Wednesday, September 21, 2011
The Asian contagion deleveraging trade rolls on. We've seen more selloff in FX (though less violent) and a widening of local FX bonds' spread to treasuries. To date it appears to be the worst in the most liquid and crowded macro trades with Korea taking the brunt and Indo/Phils relatively tame thus far. Per everyone's NEER model for Sing Dollar and the like, this could still go some way and TMM aren't stepping in front of it all just yet - when Indo cash gets moving it really moves.
Europe continues to try and flog its copies of the "Big Issue" around the world. Brazil has chucked in a sympathy $10bil which in Euro spending terms wouldn't even buy a cup of tea. The Japanese are offering to buy some more EFSF, but, however, not sovereign debt. Much like "Look, I'll give you it for a sandwich, as long as you promise not to spend it on booze". Sure guv'nor.. 'course I won't. Meanwhile, the French banks burn.
But today it feels as though the market is trying to take a break from the stream of Euro-headline watching and is using FOMC as the excuse. That suits TMM just fine and gives us a moment to consider an outstanding issue. Last week we asked for suggestions to be added to the Glossary of TMMIsms. As with all competition announcements, there will be tears. Tears of joy, tears of disappointment and tears of boredom. After a week of fierce debate the panel has decided that the following, chosen from a very strong field, will be added to the TMM glossary to be found top right of this page.
Honorary mention first goes to "EUROs" offered by "the Original"
EUROs - Convergence Unravelling, Non Taxpaying Spivs.
Now whilst this is a beautifully crafted expression it is pretty hard to use without causing too much confusion and, as this is a family-friendly blog, we will save it for the HBO/Cinemax Film release of "Macro (mother****er) Man" starring Samuel L. Jackson and Al Pacino.
But the winners are-
MBA - Mindlessly Bullish Analyst. To be used in the hushed tones of Test Match Special, "Oooh that's a ripper from the MBAs at Banca Indebta".
This entry struck a cord and appears to fit Asian analysts particularly well. Education and blinkered bullishness is a dangerous combination.
RORO - Risk On Risk Off.
So obvious we wonder if it hasn't been used elsewhere already, but so apt in these current "RORO" markets. Lovely play against the "Roll On, Roll Off" original term which is exactly what this new RORO reflects.
MTMB - Mark to Make Believe. An accounting technique perfected by French and other European banks during the sovereign debt crisis, which ignores conservative accounting principles and practices market pricing by a range of obfuscation including "hold to maturity" accounts, secret internal valuation models, conveniently excluding Greek government bond holdings maturing later than 2020 from the hallucinogenic 21% haircut because they are excluded from the PSI etc.
A well-crafted description of a function we all know far too well.
BOLIVIAN - Balls Out Long, Infinite Var, It's A No-brainer. As in "We are going Bolivian, can't lose."
A much, much better description of a trade that has us SEWCPS (so excited, we can't pee straight). We anticipate this entry getting a lot of use in future posts, though not always in a complimentary manner.
PISN - Price is News.
Now here we want to be a little devious and ask the creator (Corey) if we may shorten it to PIN. In doing so we can open up a subclass of TMMisms, such as "PINball" - Price is News, having a ball; "Hear a PIN Drop" - suspect an oncoming fall that is self-fulfilling on price panic; "PIN Money" - money made on a no-news move (large hedge fund manipulating stuff, perhaps). And if only a small amount is made perhaps it could be called a PINnickle?
And finally to the overall winner. In TMM's eyes this encapsulates form, functionality and craziness in a way that still makes them chortle - The link provided sealed it.
Vengabus - A trade/idea that has everyone jumping on board and becomes immensely popular, but is destined to return to the obscurity from whence it came leaving everyone scratching their head as to how, being so terrible, it ever got the amount of traction it did in the first place. As in, is the driver of the Euro Vengabus falling asleep at the wheel? The GGUF Vengabus seems to have gone into reverse gear.
The idea of a Vengabus led TMM to ask themselves what Venga actually is. We suggest that "Venga" is "an asset value's sensitivity to something no one was talking about 3 months ago". This could lead it to become a tradable value in its own right. We anticipate the likes of "where are you seeing the Venga on that basis swap?" or "see how the Venga has changed on copper to China off balance sheet financing? Think it's probably peaked now that Ambrose Evans-Pritchard is talking about it" being heard across dealing rooms of the future.
Congratulations to the winners in meph (twice), bcordischi, Corey and to the Anon, whose winning entry surely means he or she should step forward to accept the glory. However we hope it doesn't lead to a Spartacus moment .. Who is Anon? I'm Anon .. no, I'M Anon.. no I'M Anon.