Poll Results and Ramblings.

Wednesday, May 16, 2012

Thank you for the many votes from various quarters and first we apologise for a lack of graphs and charts. We have some of the results but are struggling with uploading at the moment but will try to update later tonight ( if you haven't already done your own). So here are the words, if no pictures.

Though of course it is still a  low sample size to draw many conclusions from, by eyeballing our charts the underlying trend was that most of you think the market is perceiving the date of an exit to be one notch earlier than you are. Trends by segment had the "buy side" putting their own views and market expectations at much about the same, which would make sense as they effectively ARE the market. The "e's and d's" are most skewed to things happening much later than where they think the market is pricing. To be honest we expected the "non-financials" to be more "sooner than market" rather than the other way around. Oh, and perhaps the most important voter, the one  proclaiming to be a Greek Politician, says 2013. But then how much do we trust a Greek Politician.

We also half expected prices to start moving in to "earlier" as time wore on in the survey as the noise levels in the real world grew deafening. But not really so. You are a principled lot who stick to your views! We really will have to try and dig out some good survey widgets that not only do simple polls or surveys but can also let you all play with the results. If so we'd start running regular surveys.

Right .. onwards and downwards. TMM are coping with a severe "Edward the Seconding" (see Glossary) at the hands of  a markets that are.. well.. as a friend descibed them - "The financial markets are like a strapless bra. Half the people are wondering what's holding it up whereas the other half are waiting for it to drop so that they can grab the opportunity with both hands".

TMM have been thinking and wondering. With the market effectively pessimistic of any workable solution being found TMM think its time to think "outside the blx". and come up with some may be not so mad ideas of their own:-

"Rotten borough" short term fix - Offer each voting Greek say 5,000 Euros to vote in "the right way"?  How many voters are there? A guess of 8 mil? So E40 billion cost? Worried about the morals? Well they can always say no! Surely a bargain compared to the trillions that would be wiped off global markets and debt foreclosures on a complete mess up? Yeah yeah .. we know, it doesn't fix the long term problems etc.

Longer Term - In the UK the BBC was moved up to Manchester from the expensive costs of real estate and living in London, to the economic benefit of their new home. This was after the government had already moved state run administration for similar reasons to the likes of Cumbernauld and the economically suffering North East.  Now TMM propose that the EU do the same and move all EU parliamentary, administrative, legal  and regulatory functions from their homes in Brussels, Strasbourg, Frankfurt and wherever else they are squirreled away in "core countries" to Greece. On top of the benefits to Greece of the huge cash injection of all that EC admin budget,  placing the ECB and EU Parliament in Athens and the EIB and European Court in Thessaloniki might just focus a few minds. We could even rename the Acropolis the Troikopolis. They can also keep the move of Parliament between two centres, how about Athens to Rhodes to give the Greek Ferry services a boost? On top of it all, just as Gordon Brown knew, creating more jobs paid for by the state overlord makes that overlord a lot more likely to be supported in the polls. We see Greece's benefits to be huge and the cost savings on current process would also be significant.    

But joking aside, it is still fascinating that the true cause of the current failure of Europe is the half-cock nature of its unity. Much as some are more equal than others, some areas are more "unified" than others. Unified monetary system, unified trade, open borders, BUT and the big BUT -  There is still no real unity and freedom through mobility of workforces and until Greeks exodus to Germany to freely take German jobs for less pay the rot will continue. Perhaps we need cultural union before monetary union (oddly perhaps via the English language).    

We are still convinced that printing money is the solution that needs to be arrived at as fast as possible. What's the problem with that? The currency moves lower - well that's helpful.  You can use the newly printed money to fill in the bank debt holes and sovereign funding issues.  Inflation? On imported goods via fx moves yes,  but the export and global competitiveness function is of greater importance. So what about that imported inflation feeding through to wages? Looking at the UK and Switzerland that is not a problem. In fact the UK's management of the crisis so far is, despite non-financial sector sniping, is remarkably robust and though we have been huge critics of Mervyn King in the past, maybe its time we put him in charge of the ECB.

The problem is that policy response is, by its very name, rarely policy pre-empt and is always reactionary with a lag and as we have seen in Europe so often - A lag that just makes things worse.

Posted by Polemic at 2:10 PM  


'Edward the Second' lol.

Lucky he wasn't Edward the 1st - he would have had the Hammer of the Scots inserted instead!

Hotairmail said...
2:37 PM  

"The problem is that policy response is, by its very name, rarely policy pre-empt and is always reactionary with a lag and as we have seen in Europe so often - A lag that just makes things worse".


Give Bernanke his due ,he's been quick and he has been quite consistent, that is why markets love the guy. Poor old fragmented ,argumentative Europe. Everything that markets hate.You have to look no further to understand the relative performances of the various indices.

Technically,we appear to be in what I would describe as that hiatus where recent breaks get a retest to check out buying conviction ,but after that I foresee a long ,hard Summer because at least in Europe I suspect the market conclusion is going to be that no one is really steering the ship in a way which begets buyers confidence. Who exactly is going to start mopping up risk with this dirty great big issue hovering right in front of them?. Cue, LB !.

