Current Currents and Meanderings.

Tuesday, September 25, 2012

It's sort of going according to plan. "Sort of" in as much as plans never really go as planned but are a weaving together of many paths that on average hopefully take one to where one wants to go. As we know with markets, a win is a win even if the theory was wrong. Unless of course, you are the boss, or an insurance company, or a fund regulator in which case the win is invalidated as if didn't follow the path exactly described in the prospectus, policy or proposal and the resulting payout goes into the pockets of Mr Boss, Mr Insurance company or Mr lawyer or Mr FSA/SFA fine. But in general a win is a win and we take the pullback in euro things and equities as a "Thang Yow!"

Talking of Yow, TMM's mind jumps to that marvellous "Fast Show" portrayal of a regional Brit displaying those Nuevo-riche tendencies that we all detest and can't help but think of Germany's attitude towards Spain and their ilk "I can't help noticing that I am considerably richer than yow"

With Switzerland being the hotel owner.

 So what else is bubbling? With policy-maker bazookas smoking empty, we are back to data watching to see if the rockets have hit their targets. Or, perhaps more apt in war film analogy land would be that the economy is like one of those moments where the stricken fighter pilot (policy-maker) is pulling back on the stick for dear life muttering through gritted teeth "Pull up! Pull up, damn you!" while siren screams gain in pitch as the plane hurtles towards the ground. The audience left on the edge of their seats awaiting either a fiery death or the plane to recover enough to level out and skim the treetops as relief music rejoins the rugged smiling visage of our heroic pilot (if anyone can find such a YouTube clip we'll embed it - we failed).

Right now the markets appear to be doing a "Bosphorus" which has currents at different depths moving in opposite directions. Which leads back to that reference we made in our last post. Markets are the sum of people expressing short, medium and long term views all at the same time. And the currents we refer to in markets are instead of being haloclines (layers separated by saline density) are temporoclines - layers separated by time view. We should of course add finer and finer layers ending with a top layer of vibrating spume representing the high frequency trading models.

TMM currently (oh dear) see 3 currents. Our core subsea current is the move we saw betrayed post QE announcement which is being expressed by those comfortable enough or with pockets deep enough to cope with any chasm between them and their promised land they have identified in the distance. The middle counter-current is represented by those that see problems in reaching the promised land and who are strapping on the crampons for some extreme mountaineering through countries like Spain, China and Japan and up US cliffs. The top short term surface current has today effectively gone slack with short term starting to say "errr now what" and that lot together means today prices are really not going anywhere.

So once again its a dull day. But that hasn't stopped the cut and pasting of random headlines around the chat systems in sorts of death twitch seizures. The heads have been chopped off, thought is not being applied but the foul is still flapping its wings and running around the yard trying to squawk. Headlines such as *The U.S. Embassy In India Announces A New Visa Processing System" are being recycled with the sort of implied importance as "Worlds largest oil reserve found in Spain". But to TMM most of the headlines being thrown at them today may as well have come from the backs of German one piece ski suits of the 90s. Remember them? Random meaningless words sewn on gaudy colours - "Ski! Artichoke! Yeah ! Banana!" but now "China! Greek! Less! More!". Meaningless.

Posted by Polemic at 1:48 PM  


Don't call me Shirley is the one you were looking for, I believe.

Dee Dee Humberside said...
2:23 PM  

Meanwhile the headlines (but not the bond market) entirely missing a really bad ES bill auction this morning. Odds it marks the end of the run?

Charles Butler said...
2:52 PM  

Markets are telling Sr. Rajoy that time is running out. It's time he made his deal with the Teufel...

Leftback said...
2:57 PM  

But he's extracted a lot of benefit from volatility up to now. May not know there's probably nothing left there.

Charles Butler said...
3:07 PM  

Sharp upturn in DX and a big down move in Tsy yields into the close. Not sure of the origin of this, but that was a strong reversal so the move is probably incomplete. Looking for a 2.75% on the 30y perhaps before fading this.

Leftback said...
9:10 PM  

The scene you are looking for would be from the opening of GoldenEye, the first of the Pierce Brosnan James Bond films. You know, the scene where Bond dives off a cliff after a falling Cesna that lacks anyone on board, manages to get into the plane and then the pilot's seat, and finally pulls the plane up before flying off into the opening title sequence.

Anonymous said...
12:20 AM  

I am sure you seen this,

but seriously? shaking my head over here.

