Phriday Photo XXXVI

It was a great pleasure to see my Antipodean mucker, VB, over the bank holiday weekend. Not only did we get the chance to sink a couple of Spitfires, he even came bearing gifts - including a most excellent T-Shirt from that gentleman and scholar, Trywalker....

FX Traders' survival wear...

(pic above now viewable - thanks for the heads-up, Jay!)

To view previous Phriday Photos, click here!

Big Issues?

The Somnambulists are homeless.

Before anyone calls the RSPCA that doesn't include the mini-somnambulists, who are oop Naarth, or the under-exercised hairy one, who is staying with his best mate...

All worldly possessions are on a brace of big lorries at their first stop-over in Naughty Oberhausen, preparing to break for the border under the cover of darkness, en route to Blighty. Sparkly Aph is already camouflaged underneath a snowdrift on neutral territory, while I am in hiding in the safest place this side of the Maginot Line: Trywalker's bedroom.

The plan is to split up, leaving multiple trails, and then rendezvous just South of Lac Leman on Friday, moving quickly to another secret hideaway in Chamonix. I'll be sending delirious messages to everyone I know, the moment I have crossed enemy lines. We'll lie low (or high) there for a couple of weeks, while the minis and various other 'nambulists come and go with supplies. We may try to throw any surveillance off the scent through an elaborate ploy of repeatedly jumping on random ski-lifts.

Once safely into 2009, we'll zig-zag our way back to the escape tunnel, pausing only to thank our friends in La Resistance by spending our remaining Euros on as much of their wine as we can stuff into the Somnambulist Mothership. Then, Dionysus-willing, we'll pop our heads up on the other side, not far from the farmhouse that is to be the new Somnambulist-residence-come-ATIA-HQ...

Big Issue? Pas de problem, mes amis!

New Book

We like new books around here :-) That gentleman and scholar Trywalker very kindly brought me a gift back from his recent trip to London: "The Price Of Everything" by Russell Roberts, replete with a touching inscritption from our young star.

I am thoroughly looking forward to reading it so that it will "change my life - reading it will give me a sense of wonder about the everyday marvels that are all around me." Check back soon for the verdict...

A parable of possibility and prosperity (and, apparently, alliteration)

Monday Is Funday

Another day, another dollar, or so the saying goes. If only it was just the dollars we had to worry about. It's the pounds, and the euros, and the yen, and the francs, and the florints, and the liras... ah, well, at least Trywalker is back at his desk.

Apparently, an infinite number of spot monkeys with an infinite number of Bloomberg terminals can tell you where EUR/USD will go (with the following conditions...)

Multiball!

I’ve always been a great fan of pinball and most modern games have a feature called ‘Multiball’. If you hit the right sequence of bumpers, ramps, loops and slots it initiates a period of play where you have 3 or more balls whizzing around in Brownian-motion fashion, requiring a good degree of focus and flipper coordination to keep them in play, while a cacophony of sound and flashing lights tries to distract you. Brilliant.

A few days back I mentioned that a number of balls were about to start rolling…and so they are.

Ball 1: Project Dennis
By the end of today we will have determined which developer we will be contracting to turn an idea into reality, and the project will press ahead in earnest. We hope to have a working Beta-site before the end of the first quarter next year.

Ball 2: MSIB Exit Strategy
Some details to resolve still but terms are agreeable. We are in the final weeks. UDH Boy, Trywalker, TB and the rest will soon be free of my totalitarian tendencies.

Ball 3: Secret Alpine Hideaway
This one is threatening to get stuck in the Swiss Architect-locust feature. Having admitted a couple of days ago that the ATIA mountain retreat will not be ready on schedule, they have exposed themselves to the ‘failure to complete’ clause of the contract. This allows for the buyer to withdraw from the purchase and claim 10% of the property value as a penalty. I would imagine in the current climate, losing a nailed-on buyer and having to shell out a large wad of cash is disconcerting. The SA-Ls have for the very first time in two and a half years started being reasonable and courteous. I think there is some room for negotiation here…

Ball 4: The Greatest Escape
After almost six years sausage-side I can’t deny that I am looking forward to saying auf wiedersehen. Allied POWs captured at the beginning of WWII got out after about six years and I know how they must have felt. However, having spent a long time digging the tunnel towards the Swiss border, it might be time to look in the opposite direction if Ball 3 is lost. Our removal company just thinks we are indecisive.

