Wednesday, February 22, 2012
Team Macro Man are really struggling. Struggling to find something to say that they haven't said already and struggling to work out why the world is so full of people we just don't agree with. We are not talking solely markets, we seem to be surrounded by them in life in general. It must be us. Perhaps we need to adjust our sense of the new normal and get with the program. But we can't.
It is all too easy to launch into a vitriolic lambast of all we think wrong, but we don't want to rant, so the logical answer is "lay down the cogent arguments for why things are wrong and what needs to be done to right those wrongs". But why bother? There are blogs all over the world with reams of well argued points that stretch to novella length, but does anyone in the blogosphere really read those things fully through, especially if they don't agree with the first paragraph? To this extent a blog post ends up either preaching to the converted or lines itself up for a kicking. So what's the point.
To TMM it appears that the blogosphere is becoming a general armoury for supporting wars that are more and more partisan. You can see it in the markets. Either everything goes to hell in a hand basket (quote ZH all day) or it isn't and quote err... Actually this is another important point -The blogosphere has a massive skew to end-of-the-worldness. Those that have lost all interest just don't even bother with reading blogs at all. How many people actually have their opinions changed by what they read, rather than reinforced? Maybe it's just us but at the moment there appears to be little interest in either reading or writing and opinions of quality are either not being expressed or people have nothing to say. Like us.
So what do we do? We aren't going to write reams of boring research, that's what research people do and get paid for, so we will leave it to them. We aren't going to list our portfolios because that's our business, so we are left either with the light-hearted pieces to fill the time (which, to be honest, are the bits we enjoy most) or we don't write anything. As you might have guessed this is why posts have dried up to an extent.
Since TMM have taken the reins from MM the world has been on one rocky ride, but things are now beginning to settle down. Whether as a calm before Storm II or as a general exhausted flop we don't know, but for now we are at slack tide where correlated trends will drift apart as the flow comes to a halt with the only movement in side eddies. As markets stabilise focus and diversification starts to occur. Investors adventure out of the door of "risk on/risk off" and start to look at nuanced fragile cross trades that aren't going to get torn apart by a global meltdown. Shouldn't be long before the buy-side starts recommending all sorts of exotic stuff designed to lever up some return in an otherwise not moving market. Death by x-axis spawns leverage and leverage just starts the cycle again. USDJPY is a classic example - it does nothing for eons, vols fall, VAR measures fall, options are built around it not doing anything and then BOOM - we have another "where did that come from" moment, accompanied by the normal "told you so's" and "this is stupid's" from those left playing.
Sell vega, buy gamma?
TMM are down and don't know if anything in finance will cheer them up.