Monday, September 26, 2011

Hugh Hendry on the importance of social mood & failure

"I'd say 80% of my activity is engaged in the interpretation of social mood." - Hugh Hendry. 

That quote taken from this September 2010 BBC Hardtalk interview with Hugh Hendry

When asked about the need for regulatory control of financial markets and curtailing of risk, Hugh replies, "The best form of regulation is, 'If you mess things up, you fail.'".  

Hat tip: Kevin Kaiser at Hedgeye.

Friday, September 23, 2011

Precious metals take a hit as dollar moves higher

Gold and silver have really taken it on the chin this week, with gold down 5% Friday and silver down a whopping 15% in today's trading (as of 4pm Chicago time). 

For the week, Finviz shows gold and silver down 8.7% and 23.6%, respectively (see performance chart below). 

The sell-offs in the futures markets have, of course, impacted the share prices of metals ETFs, GLD and SLV similarly.

The leading gold and silver mining indices, XAU and HUI, also took a dive over the last few days. 

Meanwhile, the US dollar index continued its climb this week. Having bottomed near 72.70 in early May, and following its consolidation around the 73.50 mark in August, the index (which measures the US dollar against a basket of other paper currencies) is up strongly in September. 


So were there any technical price signals or sentiment changes that hinted at these latest shifts in the dollar and in the precious metals market?

Sounding prescient on the gold trade is Phil Pearlman, discussing his decision to sell gold in this August 24th interview on CNBC (looking sharp, buddy). 

We'll continue watching gold, silver, and the dollar in the weeks ahead. Keep up with our real-time updates on Twitter and stay tuned to the blog feed for more.

Wednesday, September 21, 2011

Long bonds flying on Operation Twist - $ZB_F $TLT

Earlier this afternoon on Twitter, I noted that the long bond ETF, TLT was up over 10% (then quoted near $114.60) since S&P downgraded the USA's debt rating to AA+ on August 5, 2011.

Well, it looks like we'll have to update those stats already, thanks to the pop in 30 year bonds (ZB_F) and in TLT on news of Operation Twist, the Fed's telegraphed scheme to sell $400bn of short maturity bonds and reinvest in longer (6 to 30 year) bonds by June 2012. 

Here's how the market reacted to that news. Note the flagpole move up in TLT and the 30 year Treasury futures, ZB_F on the intraday charts. 

 Above: 5 minute chart of the 30 year Treasury futures, via Finviz.com.

Here's an intraday chart of TLT, courtesy of freestockcharts.com.

The updated daily chart of the TLT, marking the August 5th closing price to today's action on the Twist announcement. Chart via freestockchats.com.

So in the space of 20 minutes, we had to recalculate that 6 week return figure (post S&P debt downgrade): the long bond ETF TLT is now up 13% since its close on August 5th, based on an intraday price of $117.70

What a difference a day makes...

Tuesday, September 20, 2011

New: Finance Trends mobile reader view

Finance Trends mobile readers: you can now easily access our new mobile view on your iPad, iPhone, Berry, or Android device (courtesy of Blogger). 

Here's what individual posts look like in our mobile site view: 

Right now we're leaving the mobile view as an option, rather than a default, for our mobile visitors. 

If you're a mobile reader and you'd like to see this mobile view as the default view during your visits, please leave us some feedback. For now, I'll work on providing a mobile link icon near the top right portion of our sidebar column. Thanks!

Tuesday, September 13, 2011

Bruce Kovner retires: a Market Wizard's career

Bruce Kovner is stepping down as chairman and CEO of Caxton Associates, the hedge fund he founded in 1983. 

Bloomberg has the details on the transition that will see CIO Andrew Law take over at Caxton: 

"...“After 34 years in the trading business and more than 28 years leading Caxton, the time has come to hand the leadership of the company to a new generation,” Kovner, 66, wrote in the letter. “I do so knowing that I will miss the adrenalin rush of confronting markets every day but also confident that new leadership will carry on the traditions, style and substance of Caxton’s successful history.”...
...Kovner is attempting a rare handover of power in the $2 trillion hedge-fund industry, where some of the most successful managers, including Stanley Druckenmiller and George Soros, chose to transform their firms into family offices rather than put another trader in charge. A family office usually oversees money for a wealthy individual and their relatives." 

And a note on Kovner's successor Law, who offers up some interesting comments on lessons learned from Bruce Kovner and similarities in their trading styles:

"...Law’s trading style has always been similar to Kovner’s, he said in an interview in his office on Park Avenue in Manhattan. Yet the older man drove home some important lessons.
“I’ve learned to listen to the markets more,” said Law, meaning that he pays close attention to how markets move relative to one another, and how they react to events. He depends on these observations, rather than what he calls “abstract fundamental preconceptions,” to forecast future price movements.
Law also embraces Kovner’s practice of cutting risk when he doesn’t understand what’s going on in markets, something that Law did in May and June of this year. “Bruce has done this many times in his career,” he said."

Kovner is a true trading legend whose trading career really took off once he joined Commodities Corporation in late 1976. On his performance as a hedge fund manager, Financial Times sums up his 28 years thusly: "An investment of $1,000 in Caxton made when the firm began trading in 1983 would today be worth $168,000.".  

Kovner sat down for a rare interview with Jack Schwager in 1989. The resulting chapter on "Bruce Kovner - The World Trader" can be found on page 31 of this Market Wizards ebook. Check it out.
Related articles and posts

1.  Bruce Kovner interview with AR magazine - Absolute Return.

Thursday, September 08, 2011

Banknotes as wallpaper: Weimar Republic, 1923

When Money Dies: Banknotes (Marks) as wallpaper. Weimar Republic, 1923.

Weimar marks inflation wallpaper money

*Photo via Wikipedia (Deutsches Bundesarchiv), Hyperinflation in the Weimar Republic

Related posts

1. FT interviews Adam Fergusson: When Money Dies - Finance Trends.

2. Dying of Money: Financial Sense Newshour special on inflation - Finance Trends.

Thursday, September 01, 2011

Traders and brokers at the Curb market, 1916

Traders brokers hand signal Curb market

Traders and brokers signaling to offices at the Curb market, New York City, 1916. The Curb market moved indoors in 1921 and, in 1953, became the AMEX. 

Photo via Library of Congress.