Christmas Comes Early

Monday, December 14, 2009

Ho ho ho!

Christmas has come early (OK, not this early) today, courtesy of that well-known proponent of Yuletide cheer....Abu Dhabi! The emirate has lent a cheeky $10 billion to Dubai, which has funnelled the dough to Dubai World, enabling them to redeem the infamous 12/09 Nakheel bond (which was trading in the mid-50's on Friday) at 115.52. Even the 2011's, pictured below, have nearly doubled.
Ho ho ho! Macro Man can only wonder if the Emir of Abu Dhabi was secretly long a bunch of villas here and figured lending 10 yards was a cheaper solution than looking for the bid....

So it's happy days, right? Spoos are flirting with their highs of the year, Eurostoxx are up a percent, and hell, even Japan's Tankan was better than expected. Hmmm....not so fast, my friend. The risk rebound has been selective, to say the least. EUR/USD has barely budged and FX carry is actually lower on the day (AUD/JPY is down 0.75%.)

And while gold has at least tried to rally, poking its head back above $1120/oz, oil couldn't even be bothered to put in the effort; at the time of writing, prompt crude is down 40 cents on the day.
Perhaps this is because of the Abu Dhabi loan; on an exclusive basis, Macro Man can provide a short video of the Emir's conversation with the head of ADNOC over the weekend:



Perhaps Christmas really has come early for those tired of the naive "risk on/risk off" regime. A bit of quality differentiation would be a welcome Christmas present indeed.

Posted by Macro Man at 8:24 AM  

7 comments:

would be nice to know the volume traded at distressed levels... and who bought it (my old "spoofing" theory).

haruspex said...
9:46 AM  

Not quite sure it's quality that's separating winners from losers here ...

PJ said...
12:49 PM  

Wow - what to make of the sudden reduction in comment volume? Did everyone go on vacation?

L/S Equity Guy said...
3:58 PM  

L/S, here, bored, frustrated, let's get on with 2010 mode.

Steve said...
4:15 PM  

Silence is contagious in moments like these...

I-Man said...
7:28 PM  

One equity strategist from the street closed out a conference call last week saying that he is finding a lot of clients and counterparts taking the next 2 weeks off. And when he thinks about 2010, he feels it is important to position now for the positive catalysts that are going to hit in the beginning of 2010.

I agree in that I feel the larger 'risk' for equities is to the upside.

der Tillman said...
7:42 PM  

I agree risk still to the upside, especially in financials.

L/S Equity Guy said...
8:18 PM  

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