I really thought couple of weeks ago, when AIG announced the biggest quarterly loss ever by a company, and asked for another help from the government, that this would be last time I write anything about it. I mean, can they possibly top that somehow? Now we have new instalment of this pseudo-comedy unfolding. AIG decided to pay over $150 million dollars in bonuses to some top executives. This story broke out over the weekend, but I still didn’t want to comment on it. By now it has become a very pecular mix of soap opera, Greek tragedy and a farce. Even president Barack Obama and his top aides expressed outrage at reports that AIG went ahead with bonuses. This was to be expected, he is just next person in a long line of outraged people. My personal interest in this whole mess is the explanation given by AIG as to why they must pay those bonuses. They are obligated by contracts that were negotiated with these executives. As far as I know, bonuses in corporate America are based on performance. One has to meet or exceed certain goals in order to qualify far a bonus. In all fairness, in a company as large as AIG I’m sure there were some employees who met bonus requirements, even during this abysmal stretch. Employees, mind you, not top executives. Executives would be the ones responsible for divisions of the company, or individuals who oversee this whole mess. To my knowledge AIG as a whole failed to meet any annual goals. Separate entities within the company have not impressed anybody neither, since so far it was impossible to sell any of them. Two possibilities- this company is so screwed up that contracts drafted and signed by them don’t make sense at all, in which case what is the point in trying to save them, other then entertainment value, poor one at that? Or, just maybe, they played some sick game and the bonuses go to those who manage to loose the most money. Come to think of it, perhaps we should save them? Seems to be a great place to work. One needs a fall back position if trading is not the true calling, right?
Speaking of trading, Sunday’s post covered possible trade in GBP-AUD. Two buy orders were placed, one as a breakout to the upside and the other at a lower end of price range. This order was filled earlier today.
Entry was at 2.1185, at this time of the day spread is only 15 pips. In general the range held, as expected, but… My line of thinking was that price would get here on some temporary strength of AUD. From what I see now, this is more of a general weakness of the Pound and I don’t like it. After some thinking, T/P was placed at 2.1285. About an hour ago my 100 pips were realized. For the moment, buy order at 2.1535 remains valid, although it is unlikely I’ll see it filled very soon.
As promised yesterday, I’m considering another trade in one of more exotic crosses. Currency is Polish Zloty(PLN) and my interest is in EUR-PLN. The valuation is higher that USD-PLN, with the same spread, so the cost of trading is a little lower. Weekly chart of EUR-PLN.
We can see steady uptrend, with PLN loosing about 50% since last summer, very powerful move. This is different that the pattern which decided about EUR-SEK trade for me- that chart had a parabolic price run up. Here I don’t expect a fast price collapse, but rather somewhat orderly retracement. I don’t want to get into fundamentals here, the are numerous, but over time Zloty is set to appreciate against Euro, especially after this move. My goal is to find reversal pattern, on which to enter.
Daily chart appears to be forming just such reversal. I placed a sell order at 4.4000, targeting about 3000 pips. If the price moves up first, before the order is filled ( as I hope) one could try to enter at around 4.8000, should we see this level. However, primary objective is to be on a possible move from 4.4000 to 4.1000. I don’t expect this trade to play out as fast as EUR-SEK. Set up is completely different and so are dynamics of the cross, but chances for decent result are good.
Some other developments today- Swissy is getting stronger, finally a slow, post intervention counter move, something talked about on Sunday. Tomorrow I’ll cover it again. One more thing, I took partial profits on NZD-JPY 4H chart trade at 52.34. Details in the next post.
Mike K.
I don’t even care about this AIG shit any more. Some of these people are real scumbags. They should be happy to have jobs, but bonuses? I think your trades are much more interesting than AIG crap. It is PLN now. Does mean you’ll post more trades of real exotics from now on?
Probably not , Bob. From my point of view the real exotica are not really tradeable on charts lower than daily. In general i’d rather work smaller time frame, so don’t expect these kind of trades very often.
Remember Bill Clinton – he was going to do something about the big salarys out there and tax them of a million. The execs had to make them performance based if they were going to avoid the tax. One exec made his performance cause that he would show up to the office at least 200 times during the year. He did and the company avoid the extra tax – lol.
Bonus for showing up to work…, I’m in a wrong business. Here is another one for you. Bonus for not drinking on a job, 20% of base salary. True story, have seen the contract myself.
Thank you for writing about EUR-PLN. I have interest in remaining European currencies, so this is very usefull to me.
What the hell are you guys talking about? Bonus for showing up to work? Bonus for not drinking on the job? This is sick. What’s in next, bonus for doing anything at all? Bonus for collecting a paychek?
Isn’t it amazing?
Most of execuitve bonuses are not that stupid, but the higher up you climb in a big company, the more interesting they get. Other points of employment contract can be raising eyebrows as well, like limits on business related lunches, entertainment etc,. Under normal conditions it is good to be an executive.
[...] trade discussed couple of weeks ago. Currency pair in question is EUR-PLN. This was described in AIG bailout a farce. Plan was, and is, to sell it at 4.4000 with an objective of about 3000 pips. So far price is [...]
[...] dollars in bonuses to executives in financial products division. At the same time, they still have not repayed the bailout money provided by the government in early days of financial crisis. It is not my place to say that these people don’t deserve [...]