Monday, February 13, 2012

Don't know Monday

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.

9 comments:

Amplitudeinthehouse said...

I sense the essence of befuddlement,TMM..have no fear ol'son ,The markets in Yennish mode.

ps..I had to throw that one in :O)

Leftback said...

Another good day to do nowt, except trim a few longs and watch the dollar. Unless Martian spreads blow out and little green men buy gold, a near term correction in PMs seems like the first order of business.

Yes, we are already Bug Hunting.

abee crombie said...

With volatility pretty low, I'm looking for some pink elephants to hedge with, any ideas? I like Short $CAD but hard to find other idea without paying a lot of carry

Anonymous said...

"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"

Wouldn't this depress domestic demand and cause further economic discrepancy within society?

Besides, I don't think it would do much to improve competitiveness in most European countries, since export industries are largely unionized.

It would just help create even more of an underclass of people. What next? Workhouses?

And if you are implying the high unemployment is due to people not wanting to work...I really hope I misinterpreted that.

Polemic said...

Anon 5.54. This post wasn't designed to whip up debate over the values of a minumum wage. So to keep it brief but in answer to your questions-

No
More jobs
No

I think you have misinterpreted a lot from a single sentence.

Polemic said...

Anon.. I apologise for the brevity of the last response. Unfortunately it has provoked fierce discussion amongst us and as you have shown the issue is exceedingly complicated and probably deserves more. But short of a post on the issues which we don t want to do because of the religions involved in both camps, we will have to leave it at that as we don't want to get dragged in. But rest assured we DO support the necessity to aid the needy!

Anonymous said...

Ahh, it wasn't my intention to start a flame war. No need to apologise. If I was running a market commentary blog, the two groups of people I'd least want to see in the comments are self-righteous liberals and goldbugs.

Considering your annual efforts at raising money for charity I hardly think of you as cold-hearted robber barons. Sorry if it came out that way.

I've been reading this blog atleast weekly since 07 or early 08, and it has always provided clarity.

Respectfully.

Anonymous said...

$aud going down, discuss.

rossco

Anonymous said...

Maybe TMM means all this in the same sense as with the banking industry, where lower structural pay is going to lead people to move on and transfer intellectual capital to more constructive use.