update sunday night

euro sits at 1.295, thats +0.035, and cable sits at basically 1.488 (+0.002).

thats +350 and +20.

Greek debt crisis

So a bunch of greeks went around and cheated the system, pulling their debts off of their balance sheets using swap derivatives. Trichet is giving them abour 150 billion so they will not default. The greek people are striking. They are caught in a catch 22. If they leave the EU they are fucked, if they stay they are fucked.

Anywho,

Majority of the markets are imploding from this. I see this as a chance to test the reflexivity of the markets. As cds's and most markets collapse, one question comes to my head.

Is this really that bad?

We can look at the US bailout, the Russian default of 1998 that crippled ltcm, and the bullrun of 2009.

Fundamentally I am thinking that this is just one of those moments blown out of preportion, and traders with a straight head can make a killing cutting through the bullshit and make serious money.

As I write this the dow is 10630, down 237.76, down 2.19%, euro is 1.26, down 10% in the past month, usdjpy is 90.18, and cable is 1.49.

Interesting would be testing my theory of the equlibrium between similar based currency pairs.

So let's create a paper portfolio. 1 000 000 dollars.

25% equities, remainder fx.

Long dow 10630 for $106300
Short cable 1.49 for 100 000 cable making 149 000 usd.
Long euro for 149 000 usd, or 118 253.97 euro @ 1.26.

100:1 margin for the fx trades:
So that's 1000 for gbp, 1490 for euro.

And no leverage for equity trades,
So total margin is
108 790 for the portfolio. Will start to update this every day to test it out.

death of the euro

Ok so I have an idea,

if you can profit when company a merges with company b via risk arbitrage, can the same not be done with currencies?

Profiting from the breakup of currencies?