Agenda First Week of April 2011

April 03, 2011

Weekly Agenda

• Complete legal documentation
• File with the S.E.C - (mid process)
• File with the NFA 
• Open corresponding bank accounts
• Research 
• Portfolio analysis

Trading was on the menu, but not sure if I will do that as there is a lot of other things that need to be completed. Perhaps small trades with minimal market coverage. I think I'll take this week as a reading and research week. Last month was a bit hardcore and going forward won't be any easier after seeing market action from last week. 

Analyze Capital LLC

AnalyzeCapital(at)gmail.com

End Month Performance of March (21st to 31st) - April 1st 2011

Traded the fourth week of March but not the last.


4th Week Performance -  March 21th - March 25, 2011

• Open Week - Long GBP/USD @ 1.6233 from last end week - Closed @ 1.63077 - March 21, 2011
• Open Week - Long WTI @ 102.28 from last end week - Closed @ 104.97 - March 22, 2011

WTI	GBP/USD	Total Cents	Total Pips
+269 cents	+74 pip	+269 Cents	74 pips

This was the performance from within the week though both these positions were initiated from two weeks ago and were unrealized gains.

The overall realized P&L:

WTI	GBP/USD	Total Cents	Total Pips
+27 cents	+198.7 pip	+27 Cents	198.7 pips

• As you see from the realized P&L my second crude trade for the month was timed extremely poorly. For about a week and a half WTI was in down trend for about 2 ATRs. I sat through 2 ATRs of uncomfortable volatility. The proper risk management would have been to set stop loss at 1 ATR reassess on the third week then sat through another 1 ATR of downside volatility and setting it wide enough to be able to catch the recovery that we saw end month. That strategy would have garnered at least 300 - 400 cents vs the 27 cents I realized.  In the end though I'm glad I stuck to my views and convictions of seeing the 105 squeeze I was looking for. The move going into April is another story on its own for another day to tell...

• GPB/USD trade was overall a very solid trade. I caught about 66% of the move up to about 1.64. I bailed early because I was going out of town and didn't want to manage my position when I was away. Also, wasn't sure how the UK inflation report was going to turn out. Even If I stuck through the inflation report which would have been about 100 pips more, the reversal was hard and fast and probably difficult to time. If anything I would have resulted in the same realized P&L. I sat through about Daily volatility of 100 pips or so before the move took off. 1 ATR risk management would have been sufficient but I was using broad 1.60 base support. 

So my total trades for the month of March realized P&L:

Total Cents	Total Pips
+981 cents	+32 pip

Majority of cents come from crude exposure on front month trades (Brent, WTI) and with one week trading the dollar index.

The reason why the pips are so low was because of my poor poor poor NZD trade. Talk about bad timing. Fundamentally I was right but was trying to fight the crowd. In the end the move I wanted came and again came much faster than I expected. The pound was an excellent trade and had I de-leveraged a bit on my NZD trade the pip significants would have been greater. Either way 32 pips is better than negative pips.

Overall a very good positive month thanks to energy trades. My second trade was almost a disaster but I stuck it through. Better risk management would have improved P&L significantly. Got to stick to the discipline...

Analyze Capital LLC

AnalyzeCapital(at)gmail.com 

NFP April 1st 2011

It would be funny if today's BLS played an April fools joke on the NFP release. Too bad that won't happen.

The initial reaction has been dollar strength coming off the hour of the release. Whether or not this is sustainable is still questionable.

NFP numbers coming in at

• 216,000+
• and UE at 8.8%

Not gonna bother to break down the rest of the numbers (you can do that HERE).  Initial equity reaction via futures seems positive. I'm looking for continued dollar strength, S&P500 to stay below 1333 by close and oil to give back gains. 

Analyze Capital LLC

AnalyzeCapital(at)gmail.com

European Bond Spreads on March 30, 2011

March 30, 2011

Chart taken from Calculated Risk via bloomberg

Spreads remain quite high on the 10 years. Risk is still there. In light of the EUR that keeps on rising at the end of March 2011, eventually the price will have to reflect some of these risk factors/fundamentals. It is very possible that the ECB rate announcement might be the catalyst for such a move.


