Some Weekend Reading for the Fundamental Masochist!

America flirts with a fate like Japan’s. An excerpt:

The stalling of the US recovery raises big, scary questions. After a recession, this economy usually gets people back to work quickly. Not this time. Progress is so slow, the issue is not so much when America will return to full employment but what ‘full employment’ will mean by the time it does.

The conversation needs to stop being about “jobs“. It should be about making money.

Eurozone Breakup

Dodd-Frank Precious Metal Trading Prohibition Could Make Hedge Fund FX Trading Illegal

Send in the Magicians. An excerpt:

With the aforementioned end of quantitative easing, it’s tough to see where any thrust is going to come from. As Northern Trust’s redoubtable Paul Kasriel and his very able subaltern, Asha Bangalore, observe in a recent commentary, “The Federal Reserve is responsible for all of the combined Fed and commercial-bank credit created since the launching of the second round of quantitative easing at the beginning of November 2010.” And they add that “unless commercial banks miraculously crank up credit creation, combined Fed and bank credit will dry up.”

You can’t trade successfully off this stuff, but maybe it makes a little sense to be aware of current economic chaos…in case of riots!

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One thought on “Some Weekend Reading for the Fundamental Masochist!

  1. I’ll give you a case where fundamentals can matter for us systematic traders – Counterparty Risk!!

    Most US based Money Market Funds (MMF) have about 30%-40% of assets in US$ denominated paper issued by European Banks. So if you’re not careful, or can’t put your money anywhere else but a conventional MMF you might have some counterparty risk, and neither Trend Following nor back testing will help you when things hit the fan! Another case, I use Leveraged Mutual funds for my trading (e.g. Rydex, Profund) and they get much of this leverage via Swap agreements with the likes of UBS, Goldman, etc.. Things might be a bit better in the futures market because of collateral requirements, but it’s hard to know….

    Let’s hope that regardless of what the markets themselves do (up, down, whatever) that the “powers that be” can hold the SYSTEM ITSELF together! Otherwise, the guys with canned food, rifles and ammo, and gold coins will be the ones running the place. LOL!

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