Blog Posts

The Trump administration recently upped the ante on tariffs with China, putting another 10% rate on $300 billion worth of goods. A general trading principle is that whenever one country imposes tariffs on another country with a floating exchange rate, that’s an adverse shock that will cause that country’s currency to fall. Whenever a new […]

Last Friday, the Wall Street Journal published a very important article regarding the rampant accounting fraud, financial reporting improprieties, and securities infractions that occurs in the Chinese capital markets. For many day traders, prop traders, and high-frequency algorithmic trading operations, fundamentals are often of secondary importance. However, fundamentals are part of it and accurate derivations […]

The developed world is awash in low interest rates and is about to get rates that are even lower. Traders look heavily toward the US Federal Reserve and other central banks for clues on where asset markets will go. This has been covered in other posts on the blog, such as “Why Day Traders Need […]

The idea that computer- or algorithmic-driven trading (sometimes called ‘quant trading’) will drive out human traders, or at least make it extremely difficult for them to compete in the markets, is not new. Computers react to news and information within milliseconds that no human trader could ever do. For this reason, it’s practically impossible to […]

Risk should always be proportional to reward. Therefore, one of the most basic ways to determine whether market trends are sustainable is to look at the comparative yields between cash, bonds, and stocks. Stocks should provide a positive expected yield above bonds, and bonds should provide a positive expected return over cash, and by the […]

In interest rate swap contracts, traders betting on rates declining will do what’s called “receiving” – or receive the fixed rate while paying the floating rate. Those who bet on interest rates rising will “pay” – pay the fixed rate and receive the floating rate. Central banks throughout the developed world are in an easing […]

Markets are sensitive to bank problems, given the scenario that transpired in 2008. Deutsche Bank is currently shaking up its operations, one of the largest bank restructurings since the financial crisis. So, there are all the natural questions that would emanate from the Deutsche scenario: 1) Will they go under? 2) Does this mean the […]

Inflation is one of the main overarching fundamental drivers of asset prices (the other being economic growth). Both central bankers and macro-oriented traders tend to have an obsession with inflation and its forecasting. Inflation and inflation expectations feed into interest rates, which are the bedrock of finance and how financial asset prices are valued through […]

On 18 June Facebook announced it will be launching an innovative global currency named Libra to mixed reactions from news sites and financial experts across the world. In the UK, the Bank of England has issued a cautious but positive welcome to the move, although Mark Carney, Governor of the Bank, said that advance regulations […]

US markets have been battered with multiple pieces of bad news over the last few weeks with indicators pointing to possible recessions, or at least a significant slowdown in the rate of economic growth across the globe. Many have pointed the finger at President Trump’s increasingly harsh rhetoric when it comes to tariffs he has […]