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March 30, 2015

The state of the financial labour market

Filed under: Forex Strategies — Tags: , , , — admin @ 4:43 pm

As many risk takers are likely to be concerned with locking down positions and profits into month and quarter end, Macro Man thought he would address an issue that’s near and dear to his heart, the state of the labour market for market professionals.

He spent a few minutes sifting through efinancialcareers, an online job portal that pretty much does what it says on the tin.  First, he looked at openings for portfolio managers:

As you can see, the query generated 290 results, globally.   OK, what about looking for traders?

Hmmm…507 results, but as you can see, a lot of the results are for quant traders because hey, HFT front-running is perfectly legal and what could ever go wrong?  If you sometimes feel like trading these days is like living in The Matrix, you just might be on to something.   A search for C++ yields a whopping 1434 results.

If you apply for one of these roles and are contacted by an “Agent Smith”, watch out!  On a slightly more serious note, perhaps the best piece of advice that Macro Man can give young readers interested in a financial career can be summed up in 3 words.  Learn.  To.  Code.

Even more than coding, however, there is one area of finance that is in a roaring, runaway bull market with no end in sight.  Some may call it a bubble, but as you know the authorities always feel uncomfortable identifying bubbles in real time.   Indeed, listen to Yellen’s Congressional testimony and you can see certain members cheering lustily for the trend to continue, nay accelerate.

Step forward Compliance officers, for whom there are a stunning 3093 vacancies!

There you have it folks, financial markets in 2015- where demand for compliance folk outnumbers that for portfolio managers by more than 10-to-1.  The irony, of course, is that in their zeal against too-big-to-fail on the banking side, the authorities have significantly raised the AUM bar for what constitutes a viable business proposition on the fund side.  As a result, in some sectors at least assets have concentrated in huge funds with the built-in compliance infrastructure to satisfy the rampant bull market.

One can only hope that come the next market crisis, they do not prove to be too big to fail.

August 12, 2014

Guardians of the Financial Galaxy

Filed under: Forex Strategies — Tags: , , — admin @ 4:43 pm

Macro Man had the, ahem, “pleasure” of taking his youngest, Macro Boy the Younger, to the cinema over the weekend to view the latest comic-book blockbuster, Guardians of the Galaxy.   As he was watching and averting questions about Jackson Pollock, it occurred to him that many of the characters bore more than a passing resemblance to some of the “heroes” of financial policy-making that he’s observed over the years.  Call them Guardians of the Financial Galaxy, if you will:

Peter Quill:  He’s a bit shifty, a bit of a know-it all, and he’s been living in a region of the galaxy that’s not where he was born.  Even when he’s trying to do the right thing, he can move the goalposts and hoodwink people to get what he wants.   He has a number of unconventional gadgets that help aid him along the way.   He’s the star of the show, as he’d no doubt tell you if you asked him.   Who could it be but Mark Carney?   (Apologies to James ‘Hollywood’ Bullard, but the casting director thought he was a bit out of his depth.)

Gamora:   A woman in a made-dominated world, she kicks ass while cleaning up a lot of other people’s messes.  With the guts to be bold when it’s required, she’s not afraid to leave her natural surroundings to fight for what she believes in.   In  a bit of a surprise, Gamora is represented by Gill Marcus  of the SARB.

Rocket:   A smug know-it-all who isn’t quite as clever as he thinks he is, certain aspects of Rocket’s physiognomy recall a well-known Wall Street Journal writer who’s the frequent recipient of dodgy leaks from the Fed.  However, it would be grossly inappropriate to elevate Mr. Hilsenrath to such a prominent position, so we must focus on Rocket’s winning personality.   His hectoring, badgering tone and seeming inability to recognize his own tactical failings will be instantly recognizable to anyone who ever sat though one of Jean-Claude Trichet’s  press conferences.

Drax the Destroyer:  In his comfort zone he appears all-powerful  and can intimidate lesser beings to bend to his will.   However, when confronted with larger forces his strength is impotent, and it turns out he isn’t actually all that clever; some of his policy choices are actively harmful to the greater good.  His nickname says it all, really, and the fact that the character shares a name with a prominent interest rate futures brokerage is icing on the cake.   Who could it be but Alan Greenspan?

Groot:  This half-creature, half tree is notable for his strength and his inability to say anything but one phrase.   From her wooden performances in press conferences and Congressional testimony to her endless repetition of the “more accommodation needed” mularkey, Janet Yellen is Groot.

August 31, 2013

Financial Repression: A Game Every Government Loves To Play

Filed under: Currency — Tags: , , , , , , — admin @ 2:24 am

Quotable

I saw their starved lips in the gloam

With horrid warning gaped wide

And I awoke and found me here

On the cold hill’s side.

