Is this Kind of News Reliable [bank trades]?

[debrox]

A website I sometimes go to says

From Dow Jones:

"The euro may lag in a risk rally, as the ECB's LTRO will increase the supply of money in the euro zone and let other high-beta currencies take the lead, according to Morgan Stanley. The bank has gone short EUR/USD at 1.31, with a tight stop at 1.3170, but says the latter may be challenged over the next couple of days as the unwinding pf market shorts continues. EUR/USD trades at 1.3143.

So I was wondering: does Morgan Stanley need to be telling the truth here? If so, why would they disclose their trades? Do you think they do it sort of as a pump/dump sort of mentality (that people will trade with them, helping their profits)?

The website is: Morgan Stanley on EUR: may lag in a risk rally

 

[Martinghoul]

Firstly, this is coming out of Stanley strategists, so doesn't necessarily have to do with their prop position (assuming they even have one). Secondly, in the case of a very liquid product like FX, it's not likely that their recommendation is going to move the mkt. So, all in all, it doesn't matter. Everyone has a view and there's far too many views making rounds these days.

 

[wackypete2]

The analysis of where the eur will go is part of what they do, as any major bank or brokerage house. I doubt they are outright lying about their short position as that would probably violate some rule here in the US, but they can be covertly attempting to manipulate traders. Suppose they really wanted to go long for the foreseable future. By putting the info out they they are short they expect traders and clients to follow and hope to drive the market down. So they may be short a small position but then reverse and go long a much larger position at a significantly better price.

I'm not saying they are or are not doing this and I certainly don't know attainable it is, but it's something you should be aware of when using any analysis from large houses.

Peter

 

[wackypete2]

Firstly, this is coming out of Stanley strategists, so doesn't necessarily have to do with their prop position (assuming they even have any). Secondly, in the case of a very liquid product like FX, it's not likely that their recommendation is going to move the mkt. So, all in all, it doesn't matter. Everyone has a view and there's far too many views making rounds these days.

Agreed, it's difficult except at this time of year when liquidity and volume are extremely low.

Peter

 

[c6ackp]

3198 - it's best to tune all the noise out of your mind if you want to trade effectively - the best traders are at hedge funds - this recommendation would've come from an analyst (not a trader) who would have no clue