Monday, February 13, 2012
Team Macro Man have been sorting out stuff for the past few days and, to be honest, have been having a bit of an internal debate as to "what from here".
If you were to look at the deep underlying currents of the markets (or the carrier waves of the signal) we are still very much in the "it goes higher camp" for equities. It feels as though there is the start of a sea change in the investment cycle with the old 7 year cycle of Equities->Commodities->Bonds seeing the phase of bonds to equities taking place. It also looks as though underweight funds are chasing the markets getting in high beta to try and get back to benchmark. All supportive bigger picture.
With that in mind we are happy. But once again we are looking at shorter term. The Greek problem is one step closer to its final battleground, with the confrontation having moved from Europe vs Greek Government to Greek Government vs Greek Population. Team Macro Man have to say that lowering minimum wage is a no brainer when trying to get people doing something useful with their time (something the UK should follow suit with).
But Monday morning euphoria is pretty muted considering the consternation bubbling (no pun intended) up at the end of last week. Our internal debate has focused upon how many longs were canned in the run up to the weekend vs the number of longs re-established since the agreement. On the whole we are thinking that though the background current is positive, the lack of lift-off (we are only back to where we left it thursday) has us thinking that a correction in risk is due. No facts, no clever figures, just a handful of gut feelings and the type of folks who are bullish. On that point AUD is leading the way. The new flush of "it can only go up, mate" comments after the RBA inspired spike to 1.0800 had TMM going "wooohhhh" in unison.
So, to be honest, the best thing is probably to sit on our hands, since we lack conviction and clarity either way. Long core positions happily long with the spivvy portfolios trying to short with stops above recent highs in eur/usd and spx. However, to be totally spivvy we will likely do it at the usual afternoon time today.