Climbing over the Financial Times subscriber wall

Just thought I’d share this tip to access any article in FT.com:

Copy and paste the title of the FT article in Google and hit ‘Search’. 9 times out of 10 the first search result link is the right one – clicking on the link through Google bypasses the subscriber wall. This has worked for me for as long as I can remember.

Why shorts selling needs regulation…my experience

A few years ago I was lying on a beach in Mauritius when a hawker came by and started pestering me to buy knee-length shorts from him. The shorts-seller had spotted weakness and he came for me when I was in a vulnerable position, lying down in the sand. I had no need for the shorts but he just kept on pushing and pushing, trying to get me to enter in to negotiations. I just wanted to relax but there was no way this guy was going to leave me be. After a while, I caved in. I handed him about one or two pounds and I got a pair of shorts that have never been worn. The shorts-seller wondered off with his ill-gotten gains, combing the beach for more unsuspecting victims.

It’s a war-zone out there

More from Felix Salmon, one of my favourite professional financial markets bloggers:

“I don’t think anybody’s capable of holding in their head all the vital information needed to get a grip on things right now — not in the wake of Lehman and Merrill and AIG and the liquidity injection and the TED spread and Morgan Stanley and the money-market funds and counterparty risk in the CDS market and bans on short-selling and WaMu and negative nominal interest rates on T-bills and the oil price and the dollar and why on earth that German bank wired $300 million to a bankrupt bank and on and on and on and on. We’ve been overwhelmed by the complexity of the system, and nobody knows anything.

But hey, at least the stock market rose today.”

Financial crisis pic

(Source: Felix Salmon)

A few scattered thoughts

Here are a couple of thoughts that popped into my head when I was watching the BBC Newsnight discussion on the Lehman collapse:

- Anatole Kaletsky commented that no one is going to invest in financial institutions now because the authorities allowed the investors in Fannie Mae, Freddie Mac, and Lehman get completely wiped out. Um, hello, free markets?

- When Robert Reich was asked by host Jeremy Paxman where he thinks we are in the credit crisis, Reich responded wonderfully with something along the lines of, ‘we’re at the end of the middle of the beginning is where we are.’ In other words, nobody knows.

- There were several negative comments about wall street being a casino. I thought that was broadly the point, that you pays your money and you takes your chances. Transparency is another matter.

- The discount rate to ‘not knowing’ has suddenly got a lot higher. Transparency in companies varies to different degrees. Sometimes it can be improved, but sometimes it can’t. Do analysts have a decent way to deal with this, or is it too dependent on investor preferences to be priced?

- Many UK financial institutions are in decent shape and churning out large profits from their retail customer base. So why are they getting hammered along with the investment banks? The way I see it, the likelihood of a major UK bank going under is extremely slim, but it exists and as we have seen, a company does not go bankrupt in a linear fashion, it is more of rapid death spiral. As that probability of this death spiral increases, even by a small amount, it makes sense for share prices to get hit hard. Most of the time, the marginal danger disappears and the stock stages a strong recovery. People then talk about how the price was irrationally low, an obvious bargain for the seasoned investor. But once in a rare while, the bank goes under.

- It is easy to be blinded by the bad news, but there is some good news in the commodity world. At around $94 a barrel, oil is over a third off the highs. ‘If’ the financial crisis doesn’t spiral out of control and infect the real economy at a deep level, then I see lower oil prices as a crucial ingredient for a rosier longer term outlook. Good stuff, what?

Every configuration pays out…eventually

caveat : my money is not where my mouth is.

Long USD, short gold, short oil, short the carry trade, and long equities, is a configuration that some people have been calling for a long, long time. Apart from the equities column these guys finally got their pay day. The media is and will always be filled with reasons for every daily price move but my rationale boils down to simple overvaluation. Why did price x go down today? Because it was too high would be my answer.

Until today, we had the rare case of several prices pretty much moving in a straight line, especially in the fx market. But today, what a turnaround. Look at that jump in cable. It rose by almost four big figures from open to close, the biggest daily rise in my memory. My favourite observation of the day is how EUR/USD rallied strongly but oil failed to follow. My old mind set would have said that oil has some ‘catching up’ to do on the upside, but I don’t believe this. My feeling is that this is a signal that oil is going to fall and the best a falling dollar can do will be to stabilise the price for a while, before oil has another leg down. Even if we get a short term bounce, I’d say risks are firmly skewed to the downside.

Broadly speaking I reckon the configuration has further to go, as momentum likes to surprise and prices have a tendency to overshoot everyone’s expectations, leading to analysts adjusting their forecasts in the trail. But talk is talk and I felt like blogging!

The Large Hadron Collider and EUR/USD

What happens to EUR/USD when one half of the equation disappears down a black hole?

Murrary loses well to Federer

Andy Murray pretty much got squashed in the US Open final but it is a grand success all things considered (he beat Nadal a long the way). Murray has adopted a far more constructive, positive attitude compared to a his impulsive, standoffish character of a few years ago and it is paying dividends. There is much traders can learn from his transformation.

Here are some quotes from the post-match interview:

“I know mentally now that I can get to a Slam final, and physically. The only thing it comes down to is the tennis.

“You work harder, you know what things were breaking down, what things need to get better, and you go to work on them.

“I hope that this will be the start of big things for me but I’m going to need to put a lot of work in.”

Alas, Murray is not the man to give us the latest on the FX market,for the article concludes with ‘when asked how he felt about picking up a cheque for US$1m. “That’s about £10, isn’t it?”

Big gap in the FX market

The fx market offers good liquidity in the majors and 24 hour, round the clock access between Monday and Friday. The weekend is another matter, and this gap is the largest I can remember.

This blog is still alive

I haven’t had anything of note to say recently so nothing has been said.

There is a trading lesson there.