Tuesday, December 14, 2010

Of Squeezes, Ratings Agencies, Lawyers and Haircuts

Well the Mervynflation report came out again and managed to show remarkable stability as inflation ex-everything is encouragingly low. Well done, Mervyn. Great application again of the Gaucho Grill.

Elsewhere December is going just swimmingly as far as the general "stuff you" moves go. We are still intrigued at the almost desperate recycling of Eurowoe headlines in an effort to get Eur/usd down again. But the price is not responding. The path of pain beckons beyond the oft quoted 1.3450 JSTFR point. The latest excuse for this further squeeze on Euro shorts came via the mood swing on USD. Or rather the Moody's swing on US. Once again the ratings agencies come out and screw a country with their views observed through their rear-view blindingly obvious binoculars. Are the ratings agencies as dangerous and uncontrollable as Wiki-leaks? No. Probably not, as what they say has normally been out in the public domain for years (though a lot of folks would like to see them go down for abuse crimes). We have bankers' taxes, how about ratings agency taxes, where we refuse to allow ratings agency employees to receive bonuses if their agency causes financial upset?

Whilst we are on the subject of taxing professions. How come the lawyers get off so lightly? Talk about a tax on efficiency, a tax on lawyers, if it decreased their activities and intervention, would actually be a tax that INCREASED efficiency. And if you thought Winston Churchill was talking about the RAF when he said "Never in the field of human conflict was so much owed by so many to so few", it's more likely he had just received a lawyer's bill.

Another profession that appears to shun efficiency as much as the lawyers is, surprisingly, hairdressing. How many of you are as bemused as TMM by the questions even one's regular hairdresser asks. "What is it to be then?" Errr... Shorter? "Would You like it layered?"... Wassat? "Scissors or clippers?" Err.. "Tapered or straight across the back?".. I dunno I never look at the back! "Wet or dry cut?" Why the hell do I care? Basically we don’t speak "hairdresser language", so much as we'd love to be able to trot out "scissor-over-comb-1/2inch-over-ear-layered-1-inch-top-thinned-tapered-back-dry-cut-shaken-not-stirred", we can't. We are normal people and don’t watch reality hairdresser programs. So here are some TMM top tips to all our hairdresser readership. Please do one of the following.

On completing a haircut, jot down exactly what you have just done in hairdresser language on a small card that we punters can present to the next hairdresser to get the same results. Or set up "HAIRNET", an internet based service that you log the above data in, preferably with photo, so that it can be accessed at salons globally, then make it into an "app". Or don’t act surprised when the client, as this one did, hands over a phone and asks to have a photo taken of the result for use at the next visit.

Finally a tip for us customers. You know that bit at the end where they get out a mirror and show you the back (as quaintly traditional as offering that stupid oversized pepper pot in Italian restaurants) and you mumble the expected "yes lovely thanks" ?
Well, instead scream: "WHAT THE HELL HAVE YOU DONE TO IT!! ". It doesn’t half freak them out.

Now we know we should be saying something intelligent about the markets, especially after the very generous responses a few of you have made to the TMM "last request" Christmas appeal, but we really haven't anything intelligent to add. But, to those of you who have responded - A really Big Thank You. It is a lonely place doing this for the love of it, so seeing your appreciation and support being channeled to something worthy is heart-warming. Thanks again. To those of you that haven't responded, we are sure that you have good reason, but there is a candle lit in the window of the "JustGiving" site for you just in case.



Leftback said...

Yield Watchers Anonymous note that the yield on the US 10y is now close to 2.0 x that on the SPX, and the yield on the 5y is approaching that on DIA. Usually these kinds of ratios occur close to a short-term top in equities and signal a local maximum in yields. The yield on gold remains stubbornly close to zero, in fact it couldn't be closer.

We feel that there will very likely be a filling of one's boots with fixed income in the near future.

Anonymous said...

>Finally a tip for us customers. You know that bit at the end where they get out a mirror and show you the back (as quaintly traditional as offering that stupid oversized pepper pot in Italian restaurants) and you mumble the expected "yes lovely thanks" ?

Well, you can smile. However I once had a hair(rising)cut where the mirror was waved about in the deft manner that makes you unsure if you saw your own back or that of another customer. I got a bad feeling (tm) but was in a rush.

Later that day my suspicions were confirmed: a big pink stripe along the scalp. At full price.

Polemic said...

LB - Its christmas. Doesn't theory goes out of the window when positions meet thin markets? I would definitely agree in general but isn't usd/jpy a case in point. On normal rate move scenario's that should be up through 87.00 by now shouldn't it? Or are we suddenly using the excuse that we only care about the short end now? in fact usd/jpy only really got its skates on when the short end had that move out on spread unwinds.

I am really sorry to hear that.... but that has not only made me smile, its really made me laugh. Has to be said that when some things happen, the post event value of the tale easily pays for the short term grief. Case in point?

Leftback said...

Polemic, old chap:

It may already be Christmas in England, defined these days roughly as that season between the first mince pies being on sale in Marks and Sparks and the end of the Xmas-New Year orgy of Premier League footy matches (i.e. December 5 until January 8), and obviously a period where nothing of any significance happens or anything that could vaguely be described as work. There really is no time for shorting Greece, Spain or Andorra when one can get absolutely bladdered at the company knees-up, after all.

Over here, in an even more diverse and even more secular society, the markets seem to be still quite busy, as we are now in the season between the last Hannukah candle and the closing of the last toy store on the 24th. So there is still time for funds and IBs to be tossing out piles of shit that they accumulated during the year (sometimes referred to as profit taking).

After a few brief turkey burps on the 26th, you'll find that the whole bloody machine will be up and running again on the 27th, "The Holiday" is just a brief hiatus here in the eternal hamster wheel of American capitalism, as assets are traded in circles and bankers "create wealth" by "taking risk" "securitizing" and "exploring opportunities" to line their own pockets.

Merry Christmas to all at TMM and thanks for all the road maps and laughs throughout 2010.

Polemic said...

thanks LB and to you and yours.

Oh and your definition of a UK xmas seemed to omit X-Factor dates. Simon Cowell runs Christmas here now haven't you heard? That reminds me, I must go and buy 4 mins of silence ..

Chris (i-cjw.com) said...

I fear a tax on lawyers would just be yet another excuse for them to bump up their fees...

As I open my year-end bills, I have profound appreciation for Shakespeare's sentiments:

"First thing we do, let's kill all the lawyers"

Anonymous said...

Just tell your barber you want the "Macro Man Special:"


FX said...

Slowly but surely there grooming the next generation of hairdressers in the EZ, Anon, your pink strip is likely the precusor in the next fad to come around.

Anonymous said...

So the markets haven't left you bald from stress yet?

Must be nice