Ball 5: Winter Holidays
Plans for friends and parts of the Somnambulistic clan to stay over the end of the year holidays, not to mention the prospect of spending a fair chunk of the ski season skiing, have collided head on with Balls 3 & 4. My biggest worry is disappointing the mini-Somnambulists…

When I started this blog it was with the intention of recording my path out of the comfort zone. No sign of the Holy Whale, but I guess this is the sort of fumbling and bumbling I was referring to. It’s a lot of fun!

Educating Trywalker II

Last week I decided it was time to inform young Trywalker, who knows much about economics and markets, about some of the more important aspects of life.

I have no idea where Lorzweiler is, or whether it is locally renowned for cheesy comestibles. Wherever it is, it's unlikely to be as smelly as its more prestigious twin-town.

This is where cheese comes from.

Educating Trywalker

Our young friend knows a lot of stuff about a lot of things. However, I am going to help fill in some of the small gaps...

This is where white wine comes from

Unidentified Trading Wound

Gathering my thoughts about the state of the world this evening I noticed an injury on the outer knuckles of my right hand. Nothing serious, just a scraping and contusion that could have happened anywhere. Except I haven't been anywhere except the office...



The only conclusion I can come to is that since I am currently sitting to the left of Trywalker, and since he is the only person left in striking distance this week, I must have inadvertently lashed out at him once or twice, during a bout of Clear Market Turbulence. Sorry, mate.

Despite the knuckle injury, I still managed to calculate a 1-month forecast for EUR/ISK...

Thin Iceland

Not so long ago Iceland was, ironically, hot property, the home of hot money. Tempted by the country's high interest rates, investors fell over each other to buy Icelandic assets. The problem is that it's a small place, home to a few decendents of some Vikings who gave up half way to Greenland, with very little to actually put your money into. This means that the investment funds were in total disproportion to the real size of the underlying market. In the recent rush away from rISKy assets, the unwary have learnt what it means when everyone rushes for the exit in a small market. The door is just too narrow and something has to give.

One of the dislocations has been the currency. The Icelandic Krona (ISK) yesterday moved in an almost mindboggling manner. Trading at one point at 350.00 to the Euro, it dropped to 140.00 as the Central Bank decided that the proper rate is 131.00 and declared that is where it shall be. Not so, said the market, which almost instantly started paying up to 200.00. Trywalker only had a half-a-million Euro position, but with prices moving at 10% a quote it caught his attention, I can tell you.

Troubling times for a country that used to be called Beejam...


Update 08/10/08 15.00 CET: The Icelandic Central Bank has just given up on its idea of pegging the Krona at 131.00 to the Euro. This is because the rest of the world thinks it's 280.00-300.00 and denial is never a good status for policy-makers.

Packages

There's a special feeling you get when waiting for a package. Whether it's a new book from Amazon, the plastic cutlery you bought on Ebay after returning from the pub a bit worse for wear, or, in my case an 8-foot golf swing trainer that I treated myself to last birthday and which now occupies the majority of the study. You get a little excited, a little nervous - the anticipation is palpable.

The financial world is waiting for its own kind of special package, of the rescue variety, from the US government. And boy are the markets all a-jitter. The sums involved are so vast they are basically beyond comprehension, although the general consensus seems to be that it will probably not be enough. More than a few people are unconvinced that the package is actually a good thing, and the US congress has decided it needs repackaging before it gets delivered to all the fidgety bankers. In the meantime, we wait...

While you're waiting for the numbers, here's a little puzzle to keep you thinking (courtesy TC):

What's the next number in this series? 1, 2, 6, 42, 1806, ...

I know Trywalker will probably get this in 3 nanoseconds, so rather than spoiling the game and posting the answer in a comment here, please email the next number to dan (at) atigerinafrica (dot) com, and I'll add the names of any brainboxes to this post. Then I'll pick a winner at random and mail them a $700 billion package (if I can get it through congress).

