It's hard to believe that Warren Buffett's "Buy American" op-ed was more than seven months ago. How time flies!!
Macro Man wonders, however, if some foreign (Chinese, perhaps?) Buffett equivalent hasn't written a contra piece, entitled "Sell American. I am." For how else to explain yesterday's price action, in which the dollar, US equities, and US fixed income all received a good thrashing?
Well, one way to explain it would actually be noise; after all, yesterday barely registers on the scale of the chart above. Moreover, in thin holiday traffic (Europe on hols yesterday; the US and UK, on Monday), it doesn't take much to push things.
Still, markets are never afraid to let the facts get in the way of a good story, so it's worth keeping an eye on the "Sell American" theme...possibly coming to a Bloomberg screen near you!
Macro Man wonders, however, if some foreign (Chinese, perhaps?) Buffett equivalent hasn't written a contra piece, entitled "Sell American. I am." For how else to explain yesterday's price action, in which the dollar, US equities, and US fixed income all received a good thrashing?
Well, one way to explain it would actually be noise; after all, yesterday barely registers on the scale of the chart above. Moreover, in thin holiday traffic (Europe on hols yesterday; the US and UK, on Monday), it doesn't take much to push things.
Still, markets are never afraid to let the facts get in the way of a good story, so it's worth keeping an eye on the "Sell American" theme...possibly coming to a Bloomberg screen near you!
11 comments
Click here for commentsAny ideas what to use for shorting gilts. Is there an ETF out there?
ReplyOn another note... enjoyed the Holmes posts keep them coming.
Thanks
Gilt futures on LIFFE is what I would use as a generic. As for Holmes, I'm sure he'll reappear at some point!!!!
Replythere is still so much cash lying around that hasn't been put to work.. there is some merit in the thinking that had HY (US and to a lesser extent EU) not outperformed equities in this rally, the pain trade (to the upside now) would've been felt more strongly.. only begs the question.. if going forward (new issues coming in soon) HY spreads widen again, i wonder how it will affect asset allocation decisions... more money could pour into equities (unjustifably so)
ReplyNoise? Noise you say? The credit rating of an actual country is downgraded and their currency rallies 400 pips?
ReplyIt's madness and now I must choke upon the bitter vetch of my shame forever, then? To be treated worse than any mongrel dog? No, sir! And again I say no, sir! Not as a free man born, not while I yet draw breath! Pistols at dawn, I say!
Or maybe I should just put Obama stickers on all the cars at the local GM dealership. Is that vandalism?
LOL..a nice one on Warren Buffet
ReplyArun - when you say there is "so much cash lying around that hasn't been put to work" where exactly is it sitting? If its in any sort of deposit or money market fund then its already invested in very short term debt securities... as those expire and are not rolled over (i.e the cash is withdrawn) more long term debt has to be issued to replace them... which means there is consequence to the portfolio reallocation - increased supply of debt issuance and higher rates.
ReplyThe EUR/USD move higher has decoupled from the relationship between Eurozone/US credit default swap spread.
ReplyIf the US note auctions next week prove less ominous than some anticipate, there could be a nasty snap back in EUR/USD from what appear to be over-bought levels.
On the back of the dollar bashing, If I where a gambler I would bet the kiwi is due to gain a cent or even 8ight to .7
ReplyThat macro enough?
MM - we need some hula girls on your website.
ReplyAnd maybe have a "talk like Joe Biden Friday."
And maybe a section about water boarding the Euro into capitulation.
Just some random thoughts. Hope it helps.
Dumb. USD will be the last currency to collapse. It will be the world's safe haven for the next 10 years. Scared money moves to the center -- you know that. Dumb dumb dumb.
ReplyHi Macro Man,
Replywould like to pick your brain on a deleveraging theme where a stronger Dollar + steepening yield curve are the incredients for the next leg down. The dollar is so oversold that it has a fair chance of a bounce.....
http://reflections-of-reality.blogspot.com/2009/05/dollar-deleveraging.html