Tuesday, April 20, 2010

Shift F9

** Shift F9 **

On day two back in the saddle, Macro Man already feels like he's become macro man. Allow him to explain.

Consider the day's major talking points:

* Despite (or perhaps because of) concerns over the Goldman case, Magic Monday struck again, buoying stocks into a green close and running its recent record to a Cy Young Award calibre 29-4.

* Despite all the kerfuffle about rescue plans for Greece, Hellenic Republic debt is plumbing new depths this morning, with 5 year yields trading above 7.5%. The government must feel as if they are bearing the combined punishments of Prometheus, Sisyphus, and Tantalus on a daily basis.

* Despite all the "insider knowledge" of a forthcoming RMB adjustment, nothing has happened and suggestions of an agreement have been denied.

* Despite a consensus forecast of moderating inflation, UK CPI surprised to the upside....again. In line with the whispered leak.....again.

Plus ca change, plus c'est la meme chose. Those bullets could seemingly have been written on virtually any day over the past few months. It's almost enough to encourage Macro Man to write a macro to auto-generate a post on days like this.....hence the name change, geddit?!?!?!?!

So sorry to mail this one in, but you've gotta admit, the same themes have been dominating market consciousness for a long time now, with little in the way of successful resolution. So robo-blogger is set up and ready. When you see the telltale "shift F9" sign, you'll know that Macro Man has been replaced by macro man....

13 comments:

Pascoe said...

Hmmm - brent almost 2% off the lows. There a leak on the volcano situation out there too MM? (sorry, mm).

Nemo Incognito said...

You'd think there'd be something to do with this volcano on distillates - long bunker fuel short kerosene for example?

Currency Rates said...

It's almost enough to encourage Macro Man to write a macro. Currency Rates

Right Field said...

Asset Markets Have Shifted to a Range Trade ----- Macro themes without resolution - Financial asbestos litigation, sovereign debt, Chinese weakness - are largely being ignored by developed markets. The majority of investors are relieved by the positive response or resilience in risk assets post last Friday. Clearly this highlights that the pain trade of higher prices has subsided and that downside is less desirable than upside. Mid-month data is less impactful unless there is a negative employment read through, Real Money remain buyers of higher or lower Equity prices, Macro professionals are disappointed due to no risk asset weakness follow through and long/short investors are primarily focused on earnings. Technical ranges are now clearly identifiable - 10-yr yields 3.73-3.88%, SPX 1183 (20-DMAVG) - 1213 (highs), Crude Oil 81.31 (50-DMAVG) - 83.61 (20-DMAVG) and EUR 1.365-1.328 trend channel. Point being, these ranges bread rotation or book management until something breaks. Post last Friday, my bias is downside but to what degree is hard to handicap. A break below SPX 1183 would be material.

Leftback said...

The YGDF, MGUF code was invented for days just like these.....

Tyler said...

what do you guys think about other banks benefitting from the gs charge? sure, if there's a witch hunt, they all stand to lose. but what if the others (bac, jpm, ms, etc.) emerge with reputation largely in tact? with whom would you be more inclined to trade?

everybody has always been skeptical of gs, but this is taking it to a whole different level.

just a thought.

SFOT said...

Nemo,that is certainly not a bad idea but it has already done a lot in the past 2 days. Not exactly convinced we see more of this move until we know how bad the backlog of Jet fuel is.

Leftback said...

Tyler, there is never just one cockroach, and there are going to be European cockroaches too. GS is just the first in line. If DB, SG and CS, for example, get hit by Greece and the regulators at the same time... well, let's just say things will be interesting. We are more or less due for the Kredit Anstalt moment.

Greek 10-yr now yielding 8% .. we are getting close to the point of no return.

Nemo Incognito said...

FWIW between Greece, having a huge rates business that probably has exposure to Greek banks and related instos and the fact the Greg Lippman et al were pushing the short subprime trade *hard* as per the "Greatest Trade Ever" book its hard not to see DB as the more braindead trade here on the short side if you want to beat up a European bank.

Nemo Incognito said...

And yes SFOT, I've been in it for 24hrs but figure this could run for a while the longer these flights are on the ground. Trying to work out when is a good time to cut it.

Leftback said...

Yes, indeed. DB seems set for its moment in the sun, having hidden behind the curtain a bit while C, BAC, RBS and the rest were taking a spanking. Too much exposure to the Greek sun can cause a nasty burn to German (and French) visitors.

Now before long we will get to see exactly how cozy is the relationship between DB and Mutti Merkel's government. The German people are not going to enjoy finding out that their politicians are just like those they have derided in the US and UK. In fact, if they are lucky, they too may soon enjoy owning their very own bonus-hungry banksters!

A dollar-positive scenario is now slowly coalescing on the horizon, and it may well be the Europeans who get the stagflation for a while as we get another whiff of Japanese deflation in the US.

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Rossco said...

@Tyler

I think what is bad for GS is bad for the sector. MS have lost their way, ML were never that bright anyway and will probably have made a mistake somewhere. The Europeans have typically had a higher appetite for regulatory risk. Fear = lack of innovation = lower margin businesses. For a lot of these guys it's back to their knitting.