Wednesday, November 10, 2010


Drowning in it today. We are a smidge buried in our own little Worlds. Earning a crust coming before the hobby. So a brief one.

If you imagine that dealing in the markets is a bit like beekeeping, where you are managing lots of small independent bits of information (the bees) and if you do it well you are rewarded with Honey, then we feel that today the little buggers have swarmed. Lots of little headlines all hitting the wires which individually would be just fine but they are coming in thick and fast on all the current themes.

Last night we had US yields picking up after the 10yr auction and it that uber rate sensitive pair USD/JPY has responded in style. Is it the start of something bigger?

Dunno because we are trying to work out what the Aussie data + Chinese data + reserve requirement hikes means.Is this significant?

Dunno because we are now trying to swipe away a swarm of stories on Ireland (IMF bailout speculation the latest). Do we think that’s likely?

Dunno we are now being harassed by an attack from the Mervynflation headlines. Argentine Economics. Have to say BoE Quants on fire there. Chances of inflation being at or above 2% or below 2%? Remember, only 2 outcomes possible... 50/50... Well done chaps. Do we care?

Dunno because the Portuguese auctions are out. Are they good or bad?

Dunno because someone has just placed all the soothsayer "turn" indicators in USD in front of us... Should we follow them?

Dunno because now a load of pre-G20 whining is hitting the wires. Are they going to hold it in a boxing ring? Or one of those cage-fight things?

We know that mastery of the market would look like this:

But today we just feel more like this:

So basically, sorry, we are just too busy to try and strip the swarm, find the Queen and get them back in the box. (Though for some reason, selling AUD/CAD is singing out to us).


Anonymous said...

Macro Man, thanks for the blog, it's great.

What is your motivation for short AUD long CAD apart from a toppish formation?


Anonymous said...

Tend to agree on AUDCAD, especially if you consider that AU data have been rather disappoiting as of late (employment tonight to confirm?), while CAD could well be a big beneficiary of the ultra loose US monetary policy stance at a time when US data are picking up rather nicely ...... short AUDNOK looks tempting as well.

Anonymous said...

all about timing ... but aud/cad may have a few more motives than aud/nok right here right now!

Anonymous said...

an additional motive?

Anonymous said...

Nice post. Can't escape the feeling that leveraged commodity longs are about to get stung....

Anonymous said...

"I say, sir, the students are revolting."

"I know that, Carruthers, they are quite disgusting. Now pass the caviar, would you. old chap?"

Nemo Incognito said...

Anon, if you've been watching Palladium its well and truly underway. Risk on into year end only working for gold and the energy complex.

CV said...

On commodities, I follow copper quite closely and continuing decline in inventories (have not looked at the VERY recent data) and price momentum still not hyper stretched suggest that this one may run a little bit yet ... but I predict a pretty sharp correction somewhere between now and XMAS (how is that for a "non"-prediction? :))

On the other hand it did test 4USD per lb unsuccesfully so ...

generally, on risk on/off ... I think it is all down from here for the SP500 ... perhaps in choppy moves, but I definitely think we have a downleg from this point. I would say about 1120 or something (just pulling it out of the air this, but reasonable no?)


Anonymous said...

Claus, I would be a buyer at SPX 1120, was raising $ on the way up immediately pre and post QE.

Important auction ahead for what some have termed the "orphan" 30y. Ts set to rally ahead of POMO schedule release at 2pm.

chancee said...

The S & P has a mysterious way of not going down this time of year. The investment banks on Wall Street have fought tooth and nail to push the market up to these levels. The last thing they want is their bonuses to suddenly shrink. Don't look for any kind of sell off here.

Refer to a chart of SPY from this same time last year to see what's most likely coming. A market that tries to sell off, but is then repeatedly opened higher via late night surges in the futures.

CV said...

Point taken Chancee ... I would like to see a close above 1230 in this week before I am fully convinced though, but your argument is not without rational :) ... most big financial institutions that I have looked a bit at in terms of research has year end targets at 1250 to 1300 which would be consistent with a slow upward grind.


JohnL said...

Try this S&P seasonal chart. But this year has been backassward so who knows???

Anonymous said...

There is possibility that authorities are trying yo orchestrate another short term deflationary crash in order to prove the worthiness of QE2.

Corp bond funds have joined the divergences with major indices.

CV said...

Interesting point Anon ... My point would also go something along the lines of the fact that to see further upside here in global risk we would really need a melt-up scenario (which many is expecting). Usually, you don't get melt-ups when everyone expects them.


Minty said...

This week I got short AUD/USD on Monday around 1.0125. I am taking small profit around par but really want to stay in as I fancy a bigger move back down to 0.9400 in the next 3 months...does anyone else look at fib retracement and see confluence between the 3month low to high and annual low to high?

Yesterday got long NZD and 0.7800 and took half profit this morning 50pips higher...feeling like I should've taken it all

Was long CAD/JPY on ichimoku from 80.50 but not sure what to do with the trade now. On RSI looks a touch overbought perhaps?