Greece, Swaps and Dollars

Not only is Greece in a lot of trouble with the derivatives they have created to hide their budget deficits, but it spells deeper trouble for the EU and the Euro. A meltdown of the Euro would surely send financial markets in a tailspin. This is great news for all those long the dollar, but would your gains in the dollar offset your losses else where? US Treasury demand experienced a record drop in Dec as China dumped some of its holdings, a sign that there is some confidence in the recovery. Could be a bit early

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDibpgE_X2MM&pos=5

http://www.ft.com/cms/s/0/49639438-1b21-11df-953f-00144feab49a.html

Dollar and comodity prices

Bernanke today mentioned that the fed will raise rates, although he did not place an exact time frame on the Fed would do so, we might expect to see a bit of a rally in the dollar. In the coming months I would expect to see oil retreat to the $57-63 range, other comods will also drop in response to a stronger dollar. The trouble in Dubai could be telling of other sovereign wealth funds, many of which bought the high in real estate and piled into some inflated private equity deals. Those with oil, that run short on cash to meet interest payments, will be more than happy to flood the market to generate some cash and help depress future oil prices.

Dollar Index ETF call buying

many saw the action in UUP the dollar index ETF, with somewhere in the neighborhood of 250k calls trading in then Nov 23 line

there has been more buying today in the Nov 23 calls as well as the 24s and 25s

rumor has it that it was Goldman that traded the bulk of the nov 23 calls yesterday. lookout if you are on the short side of that trade

http://www.reuters.com/article/fundsFundsNews/idUSN045163820091104

a potential ceiling for oil

over the next 3 years Dubai has 50 billion worth of loans coming due. It is believed that Dubai is currently exploring a new bond offering to refinance the 50 billion. Should they experience any difficulty with the bond offering, Dubai maybe forced to sell extra oil. Just a thought

yesterday's sell off, today's opportunity

yesterday we saw selling across almost all asset classes. Some what surprising that as people were unloading risk in the equity markets and taking some profits in oil that we didn't see bids in gold and government bonds.

A little late on this, but this was the perfect opportunity to get long 10yr UST and take advantage of momentary disconnect