Analyze Capital LLC
AnalyzeCapital(at)gmail.com

April Fools Day London Hours - April 1, 2011

London Hours

• Seems End of Asia trading will end up positive for equities; the only downers seem to be Japan and India
• Crude fell from its yesterday highs through Asian trading
• Overall Dollar largely unchanged over night with slight weakness over Asian Trading (overall strength from previous session)
• European Equity futures point to lower open
• Rumors on cheap Japan having cheap banking loans to the system
• More US Fed speakers talking with Hawkish tone
• Softer China PMI

Bloomberg comes up with more stupid headlines "Australia Boom Pays Men Without Degree More Than Bernanke" , the guy is a semi-public servant what do you expect? Its amazing how compelling this growth story has been. I was really correct on my NZD view on my targets however I didn't expect it to move with the speed that it did so I completely missed out on the action. Also, the effect of the RBA rate decision again had very limited effects over maybe two weeks. Asia fundamental growth is there, or this is all speculation at this point. While OECD growth has been largely inflated the past few years (QE one through infinity, pomo, stimulus, austerity sentiment blah blah blah blah).

Going into NFP within 6 hours I get the feeling these levels have been to hesitant. Expectations of anything less than 125,000 to 145,000 is bad while the bar is set even higher currently. I dunno the effect of missed expectations on this, but I'm leaning towards a dollar correction that will weigh in on crude initially. This will likely carry into early next weak before continuing a dollar weakness trend.

Going forward I'm looking at:

• EUR/USD needs break about 1.425 then 1.428
• Markets looking for rate hikes next week for the EUR/USD to support yields
• GBP/USD continues its weakness within the majors breaks below 1.593 will see accelerated lower prices
• In general large divergences of fundamentals and sentiment (AUD, EUR, USD)
• ISM later today along with EUR employment data and PMI releases

Don't think the Eurozone can handle a rate hike for whatever reason. Fundamentally the region is too weak - essentially what we are seeing is the "buy the rumor sell the fact."

UK econ data is still very fuzzy with mixed reports which has definitely been weighing in on the pair. However, a bullish selling point is that 1.60 still remains a good support.

Again with Australia, it is either a true growth story or spectulation. I think this big move up to 1.03 the latter part of the highs have been speculation. Prices will give back some pips into next week. Overall though, greater than parity has been a good call. Just a matter of time before NZD follows.

To much risk to take leveraged positions today. Trade small today. Today and into next week I expect a reversal in the trends we saw all this week (Equities up, Crude up, Dollar down).

Alexander Lê
Managing Partner
Analyze Capital LLC
AnalyzeCapital(at)gmail.com

End Month of March 2011

March 31, 2011

Didn't get to follow much of the day. Finishing lots of business work.

*Crude Significantly up going into Friday

*Ireland stress test well within Expectations hence the strong Euro today

*PMI ... reaction seemed muted?

*GBP was floatdown most of the day but mostly flatish

*Corn was on fire via supply news

*AUD continued its rocket ship move up

*NOK broke below support levels quite strongly following the dollar weakness trend

I kept hearing today crude oil prices can't be good for the consumer all day... to be honest there is room to 145 will we see mild effects on the consumer at these levels... but it won't show up for another few months, and will be negligible IMHO if anything.

Im getting a felling in the back of my mind a dollar correction is needed. SPX seems like its hesitating quite a bit at these levels. Will we get a break to the upside?

Probably a lot of this action will be seen with NFP tomorrow. Overall with quad witching this month, window dressing, MENA risk... this month has been wicked wild... getting any "real" solid read probably is BS. Got to go with the flow with these trades and stick them short term. Any rational has been quickly reversed and fipped and flopped. Heres to making money and being right or wrong!

----

I still owe the 4th week march trade summary ill have that up soon. Didn't trade this week too busy with business development. Anyway, tomorrow will be fun to watch. Darn markets been very distracting with all the action going on. Back to wrapping up this Partnership Agreement!


Alexander Lê
Managing Partner
Analyze Capital LLC
AnalyzeCapital(at)gmail.com

Inflation Outlook - March 21, 2011

Referencing from seeking alpha ---> http://seekingalpha.com/article/259082-top-5-graphs-of-the-week-global-inflation-focus?source=email_the_macro_view

Click through link above for more in-depth inflation commentary (along with monetary policy comments)

• This is mainly commodity driven inflation (I agree)
• Inflation is a greater central theme for central bankers (Duh)
• Emerging Market (EM) inflation out-pacing developed economies inflation

As long as the US inflation lags its peers and EM inflation this should continue downside pressure on the dollar in the short term. The idea with EM central banks is that continued rate hikes should induce dollar selling UNLESS the higher rates are proving to being ineffective. If monetary policy in EMs proves to be ineffective this may induce dollar hoarding as we saw back in the summer of 2008. Even still, the dollar should still be pressured to the downside as long as the EU, the UK and Canada has stronger inflation expectations and hawkish monetary policy (the bigger weights in the dollar index). 

(IF)/Once this period of volatility can normalize these fundamentals should pull through. Core books  based on an inflation thesis should be in good shape longer out. 

Alexander Lê

Managing Partner

Analyze Capital

analyzecapital@gmail.com