Friday, October 07, 2011

That's why the lady is...

Non Farm Lottery day. TMM are all a little weary after late Thursday nights and have used this lull to trim back some risk ahead of today's lottery and are aware of generic "sell Friday" tendencies. We will be just happy enough to make it through 'til home time and some sleep. But as we doze, the lilt of the "Ol' Blue Eyes" classic that was playing in the bar last night is still echoing around our muddled brains...

She gets impatient, over the greek debate
She'll never rescue, lazy people she hates
She loves to tighten, just don't do it late
That's why the lady is a tramp

Won't go to Athens, there's nothing to see
Doesn't like crap games, with the ECB
Won't compromise, with the FDP
That's why the lady is a tramp

She loves the free, free Germany
Export ecstasy
PIIGS broke, but it's "OKE"
Distrusts the French, they're not in her camp
That's why the lady is a tramp

Doesn't like dice games, with the Finns or the Nords
Rides in Mercedes, not Seats or Fords
Will dish the dirt, wont sign the accords
That's why the lady is a tramp


abee crombie said...

if nothing makes sense anymore, then I guess you sell today's better NFP

or do we do, the contra, contrary trade!

jill said...

"The world is facing the worst financial crisis since at least the 1930s “if not ever”, the Governor of the Bank of England said last night."

Of course King takes no responsibility, whatsoever.

Anonymous said...

question: if France has to recapitalize its banks by itself, how soon will its credit rating be downgraded?

Nemo Incognito said...

I think what a lot of people are missing here is that if NATIONALIZE banks (ie, screw the subs and the equity) you aren't just long a liability and out of cash. You are also long a call that those banks are worth something in the future when all the bad stuff is over. Hence I am a big fan of nationalization because it should be less negative for credit and allow much more sensible responses to Greece.

Leftback said...

Nice dull day for a certain hungover member of TMM? Thirsty Thursday is a great tradition, though!

Looks like no more fireworks this week. My comments on NFP as a noisy series seem to have played out.

Seriously though, all these 2011 jobs numbers are like Budweiser's alcohol content. F***ing close to zero.

WellRed said...

The credit ratings agencies giveth and they taketh away.

They threw a huge party through to summer 07, but does that mean we can still forgive them for crashing so many parties since then?

Leftback said...

The Big 3 credit ratings agencies are really irrelevant now, nobody trusts them, or needs them. They will only be important to the interns that write the headlines on Bloomberg for why the market goes down, or up.

There will be, indeed already is, a place for new clean ratings agencies, and indeed banks.

"Market falls. Polemic hung over, TMM lighten up" is probably as useful an explanation for today's action as any action of the credit ratings agencies.

WellRed said...


Agreed that the CRAs add nothing to the discussion re: sovereign debt. The market was looking for an excuse to sell and got one.

Strikes me that the only downgrades that matter are those that land you below BBB. And now that the ECB no longer cares for ratings at all, the impact for the peripherals of falling below these levels is of effectively zero consequence - it simply marks the acceleration of the transfer of privately-held risk to the aggregate European public balance sheet.

What's a few billion more in interest expense? The only thing that matters is the speed, efficacy and size of the mooted European bank recaps.

Leftback said...

From Doug Short, a post-mortem on ECRI's forecasting record since 2000.

ECRI: An Object Lesson In Forecasting Futility

Note that they were late in 2007, then they called a little recovery in 2008, just as oil spiked and then everything tanked. The 2009 recovery was vastly over-estimated, and then there is the small matter of 2010's non-recession, perhaps to be followed by a 2011 non-recession as well. In summary, this index knows less about the economy than my left testicle.

The fault isn't hard to spot. One of the components is SPX. It is clearly over-weighted in this index, and the fault has become especially obvious since the onset of ZIRP. SPX is much more sensitive to QE, liquidity etc. than is the real economy. Conversely, the price of oil and gasoline hasn't been embedded correctly into the algorithm.

You could give them a B-, but only at a place like Harvard with rampant grade inflation. At Oxford, perhaps the "gentleman's 2:2" (Pass degree) for Achuthan & company....?

Misfit said...

Let's clear up a few points from the comment above about ECRI's leading indicator. First, while their indicator was negative in 2010, they never came out and called a recession. Also, unlike LB's assertion, there was no indication of recovery in 2008, the indicator was solidly negative throughout.

It does appear that the SPX may be overweighted in this indicator, but I think they have earned more credibility than some *cough cough* are giving them. Disregard this recession call at your own peril.

Anonymous said...

Calling her a Tramp better than "unf*able fat arse" as Bunga-sconi seems to have called her

But looks like they are all ready to throw the euro banks under the bus and force a recap. +ive for risk assets