To: IQBAL LATIF who wrote (28822 ) 9/16/1999 3:56:00 AM From: IQBAL LATIF Read Replies (1) | Respond to
THe market kept falling that long trade remained unfilled but on solid break of NDX 2500 I did go thru a trade on some long puts and some short calls coverd towards the end I still see that 1322 test a real possibility that relates to old 1308 are on SPY, SOX gave up nearly all its gains and is back to Monday lows after breaking that 570, all on rumors based on $ weakning vis a vis Yen, tghe problem is that on one hand $ has weakened but against Euro it has strengthened from original 117 area to near parity although today it is touch firmer, I would still think that TB's at 113 4 are at a good support with a little downside but much better upside, BKX has suffered as result of big unwinding of carry trade but I think most of it is out of the way, I do see a possibility of 100 but I would think that concerted efforts and basic fundamentals demand that $ reamins firm otherwise Japanese recovery would seriously hamper, anyway Yen strength is not helping Nikkei, I would expect a resolutin of these various inter connected issues very soon as $ stabilises vis a vis Yen that would help the US asswts which are under pressure more for flight to quality fears in this case Japan, but Japanese stock market and assets are falling due to resulting imbalance from $ flight. The real level is 118-122 band and that is good 15% away but markets are jittery, the prospects of no hike in interest rates by Fed in their Oct meeting did not go well as higher interest rates some time support the currency too, I think the fear is well entrenched when certain levels are breached we see excesses for simple reason, no one really tries to sit and disucss the longer term, traders with short term horizon sell first and ask the questions later. In my opinion we may see some higher volatility but fundamentally I have not seen any significant chnage that demands relaignment of strategic core, long puts at highs for me is the best protection in times of higher volatility stemming from such moves in currency markets.I would like to see Yen strengthening vis a vis $ to that band of 118-122, presently stronger Yen brings a lot more balance and needed calm to ASEAN countries. China that always worry from Yen weakness must have got a good reprieve and so would other countries like Malyasia, Korea however these countries while benefitting from Yen strength certainly are more competitive, China like ASEA excluding Japan are largest trading partners of US and the issue we are involved with is not about $ weakness it is about Yen strength, those who sold Yen and borrowed $ to buy TB's have unwound their positions,that has put pressure on $ and long bonds but such unwinding is not a fundamental shift of economic realities, once this stops we will see a quick bounce of Yen to its level of 118-122 area.. Like the spreads we saw post LTCM these excesses get repaired quickly for those of usa who go by medium to long term trend in the markets and try to trade on daily basis also all this should be understood but it not something tradeable. If CPI number would have been strong may be we would seen $ strengthening due to possibility of rate hikes in Oct FOMC, $ strengthening! what would be fundmanetally bad for the economy in long term, could have been accepted as a good sign, for me these unwindings are normal part of trading it creates these volatilities but long term trend is only sustainable by real demand ,low inflation and higher productivity associated with lean and mean corporates with dominanat market shares, so far that is true for US as such this crisis as we may call it may pass once these positions are fully neutralised..
