2011-07-11th (Mon)

At the end of the previous trading session I had no positions.

I was in 100% Cash.

As European markets began to trade pre-market I saw Dow Jones Industrial Average Futures Contracts slide down and so got on the bus cautiously.

Sell-To-Open 20 contracts Dow30 Index at 12583.60 (2011-07-11, 05:52 am EST)

I did not go in big for Alcoa (AA) earnings was after-hours and I did not want to be caught in an up-swing.

A Stop-Loss Order was triggered during the intra-day volatility.

Buy-To-Close 20 contracts Dow30 Index at 12530.00 (2011-07-11, 12:27 pm EST) for a small profit.

I am currently in 100% Cash again.

In today's trading session all US markets fell due primarily to the worries about Italy and the US economy.

These articles caught my attention today.

I wonder how China is going to execute this strategy, with price subsidies, raising more livestock.  Would they also need more animal feed?

Article - "China's premier orders boost to pork supplies - China's premier orders officials to boost pork output to hold down surging food costs"
http://finance.yahoo.com/news/Chinas-premier-orders-boost-apf-3615549903.html;_ylt=AjrH8xhYyITRtL8VOx_.FUSxba9_;_ylu=X3oDMTFkYXBhMHZoBHBvcwMyBHNlYwNuZXdzSHViQXJ0aWNsZUxpc3QEc2xrA2NoaW5hc3ByZW1pZQ--?x=0

I am curious how the market will react to terrorism news and how it fits into the overall picture.  Will natural gas prices go up?

Article - "Officials: Gunmen blow up Egyptian pipeline - Officials say gunmen blow up terminal of Egyptian gas pipeline to Israel, Jordan"
http://finance.yahoo.com/news/Officials-Gunmen-blow-up-apf-3211117328.html;_ylt=AhBDHESXP2.tXDOPqrr_UzSxba9_;_ylu=X3oDMTFkbWlraXQ2BHBvcwM4BHNlYwNuZXdzSHViQXJ0aWNsZUxpc3QEc2xrA29mZmljaWFsc2d1bg--?x=0

I am curious how Sheila Bair will clarify issues in her book and what legacy she wants to leave.

Article - "Former FDIC head Sheila Bair has book deal - Former FDIC Sheila Bair has book deal, will write about financial crisis"
http://finance.yahoo.com/news/Former-FDIC-head-Sheila-Bair-apf-1041961607.html;_ylt=Ale3rBgKs5fCNZ07pDwMmBqxba9_;_ylu=X3oDMTFlNWZwdjZvBHBvcwM5OQRzZWMDbmV3c0h1YkFydGljbGVMaXN0BHNsawNmb3JtZXJmZGljaGU-?x=0

Flavour of the month news reporting, we already know Brazil's inflation rate was sky high.  I will wait for others to inflate this issue to a national debt issue before I Short the Brazilian Real (BRL).

Article - "Credit-card debt may threaten Brazil's boom - Brazil gorges on credit-card debt, and economists worry it could threaten nation's boom"
http://finance.yahoo.com/news/Creditcard-debt-may-threaten-apf-3046211331.html;_ylt=AjnxiHFnG0gGzwhjzF1Ogamxba9_;_ylu=X3oDMTFlZTZpcjEwBHBvcwMxOARzZWMDbmV3c0h1YkFydGljbGVMaXN0BHNsawNjcmVkaXQtY2FyZGQ-?x=0

Goldman Sachs Asset Management Chairman Jim O'Neill wrote a note titled "A Messy Start To July" over the weekend and it was quoted many times in the media and CNBC today.

Article - "Euro Zone Can't Afford Italian Bond Market Crisis - Goldman's O'Neill"
http://online.wsj.com/article/BT-CO-20110711-710124.html

Quote Jim o'Neill - "I have found it reasonably easy to not get too worried about the debt dynamics of Ireland, Portugal or Greece - but Italy is a different topic. While Brazil overtook Italy to become the world’s seventh largest economy last year, Italy is still a big economy. At 120 pct of GDP, Italy’s debt is equivalent to around 25 pct of the Euro Area GDP. Neither the Euro Area nor possibly the rest of the world can afford a full-blown Italian bond market crisis."

The complete article can be found on Goldman Sachs Asset Management's website.

Viewpoints from the Office of the Chairman, Jim O'Neill
http://www2.goldmansachs.com/gsam/worldwide/viewpoints/

Access Jim O’Neill’s latest insights on global investment themes and key market trends around the world.
http://www2.goldmansachs.com/gsam/advisors/education/viewpoints_from_chairman/viewpoints-pdfs/messy-start-to-july.pdf

It is quite an interesting read and I enjoyed what Jim O'Neill had to say about various countries and under-currents, it will be interesting to see if all those scenarios unfold the way he describes.
More importantly, how would a world class asset manager trade on those Thesis? And how can I get on the bus?

Since Jim O'Neill and I disagree on some points I have decided to not trade tonight and spend more time observing.

I am currently in 100% Cash.

Our first line of credit was activated on 2011-06-16th (Thurs) and our second line of credit was activated on 2011-06-29th (Wed). Although I am 100% in Cash, I am keeping the available margin for tomorrow's trading session.

Total equity is 16% of June 1st and we are committed to trade ourselves back to our High Water Mark.

Stay Tuned,

Jeff
(2011-07-11, 23:56 pm EST)