                                                            John Keats

Commentary & Analysis

Financial Repression: A game every government loves to play

I’ve been trudging through Prof. Michael Pettis’ latest book, The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy.  I think it’s excellent.  I’ve learned a lot.  I particularly like his coverage of financial repression.  It is a game all our governments are now playing to the detriment of their own peeps.  Shocking, I know.  J I think and understanding of financial repression may shed some light on why central banks have wondered off into monetary Wonderland, a place where our boy Ben Bernanke stars as The Mad Hatter.  

 “I’m investigating things that begin with the letter M.”

The Mad Hatter

“Financial repression is not always well understood, but in fact it can often be, and usually is, the most powerful of all the policies or conditions that generate trade imbalances and is at the heart of Chinese and Asian overall imbalances. Financial repression matters to trade even more than undervalued currencies, although, unfortunately, it rarely enters into the debate on trade imbalances.

“What is a financially repressed system, and why does it matter? In a recent article Carmen M. Reinhart, Jacob F. Kierkegaard, and M. Belen Sbrancia described a financially repressed system this way:

Financial repression occurs when governments implement policies to channel to themselves funds that in a deregulated market environment would go elsewhere. Policies include direct lending to government by captive domestic audiences (such as pension funds or domestic banks), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks, either explicitly through public ownership of some of the banks or through heavy ‘moral suasion.’

Financial repression is also sometimes associated with relatively high reserve requirements (or liquidity requirements), securities transaction taxes, prohibition of gold purchases, or the placement of significant amounts of government that that is nonmarketable. In the current policy discussion, financial repression issues come under the broad umbrella of ‘macro prudential regulation,’ which refers to government efforts to ensure the health of an entire financial system.

“As the passage implies, most savings in financially repressed countries, like most of the countries that followed the Asian development model, are in the form of bank deposits. The banks, furthermore, are controlled by the monetary authorities that determine the direction of credit, socialize the risk, and set interest rates. Financial repression is a way of describing a system in which the rates of return and the direction of investment of domestic savings are not determined by market conditions and individual preferences but rather are heavily controlled and directed by financial or political authorities. At the extreme the financial system is often little more than a fiscal agent of the government.”

Key points:

In short, financial repression is a direct transfer from the household sector (who is the primary source for deposits) to the net borrowers, which Prof. Pettis defines as “local and central governments, infrastructure investors, corporations and manufacturers, and real estate developers,” because the repressed deposit rates effectively lowers the cost of capital for the benefitting entities. 

[Note: There was some excitement recently over the fact China was lifting its cap on rates its banks can charge borrowers; but the most telling part may have been caps were not lifted on depositors, steeping the yield curve in favor of banks.  China over the recent past has clearly been the most aggressive of financially repressive government.  Since the credit crunch, however, Western governments have dramatically improved their game.] 

Here are some of my random thoughts on this process and its implications:

  • It’s a reverse Robin Hood when you think about it.  Those that can borrow get the subsidized goodies.  Yet our government is here to “help us” don’t you know.  It really is the big money scam and why the big players in the financial community love The Mad Hatter, i.e. Mr. Bernanke. 
  • It tends to reduce consumer income and therefore consumption.  Effectively this is another way of attempting to increase the relative size of export component, i.e. improve the trade balance and by virtue the current account. Put another way, it forces the major players to scramble for relatively scant aggregate global demand in the world. 
  • It explains why retail investors’ “stretch for yield” and are willing to buy stocks with little regard to risk. 
  • It explains why the big money guys have been so confident stocks can only go higher, and have reaped a huge bounty from their bet.  Liquidity is the mother’s milk of stock prices. 
  • It explains why the real economy, where Joe Six Pack works and lives, is so badly disconnected with the financial economy, where Joe Hedge Fund and his banking buddies work and live. 
  • It explains why big interest lobbyists are flush with cash to manipulate the so-called “Representative Republic,” with a blatancy we have witnessed in our lifetimes. 
  • It helps explain why our government is so dramatically cracking down on US citizens who have money offshore, as those Swiss bankers know all too well. 
  • It may lend credence to the idea if things do get worse, the government may begin to put restrictions on citizens buying gold.
  • It definitely explains why even the US banking system reserves have soared something like 2,145.6% percent since the credit crunch and continue to rise–incredibly.  

(Billions of $’s in banking reserves: Aug ’09 $97.3 billion – Jul ’13 $2,185.0 billion or agrowth of 2,145.6%)

  • It may explain why the emerging market problems may be “their” problems, as the result is likely more developed world investor money returning to the collective coffers of our illustrious governments via those conduits we call banks and Treasury paper.  