Intrinsic Value said...
1:18 AM  

Looks like the summer rally correction is going to start with earnest then eric then !!!

Anonymous said...
8:13 AM  

Re airplane vid: something like this, perhaps?

Vasastan said...
10:08 AM  

Time to dust off this post?

Anonymous said...
11:27 AM  

Suddenly that large cash position looks a lot more cleverer than wot it done last week. Innit?

Saul Bollox said...
3:44 PM  

tsqolen 7C

(cough) Arsenal (cough)

Anonymous said...
3:45 PM  

Hi, what do you guys think of selling EUR/SGD. Seems like it's been one of the best places to be during the euro-tremble. It's gone down for 5 years now but as there is unlikeliness (when looking what the Greeks and Spanish think about their new budgets) that euro zone economics start improving anytime soon, might it have still room to push further down?

Of course the risk in that is that one of the PIIGS get kicked out, but from what I'm gathering from the media, EZ financial policies are now pretty much run by the "irresponsible pigs". Thanks for the blog btw, I love the stuff.

Anonymous said...
10:10 PM  

pretty decent looking "sooth sayer" going off in Chinese Equities this week

come on PBOC - the bonfire needs some more petrol thrown on it

Anonymous said...
8:10 AM  

UK Fixed income shorts smiling today with a cheeky +22 bps move by UK 10y... US durables down 13% but 10y yields still rising, that's bearish Treasuries.

China bottom may be in. Here we are thinking that Q4 is likely to be EMs>DMs, essentially on a global tide of liquidity and a weaker dollar, reversing one of the main themes of 2012.

Leftback said...
2:47 PM  

Spanish budget to be announced after markets close in Europe but during the US session. Are you feeling lucky, punk?

Leftback said...
2:50 PM  

Everyone and their auntie leaving stocks for bonds in the US. For me this is bullish, another dumb money indicator.

Fidelity Mutual Fund Flows

Leftback said...
4:17 PM  

Agree lb..

Meanwhile. Spain govt to tap 3bln euro from social reserve fund doesn t smack of a country rushing to go for a bail out..

Polemic said...
4:30 PM  

Market's vitals signs look OK. ES:10YR_ESP stable. First thing we look at every day. FX a bit twitchy but we fancy that the DX retrace topped out at 80, so maybe it's time to take a punt in the EMs?

Wonder if the global slowdown über-bears noticed the US initial claims figure down at 359k this morning. 350k is one of those litmus test numbers... it's not beyond the BLS to serve up a tasty dish just before the election. November 2nd NFP printing > 250k, anyone? How about a cheeky 350k? They wouldn't, would they?

I'll take Carnage in the Bond Markets, please, Alex. Doesn't look like UK gilts are a Safe Haven any more after today's shellacking. I'd rather bowl at Chris Gayle.

Leftback said...
4:43 PM  

Indeed, Pol. Closest possibility is line of credit, no new conditions.

Nice to finally know that the Spanish bank run - wot I've been on about for months using inadequate tools for the job - never happened.

Never happened (did I say that already?)

Charles Butler said...
4:49 PM  

EM vs SPX is an interesting trade to think about. Only a few places more over hyped than fixed income is ' Dividend Paying Companies' .. all that liquidity in EM (from previous rate cuts there and now FED ECB) you would think will be felt at some point... bovespa or EWZ looking interesting, FOR A TRADE

abee crombie said...
5:39 PM  

C says'
Month and quarter end merrygoround otherwise nothing to see.

Anonymous said...
5:58 PM  

With China maybe having put in a bottom, and the liquidity spigots open, you'd really fancy your chances investing somewhere that isn't going to show zero growth next year. For a few weeks, anyway.

May as well have it, the man is saying 'ere, come on and take this money I am handing it out for free, or you can just sit in Treasuries, so why not have a pop? B/c someone is going to.

Leftback said...
6:21 PM  

C says'
On this weekend my heart goes out to Mes Amis. Not since the great terror doth the Aristocracy find themselves prey to the state. Whilst their necks may be safe their wallets certainly are not. Only the fact that the French are more civilised than the Americans prevents Monsieur Hollande taking a starring role in the Dallas reconstruction of "Have bullet will travel" . Zut alors ,CAC(k), it certainly will be.

Anonymous said...
3:49 PM  

Watching the Ryder Cup today. Rajoy and Monti might make an interesting foursome team. Not so sure about Mangler and Hollande.

Leftback said...
4:55 PM  

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