Wednesday, March 21, 2007
Well, the Fed slammed the door on the tightening bias, somewhat to Macro Man's surprise. Perhaps you can take Ben out of the helicopter, but you can't take the helicopter out of Ben. Regardless, we are now getting the requisite risky-asset lovefest that generally ensues when the Fed finally takes its foot off of the monetary brake.
The repurchase of the puts was obviously the wrong decision, and now some other hedges will likely be jettisoned, starting with the short Turkish equity position tomorrow morning. In the meantime, Macro Man sells $20 million USD/MXN at 11.0350 spot basis, 11.0420 to 04 April. CTAs are long USD/MXN and likely to exit very, very soon.