I could continue on with this, and I am sure you can add a few of your own, but you do get the point I hope.  Financial repression allows for greater government control over the system is the bottom line.  This is not to suggest all implications of financial repression are negative.  There are times when imbalances are so great government must do all it can to right the system, lest the entire credit system evaporate; some believe that’s the justification for the severe financial repression now being applied in the United States. 

Maybe or maybe not, only the Mad Hatter knows for sure. 

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July 18, 2012

The 2012 Financial Olympics.

Filed under: Forex Strategies — Tags: , , — admin @ 4:43 pm

As London prepares for the Greatest Show on Earth, Team Macro Man have been giving some thought to their own favourites for the 2012 Financial Olympics. 

Sailing – It’s going to be tough with so many competitors sailing so close to the wind this year. Barclays opted to do their own rigging, having allegedly refused the advice of their BoE advisors, However the sudden suicides of the team captain and cabin boy have left an opening for Iran’s HSBC crew.  With more storms forecast this year, we expect many of the field to be capsized. Team US-JPM have already spent billions on repairs having hit a whale.

Weight Lifting – The SNB is expected to challenge China’s world record in reserve lifting with its attempt on 400 billion Euros, but such a tiny frame suffers serious risk of prolapse under such immense strain.

Judo – Elliott Associates is tipped to win for its skills in using other people’s leverage and a strong understanding of the minutiae of the rules of the sport which has served them well in recent competitions. 

100 meters – Facebook reached the 100 yard mark in record time but didn’t quite manage the full 100 meters. Having thought they had won, they returned 30 meters back down the track and sat down moaning that the banks had guaranteed their victory.

Water Polo – Throwing a ball to each other in an outwardly civilised manner whilst underwater carrying out all sorts of dirty tricks, gives the world’s reserve managers a huge advantage. The field is too evenly matched to call, though Sweden has been drowned before the competition even begins. Switzerland is protesting its innocence.

Synchronized Swimming – Paulson is the hot favourite having admirably demonstrated an unparalleled ability to hold his breath below high water marks over the past few years. 

Cycling – Bill Gross’s performance in the recycling of short bond calls had him tipped for gold, but having found to be using performance enhancing products when tested for derivatives, his inclusion in the team is debatable

Gymnastics – China have always excelled at this and their program this year looks to be the most creative yet with a completely new set of figures dreamed up especially for the event.

High Jump – Apple. Always beats the bar by a clear margin. 

Decathlon – We’ll go for Jim Rogers with his well practiced 10 commodity index components, although Jim really doesn’t care what discipline he competes in as long as he wins GOLD.   

Kayaking – The Greek team have excelled throughout the past 3 years, navigating the most extreme of rapids. Experts are left amazed that they are still afloat at this point in the competition despite their leaky craft, complete lack of leadership and large debts. 

Equestrian Dressage: US Congress’s ability to bore, parade around all dressed up with an air of over importance whilst not do anything vaguely substantial leaves them unparalled favourites.

Skeet Shooting – Germany’s Weidmann is the obvious choice having proved himself to be able to shoot down any idea that is thrown up before it even leaves the ground. 

Tennis doubles  –  FX dealers. Knowing the team orders of the opposition and exactly where they plan to play the ball gives them a clear advantage. Without it they wouldn’t make the under 6’s playground team. 

Wrestling – Often accused of being scripted theatre, we rejoin the final that was never completed at Beijing 2008,  China vs US. This tussle is centred upon US accusations of Chinese fixing and punching below the belt.

Fencing – Hugh Hendry. After being disqualified for sledging he has a new manager and has taken up fencing, hiding behind a mask and mindless jabbing away trying to hit anything at all.

Rowing –  A sport requiring Herculean strength, endurance, precision, timing and coordination. So Europe to come last then. We tip Finland to win for its ability to look in one direction whilst going as fast as it can in the other. 

Beach Volleyball –  PIMCO. Who cares about results, it’s the image that counts. G4S to come last. 

July 11, 2012

Forex Trading & End of Financial Year Tax

Filed under: Forex General — Tags: , , , — admin @ 5:32 pm

Please seek professional tax advice for your own personal taxation matters. I am NOT a tax professional.

Here in Australia our financial year ends mid-year on 30 June. In preparation of my personal tax return to the Australian Taxation Office I have to declare the amount of sales, purchases, expenses as well as opening stock and closing stock values of my forex trading activity. Apart from the main forex trading transaction found within my account I also declare expenses directly related to my forex trading, such as internet, software, subscriptions (eg. data), journals, telephone, depreciation on computer or other equipment (etc).

As the tax return requires amounts to be denominated in AUD I always opt to have my accounts denominated in AUD to help ease the burden of calculating everything back to AUD at the end of the financial year. Thankfully with the help of MetaTrader I have been able to create a script that calculates the amount of sales and purchases as well as the opening stock and closing stock values all in AUD – regardless of whether the currency being traded is non-AUD (the script is found below). This helps me to accurately calculate my profit/loss at the end of the financial year using AUD sales, purchases, opening stock and closing stock values.

