* Is Macro Man’s currency luck about to change? The stop in NZD narrowly avoided being done after better than expected trade and spot has come back lower in London. It is interesting to note that in the last couple of days that NZD/USD has sold off during post-Asian hours, whereas the previous couple of weeks it was bid only. Perhaps the times they are a-changin’
* The bond market, meanwhile, is growing as erratic as the currency market. Macro Man assumes that the outsized rally in bonds was a response to the lower prices received on new home sales. However, surely it is a rational response that homebuilders respond to weaker demand by adjusting the price (Note that inventories were the lowest since May.) Moreover, one has to wonder at what point the housing market becomes fully discounted. Macro Man couldn’t help but notice that while the bond market couldn’t get enough Treasuries on the back of the data, the stock prices of Lennar (+$0.80), Beazer ($0.92), and Toll Brothers (+$0.06) all went up yesterday. All the more reason to add to the bond short on any further rally on the back of GDP today.
* It is interesting to note that despite bang-up earnings from Mister Softee last night, SPZ6 is down a couple of points in early morning trade. Although November and December are seasonally very good months for equities, seasonality hasn’t exactly been working terribly well recently (one rarely hears of record low vols in September and October, for example.) Moreover, the forthcoming US elections may provide a few jitters, so perhaps it is time to think of bearish strategies for stocks. As an initial step, Macro Man will offer $2.5 million of his long OIH at 140. If SPZ6, it might be time to take advantage of extremely low vols and spend some money on puts.