List of Brainboxes:-
Trywalker - (shock) please read all instructions before solving next time...
Daddy Papersurfer - eats equations for breakfast
UDH Boy - worked it out through the arb
lazy - isn't it past your bedtime?!
tNb - Before coffee no less! Respect...
HeadTeach - No trouble for a brain the size of Richmond. Please explain to orangepeel :-p
Jay - Using the "Depp Effect" ;-)
SparklyAph - With help from the underexercised hairy one {:op );
Bambambam - I'll try to find a harder one next time and you and Trywalker can go head-to-head

Above And Beyond

Just want to say a word of thanks to UDH Boy and Trywalker for (once again) working to well past bedtime last night unwinding the accidental unwindings of the previous unwindings (they know what I mean).

I'm still pondering over the conversation that set things moving last night, though..

Somnambulist: "Hello? UDH Boy? Have you seen that email? I think we are gonna have to go in the office..."

UDH Boy: "Yeah, I'm already here."

S: "Uhh, ok I have Trywalker here shall I send him to help?" Trywalker, bounces up and down like donkey from Shrek with a 'pick-me, pick-me' look on his face...

UDH "Yeah, why not, someone's gonna have to take the rap for what we're gonna do to the EURNOK market in NYK hours..."

All good stuff... but one thing is uppermost in my mind. What was UDH Boy doing in the office at 9pm when I saw him phone a taxi home at 6........?

Taking Stock

Well that was the week that was. I'll wager (if betting hasn't been outlawed) that there are more than a couple of traders sitting over a quiet cup of coffee this morning just staring into space, vacant and shell-shocked, looking out of the window (the first time in 5 days they haven't been focussed on images 18 inches in front of their face), muttering inaudible, mono-syllabic answers to their loved ones...

Huh? Oh, right. Yeah, sorry... where was I. Well, it was clear that there was 'something up' all week. I don't mean the amphetamine-fuelled price action - we've had that before (Sterling's ERM exit, Asia crisis, LTCM and Enron collapses, 9/11, 7/7) and we'll have it again. Nor do I mean the barrage of sensationalist reporting - if I have to read the adjective "unprecedented" or the phrase "uncharted territory" in one more piece of analysis, I'll.. errm.. stop reading financial markets analysis. No, it was in the conversations. Let me explain.

Your average spot monkey is a seat-of-the-pants type chap or chappess. He is not fabled for intelligence. He is known for reacting fast, obliterating wrong prices and making crude non-PC jokes in the process. He thinks that a "liquidity crisis" is when they have run out of Laurent-Perrier Rose at the Brasserie Roque. He thinks "credit crunch" is a breakfast cereal. He thinks an "Investment Banking Model" is the latest, tasty intern hiring at Goldman Sachs. The fact that I have spent a week discussing the real meaning of these terms with monkeys all over the world is the clearest barometric indication that we were sailing remarkably close to the wind.

Like some terrifying fair-ground attraction, it was palm-sweatingly scary, and yet all rather exciting at the same time. Of course it was also another valuable learning experience.

Trywalker learnt what it is like to live, and trade through a genuine financial crisis. And he started to realise why the cornerstone of any market is 'liquidity' - you only fully realise this when it is absent. This will stand him in good stead.

FVJ learnt the meaning of the word "arbitrage" (more on that another time). Then he learnt the meaning of the word "wrath", after I foolishly gave him the responsibility of taking profit on a 2-year Gold forward position (it's so far in the money, surely he can't f### that up, I thought to myself). Finally he learnt about "near-death experiences" after he sloppily sent an order that had actually already been filled. UDH Boy was up all night trying to extricate us from that particular hole (there are a few things harder to get out of during Asian hours than 25mio USD/HUF, but not many), and will probably see the funny side of it in a year or so.

Us older hands learnt, or were rudely reminded perhaps, that complacency and disaster are never really far apart...


P.S. I do hope that Patsou held onto her GS & Citi stock, which rallied 20+% yesterday. It's a lovely necklace and would be a shame to have to hock it! ;-)

The Financial Press Is Sooo Dull

It's been a fun few days nestling in on the spot desk with the monkeys, and while everyone seems to find it a bit of a drag, I actually quite like writing a contribution to the daily market report. It gets circulated to all our clients and I think some of them even read it. As I finished yesterday's installment it got me thinking about the financial press in general. It's just so uninspiring.

If you've ever managed to venture into the market report pages of the Financial Times you'll know what I mean (unless you're Trywalker, who probably cuts out his favourite articles and sticks them in a Fenerbace-branded scrapbook at the weekend. He's young, bright and enthusiastic. It'll wear off). I know it's a fairly mundane subject matter, but I find the writing so stodgy and monotonous that I'd rather spend my time looking up the origin of the word hebetudinous.

