Friday, October 01, 2010
Hands up if you are glad September is over and hands up if you are now kicking yourself for predicting the big picture nicely but getting stuffed by that traders nemesis .. T t t t ttttiiiimming... The sooner we get this QE thing over and done with and get back to focusing on the rest of the world, the better, as far as we are concerned.
We will be doing some more in depth posts next week but for today we are sorry, it's more ramblings.
Following on from our last post's theme of "say one thing and do another", Greece's passing of a tax avoidance package gets an A for Audacity. But then it probably won't matter that much if they are just planning on selling the nation to the Chinese anyway, as Wen offers them a "cunning plan". Does this involve a couple of reserved berths in the Kalamaki Marina for the odd grey Chinese vessel? Mind you, as one friend pointed out, if the Chinese are interested in buying Greek assets someone might want to let the British Museum know.
Ireland is OK now apparently - please move along, there is nothing to see. The corpses have been whisked away in blacked-out ECB vans. Very X-Files.
Belgium Reynders is saying that more regulation is needed for ratings agencies BUT NO PENALTIES. Errr.., we are sure they'll promise to behave.
Oh and did anyone notice that Belgium held an air traffic strike 3 days ago? Do people still fly to Belgium? We thought they had gone all "train" years ago and just maintain air traffic control to stuff up everybody else's holidays. Mind you if you are UK based you won't have heard ANY news recently as the "asteroid hitting earth" type coverage on the Labour Party has jammed all other news signals.
Portugal's general strike is called for Nov 24th. Is that far enough forward? We wonder if a US investment bank could structure some "civil unrest products" that effectively roll up all the strikes to an "off balance-news-sheet" forward date far enough off to mean it will be some other administration's problem when they really blow up?
But once again the Euro currency is at the mercy of the US QE mob and the E.M. interventionistas. At least equity land has woken up. Estoxx got toasted through the futures as soon as US came in and that just opens up our mibometer even further. In fact, the mibometer is a great indicator of the very moment that the markets switched from euronews to a gimlet-eyed focus on US QE. On Fed day European equities and eur/usd parted company and have been diverging ever since.
Of course, it's obvious that the last thing that the PIISers actually need is a stronger currency now, so it is natural that their equities dump. But it isn't the fact that this is happening that is a surprise, just the ADHD way the markets reacted (but that’s OK because it's genetic you know, poor dear).
So the big question that TMM (and, they are sure, the rest of the market) are asking themselves is "Will today's macro data confirm that the mini-turndown since the Spring is over and, therefore, is The Trade "risk-on-into-year-end" "? If the data is good, it's pretty hard to argue that it is not...
TMM's doctor mates have reported that the outbreak of Eurostrichitis that began in Brussels has spread to as unlikely places as Greenwich and Mayfair. And TMM know very well that when investors are given a dose of monetary heroin (QE), while suffering from acute Eurostrichitis, it is dangerous to stand in front of the Europhoria.
It has even infected the MRSA resistant Greek bond market (see the above chart of 4y GGB yield).