Wednesday, May 06, 2009

Desireless

Macro Man is struggling to come up with much desire to have an active investment stance, let alone layer fresh risk, ahead of a few days fraught with event risk. Given the run-up in equities, EM, etc., it would be entirely plausible for those markets to sustain a setback as longs take some profits....which, if he isn't careful, could lure a bear like Macro Man from his peaceful hibernation.

Regardless of the outcome of the next few days, a bit more two-way risk does seem likely. The stress-test pendulum seems to be swinging back the other way, with this morning's headlines focusing on BAC's need for an extra $34 billion, which probably constitutes a little more than they can dig up from under the cushions of John Thain's old sofa.

Tomorrow's ECB meeting could possibly be shaping for a disappointment; while 25 bps of easing is baked in the cake, it seems unlikely that the Bank's "unconventional" measures will be anything terribly sexy. And given the "green shoots" that are emerging even in Europe, no doubt the Weimar Republic's representatives on the council will be fighting tooth and nail for rate hikes before too long.

As for payrolls on Friday....well, it's all a crap shoot. The unemployment rate should tick up, but as for the headline number, who knows? On second thought, given that the out-turn has exactly matched the consensus for most of this year, thanks to government maniupulation of the data economists' new-found forecasting prowess, perhaps the consensus forecast of -610k is the best guess.

But hey, we always have China! PBOC has hit the wires this morning, promising to increase the yuan's exchange-rate flexibility while keeping it stable. Ohhhhhhhhh...kkkaaaaayyyyyy. If we're back to playing these sorts of games, you'll have to pardon Macro Man if he has little desire to play along.

12 comments:

H(oratio) said...

This reminds me of the conversation between Kublai Khan and Marco Polo, as imagined by Calvino. When the Khan says he has neither dreams nor fears, Polo answers that many men so say. I will readily admit that I have the great desire how you London chaps do it night after night. I know that consistency is the hallmark of a true professional, however to beat back the spies for fifty points anytime I take a nap at night is worthy of awe. And 36 billion is just some pixels on a screen, I will learn. Unless it was a Lehman screen.

Anonymous said...

Macro man, you said "If we're back to playing these sorts of games, you'll have to pardon Macro Man if he has little desire to play along."

WHAT DO YOU MEAN BY THIS?

play along as is sell USDCNY??

I am confused by your comment

Macro Man said...

It means what it says. The PBOC comment, taken at face value, is self-contradictory and 1984-ish. I see no reason to participate in markets where central banks are willfully taking the piss.

H(oratio) said...

But of course, it was the sneaky ADP report this time. That were good for the twenty point turn in the spys from last night. Wonder if anyone knew anything when they started bidding the futes twelve hours ago. Yes, the question is not if you are paranoid, but if you are paranoid enough. Wonder how many other kids are leaving the sandbox and taking their bucket and shovel with them.

Clive Corcoran said...

Beg to disagree with you Mr Macro.
Central bankers do not take the piss they engage in constructive ambiguity to keep markets on their toes.
It's a bit like shuffling the deck during the middle of a game of blackjack

Anonymous said...

mm
cha ching
in capri
mpm

Anonymous said...

mm
cha ching
in capri
mpm

Macro Man said...

Clive, when central banks accumulate $2 trillion of FX reserves while maintaining the world's largest trade surplus and a largely unchanged exchange rate, I think that qualifies as taking the piss.

Anonymous said...

The ranting means nothing. Is the market too optimistic right now? What is the next shock? If even bears on this blog felt upbeat, I will begin to worry about that the next correction is coming

Anonymous said...

Horatio,

Imho, the ADP's numbers are the proverbial crock, and have been for a while. I'm not certain why anybody gives them credence.

old trader

Jeffrey D. Benson said...

Sure makes riding the triple short Direxion Bear ETF exciting. Despite my views how rotten our inflation targeting monetary is, optimistic longs may prove my view expensive to have. I think pursuing my ambition to become a hand gun collector may be more fruitful.

Anonymous said...

I couldnt agree more with MM on this gvt manipulation or shuffling of cards in blackjack (as one of the readers pointed out)

Something to cheer all you smart people out there who missed the rally. Just play along and enjoy the ride. Good luck

http://www.youtube.com/watch?v=Qw9oX-kZ_9k