Thursday, November 03, 2011


 Team Macro Man have decided that these markets are a bit like a Photoshop project. We don't know if you have ever got sucked into using Photoshop when trying to simply touch up some basic picture, but it doesn't take long before you find it isn't quite as easy as you thought, with each little addition appearing as a "layer". You soon end up cursing the system for making it so complicated. But this layer system is exactly what we see the markets as right now. We have the nice economics layer that looks relatively serene, picture perhaps an overcast day,  but overlayed on that is this Jackson Pollock layer labelled "politics". The markets are constantly playing with the "transparency" function fading from one to the other.  But its all happening so fast. Today is a true "roro" market, but it now stands for "referendum on, referendum off" with conflicting headlines having a frequency only audible to dogs and bats.  So unless you are spivtastic headline trading there is little point in trying to play.  

TMM note that the problem with due political process as generally understood is that it takes time, something Greece, european bank maturities and deposit flight do not have much of. So, in an effort to get a quick indication of Greek voters' will for staying the the Euro TMM propose they set up a page on a social networking site, invite all the population to join as "friends", and then post 2 status. One being "The Euro and Deflation", which you can 'like', and the other being "Lose your savings, return to your village to press olives and revert to only charging the equivilent of a fiver for a meal in your taverna", which you could also chose to 'like'. TMM reckon we could have a result by close of today.  

We are off to lunch,  but leave you with a live feed from the Greek Parliament


Alki G said...

status is, I believe, 4th declension. Thus the plural remains status.

Polemic said...

Good enough for me alki.. changed

Back to listening to new voice from ecb.. go Mario!

Leftback said...

Brilliant... LOADSAMONEY !!!

Anonymous said...

What to expect from a Goldmanite? Seems to be doing something. He should thank Trichet form raising rates so that now he can cut.

Anonymous said...

"(JEF).... said it’s long positions were offset almost entirely by short positions."

Hmm.... but will the short positions ever pay out? Who are the counter parties? What is the leverage on the long positions? How close is "almost"...?

Counter party risk looming large again .... this is a big problem.

Anonymous said...

The CEO of JEF is called Dick Handler (you can't make this stuff up!) and he was once at Drexel.

So everything will be OK, right? No excess leverage, or counter-party risk?

There is never only one cockroach. If another mid-size firm blows, there is going to be a mid-size panic over here, TMM.

WellRed said...

Anon @ 4:17

Your argument seems circular to me. If Jefferies is under immediate threat because of their sovereign debt hedges being worthless, won't a number of counterparties (and European governments) have to fail before they do? How is Jeffereies in the market's crosshairs?

Leftback said...

It's all a question of leverage, and confidence. Without full transparency, it's hard to tell, isn't it?

They do APPEAR to be in the crosshairs today, judging by the recent market action. It's likely that there are many external parties (those with whom they have a regular banking or audit relationship, for example) who are privy to the details, and those people tend to talk to Mr Market. We have seen this occur repeatedly during the Bear and Lehman episodes.

Dublin Dundee Humberside said...

Anon 4.25

.... Aaaaand he sold like for $20m of stock only a month ago.

Anonymous said...

Segregation of Customer Funds

Probably the cardinal safeguard of both futures and securities customers’ funds required by the relevant provisions of the Commodity Exchange Act, the Securities Exchange Act of 1934 and the rules and regulations of the CFTC and the SEC is that they be segregated from the funds of the FCM/ broker-dealer and may not be used to meet any obligations of the FCM/broker-dealer. A brief description of these provisions is set forth below.

No worries, see, funds are segregated.

That was from MF Global's web site.
Nothing to worry about.

abee crombie said...

LUK just averaged down on JEF ..pretty bright guys.


Leftback said...

Someone is going to get the timing right on European bonds and win big. But they will have to be able to get through some periods of turbulence without losing access to liquidity......

OK. NFP sweepstakes on again. Consensus is 90k. I had the "over" last time, so this time I will take the "under" and go with 40k. Strikes and seasonal issues make these small numbers in the series extremely noisy.

Anonymous said...

Maybe a bit off topic but I think its that time of the year when hedge funds start thinking about the lottery tickets that are going to save their year. Probably needs to be pro policy, not taking on real money and not subject to a sphincter puckering theta bill.

Im thinking $/¥ ? The shiny metal ? Touch of HSI perhaps ? Anyone, Bueller, anyone ?


jill said...

The NFA has sent out the following email:

If you are a Member operating a pool that has pool funds held at MF Global, you must make the following disclosures:

* On October 31, 2011, MF Global reported to the SEC and CFTC possible deficiencies in customer segregated accounts held at the firm. As a result, the SEC and CFTC determined that a SIPC-led bankruptcy proceeding would be the safest and most prudent course of action to protect customer accounts and assets, and SIPC initiated the liquidation of MF Global under the Securities Investor Protection Act.
* As of (insert date) approximately $XXX of (Name of Pool)'s assets were on deposit in an account(s) at MF Global. These assets represent XX% of the (Name of Pool)'s net asset value of $XXX.
* The General Partner does/does not believe that these actions will have a material impact upon the operations of (Name of Pool) and its ability to:
* Satisfy redemptions requests;
* Adequately value redemption requests and the manner in which they will be handled;
* Accept new subscriptions in (Name of Pool) and properly value the net asset value for new subscribers; and
* Provide for accurate valuation in the (Name of Pool)'s account statements provided to participants.
* Participants are cautioned that there can be no assurances:
* That (Name of Pool) will have immediate access to any or all of its assets in accounts held at MF Global; and
* As to the amount or value of those assets in the context of the bankruptcy.
* Participants should also be aware that future actions involving MF Global may impact (Name of Pool)'s ability to value the portion of its assets held at MF Global and/or delay the payment of a participant's pro-rata share of such assets upon redemption.

No one is getting their money anytime soon. Huge margin call is coming the next few weeks. Any hint of accounting fraud at another institution and they will go down. Get yourselves safe.

Anonymous said...

We don't currently have matching large long and short positions in Italian and Spanish bonds, but I wonder why JEF decided to take such large positions on both sides of the same trade? Probably because they are much smarter than the rest of us....

JEF Euro Debt Positions

Amplitudeinthehouse said...

TMM,since we're coming into year end may be we should go through the process of deduction of any viable pink flamingos plays that are building up or process.From my eye its a pretty mixed bag outthere - late rush EOY for our swissy friends....

No doubt OO7 fans are on the edge of their seats,and for the fans of the year of living dangerously , they may be incline to jump along side the critics of the rising sun and monkey up on the to run there!
One thing though, they all won't happen simultaneously..weight accordingly.

Anyway I think its time to think out the box b\c these last 5 weeks is bollox.