Euro Bond Traders And Risk Bet He used James Conrad, the young man with a twenty-seven-year-old devotee read suave manners, earn a living through his work in the Million Dollar Months APP sports betting company, estimates the likelihood of muddy land that affect the stability of horse races. In these days, it is betting on the muddy ground of a different kind, the European policies.
Conrad trading bonds in the euro area worth up to 3 billion pounds, or $4.7 billion, a day for the Royal Bank of Scotland. The betting is uncertain in both areas, but the largest amounts enormously in his current job, the amounts seem to impress everyone, including is. Conrad said: «How can you make someone understand you’ve traded bonds valued at one billion dollars?». He added: «billion. It’s easy to get lost your way in the zeros? ».
The bond market has emerged as a hero in Europe is a great economic crisis, represented a creative shift in power from politicians to investors relatively unknown and a group of Million Dollar Months APP bankers. It can bring down the daily appreciation of the collective governments and now holds the key to the survival of the euro.
If that market seems a mystery difficult to understand for the onlookers from the outside, in the interviews, bond traders admitted themselves that they are in a state of fear and confusion. They are now manipulating the amazing levels of risk and wealth for investors – government debt in the euro area amounting to 6.7 trillion euros, or $8.3 trillion, according to the European Central Bank.
The main economic concerns that have some European countries a huge amount of debt a key factor drives the market. And prompts many investors concerned about the environment and long-term risk of owning European government bonds, they have taken what they saw as rational decision to reduce the size of what they own stocks or bonds or even rescue. While European leaders believe that the common euro currency will survive the crisis, it is not all economists are very confident of that.
Some traders declared prompts fears that a huge number of their colleagues lack the skills required for the meaning of the conflicting signals from European leaders in the industry to explain become much more dependent on the political perception and intuition. And recognize that the volatility of short-term bond prices are not always an accurate reflection of the value and risk. However, the politicians usually make Million Dollar Months traders as the best example in a range of government policies – and often misunderstood, he said.
Tim Skeet, managing director of fixed income Royal Bank of Scotland, says: «We used to be able to measure everything precisely to the degree». He adds: «These days, there is not anything measurable. It is no longer related to significantly perform complex calculations detailed as far as it relates to the Greek wisdom. »
Economists tends to deal with the bond market as a rational player base budget imposes on politicians. And politicians are seen as the conscience of the public owns, pointing the finger at «the authors of the bond trading laws» on undermining the recovery of Europe and the state of well-being enjoyed by value. But the truth is different.
This helps fear among traders and their investors with severe neurological explain why higher prices for troubled countries such as Italy and Spain, and the reason for swing interest rates near negative territory for German bonds, the most reliable: Investors seem in a state of extreme panic than they pay actually to Berlin for the benefit of lending money .
But at the risk, there is also a big profit – in addition to the losses. Amounts controlled by the bond market now to make them vulnerable to the types of speculation and volatility and revenues more closely related to the stock market have resulted. With the arrival of government debt across the EU to 88 per cent of GDP, and even more than that in many countries the proportion, according to «Eurostat», some sovereign debt funds to investors achieved an estimated 9 per cent annual revenues. Of course, investors who owned the Greek government bonds from sharp losses when that State has failed to pay its debts suffered.
With a great deal of leverage at its disposal, can enjoy the bond market estimates strongly predict – the sense that they can achieve the same, so that affect the events, even as traders assess its trading platform.
If what investors and traders Spanish bonds as much as risky because the Spanish government may be unable to repay the debt, they are helping to increase the likelihood that Spain already unable to repay, to lift borrowing costs.
Nicholas Spiro, managing director of the Simple Profits Binary Options company, Consulting, based in the London-based specialized in sovereign credit risk company says: «Regardless of what you do the Spanish government – has done a lot already – they do not offer great help and in fact, Because the market is convinced that there is a greater need for a comprehensive rescue package. »
Of course it was not useful to the Spanish government continued throughout the months in denial or give the wrong idea about the depth of banking problems, as well as Greece’s deficit is already on its debt before that Spain is going through the financial crisis. Given the deep economic problems of Spain, some believe that it may be needed for the rescue package.
Traders complain in the House of Commons that if the politicians had expected that the bond market rally on the entire one opinion, it would be useful to bring together politicians equally to one opinion. Retrieves Olivier de Larosière claim to hold a crisis meeting in the West left the offices of the Simple Profits company Asset Management in Paris during a defining moment in June.
On that day, saw de Larosière, who as head of securities denominated Department of euro fixed-income company «Natixis», manages debt worth 18 billion euros, rising yield on Spanish bonds, which created ten years to higher than 7 per cent, while The Chancellor Angela Merkel and European counterparts are struggling to convince markets that Spain need a rescue package.
High yield, or interest rate, a bond with a low price. Each reflects the investment risk. The rise in the price indicates that the bonds bought by the de Larosière before they lose value.
When the news was announced on the bar de Larosière screen that the leaders have agreed in principle to lay the foundation of the banking union, which was demanded by the markets, revenues fell again. However, the pain did not last long.
He retrieves saying: «After the end of the week, began to raise questions within the stock market. And suddenly we realized that this will not be activated unless the right in 2013. »
De Larosière seemed in a state of acute anxiety so that it can not buy Spanish debt. It was not the only person. After a week of the Summit, the prices were higher than in the eve of the talks.
Perhaps it is the kind of negative perception – which pays at least partially legitimate concerns that European leaders are not in agreement on what they have taken – contagious, especially when mixed with real economic data have become increasingly alarming. These days, in the words of de Larosière, «should not be Italian bond yields where is», referring to the state that he believed that progress in carrying out political reforms was better than convicted beholden to him. However, it is still selling Italian debt, for fear that the difficult case of collective pessimism to Rome to collect the amount of 100 billion euros it needs this year.
He says: «This is not about economic fundamentals as far as it relates to basic human emotions – it is linked to fear». Of course, skeptics will say that with all the political progress made by Italy, but the bond prices reflect the fact that the debt level is still frighteningly high.
The fears of those new to most traders who have reached the age of majority when rated excellent credit carried most parts of Europe. The image was very quickly changed to the extent that Conrad, although it has not yet reached thirty years of age, had carried out the trading in eras.
In trading platform Royal Bank of Scotland, Conrad sits behind a wall of numbers that appear in real time: the proceeds of future contracts and table a letter written by the data color-coded versions of bonds in several colors appear on the seven computer screens.
However, in these days, his degree in history seem within reach. To determine the prices of bonds more than $ 600 a day – to support a minute – Conrad assessment of the results of the elections, one of the States in many ways the same as it seems important GDP report his own.
As someone who studied German literature and French, his colleague driving the Skate fears that modern markets are not well suited for this new world. «Some people are enormously dependent on models without asking questions», thus occur. He added: «we shift from a method based on the use of high-level technology and data driven and sensitive to its qualitative method based more on intuition».
Conrad is the only person in the office who holds a degree in the field of humanities. The four others, Simple Profits Program degrees in math or science, like most traders in the stock market.
While Conrad spends some of his time trying to estimate the changing political orientations, the owners of sports mentalities colleagues using his thoughts private trading purposes. Conrad and concludes that the results are not always consistent. He says: «There is a kind of irrationality to the market».