By using the data output from my MT4 script it helps me to fill out section 15 – Income – Net Income or Loss from Business in my Tax Return for Individuals (obviously if you trade through an entity such as a company or trust you will need to fill out their tax returns in a similar area).

Anyway, here’s an example of what I have done and I ONLY write this here for my OWN personal benefit as tax returns are only done once a year and this time next year I’ll completely forget what to do:

This is for completing an Individual Tax Return 2012 using the ATO’s e-Tax software and may change next year

  1. Description of main business or professional activity:   Financial Asset Investing   (I couldn’t find anything else that even came remotely close)
  2. Number of business activities:   1   (obviously if this is the only activity you do then it would be 1, but if you have more than one business activity you’d fill this out according to the number of activities)
  3. Business Name:   XXXX XXXXXX   (put your full personal name here and total up the accounts accounts which are in my name)
  4. Australian Business Number (ABN):   00 000 000 000   (if you have an ABN insert it here)
  5. Address section:   Fill in your address  
  6. Status of business:   Ceased? Started? Neither?   (did you start trading this financial year? = Started; Have you stopped trading? = Ceased; Are you still trading from previous years? = Neither)
  7. Did you sell any goods or services using the internet? :   No   (if you’re selling items or are offering a service through the internet then tick “yes”)
  8. Income received where no tax was withheld section:   (not applicable)
  9. Business Income section:   NPP = Non-Primary Production
    • (Description) Total Sales   (NPP amount) $XXX,XXX
    • (Description) Total Swap Income   (NPP amount) $XXX
    • (Description) Total Interest Rec’d   (NPP amount) $XX
  10. Business Expenses section: Opening Stock   (NPP amount) $XXXX
    • Purchases & Other Costs   (NPP amount) $XXX,XXX (purchases)
    • Closing Stock   (NPP amount) $XXXX + Contractors & Commissions   (NPP amount) $XXXX (brokerage amounts)
    • Depreciation expenses   (fill out this section accordingly)
    • Other expenses sub-section  
      • (Description) Swap charges   (NPP amount) $XXX
      • (Description) Internet   (NPP amount) $XXX
      • (Description) Telephone   (NPP amount) $XXX
      • etc etc
  11. Business reconciliation items section:   (not applicable)
  12. Other business and professional items section:   (not applicable)
  13. Trading stock election:   No   (valuation is generally purchase price)
  14. Enter the number of hours it took:   XX

To calculate the needed values required in the tax return I created this MetaTrader 4 script. There are a couple of things I need to be aware of next time I run this though:

  1. Go to the Account History tab in the Terminal view.
  2. Right-click anywhere there and select All History.
  3. Open up the eofy.mq4 script and edit the eofyStr variable to read the final minute of the financial year being calculated (it’s in the format: YYYY.MM.DD HH:MN).
  4. After compiling the script run it on any chart and the figures will output in the Experts message area.

Here’s the eofy.mq4 script:

May 14, 2012

Sunday Satire: The Financial World Through the Eyes of an Artist

Filed under: Technical Analysis — Tags: , , , , , , — admin @ 3:12 am

Here’s more of williambanzai7′s work. In case you missed the 1st compilation, check it here: Tuesday’s Satire: The Financial World Through the Eyes of an Artist You can find a lot more of William’s work on his site or his Flickr page, and also follow him on Twitter or Facebook. Enjoy Too big to fail The Ponzi’s about Read More


© 2012 FX Trading Blog

March 7, 2012

Tuesday’s Satire: The Financial World Through the Eyes of an Artist

Filed under: Technical Analysis — Tags: , , , , , , — admin @ 3:05 am

For folks with a sense of humor who like satire and parody, today I want to highlight the work of williambanzai7 – an artist with great talent, a genius in my opinion, which I admire very much. You can find more of his work, and trust me: there’s a lot more! on his site and his Read More


© 2012 FX Trading Blog

March 2, 2012

Adam Hewison’s Afternoon Financial Market Update – Commodities, Forex & Stocks

Filed under: Forex News — Tags: , , , , , , , , — admin @ 3:11 am

Commodities, Forex & Stocks in focus on Adam Hewison’s Afternoon Financial Market Update

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January 13, 2012

Forex & Financial Market Update: Levels & Technical Analysis

Filed under: Forex News — Tags: , , , , , , — admin @ 3:09 am

Forex & Financial Market Update: Levels & Technical Analysis

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January 10, 2012

Afternoon Forex & Financial Market Update

Filed under: Forex News — Tags: , , , , — admin @ 3:09 am

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