Tuesday, June 21, 2011

Fed announcement tomorrow

With the end of QE2 arriving and Bernanke due to talk tomorrow, I will be going into the meeting w/ positions somewhat at the inverse of several months ago, when the Fed announced what exactly it would be buying for QE2.  Instead of being short T-bonds, this time I will be long, as this is exactly the sort of "sell the news" play that tends to screw over every one trying to be logical.  The event tomorrow is the perfect opportunity for the big players who want to buy bonds to do so, as all the logical traders will be thinking that this is a sell w/ QE2 coming to a close.  I will also be long gold/silver in case any other methods of easing are discussed, and the bonds and gold/silver positions will be hedged w/ a short in the equity market.  This is a play on the meeting only--I have not and will continue not to take a position on bonds long term, as the macro drivers are competing; deflationary/deleveraging pressures are offset by worsening credit risk.  I remain bullish on gold/silver long-term, as the macro drivers for those haven't changed, and many of the weak hands have been driven out of silver in the recent downmove.

Tuesday, June 14, 2011

Refining margins

With what appears to be a bottleneck at Cushing, WTI crude continues diverging bearishly against Brent while the term structure for gasoline remains bullish.  Refiners must be making a fortune.  Going long refiners against a short XLE or ERX is probably not a bad idea