I note for interest that the next major expiry falls bang in front of the next Greek elections...there is definitely at least a short story dying to be written on that theme.

Indeed, I am so thoroughly bored by this recurring experiment that I shall use this summer to write a story which will eclipse JK Rowling. It tells the tale of a Greek teenage goatherder who arrives home to find that his parents have nailed themselves to the doors of the Bundesbank in protest at having lost their flock. Overcome with grief and rage our goat herder determines to go to Brussels and have his revenge. As the story unfolds we follow our hero across mountains on foot as along the way he assembles a band of likeminded 'victims',not counting the Italian youths who are just along to ball the girls.
Of course this would not be a Greek tale without a twist in the ending that sees him and his merry band give up their quest somewhere in Northern Italy ,Lake Garda,where they find themselves unable to resist the attractions of jobs waiting tables and playing XBoxes in the evenings. Obviously I have yet to fill in all the gaps,but it will be a gripping tale.

Anonymous said...
3:15 PM  

A lot red tape on the Bloomberg screen today featuring the ECB going one way, then this way, then the other way and then back again ...

Teetering on the brink here it seems with either a strong bounce or a slump (hint: this probably means sideways)


CV said...
4:28 PM  

excellent post TMM and C

Mark Dow has a new macro blog http://markdow.tumblr.com/, maybe he's better at writing than making money (sorry pharo)

I've got no idea in this market but interesting to see the currencies move, aside from the majors, BRL, MXP look interesting (aside from the dovish policy issues) That is where I am seeing good value but not sure I want to stick my neck out and get chopped up if the US market starts to fall apart

abee crombie said...
4:48 PM  

C says'
Thanks Abee. Regarding getting chopped I confess I am virtually sidelined because when the volatility ramps up I can't compete for speed of execution etc so I know from experience doing almost nothing is the favoured tactic and I am expecting a summer of volatility.

I wonder if Angela Merkel has a daughter who could become the love interest of our hero goatherder building of course to a lovely cliqued ending where she successfully beseeches her mother to rescue all things Greek in the name of love ! I'm an old romantic.

Anonymous said...
5:02 PM  

C says'
Thanks Abee. Regarding getting chopped I confess I am virtually sidelined because when the volatility ramps up I can't compete for speed of execution etc so I know from experience doing almost nothing is the favoured tactic and I am expecting a summer of volatility.

I wonder if Angela Merkel has a daughter who could become the love interest of our hero goatherder building of course to a lovely cliqued ending where she successfully beseeches her mother to rescue all things Greek in the name of love ! I'm an old romantic.

Anonymous said...
5:03 PM  

Claus - they don't want you to own any ES10. Shock troops sent in at 650.

Charles Butler said...
5:11 PM  

So it's to be a Greek helicopter drop then? It does seem inevitable. How on earth can they pay their debts to banks in the Core if the Core doesn't give them the money to pay with? The press is already dubbing this the Grarshall Plan. The Greeks will be told ahead of the election that there will be no money drop if they elect SYRIZA.

Yes, I think that's pretty much the message that Hollande delivered to Mangler. Assuming that DB top brass were on the phone to her screaming bloody murder at the same time, Mangler may be having a rethink on Greek austerity.

Claus, sideways sounds pretty good, especially from the perspective of where I have been this last week or so. Still, I have looked out of the window several times and it was quite clear to me.

TWINE. The World Is Not Ending.

LB will go further. He will suggest that today's FOMC minutes will mark a high point for the DXY, and that EURUSD may have put in a double bottom for now - in other words, that support exists around the 1,2626 - 1,2682 area. You are now free to buy equities around the EuroZone...

Leftback said...
8:02 PM  

turn around thursday?

actaully the slow grind down that we are having is making me a bit more bullish. I was expecting more 2% down days. Since non farm S&P is only really down 40 points a total of 3%. For all the doom and gloom its not much (though some markets are down much more)

abee crombie said...
8:59 PM  

C says'

Abee, I would not take my overall view of the market from the narrowest indices. In falling markets the large caps will at least initially show the relative strength that comes from defensive buying.However, when volatility increases and the margin calls start arriving then people start to sell what other people want to buy and then the large caps start to play catch up.
Frankly, at this time of year if I don't have to be in then I won't be unless the market does such a puke that I can't resist.Unfortunately,although mom has certainly increased I still don't detect what i would call the hmmph moment.Indeed I know it hasn;t arrived if only by the number of people still wanting to buy up here.
That isn't to say we might well catch some respite ,but personally I don't think it will be more than respite with all that that implies. You got fast twitch stuff then be my guest otherwise join me in the viewing booth.
I know HFT is meant to be so called good for liquity ,but frankly when I have become the liquidity at their profit to my expense I say arrivederci I have a goatherder to help.

Anonymous said...
9:11 PM  

c Says'
I was just reading the FTalphaville roundup and came across the ECB and Greek bank relationship on funding.

