened that could have triggered a nuclear disaster.  Since he is a vol trader, he was referring to the current environment of high risk but low volatility. I suppose I had been thinking something similar, in that I have been saying the tail risks to both sides have been quite large.  It’s somewhat unusual to think that we can get a huge move and not have a [...]

Curve Regimes

By | February 19th, 2017|Basics|

I finished that article on regime change for a trade magazine, and it has been approved.  It should be published some time in the next few weeks (I’m guessing).  There was one part of it that I thought was particularly interesting that I wanted to highlight because it seemed very relevant to the current market.  The market positioning has been “overly bearish” for some time, and partly as a result, the markets have not been able to sell off for most of this year.  EDZ0 is UP 2bps on the year, despite much-better data and a hawkish FOMC.  That’s got [...]

Op-Ed: Trump’s Glass of Water

By | February 12th, 2017|Economy|

Way back when, Mrs. CA edited a domestic violence handbook for the Junior League.  We had some memorable exchanges.  “[LOL] Do you really need another pair of shoes?”  “That’s financial domestic violence!”  We were both joking.  But through these types of exchanges, I became aware of the many types of non-violent domestic violence.  I couldn’t find the booklet online – it may have been before the internet took off.  In any event, I found something similar to what I was looking for (http://www.huffingtonpost.com/crystal-sanchez/8-steps-that-explain-why-_b_9143360.html):   “Step 5- Leniency & Opportunity  Just when a victim can literally take no more, the abuser [...]

A Nation Divided (aka Take My Wife Please!)

By | February 5th, 2017|Economy|

Don’t get me wrong – I love my wife. But if she is not the #1 Trump hater in Texas, I have no idea who is. It has gotten to the point where we have had to ban the mention of “He Who Must Not Be Named” in the house, for fear of frightening the kids. And by “kids,” that includes me. But she is not alone. I also have some very loud friends that feel similarly. I thought things were smoothed over after the election – with “no use crying over spilled milk”, “what’s done is done – let [...]

Trump’s “Master Plan”?

By | January 29th, 2017|Economy, Featured|

[From time to time, I'll write an article for Seeking Alpha. Below is the summary of the article that was published on February 2, 2017. To read the full article, go to seekingalpha.com] Summary • We have seen the past few quarters how much the Trade Balance can affect GDP. • Trump's "puzzling" foreign policy actions are wholly consistent with reducing the Trade Balance with various counterparties. • One of Trump's strengths is negotiating, and he is using some classic negotiation tactics with various countries. I discuss what he is trying to accomplish in the various parts of the world. [...]