Shares Rally Despite Morgan Stanley Loss And Dividend Cut

Morgan Stanley rudely interrupted Darling Alistair’s UK budget speech, sending shares lower as it slashed its dividend and posted a first quarter loss. However, a late afternoon rally saw the Dow back above 8000.

I warned on Monday that this week would have more ups and downs than Hollyoaks, and that’s certainly been the case. Today provided some great trading opportunities but you had to be quick. And some, like Sterling, became double-bluffs, swinging traders around wildly by their dangly bits.

I didn’t get too involved, which meant that I missed out on some big profits- or some irritating losses. As it was I was happy with a couple of low-key gains and I’ll wait for things to settle down before getting too involved.

I closed out a profitable small FTSE short bet from last night, cursed the fact that I was too hasty, then watched relieved as it rallied all the way back up to 4030. I’ve just re-opened short bets at 4020 and 4040, but remain happy to take my profits this week with so much news flow to contend with.

It was a nice touch of nostalgia that saw me profit from the market that I traded as a fund manager for years. I’d been watching gilts today after the shocking headline in the FT that issuance this year could top £200 billion. The June Gilt Future had already tumbled 150 ticks so I figured there might be a rally if the issuance came out at a lower figure.

In the event gilts started to push higher during the budget, possibly as a reaction to Morgan Stanley’s poor earning’s announcement. Once again, my squawk gave me an edge, shrieking out the new issuance figure of £220 billion. Yes £220 billion of new gilts; £18 billion a month come rain or shine.

I hit the button immediately, selling £2 at 122.02. Some clown called the initial price up, before ripping 50 ticks off the price. This is no longer my market so with the price bouncing around 20 ticks at a time I closed out at 121.51 for a grateful £102 profit. This market did continue in the same direction, falling a further 80 ticks at one point, but I’m treating it as a small unexpected bonus.

Darling Alistair provided a nice little trade in the forex market. I’ve bleated on for months about Sterling’s devaluation by word of mouth; sometimes it’s government-paid members of the MPC, sometimes it’s government ministers. Today Darling Alistair said it would help UK exporters if we could possibly have a lower currency, and those with their finger on the button were happy to oblige.

The GBPUSD rate crashed 250 pips in an hour, then rallied 100 pips. Very tasty for those awake and on the right side in both directions. Where now? Dunno, as with all UK budgets the detail will emerge over the next few days, and usually the reason for hiding the detail is that it’s bad news. So I’ll be open to trades in either direction, but looking for signs of a further Sterling collapse.

This blog is over-charted already, but if you get chance have a look at the GBPUSD daily chart. When Sterling tried to rally yesterday it managed to push above the 21-day moving average; today it crashed back below, and that ain’t a good sign.

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