Now, if I wrote the currency reports for the FT, they'd be more like my observations on the Sterling markets, as published yesterday and repeated below. Funnily enough, the FT has so far managed to resist the temptation to try and lure me on board...

"GBP: Europe Swiftly Corrects Asia's Fawlty Valuation Of Cable

In a great TV comedy moment, Basil Fawlty, exasperated with his Spanish waiter's constant misunderstandings, ushers him forwards and says, "Manuel, let me explain." Then he pokes Manuel roughly in the eye. Europe, in short, did the same thing to Asia's inflated valuation of cable, following the weekend's news of the US taxpayers' bail-out of their suspiciously named
mortgage providers. Pausing only to check that the pound really was on a 1.79 handle, dealers proceeded to clump bids faster than a John Cleese clip round the ear. The Far East low crumbled quickly and Soft PPI data helped encourage further tapping of the "Yours" buttons. The sellers weren't satisfied until a solid 3 figures had been wiped from Sterling's overnight high, and after hitting a low of 1.7564 a base in EURUSD helped the pound to rally back above 1.76. 1.80 now looks a long way away, and 1.90 may as well be Web 2.0. Wishing that you could get 2 cents to the pound again is like wishing that they hadn't stopped making Fawlty Towers after only 12 episodes. 'Fromage dur!', as they probably don't say in France. EURGBP appeared to have little interest of its own, ushered this way and that like Polly on the sidelines of the whirlwind FX farce."

Competition

It's a tough, dog eat dog world out there, and it seems like you have to fight for airspace in every direction you look. During the week it's the battle for the Golden Log with UDH, Trywalker and the rest (with Schadenfreude Boy picking over the carcasses), and then at the weekends it's taking on the cyberworld with Project Dennis.

Coming into the study to quietly write my daily musings seems like a therapeutic relief from the day-in, day-out struggle to be top dog. Until now. I got back from the day job yesterday and the computer had been commandeered!

The under-exercised hairy one has started his own dog blog. I wonder where he got that idea from, the sneaky blighter. Anyway, please don't encourage him, he'll only want a treat. Whatever you do, don't visit this page.

Copycat. Dog.

Buzbag Reserv

Trywalker, kind friend and cultured young gentleman that he is, brought me back a fantastic-looking bottle of red from his recent holiday in Turkey. Apparently Daddy Trywalker recommends it very highly.

I'm dying to give it a crack but before I pop the cork I'd like to know a bit more about it. My wine books are getting a bit old now and were printed before the expert authors knew anything about Turkish wine. In fact most of them don't even recognise Australia as a producer of fine wines, which seems...never mind. Searches on the worldwineweb have provided unsatisfactorily scant details. Any ideas??

Please help me find out more about Buzbag!

The Golden Log

"Der Goldene Baumstamm" or more simply "The Golden Log" is a little trophy that is competed for amongst the spot monkeys. Well, except for Schadenfreude Boy, since he doesn't find such things amusing, and nor does he wish to participate in kindershizaauslander games.

TGL is awarded, and retained by, the last trader to receive a significant "gift" - a low-risk client trade that nets a decent profit on their book - thus signifying that said spot monkey has made his money through luck rather than skill. The name is a derivation from the old phrase "falling off a log", meaning something ridiculously easy to do...

There is no set value of a log and TGL is passed on by consensus of the other spot monkeys. As a result, the more that one tries to protest that gifts were actually generated from craft and sweat, the more likely one is to end up with TGL on their desk.

Trywalker, being the young, sensitive, superstitious type, absolutely detests receiving TGL, since he considers it a personal slight on his trading ability, and because Fenerbace once lost a football match within 2 weeks of him earning TGL 5 days in a row. This is bad luck for him, since all the freebies seem to come in his currencies :-)

In reality TGL is a somewhat inconspicuous yellow and black cup cooler. For months I have had the intention of replacing it with a proper piece of tackorama - I imagine a kind of plastic gold log sculpture atop a plinth and plaque - but have no clue where to even begin getting one. I've browsed in the windows of a couple of shops that do trophies, but to be honest they are near the Hauptbahnhof and I have a suspicion that if I wander in asking for "Ein Goldene Baumstamm, bitte," I could end up getting more than I bargained for. Any ideas welcome...

