rss

Tim Backshall On Europe: "Default Now Or Default Later" As EuroStat Complains That Greece Is Still Withholding Critical Data

There is one major problem with putting houses of card back together – they tend to fall…over and over. And while abundant liquidity in May and June served as an artificial prop to return European core and PIIGS spreads to previous levels merely as mean reversion algos took holds, the second time around won’t be as lucky. CDR’s Tim Backshall was on the Strategy Session today, discussing the key trends in sovereign products over the past few months, noting the declining liquidity in both sovereign cash and derivative exposure (we will refresh on the DTCC sovereign data later after its weekly Tuesday update). Yet the most interesting observation by Backshall is the declining halflife of risk-on episodes, which much like the SNB’s (now declining) interventions, are having less of an impact on the market, as ever worsening fundamentals can only be swept under the carpet for so long before they really start stinking up the place, and indeed, as Tim points out at 5:30 into the interview, even the IMF now realizes that soon the eventual second domino will fall, and it is better the be prepared (via the previously discussed infinitely expanded credit line), than to have to scramble in the last minute as was necessary in May. In other words, the storm clouds are gathering and only fools will invest in risk asset without getting some additional clarity on what is happening in Europe. The bottom line as Backshall asks is: “do they default now or default later.” And that pretty much sums it up. Buy stocks at your own peril.

Incidentally all this is happening as we read in an exclusive Bloomberg piece that “four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt” and that EuroStat still has not received the required disclosure about just how fake (or real) the Greek debt situation truly is. When one steps back and ponders just how bad (and unknown) the situation in Europe is, and that stocks are unchanged for the year, one must conclude, as Dylan Grice does every week, that the lunatics have truly taken over the asylum.

31 Precepts for Traders

These precepts are trading and investing guidelines that give a compass heading to trading integrity.

I offer them to you in their raw form. Some may make sense, others not. Please feel free to question, challenge, refine and edit with your responses.

  1. We are who we are and we start from where we start
  2. Each of us brings unique strengths to the markets
  3. Every morning we agree to play as delighted beginners
  4. Reality Pays. The more our minds model the market, the more in synch we get
  5. We build on our strengths and manage everything else.
  6. The outcome we have is the outcome we want
  7. If what you are doing isn’t working over and over again, re-examine your internal models
  8. Our internal process is more important than anything else because it drives everything else
  9. You have the resources to improve your mental trading game. Coaching just helps find them
  10. We begin our trading practice slowly and build it with flow and grace
  11. Lean into fear. Fear is a primary cause of failure
  12. If you are frustrated with the markets, that means they aren’t following the internal model you have projected on them
  13. We increase the level of our awareness rather than the intensity of trading
  14. As we expand our awareness, our interventions will happen sooner and be more creative and effective
  15. We respect ourselves and celebrate our profits no matter how large
  16. If we can experience a new behavior for a moment, we can experience it for a minute, an hour, a week, a year.
  17. Change happens when we experience a new behavior that is aligned with who we are, feels emotionally satisfying in the moment and takes us to where we want to go
  18. Avoidance is buying pain on credit with interest
  19. If self-criticism made us trade better we would all be rich
  20. We allow the markets to breathe through us
  21. The markets are messy, our information is imperfect, our systems will fail and we can still make money
  22. All trading systems are successful in some markets, all trading systems will eventually fail in all markets
  23. The markets don’t care about you or your position
  24. We seek the practice rather than the result
  25. Learn about yourself with the delight of an anthropologist finding a lost tribe
  26. We make internal maps of the market, but our maps are always distorted
  27. Our negative responses are created by our maps, not the market
  28. By changing our map, we change how we respond to the markets
  29. All our trading errors have an ultimate positive purpose or intention
  30. There is no “failure” just feedback
  31. You have all the resources you need, although some may be out of your awareness

31 Trading Rules

 

  1. We are who we are and we start from where we start
  2. Each of us brings unique strengths to the markets
  3. Every morning we agree to play as delighted beginners
  4. Reality Pays. The more our minds model the market, the more in synch we get
  5. We build on our strengths and manage everything else.
  6. The outcome we have is the outcome we want
  7. If what you are doing isn’t working over and over again, re-examine your internal models
  8. Our internal process is more important than anything else because it drives everything else
  9. You have the resources to improve your mental trading game. Coaching just helps find them
  10. We begin our trading practice slowly and build it with flow and grace
  11. Lean into fear. Fear is a primary cause of failure
  12. If you are frustrated with the markets, that means they aren’t following the internal model you have projected on them
  13. We increase the level of our awareness rather than the intensity of trading
  14. As we expand our awareness, our interventions will happen sooner and be more creative and effective
  15. We respect ourselves and celebrate our profits no matter how large
  16. If we can experience a new behavior for a moment, we can experience it for a minute, an hour, a week, a year.
  17. Change happens when we experience a new behavior that is aligned with who we are, feels emotionally satisfying in the moment and takes us to where we want to go
  18. Avoidance is buying pain on credit with interest
  19. If self-criticism made us trade better we would all be rich
  20. We allow the markets to breathe through us
  21. The markets are messy, our information is imperfect, our systems will fail and we can still make money
  22. All trading systems are successful in some markets, all trading systems will eventually fail in all markets
  23. The markets don’t care about you or your position
  24. We seek the practice rather than the result
  25. Learn about yourself with the delight of an anthropologist finding a lost tribe
  26. We make internal maps of the market, but our maps are always distorted
  27. Our negative responses are created by our maps, not the market
  28. By changing our map, we change how we respond to the markets
  29. All our trading errors have an ultimate positive purpose or intention
  30. There is no “failure” just feedback
  31. You have all the resources you need, although some may be out of your awareness