Stargazer Asset Management Weekly – August 10 2020

This week we look at how extreme markets have become and why that brings opportunity. We also have a look at the USD, precious metals and relative equity index and sector performance.
BY ERIC FILL

SAM Weekly _ August 10 2020

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C8 Hedge on The Full FX

BY JON WEBB
Mattias Eriksson and Jon Webb join host Colin Lambert to discuss the launch of C8 Hedge Read more →

USDJPY and Gamma Trading (29th July 2024)

BY JON WEBB
In our piece in February (Turning Japanese, Feb 2024) we discussed how carry trades in currencies have a predisposition to trade an “escalator / liftshaft” pattern. The Japanese Yen, as the principal funding currency, is particularly vulnerable to violent reversals to what has been a remarkably steady and successful carry trade. In the last couple of weeks, as analysts started to consider the possibility of a BoJ rate hike at their meeting on 31st July, JPY crosses exhibited a bout of significant strength. USDJPY fell around 10 big figures from ~162 to 152. Is that enough to have cleared the decks? Simply put, it is not possible to clear out two years of accumulated positions in a couple of weeks. The fact that CFTC commitment of trader positioning was showing JPY shorts at their most extended since 2007 (pre GFC) before last week’s sharpish position reduction, suggests this is merely a shot across the bows, so far. Japanese retail traders (Mrs Watanabe) have slowed accumulation to a stand still but wholesale flight is far from evident. Read more →

Thoughts From The Divide: The Door is Wide Open

BY JON WEBB
Last week, we flagged Bill Dudley’s abrupt change of mind: he now advocates immediate rate cuts. One might be forgiven for suspecting Bill had spent the week lobbying his old colleagues because the July 31st FOMC statement, and J Powell’s subsequent presser gave rates markets quite the boost. Of course, there were the usual Powell caveats: “If we were to see, for example, inflation moving down quickly - or more or less in line with expectations - growth remains reasonably strong, and the labor market remains consistent with its current condition, then I would think that a rate cut could be on the table at the September meeting”. But judging from SOFR pricing, the market took Powell’s caveats as mere teasing. Powell’s presser comments suggested maybe 50bps of cuts by year-end, but Dec 25 SOFR pricing suggests at least 75bps. Read more →
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