Now if I have this right,the Greek banks pledge something to the ECB and get a proportion of it back in what I would call good old fashioned readies. Having got the readies the Greek depositors who have long appreciated the Moselle Valley ,or Chelsea take the readies from the Greek bank and put it in a German ,or Uk bank all the better to buy a wine yard ,or dockside appt with,or dare we say just to know it will still be something other Drachmas come toilet paper.
I am still at a loss how this helps Greece (I mean those who can't leave) improve their lot ,or indeed help those who ultimately will have to stand behind the balance sheet of the ECB?

Obviously being a Northern cave dweller of limited financial education with advanced Alzeimhers I am clearly missing something of vital importance in this process. Anyone care to enlighten me.?

At first blush this process appears more akin to the Captain of the Titanic tannoying the passengers not to panic at least until the first class cabins have filled the life boats and left the ship.

Anonymous said...
9:33 PM  

C says'
Finally for the evening now we have a US close. I point out that the US market has ignored two days in succession of what were actually reasonably decent economic data and 'Fed speak'.
This equates to me at any rate that buyers are disinterested in these releases ,or at least sellers are more interested in being out than people are interested in being in.Supply and demand dynamic biased to downside.
Yes,perhaps you can see the future that is tomorrow where I cannot and if you can more power to you in which case you deserve the undoubted higher returns that will indeed be yours when you are right.

Anonymous said...
9:46 PM  

This market is all about FX carry trades unwinding and it is being driven by perceptions of relative weakness. Right now the US strength is a bit over-rated and the resiliency of the European economy is being severely underestimated.

The US long bond buying we are seeing reflects a surge in demand for USD, and when that reverses we will see a slow return to risk appetite, and might I add, to sanity. So there's nothing to do except sit and watch the dollar...

Leftback said...
9:48 PM  

C says'
I've got it by jove.The idea is not to buy the wine yard at all. You still live in Greec so when greece goes Drachu you then get to take your Euros back to Drachiland and buy twice has much of Dachiland assets as you could have owned before ,but of course to do that you would have had to have been a first class passenger prior to the iceberg event.

Anonymous said...
10:00 PM  

The slow grind lower suggests to this punter that whilst the street may be positioned well for "tail" outcomes, they have no meaningful shorts in equities.... thus , the middle ground in absense of any bazooka probably means more of the same. - rossco

Anonymous said...
3:04 AM  

C says'
Well I do see some pitch hit and run opportunities this morning. That means short term trading opportunities for the next couple of weeks, not adding to my book for an ongoing hold.

Anonymous said...
7:13 AM  

I guess the most interesting topic on Greece and can kicking is whether kicking a can when it is empty is actually any good to anyone.Empty referring to the fact that I have just had to kick a Greek goatherder off my doorstep .The man had the cheek to offer me a fistfull of Greek Euros to buy my Summer house and lawn for his flock to graze on. The nerve of the chap. I told him to buzz off of course.Come back with German Euros and it's a deal!

Limit order pitches not filled due to gap ups which are even worse than unsolicited offers.Indeed one wonders whatelse that goatherder has been trying to buy this morning.

Anonymous said...
8:29 AM  

actually the red hot poker end for Edward II was an urban legend.

It was actually his lover , Hugh Despenser the Younger who got the proper "treatment".


Gory. I recommend not to read it during lunch.

Tradebot said...
10:56 AM  

I am reminded of your recent post about the market players cascading through a series of sellers until it can find no more. Price is going down inexorably but that final burst of sellers just can't be found yet. I fear there's quite a long way to go to hunt for that point.

Hotairmail said...
11:12 AM  

I think LB was on to something that US fundamentals are usually overestimated and resilency of European economy is underestimated.

I still think faced with GRexit, Mangler will blink. Return to Drachma would just wipe out ECB's capital. There isn't really any other "easy" options except to let ECB print + more of the same in political front. Moral hazard to be damned. Mr Market demands a sacrifice and Bundeathstar it shall be. I don't think German exporters would be too upset to see EURUSD at 1.1 handle.

It is hard to see EUR rally from here under any scenario , so I am unwilling to cut my shorts. Some short term hedging via 1W options might be in order , but core positioning is still the same.

Tradebot said...
11:17 AM  

C says'
Quite a nice variety of views this Am. Prices are however still dropping.The former are opinion and the latter is fact so we make our choices do we not.
What I can see are some ranges that have held for quite sometime and these have just broken ,but not yet with the kind of momentum which will start if they go into stop territory. These are low beta and the ranges just above hold a lot of weight. Personally I would not consider being long with that kind of setup.

Demtrios is back, no, not interested in doing a swap my summer house for an olive orchard in Kalamata. My he's persistent ,but I'm holding out for German Euros dammit.

Anonymous said...
11:46 AM  

Σακ Ιτ Απ!

yellowbeetle said...
5:26 PM  

Just in case I coem across negative even when markets are going down not everything is going down at the same time is it unless we are in crescendo mood. I will take the trades that gapped up yesterday now they have come back to an acceptable market order point.
Yes Demtrios,Ignacio and brother Luigi it 's a deal you've worn me down.My summer house and grazing right s to the lawn for one Olive orchard in Kalamata, one modest villa in Roses and a small jetty with landing rights on Lake Garda. I'm not usually this charitable !

Arrivederci !

Anonymous said...
8:44 AM  

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