Snowed under

Posted by on Wednesday, January 24, 2007

The UK has been crippled by a winter blizzard this morning, which dumped an enormous 1/2 inch of snow on the ground, thus crippling the entire transport infrastructure of Southeast England. A blizzard has also hit the UK fixed income market, as the twin impacts of a speech last night from Swervin' Mervyn and today's BOE minutes (revealing a closer-than-expected 5-4 vote to raise rates this month) have propelled short sterling virtually back to Macro Man's entry level.

Random thoughts on a Wednesday:

* Everytime Macro Man's commute is disrupted because of the shocking state of the UK's transport infrastructure, he feels a desire to sell sterling. If he followed through on each of these impulses, he'd probably be short the entirety of the UK broad money supply, doing Andy Krieger one better

* GG had a tremendous day yesterday, playing catch-up with gold to a degree. It is still lagging, though, so Macro Man will try to hold on and see if we can get above $28.

* Cold weather + increased SPR + short market = higher oil. The profit take on the puts was well-timed. Vols remain elevated, however, so buying calls doesn't look terribly attractive at the moment. Re-entering a long OIH is a possibility, but Macro Man wants to see a technical breakout first.

*The FX carry trade has suffered overnight on sterling weakness and the low Aussie CPI, which sent the AUD spiralling lower. Carry traders suffered what by 2007 standards represents a catastrophic loss, as carry trades suffered for literally a few hours! On a more serious note, the Aussie is reaching some fairly critical levels against a number of currencies, and Macro Man may sell a break in his alpha portfolio.

* The Colts-Bears Super Bowl matchup suggests that the long equity position should do quite well, even if the Bears win the game!


This commentary is written for entertainment purposes only. Nothing you read on this site is advice or an inducement to buy, sell, or hold any real or hypothetical investment, nor should you construe it as such.