Thursday, August 04, 2011

They are NOT Alone

But are they strong?

Japan is joining the fray on its Intervention day. As with all intervention days the market puts down its economic playthings, dresses up in its finery and heads off down to the tilt-yard to either participate or spectate in the medieval sport of FX jousting.

The rules are fairly simple. The intervening central bank climbs its mount, usually an e-platform or a phone line to one of its primary dealers and pelts off full tilt towards the market. The market will meanwhile be heading towards the intervener. On passing each other they will try to knock each other off their mounts.

But what usually happens is that the intevener will try to get the jump on Market by charging down the course and delivering the first blow whilst Mr Market is still joshing with his knaves and hasn't even donned his armour. From then on the day consists of a series of jousts with the intervener taking on all comers, normally a bevy of relieved local exporters grateful for light relief, a few commited fundamentalist nutters and a collection of headstrong (some may say foolhardy) speculators, who remember the glory Sir Soros garnered defeating the Old Lady of England. Meanwhile the audience cheers on from the sidelines and makes bets as to how many yards the intervener can do before he gets knocked down.

We suggested yesterday the markets are getting closer to the point of major coordinated policy intervention as "price" has become the news. If price is the news then of course the way to counter the bad news is to move the price. "Price" even went Tabloid yesterday with the fact that the Dow hasn't fallen for so many days since whenever the last time was. With the BoJ now in play after the SNB and their quasi-QE yesterday, we debate if the ECB will declare its support. As with most intervention days the gossip and rumors are rife and economic data is but a sideline (though today's German data once again shows their exporters loving the benefits of the periphery weakening its currency).

TMM are meanwhile firmly in the stands watching rather than jousting and have started to play their own game of futility. TMM are trying rank in order of uselessness their collection of useless things.

BOJ intervention
SNB intervention
Plastic wing-nuts to secure toilet seats
Gold puts
Lawn-mower on a yacht
Trying to get yourself off email lists
PC World (the UK store)
The Euro rescue plan
The US Republicans
"Baby on board" car stickers
US ratings agencies
Western Audit firms operating in China
VAR calculations
ECB cojones
Balance sheet accounting
Buying Swiss 1y govt bond, as it's yielding MINUS 0.047%
Your pension plans
Buying equities as you don't think 2 CBs reflating is bearish
Your children's futures
Increasing your luck by forwarding this on to 10 true friends


Ambo said...

"Trying to get yourself off email lists "


Nic said...

errm homeopathy does work

Polemic said...

Sry, nic. Scratch that to the bottom then. But I guess TMM must have drunk the amnesic water that had forgotten the cure.

Leftback said...

Well, well, well. Claus and LB have been chirping about the possibility of BoJ intervention for months, and it is finally here. As a result, we are seeing correlation breakdowns all over the place, no wonder things are such a mess this week.

The other unpopular suggestion advanced is that we would see a regime change from DGDF back to Ye Olde Yen Carrye Trayde of yore, and that we might wake up one day to see the unfamiliar sight of Bucky and Spooz climbing hand in hand, the market for the time being able to let go of its usual partners Crude and Copper.

Anonymous said...

A certain jester has been unwittingly knocked below their 1250 level. Will the bearded white knight make a cameo at Jackson Hole to save the day?

Looks eons away from here. Didn't Brazil warn us about this type of chivalry? Someone could lose an eye.

Leftback said...

Strap yourself in on your horse, TMM, while they sell off the commodity complex on the stronger dollar. The long-awaited rotation from growth/reflation to dividend/value? It is ON, baby... a good day to grab some yield.

As the dentist always says, this won't hurt.... now, anyone got some Novocaine for LB?

Bruce in Tennessee said...


I am sure you got over your wrongfooted bet on the 10 year..what interests you now?

Leftback said...

Yes, we have been unusually and unerringly inaccurate on Treasuries. We like anything today with a low price, a decent business model and a high yield.

Look, it is all about tomorrow's jobs report, and the whisper number is very very low. Anything non-apocalytic and we are going to be treated to a fry-up of shorts for brekkie tomorrow, followed by a delightfully silly low volume Dog Days rally.

Anonymous said...

There would seem to be some horsing around the 1.4150 area in the €uro... The proverbial Maginot Line in the sand.

ntwsc said...

Well there ya go PP. If you'd taken a donkey with your water, you'd have remembered the kick.

Leftback said...

Donning the gloves today, TMM? You know you look years younger in Kevlar. We have been scouring the wreckage for yield - and likely squeeze candidates.

Hope Nemo is right about impending non-apocalypse in commodities, otherwise it's all going pear-shaped.

Anonymous said...

Can't speak to TMM's gloves, but I certainly believe the Teflon Don's speech last night was not exactly conducive to confidenza.

Polemic said...

Well lb, this knife is falling at suxh speed i think i d rather wait for a confirming rally to join than lay a bid to be speared. Anyone talking about Belgium?

Ecb really are not inspiring confidence if that foray into irish and port bonds was meant to be shock and awe... "vee eff sent a seegnel to zee markets zat we are clueless" .. cmon guys get real.

Ntswc.. had enough kickings recently without any animal based punishments.

If i was to try and grab any one item from the crashing butcher's cutlery drawer it would be someone who makes gold assaying kits. Every shop may need one soon.

Polemic said...

Oh.. and sell Zar. Long gbp/zar? Surely time for zar that to finally take its well deserved kicking that we have been waiting so long for?

ntwsc said...