The closest Trywalker will come to winning Olympic gold...

Incidentally, being number 50 today, that makes this the "Golden Post", if not quite the "Golden Blog" ... orangepeel, you might want to start thinking about making space in the fridge for that bottle of Dom ;-)

Training Trainee Traders

The problem with graduates is that by the time they come within 10ft of a trading desk, they have invariably had the worst preparation possible. Sure, they may have brains the size of Andorra, a collection of economics degrees, 47 A levels, speak 12 languages and been chairman of the Uni debating club. But this is all part of the problem...

By their early 20s they have simply gotten used to being brilliant at everything. They pass every exam, they make every team, they get all the girls. Everyone they have ever met - family, friends, teachers, team-mates, career advisors - has told them over and over again how brilliant and special they are. They envisage trading in the financial markets as the next box to tick. After all, how hard can it be, it's just a bunch of numbers, right?

"Give me some trading limits on day 1 and by month end I will be the new George Soros." When you do actually give them trading limits, and take great pains to explain that they are expected to lose money at first (unless they actually ARE the next George Soros), they usually sort of guffaw, and you can read the quiet "ha-ha.. I'll show this old fuddy-duddy!" thoughts that flash across their faces. Humility is in short supply.

In light of this it becomes terribly, terribly difficult for them to admit it when they have made a mistake. No matter if the error is small (who spilt coffee on the keyboard?), medium (who just told our best customer to call DeutscheBank for a price?), or relatively gargantuan (who just bought 2 tonnes of Platinum instead of selling 2,000 ounces of Silver?). They either pretend they had nothing to do with it, or if evidence is incontrovertible, they try to bore you to tears with a verbose catalogue of mitigating circumstances, while explaining that the problem was actually the result of a communication / system / procedure / training / management-directive error...

Rare moment in which a trainee trader tells it like it is...

(thanks again for the pic, Trywalker ;-) )

Blogging At Work

I have been trying to follow Daddy Papersurfer's instructions on how to be a professional blogger, posted over here. Complex as the instructions are, I eventually managed to construct a passable version of the required equipment.

What I didn't appreciate is that problogging is something that requires enormous dedication of time and effort, which is not necessarily compatible with a busy day job. I can't deny that on occasion the ability NOT to be able to see what is going on on or around UDH Boy's desk is useful. All those charts and numbers going in the wrong directions (not to mention the inexpicable dismantling of perfectly operational electrical goods) can be somewhat distracting at times, so retreating into one's own little dark blogosphere can be quite comforting.

However, while UDH Boy is away, someone has to keep an eye on things, as, left to their own devices, the spot monkeys can make a right mess of things. I also got some funny looks from people with bluetooth headsets who haven't seen professional blogging in action.

From now on I will have to restrict my blogging activities to non-office hours...

Visible evidence that UDH Boy's desk is being put to practical use in his absence

thanks for the snap, Trywalker ;-)

Fan Aerodynamics

A guest post this morning - as requested, UDH Boy has prepared his version of the FVJ fan debacle. Apparently formal training as an Aeronautical Engineer may prove useful if one is attempting to invent a dragless wing, but is patently worthless for any practical purpose...

"Naturally, there has to be a knock on effect from the profligate spending that the Bank has carried out whilst building a Bluetooth Headset stockpile to rival that of the Carphone Warehouse.

It would seem that the dealing room air conditioning maintenance budget has become the Yin to the headset accumulation Yang, and as the aircon has ground to a halt we have seen temperatures climbing rapidly. Conditions became positively tropical a week or two ago when the outdoor temperatures hit 30+, and so I was delighted when Trywalker decided upon his own initiative to go out and purchase a team fan, for placing on the desk between us.

Trywalker returned a short time later wielding what appeared to be a splendid example of a desktop fan, and he and FVJ set about "installing" the equipment. I noticed a small flurry of activity behind me involving said fan and various tutting noises but, trusting Trywalker, my star trader, to be able to override or at least circumnavigate the complete lack of sense (of the common, rare or in fact any variety) present in FVJ, I left the two of them to it and looked forward to enjoying the cooling effects of the fan sometime shortly thereafter.

