Tuesday, May 01, 2012
We've been playing Battleships with the RBA - RBA's go. -50bp. Booosh. Hit...... Battleship AND Destroyer. Otherwise known as our short Aus bills and long Aud/Cad positions. Holed, but we still have steerage and the main engine is still running, just. Man the pumps. What a bunch of W&^ers.
Aud/Usd is 100pts lower, Aud/Cad is back to its lows of a few days ago, eur/aud is breaking higher (but then we do have euro relief going on too). Rates market moved sharply and is pricing more than 25bp of further cuts combined for the next two meetings.
That RBA rate cut has really focused minds over what's going on out there. There has been a massive positional and mood bias, mostly from US leverage that a) China is heading for a hard landing and that b) Australia's two speed economy and constant deficits leave it highly geared and more and more dependant upon the China dream paying for local excesses. Because of that AUS has been a favourite short since the beginning of Feb, when the China fears really started, as Aus was seen as the vulnerable high beta. So today's RBA cut could be seen as the final justification that those shorts have needed. Toldja so! Particularly from that McCrann man. Uuuurgh.
But the China part of the Aus trade may not be paying off as fast as many had hoped. PMI this morning at a smidge under expected is no calamity and, to us, points to flat to up, rather than down the tubes (before anyone starts, we are NOT of the opinion that the official PMIs are rigged).
Is Aus going to tank from here? TMM still think not and rather than abandoning their AUD/CAD ship they prefer to man the pumps and bail like hell. Unfortunately their Aus bills position has already sunk below the waves.
It's meant to be a holiday today, but TMM haven't had much fun either at work or outside. As the media headlines proclaim "This is the wettest drought on record in the UK". With hosepipe bans still in effect, TMM are waiting to hear back from their local water authority as to whether they are also banned from using them to pump the floods out of their houses.
Elsewhere TMM have permanently switched off the BBC Radio 4 Today program in the mornings and are bearing up to "easy listening" instead. We suppose that with the Leveson enquiry nailing the Murdoch empire and the BBC's natural bias melded with some of the most embarrassingly twisted economic "analysis", we shouldn't be surprised at the minutiae of political issues being dragged out as headline stories. TMM are waiting for the headline news that Tories are guilty of human genocide because it hasn't been proven that they are not and some email is found saying " I'll kill whoever said that" in some ministerial hard drive. BBC - GET A LIFE. Or rather get some journalists who have some understanding of the real world.
We do feel that mankind is being poorly served by politicians who have studied nothing other than politics, being reported upon by journalists who have studied nothing other than journalism. Team Macro Man have suggested before that politicians should only be eligible for election having spent at least 10 years in a "proper job" but we would now like to extend that stipulation to encompass journalists.