Friday, April 27, 2007
Will today be a Freaky Friday? Markets feel nervous, though far from panicky. Today's US GDP release could be a catalyst for a bit more market volatility than we've recently observed. A legitimately weak number (i.e., one where negative contributions come from sources other than housing and inventories), coming on top of a skein of poor Japanese data overnight, could prove to be a tipping point for risky assets.
Macro Man senses nerves in a range of markets, an small wonder. Everything is the same trade. One would struggle to come up with a strong macroeconomic relationship between Spanish equities and the foreign exchange value of the New Zealand dollar versus the yen, but for the last year, they've been the same trade.
It is interesting to note that housing markets in bubblicious areas like Spain and Ireland are showing signs of rolling over; meanwhile, rumours abound that Ecofin poobah Jean-Claude Juncker wants to resign his post in protest over the ECB's acquiescence of a strong euro. Maybe, just maybe, things are about to get interesting. Such developments will come none too soon; Macro Man has been mullahed on his short risky asset position in the alpha portfolio.
As a housekeeping note, he exercised his 1.3550 €/$ calls yesterday and was filled on his sale of 100k XHB at 35.50. Roll on 8:30 EDT!