Now, things got a little busy for the next couple of hours, evidenced by me, well, UDH'ing away and Trywalker using copious amounts of the trading force. Suddenly, during a break from our battles against the rest of the market, I noticed the temperature was continuing to ratchet higher and the keenly-awaited cooling desktop team fan was, in fact, not on the space where Trywalkers' desk and mine adjoin, as had been planned. Remembering the age old saying "There is no I in 'team'", I stole a quick glance at SB's desk, to ensure there was not a bit of"I think I shall have that fan" action going on, but mercifully SB was in his customary position whilst making fast aggressive prices and keenly fighting the FX markets - asleep at his (fanless) desk.

"Where's that dastardly fan?" I enquired of FVJ (or words to that effect).

"Ah. Uh. THAT fan? " Responded FVJ, in his inimitable 'it definitely wasn't MY fault' voice. I clarified that it was indeed the only desktop fan within 100 metres of our location (the one lying on its side on the desk directly next to FVJ) to which I was referring.

"Broken" sniffed FVJ, keeping his replies notably shorter than when he doesn't think he's ballsed up. [NB. Ask this chap a blameless, open or opinion related question and watch him talk for hours (you watch but don't listen because the bullsh+t deflector ear protectors start working after Dr Ramblers' previously discussed bullsh+t radar has spotted the incoming missiles after around ten seconds). Ask him "what did you do to my " and you get monosylabillic grunts until you go away.] I maintained a baleful glare for long enough for FVJ to ascertain that this time, he was going to have to elaborate just a bit more.

"Wellyouseeitwasn'tworkingwhenweunpackeditandIpluggeditinandthetimerwasclicking but thefanwasnotworkingsoItookitapartandthewiringwaswrongsoItookitbacktotheshopand...." I stopped the breathless diatribe with another 'friendly' stare and before FVJ could get a trademark "but, but, but" response out of his mouth, stepped over to investigate said fan, which upon closer inspection was in several more pieces than is normally expected, with underbase wiring exposed and the base / stem assembly very much disconnected.

"So, ***** (for once I called him by name not expletive here actually, but as our Holey Whale Hunter has deemed names need to be withheld to protect the incompetent he gets 5 stars here, for probably the first and last time in his life) you unpacked the fan, plugged it in, found it was not working, took it apart, ascertained the wiring was wrong, then took it back to the shop, brought the replacement here and have subsequently, I am guessing, found that the exact same wiring fault exists?"

"Exactly!" he replied triumphantly.

"And you deem that the timer is getting power because it is clicking, and that the incoming wiring only feeds the timer switch and not the fan?"

"That's RIGHT!" he almost yelps with glee at realising that I am on his side about this darn faulty fan after all.

"*****, I know you are an aeronautical engineer by qualification, and I never even went to Uni so I probably have no place to question this... but did you ever consider whilst dismantling two fans and finding this same 'fault' that the electrical socket you are using to test it could be the faulty item?"

The blank incoming look that followed is something I have become accustomed to with FVJ, although this time it was mercifully silent and didn't include the normally omnipresent accompniment of "well, yeah I KNEW that already...".

"Err well, no it cannot be the socket, because the timer is definitely getting power".

"On what are you basing that assumption" I ask, knowing and dreading the answer...."Well, it clicks when you turn the dial".

"Have you ever heard of wind up timing devices?" I ask.

The penny drops, with the kind of resounding clang that only occurs when coins are allowed to fall inside huge vacant spaces.

"Weeeeell, it doesn't LOOK like a wind up timer." comes the initial response, although even FVJ has to realise where this line of defence is going.

"Try this other socket here" I suggest, indicating one which we knew worked.

FVJ proceeded to start removing the chest of desk drawers and clambering beneath the desk before I swatted him around the ears and explained we could test the fan in the socket BEFORE we spent five minutes neatly tucking the wiring underneath the desktops...Lo and behold the fan's complicated faulty wiring issues were fixed by taking the radical last chance step of plugging it into a functional electrical socket. The fate of the dismantled "faulty" fan that went back to the shop is as yet unknown, although it is likely to have been "fixed" somewhat quicker than ours.

Needless to say, I think for the safety of aviators and air travellers everywhere its probably good that this particular Aeronautical Engineer has headed into the banking industry at the moment. My loss is probably a lot of peoples safety gained."

Thanks UDH Boy. Hurry back.