[Dan007]

Lets start with the good news. The market continues to trade very welland bearing in mind the money that seems to be pouring out of moneymarket funds and towards riskier asset classes there is no reason whymany of the quasi sovs cannot tighten in further towards CDS levels.Clients worrying about underperforming their peers continue to pile in.The rally can continue until we reach potential new issuance levels andunfortunately for syndicate desks we are not quite there just yet.Spreads anywhere between 25 and 75 bp tighter, and surprisingly therewere some profit takers about despite the fact some clients seemedalmost desperate to put risk on the books. The bad news is that this rally cannot last forever. I am hearing thewall of money argument once again, I am hearing credits such as Phillyare back within 50bp of their all time tight spreads. As I said tosomeone earlier on today, the world and the markets have changed foreverhowever the market participants have not. They have short memories andfear they have missed one of the biggest rallies in history. Thereality of course is very different however for now the rally is veryreminiscent of August/September of 07 when the Fed started slashingrates. People calling the punch bowl effect, the carry trade is back onetc etc. Well today its all about green shoots of recovery and we haveseen the worse. The Uk press is doing the same thing with housing.First time buyers who were waiting as prices came off in 07 and 08 arenow piling back in fearing that they may miss the bottom and thinkingthat prices will return to 07 highs. All these arguments are laughable,spreads can but should not return to previous levels. Leverage is notwhat it used to be and fundamentals despite so called green shoots aremuch much worse. Same story with housing, ability to leverage up ismuch lower and the amount of people that have saved 25-35% deposits vscurrent offer prices are still small. People are talking about rentalyield as a reason to buy a house. Well what if rents collapse as peoplewho lose their job cant pay and migrating workers go back home becausethere are no jobs. How does the yield look if rents come off by 10 or20%! To put it simply the numbers do not add up, this is not a rallybased on fundamentals but one of hope and a fear that participants havemissed the greatest buying opportunity ever. If you believe in greenshoots I suggest your have a little trip to Ireland, Spain or Dubai andsee if you can find evidence of Spring there. As you may have guessed Idon't believe this rally. For me to become a believer I want to seeeconomic growth and real job creation (ie not by governments) and thenand only then will you hear me singing the Monkees classic most famou**** record. In addition I would like a word on Kazakhstan. We have now seendefaults of 3 major financial issuers from Kazakhstan ie Bta, Allibk andnow Astana. Despite this other Kazakh banks continue to rally in linewith the rest of the market and ignore this quite scary trend. Theconfidence in Kazakhstan is shot to bits, it will be a long time beforeinvestors return to invest in a Kazakh bank therefore is it a given thatthe authorities will support the other banks that haven't defaulted yet?Answers on a post card please, for now lets enjoy this inanity until asis always inevitable it all ends in tears, and cries of "I thought I hadlearnt my lesson this time!"

Mr P........

[Dan007]

Morrning

Quite simply i have no idea how to explain this market.

I have a small position in USDJPY but otherwise i am completely flat. This market is nuts and we have to back off from it today. Golf beckons because i cant read this market.

I will be honest with you when i can´t read it!!! After a cracking week (last week), this week i feel i cant read a chart. Its not me but the levels the markets are at.

I am not trading and havent traded today and will come back tomorrow.

See u.

D

[Dan007]

Remember trading is a long term game...You get good weeks and bad weeks and if that means not trading for the rest of the week then thats how it is.

I will only trade at the levels i am happy with.

D

[Dan007]

Hi

Well the USD is in big trouble...

Re our USDJPY email alert that was sent to you all last night. We are sending you another one now suggesting that you bank part at 95.00 and will hold the balance for now.

Yes i backed away from CABLE but the lowest risk trade out there was USDJPY. At least that has made us a solid 100 pips in 24 hours.

See u tom and more email alerts to come.

D

[Dan007]

Good evening

Am i surprised with the weak USD? Am i surprised with the rally with EUR and GBP? The answer is no...

