Thursday, April 28, 2011

English Passions : Weddings and Football

Well TMM are still trying to be on holiday and were hoping to sneak off until next Tuesday after the bank-holidayfest in the UK. Fat chance, as this USD slugfest has picked up a pace after the Beard seismic-shifted opinion from the Plosser-rebel-hawks firmly back to the regime's dovish master plan. We will be mighty brief today, though we know we should be discussing many things. Apart from the market madness there are two major themes in London this morning. Football and a wedding.

Let's start with the scores:

Real Madrid 0 - 2 Barcelona

Federated Beards 1 - 0 Plosser's Hawks

Larry's Finks 1 - 0 Pimco Bill's

Voldemort 3 - 0 Dollar Bulls

Share Bears 0 - 1350 Spooz Longs

Volatile Vixens 15 - 43 Onemonth Silvers

Bond Vigilantes EU 3 - 14 Bankers Centrale

Spam Chuckers 1530 - 0 TMM

A-Team ECB 1 - 0 Merkel Placators

Draghi United 12 - 1 Stark Disappointments

Zombies Ununited 480bio - (-480bio) Germany

UK Doubledippers 0 - 1 ONS Fabricators

FX All Blacks 5 - 5 Walabies

Shanghai A (-3) - (- 10) Shanghai B

USA 0 - 0 Japan (gone into 3 years extra time)

And now for the wedding.

Just for a bit of fun, TMM thought they'd have a quick look at what happened to markets at the time of the last Royal Wedding in 1981. The below chart shows YoY RPI (white line), Cable (Yellow line), YoY GDP (orange line), the Bank of England Base Rate (pink line) and the FT30 Index (green line - this was before the days of the FTSE100...). Coincidentally (or not), the recession ended exactly one month after the engagement of Prince Charles & Diana was announced, with equities rallying, inflation falling (along with the Pound). The equity market peaked a month or so before the wedding, with the BoE hiking rates shortly after and the Betty put in something of a rally. Equities then bottomed just after Diana's pregnancy was announced, rallying until just before Prince William was born, with Sterling resuming its sell-off as rates were lowered in response to falling inflation.

Now TMM would like to offer their most sincere and heartfelt best wishes and hope they have many happy years of marriage. But, to be a bit mischievous (and after all, this is just for fun), TMM also thought they'd have a look at the events around Charles & Diana's separation and eventual divorce.The below chart shows Sterling rallying hard (but equities selling off) after Charles & Camilla's affair was exposed in "Diana: Her True Story" by Andrew Morton in May 1992, but falling sharply (while equities rallied sharply) after the Diana & James Hewitt's "Squidgygate" Tapes were published in Aug 1992. There was little reaction to the release of the "Camillagate" Tapes in Nov 1992, but Sterling bottomed shortly after their separation was announced in Dec 1992. News of the Queen's asking of the couple to divorce in Dec 1995 appears to led the Bank of England to begin an easing cycle, with the eventual divorce leading to another strong rally in Sterling.


In no event shall TMM be liable for any loss or damages of any nature resulting from, arising out of or in connection with the Royal Marriage of William and Catherine. Please note:

  1. The stability of marriages can go down as well as up. Any children arising from them may or may not be the product of both parents.
  2. You may not get back all of your original investment
  3. Past relationship performance is not necessarily a guide to married life.
  4. A mother-in-law is for life, not just for Christmas.


Anonymous said...

Highly entertaining post. "A mother-in-law is for life, not just for Christmas." Drawn from personal experience?

FX said...

Those Aussies are worth every penny...

Polemic said...

Anon 4pm - Yes. Ohhhh yes.

Fx - yes tmm have been tracking the pay of some of the australian jobs. We are off to try on hard hats.

Polemic said...

Hell , hope mrs P doesnt see that.

Leftback said...

It's the "Osama popped his clogs rally" today. Speaking of football, I wonder if they knew he was going to be in with his homies watching the Gunners play Man U?

The wedding was luvlee but the honeymoon may be over as soon as Wednesday for certain overextended currency pairs. [Hint: GBPUSD, EURJPY].

CV said...

What rally LB, Spoos are up a measly 6 points at pixel time. Surely that cannot be enough for addicts? Of course, we did hit a new high after Benny gave his blessings to the current trend. That leaves the past recent high (1343) as support I guess.

I do note though that the DGDF is still "en route".

More generally, we are receiving the standard "May rhyme reports" today and I am not sure what to make of it all to be honest. We have spoken about Dr Copper as a canary in the coalmine before ... it is definitely looking tired and setting up a move below 40.000 I think (3m Jul).


CV said...

Come on guys, where are ya?

Silver down close to 9%. Is this the blow-out or just a nifty little correction to the 20dma before the rest of the short suckers are squeezed out?

What is the pain trade here? Rumour has it that the smart money has left?

full disc: no positions and I certainly will not touch this with a barpole in either direction.


Leftback said...

Silver bulls...


(Cue the Two Minute Hate....)

EURUSD 1,50 anyone?
Silver one last gasp to $50?

After that, you know..

Nemo Incognito said...

Some of us are long quite a few puts of the short dated nature in Silver and are waiting for the price action to get worse before we bust out the ticker tape.

Leftback said...

The JPYUSD retracement we discussed from 85 has reached 80.92 here. Anybody else think this is about done? Stick a fork in it....?

Are Treasuries finally way overbought here or is everyone enjoying the sounds of discomfort from Newport Beach a little too much?

Leftback said...

Re: Shorting silver. A classic "widowmaker"...

One of the truisms about the ultimate Widowmaker™ trades is that they are always making money for someone else when you are not actually in it, having been squeezed the previous week before The Powers That Be raised margin requirements by 1500% having already tipped off all their mates in advance.

Just speaking for LB here....

Of course we may be getting to the point where JBTFD no longer works and long silver becomes the new widowmaker....

Leftback said...


flatteners over? Back to the steepener? Bill, are you OK? You don't look so good....

CV said...

Well, to the extent that QE2 was meant to push down yields (which it didn't) its end would be expected to bring higher yields (which it won't) and thus short term yields would start to discount a US economy recessing without stimulus ...

presto ... that would then steepeners. Or not?


Polemic said...

Lb re Usd.jpy - Me.

Leftback said...

Some bond commentary from a variety of sources. Note that our old friend Jim Caron of Morgan Stanley thinks that the 10y is fairly valued here:

Bond Market Commentary May 3 2011

Leftback said...

It is probably superfluous for me to add that this is the same Jim Caron of the same Morgan Stanley who was so massively bearish Treasuries at the end of 2009, calling for a 5.5% 10y in 2010, and then issuing a mea culpa in the summer of August 2010 after the anticipation of Qe2 had presumably resulted in a right royal rodgering for their fixed income positions.

Oops I misread the bond market again..

Leftback said...

Polemic @ 9.18.

Yes, to clarify, it was in fact P Himself who made the unerringly correct call on the USDJPY retrace, which we ourselves then rambled on about at some length here in the Peanut Gallery - consisting of LB and Claus - while nobody was reading the blog owing to a lack of posts from The Lads.

We have been absolutely lousy of late with our calls but.. looking at a still very crowded trade in DGDF, the now universally miserable expectations for US employment, the recent short squeeze being more or less concluded, and the presence of an unfailingly reliable Contrarian Indicator (vide supra) we are shorting the long end of the curve.