Trading Blog

Can China Offset US Tariff Threats?

The US and China recently came to a partial deal agreement, termed “Phase I” by the Trump administration. US tariff threats against China remain, but were pushed back by two months. (Mini) Deal Overview As we believed from the start, some form of a “mini deal” or “truce” could be viable in terms of the […]

Did the Fed Restart QE?

Due to recent issues in the repo market, the Federal Reserve began growing its balance sheet again to avoid a scarcity in reserves (a type of cash asset held by banks). In 2017, the Fed began to shed around $50 billion per month to unwind some of its post-crisis stimulation designed to lower interest rates […]

The Discounted Future: Backing Out What Markets Think

Financial markets represent the discounted future. As mentioned in a previous article where we discussed our big three market equilibriums that traders and investors need to pay attention to, we described the “risk premium” between different asset classes. It tells you what the discounted future is like. 1. What’s the yield on cash? Where does […]

Zero Commissions: Where Brokers Go From Here

With the recent surge in brokers going zero commissions, more traders are celebrating being freed from perpetual costs that eat into their returns. Controlling trading transactions costs is important for all different types of traders from small savers to large institutional funds. These costs are very different depending on size, strategy, market, time horizon, and […]

Swap Rates vs. Bond Yields

The swap rate market gained widespread institutional popularity during the 1980s. Reportedly, IBM and the World Bank completed the first modern swap agreement in 1981. Today, hundreds of trillions of dollars’ worth of swaps are outstanding – many multiples of world GDP of some $88 trillion – making them among the most traded financial instruments […]

How to Leverage Cash Yields

Even with the Federal Reserve cutting the fed funds rate – which is the predominant feeder into cash rates in the US economy – cash is still one of the best returning financial assets. Treasury bonds return even less or about the equivalent. Stocks do not provide much extra in compensation relative to their volatility […]

Trading US Short-Term Interest Rates

Like any financial instrument, short-term interest rates are tradable. While the federal funds rate is under the purview of the Federal Reserve, traders can anticipate the future direction of interest rates several years into the future. Traders price the fed funds rate to move down to just below 100bps (1 percent) in perpetuity. (This chart […]

Manhattan Real Estate Market: How It Can Inform Your Trading

So first, you’re probably thinking, what does the Manhattan real estate market have to do with day trading? My belief is that it’s important to have as broad of a view as possible of what’s going on in different asset classes – i.e., what are the forward returns of cash relative to bonds, and the […]

Are Stocks Overpriced?

Are stocks overpriced? At the most basic level, the valuation of stocks is a product of cash flows and the rate at which they’re discounted back to the present. For example, to use real estate as an example, since most have some exposure to the real estate market and it’s another form of equity, let’s […]

Is a Recession Coming? Where We Are Now

The health of the economy is the one thing that applies to us all, traders and non-traders alike. For various reasons pertaining to their jobs, their investment portfolios, and what that means for other assets such as their homes, individuals are interested in the question: Is a recession coming? When is it coming? How do […]

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