Haha good point PP.
I'll push the liver to one side then.

And have you thought of CNT reinforced trolleys?

CV said...

Sniff, I love the smell of burnt Kevlar in the morning. I know a crash when I see one.

Clearly, the pain trade is further down here!


Tradebot said...

yikes! i hate the equities but i hate bonds even more!! Yours everything!

Leftback said...

Seconded on bonds. The last one in is going to be quite unhappy.

Claus, burnt Kevlar smells a lot like smouldering electrical insulation. Anyone got ideas on burn medications? Preparation H?

Charles Butler said...

For numerology fans...

Various eurozone indexes that are heavy financials are sitting at June 2010 lows (although the banks have broken them already). Next stop is another 7-8% down, then March '09.

The banks trade that has made money since early July has been long exposure to S and short that to PIIG. If the breakdown continues this should continue to work.

...if it matters, the Google security word dished up is 'redip'.

Anonymous said...

Some cash machines worth a hard look here. The likes of Total, 20% down from the tops, only 6% away from the 08 lows, and good for 8-10% yield at current levels.

Leftback said...

....and it's a win for the 1200 crowd over the 1250 support. Ugly, ugly day.

CV said...

So where do we go from here, a bad job report takes us to 1150 tomorrow?!

The problem is that too many have probably tried to catch this knife (you looking at me?!, make it stop!!) and this is why the pain trade is still down.


Anonymous said...

pretty much guaranteed some numb nut central banker will come out monday trying to reverse things and play god. start praying!

Anonymous said...

'Confused from Cheltenham' asks LB when would you like me to remove the knife ;) ?

WellRed said...

Been sitting on a ton of cash ever since I took it on the chin going over the top with TMM a few weeks back. Trying to parse the price movements/news (or lack thereof)/data to determine when it is time to emerge from the foxhole.

This morning I was thinking that a NFP number which beats expectations would be enough to send these markets up a few points. After watching the sellers absolutely steam roll the buyers today, I am not so sure.

What about that story about BNY Mellon charging people to hold their cash? Seems like a lot of real money has done a lot of selling and is sitting tight.

But all that being said, is there some sort of cataclysmic event that I missed? I mean wasn't GDP last week? Europe's earnings have been pretty trash, but S&P companies continue to outperform...

Anonymous said...

Anon 9.17
'Confused from Cheltenham' says'
See the US$ see gold see where money really goes for safety when it needs a really big big hole to hide in! Now imagine how much asset buying is out there that depends upon the US$ being weak .
We've hardly touched that stuff yet.

Polemic said...

Does anyone care about the jobs report? its history anyway and the recent moves will have reshaped sentiment. this needs more than the sticking plaster of some nice jobs.

This needs, as we may have been mentioning, serious surgery from the top brass. Coordinated policy response that unfortunately is not going to leave the financial institutions in a pleasant place.

think the world is changing fast and regulation may even end up putting an end to not just financial company's activities .. but god forbid . even day traders.

Off to learn an artisan skill...

CV said...

Oh, I agree 100% Polemic. In my book the US is headed for a recession and Spoose could easily end up in 1100 territory here. But nothing falls in a straight line ...

Polemic said...

and I agree with you CV too. If they get their acts together they can yet stabilise and restore the markets. And in the short term that is my preferred direction as we don't think they are going to let the weekend go by unactioned.

Otherwise Monday is going to be .errr. whats blacker than black?

ntwsc said...


Gawd knows what Olli's thinkin of bringin to the paaarty tomorrow though.

ntwsc said...

See, I bought summat in ink yesterday, it's the new black.
Set me thinkin we only had ink Monday last time around.

Ambo said...

They don't get it, its the currency system stupid!

We're in the last stage now, its all about really think the $us going to 60 is going to melt the spooz up,thats nothing but bullshit.....this meltdown is the only collaborative effect I've seen since I'v started trading, a whopping 2 years,nevertheless thats what research is allbout.

Anonymous said...

A lot of emotional comments on a usually pretty cerebral forum. Tells me not a bad time to step in when confusion reign supreme. I try to keep it simple KISS, 150 points down in short order, feels like world is coming to an end, some of my speculative plays got margin calls today moving 20-30% in 10 min. Fired my first bullet for 1/3 position long, fully expecting we can move down more, will fire another if we open down 2m 20-30 points, the strength of the rally should we get one will let me know if it's worth holding or folding. Simple. I take solace in the fact that Dr. Copper is still holding uptrend line. If world was coming to an end should we not be puking copper more than gold? My 2 cents.

ntwsc said...

"Fired my first bullet for 1/3 position long, fully expecting we can move down more"

Pretty cerebral, that.

Dammit, first Kenickie and now ChaCha.

chancee said...

Nothing falls in a straight line? These days I'm not so sure. After all, the bots probably know right where we're headed anyway - why dally?

Nemo Incognito said...

Oh man what clusterfuck - up but with gamma like this who knows how long that lasts. Ok so on longs do I re-overwrite now? Way longer than 24hrs ago on a number of things.

And on shorts how much short banco itau and Trina solar is enough? Thank god for sketchy financials and overheated economies....

One thing for damn sure - getting into some EM carry unwind train wreck options and not just talking about short AUDSGD.

Anonymous said...

CAD not having a good time either

sooperman said...

"as to how many yards the intervener can do before he gets knocked down."
oooohh..very nice sir.