Wednesday, January 24, 2007

Snowed under

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!






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