Bits and Bobs

Thursday, September 13, 2012

Hamlet Act III - Basically they will or they won't or they may do a bit or they may not or they.... Oh take your pick and trade on it if you like but all we'll say is if there is no glimmer of QEness then the markets are going to tank and the dollar zoom higher. Much as this may help out our eur/usd turn call, it really would be too messy to consider as helpful to global confidence. Considering how Europe has nearly achieved the impossible in turning around sentiment, it would hardly be polite for Ben to then drag the dog out to the wood shed just after Draghi has spent so much on vet bills.

Europe- No change from yesterday's views, we are still looking for eur/usd to roll lower accompanied by Spain yields ticking up again. Will Spain miff eveyone off now by not running into the straitjacket that France is kindly holding open for them? But we are wondering if the wealth of push back we are getting on that idea from friends and colleagues is indicative of us being more right, OR about to be hit by an FOMC driven steam-roller doing Mach 3. 

Its just like [insert year here] - Currently 2009  is the year of choice for many but to TMM that reflects that general towel chucking extrapolationista mood change of the last 3 days. But as per Fat boy Slim, it's "come a long way baby" already. The main difference between 2009 and now is that the data hasn't yet rebounded. We still prefer the answer "none of the above" to the question " which year does this resemble" 

Any old Iron - Talking earlier of being dragged out to woodsheds, all those calls for 0.9500 aus/usd have gone somewhat muted and even against Euro Aud has been flatlining rather than falling. Iron ore +15% from its base. Ho Hum, pass the bear baton to Fortescue. 

Apple - Well.. in TMMs eyes, Form is writing checks that Function can't cash and the Iphone 5 is going to be leaning heavily on Apple's fashion and religious functions. Will Apple start correlating to Burberry? Has last night's party in Korea finished yet?  The Daily Mash has a point


Back to work. May the fomc be with you.

Posted by Polemic at 12:56 PM  

7 comments:

And from the looks of it macro team is back from summer vacation.

Intrinsic value said...
2:34 PM  

It's 2009 in Spain, perhaps. That was my intended argument. In the US, maybe it is going to be 2010 for ever. Flashy Crash, then Splash the Cash. A sort of economic Groundhog Day where they bring out Punxsatawney Ben to look at his shadow...

Let's hope this isn't Japan 1993, as the response of the Nikkei to the lack of new QE wasn't pretty:

Japan 1993

Market participants "know" BB will not allow this to happen, don't they? So a deep sell off "can't happen". LB has learned to be wary of certainty. Not bearish, but seeing both sides....

Leftback said...
4:30 PM  

So the "no QE3" crash is off the table. That's a relief.

It will be interesting to see where we trade after the first half hour of stop-hunting robo-trade oscillations is over. If markets are indeed forward-looking, then do we now see FX traders begin to debate the timing, size and likelihood of QE4? Clearly I am being somewhat facetious but this isn't your grandfather's market it's the era of Central Bank Bingo...

Leftback said...
5:42 PM  

Dividend punters would do well to take a "it's not you, it's me" break from our dear Anna Lee, 'cause I am not sure MBS spread compression is going to help the (already down quite a bit) yield

Dee Dee Humberside said...
5:54 PM  

Interesting. The long bond spiked to 3.006% before catching a bid. Wonder if that will cap the range or if we will see more selling? Perhaps a function of what happens next in regard to Europe, fiscal cliff etc...

The mREITs have run up a fair bit these last few weeks in anticipation of MBS buying, but most of them are actually down on the day, notable exception being CIM. We are only long the NLY-A preferred, which is up today.

Leftback said...
6:16 PM  

@LB, NLY common stock, was that sell-the-news?

Anonymous said...
2:51 AM  

I wouldn't say that. It's just that agency mREITs are not a one-way respective to QE, 1) because the "safe" nominal yield becomes less attractive as punters are being pushed into risk (think of it as income plays rotating into principal plays) and 2) MBS spread compression (and in effect, open ended caps on mortgage spreads) means that your dividend stream is headed lower.

Add the outside chance of a refi bump (not large but still), and you see how price will have to move to keep the divi yield in check against competing investments.

Dee Dee Humberside said...
8:57 AM  

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