3 post-payroll thoughts

1) Maybe Holmes doesn't know everything. True, the initial benchmark revision was revised down by 297k, the largest downward revision since 2002. But the constituent brealdown won't hit the tape until next March, so we have a few months to go to see if Sherlock was right. The teachers issue, meanwhile, sorted itself out not via a big October figure, but via revisions to the August and especially September figures. Right idea, wrong execution. It makes the October Fed meeting very interesting indeed- does BB make the same "insurance cut" mistake that Easy Al committed in 1998? 2) WTF happened at Merrill Lynch? Macro Man's coverage at ML has been in the doldrums for the past few weeks, and now he knows why. Today's pre-warning of a potential $0.50 loss in Q3, with a $1.19 profit expected, is just fugly. That stamped you see at ML headquarters is bonus-less employees heading fo the door...

3) Macro Man loves Voldemort, CBR, et al. Today's data could have been construed as pretty darned bullish for the buck, particularly with the revisions. And EUR/USD did drop 1c in a straight line.....only to meet strong CB bids, which has stabilized the euro and indeed encouraged a gentle drift higher. Would you put it past an unscrupulous institution to perfom a "drive-by" during Monday's illiquid Columbus Day conditions? In any event, now that they are saving him money, these guys are Macro Man's new best friends....
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RJH Adams
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October 5, 2007 at 5:01 PM ×

Nice device Arthur; look forward to subsequent installments...

R

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Anonymous
admin
October 5, 2007 at 5:07 PM ×

CB bid is consistent with the view that a bunch of central banks ate a lot of dollars in september as the $ weakened, and are looking for any chance to sell.

bsetser

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Macro Man
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October 5, 2007 at 6:47 PM ×

Mrs. Macro was less-than-impressed when I had the idea at 9.30 last night and spent the next hout and a half or so writing the story, but it was a Coleridge-type inspriation that just couldn't wait. Perhaps I will bring back Mr. Holmes when I find another mystery in need of a solution...

Brad, in addition to China and (especially) the Middle East who are behind in selling $ to get back to benchmark, CBR reportedly bought in excess of $3 billion today, taking the other side of punters who bought RUB after anothe punchy inflation print. Word on the strasse (or is that prospekt?) is that they lost little time in ptting the money to work in euros...

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Anonymous
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October 5, 2007 at 7:38 PM ×

how do you know it was CBs who were behind the $ selling?whats the evidence?

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"Cassandra"
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October 5, 2007 at 7:40 PM ×

a quick perusal at the last page of the Economist is instructive for all the high-yielders seem to be running double-digit rates of inflation despite strengthening currencies. The US has issues, but I could fix them in a week, given the chance. Is there really a "free-lunch"?

Perhaps what's more deterministic than a lower dollar is that the US is on the cusp of consuming less relative to what they produce. This is ultimately dollar-bullish once the carbon taxes are established (or oil prints >$100bbl.

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Macro Man
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October 5, 2007 at 8:53 PM ×

Anonymous, the "evidence", insofar as it exists, is that a number of the banks who saw the flow told me about it using the oh-so-special code words that markets have developed for this sort of activity.

C, it will be dollar bullish once that lack of US consumptions rebounds upon the rest of the world. While planet Earth is happy riding on China's back, the dollar is likely to remain toast (relative to where it has historically traded against non-yen major currencies.)

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Anonymous
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October 6, 2007 at 11:33 PM ×

MM, any comm about:

Unseemly bragging by the English authorised after today's victory against Australia in the Rugby World Cup.
Unseemly bragging by the French also authorised after tonight's victory against New Zealand!!
Unseemly bragging by the Welsh authorized at any time, just because...!

And humor apart, very in topic about London:

Return of the rentier city, by P. K.

http://krugman.blogs.nytimes.com/2007/10/05/return-of-the-rentier-city/

Thanks!

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Anonymous
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October 7, 2007 at 9:17 PM ×

"Anonymous confessions of a bond trader"

http://tinyurl.com/2qowlo

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Macro Man
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October 8, 2007 at 1:18 PM ×

Rather amusing...though he left out the bit where someone asks him for a price on a bond, he makes 94.50 - 95.50, the customer tries to sell a few at 94.50, and the bid magically changes to 94.00...

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