I remember being a bull all the way from 1.4000 up to 1.5000 and a strong one at that in CABLE. I have done the classic over the last 3 weeks by listening to so many people telling me this stock market is going to crash that i have actually taken my eyes off what is really happening.

The easy thing to do is listen to the bear traders and listen to them saying the world is over and that Indices will fall another 2000+ points. Well yes it might do but the fact is the trend is up for now and i took my eye off it. I turned into a bear which i promised myself i wouldn't. If i stay neutral as a trader i make good decisions however if i come in everyday thinking this must happen it affects my judgement. There is no point prempting this maket. Its less thought and more action with the trend that is important...

I know i am not the only one..I know some traders who have lost a mere fortune by selling without stops on cable and eur..A bad bad mistake!!!

With this USDJPY trade i am 50% there on making my budget for the week but i am still annoyed with myself how i became a bear overnight!!! I will make budget this week but it should have been so much more. Only 3 trades this week and 2 more days to make target..

Ok see u tom.

D

[Dan007]

Indices tanking...

Sorry been very busy today but good to see Zak and James keeping you vvv vusy in the room with shorts in USDJPY, AUDJPY & DAX.

I am short on all 3 stil and AUDUSD. Can´t lose on these trades now...

Cheers
D

[Dan007]

Well my tight stops got hit on those shorts from earlier this am in DAX and AUDJPY. 2 very nice trades...

Still got AUDUSD amd USDJPY.

D

[Dan007]

Being a Friday before a bank holiday I wasn't going to bother writing acommentary however despite the lack of activity in the street todaythere is a worrying theme developing in the market right now. Concernswere raised and triggered by the S&P move on the UK's ANA outlookyesterday citing their increasing debt to GDP. The market is now askingthe question who next and that has led us to our friends across thepond. US 10 year treasury yields have shot up almost 30bp in the last24 hours. Effectively what we have seen these past 18 months is anindebted private sector (specifically the financials) being passed ontothe government sector. This was never a problem so long as thegovernments kept their AAA rating and could continue to borrow money viathe bond markets. The outlook change has now thrown a major spanner inthe works hence the govy moves of the past 24 hours. For those thatthing a treasury sell off is a good thing for EM I would suggest theylook at charts of June of 2003, May 2004 and June 2006 to remindourselves that these moves were not good for credit even if you were100% hedged with govys. Personally I don't see this being a problem inthe long run as its in China's interest that the dollar and the treasurymarket doesn't blow up as they are already long a decent chunk. Anotherreason why this move is dangerous is that the hike in long end yieldscould de-rail the so called housing recovery that is underway in the USas mortgage rates creep back up again thus running over the alledgedgreen shoots! This may of course just be a blip with moves beingexaggerated because of holidays however if these moves continue it couldtest the resolve of the markets and this so called recovery. If I amwrong and the US and the Uk government do have major problemsrefinancing then I fear we have found a trigger for the next blow up.On that happy note, enjoy your long weekend!

Mr P.....

[Dan007]

Evening all

Been quiet this week...CABLE at levels that i am uncomfortable to trade at, Indices that are expected to tumble and above all a baby about to pop...

I don't mind having quiet weeks to be honest... USDJPY was the big winner and manged to hit my weekly target of 250 pips so happy overall.

Sister in town so off to take her for a fine glass of red.

Remember to take week by week.

250 pips is the target again.

D

[Dan007]

Afternoon team

Sorry been a busy boy again today...

Some took CABLE short earlier this am which was great to see..I mentioned a 70 bid as only wanted a 50 pip risk for newbies but didnt quite reach it. Shame as was a great play...

Managed to get a few short b4 figures out at 3pm from 1.5865, 70 & 75 with stop at 85 above resistance. Banked on way down to the 4hr 20ma at 1.5825 and then got stopped on balance at 85 with DOW rallying giving us weak USD across the market.

Wont long it up here ahead of the 1.5946 resistance and 1.6000 level.

Cheers
D