Holidays



TMM are spreading themselves a bit thin over the next two weeks due to holidays, so posts will be even less frequent (if at all).

We are going to have crack at re-enacting one of the best ever film openings - The one from Sexy Beast.



In the meantime please use comments to keep discussions alive, especially the joke themes.

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VandalsStoleMyHandle
admin
July 30, 2013 at 3:26 PM ×

Enjoy. Who or what gets to play the role of the giant boulder, I wonder...?

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rp
admin
July 30, 2013 at 6:23 PM ×

ha, good job.
My summer 'holiday' looks more like the opening scene from Raging Bull - an overweight psychopath re-enacting film scenes in the mirror.

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abee crombie
admin
July 30, 2013 at 7:13 PM ×

I've always been partial to opening of Bad Santa. Link

Achuthan is just too funny Link

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Rs To Gold
admin
July 31, 2013 at 2:13 AM ×

ha, excellent job.
My own summer season 'holiday' seems similar to the opening scene coming from Flaming Bull - a good chubby psychopath re-enacting movie views from the hand mirror.rs gold

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Leftback
admin
July 31, 2013 at 3:02 PM ×

US data fest served up a heaping helping of Goldilocks lukewarm porridge. That will keep the Bears at bay for about 4 hours.....

Hard to see why annualized 1.5% growth and 1.5% inflation would have people selling bonds to buy dodgy US small caps at ever expanding multiples, but each to his or her own.

Back later for pre-Wizard exchanges with other macro punters ...

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Gus
admin
July 31, 2013 at 3:09 PM ×

"TrimTabs reported that wages and salaries increased a scant 0.4% year-over-year in real terms in July, the lowest growth of the year. This level of growth is consistent with an economy that is close to stalling."

"Job growth this month was the slowest since September 2010 when the U.S. lost 65,000 jobs -- the surge in mortgage rates seems to be hitting the economy hard."

"TrimTabs attributed the weakness in the labor market mostly to higher borrowing costs as well as looming Obamacare mandates and slowing growth in emerging economies."

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abee crombie
admin
July 31, 2013 at 3:11 PM ×

speaking of small caps, anything bio/drug has been going nutty.

Need to see some fund/ETF launches before I get too bearish though

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Anonymous
admin
July 31, 2013 at 4:41 PM ×

C Says
Well small caps might well be getting a bit rich ,but from a macro point of view I wouldn't fight the theme. Global rebalancing in effect will lead to an ongoing change in portfolio allocation. If the last big cycle for focussed on getting your portfolio outperformance from having a foot in the emerging/Bric the next big cycle is the switch to Western Mid/small caps.

Indeed let me be the first to coin the phrase 'The great rotation from emerging mkt equity to Western 'emerging' equity.

It's got to be ,because it' the policy friendly outcome that eventually is the only way those output gaps are going to get narrowed. We know large caps don't do that.

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Leftback
admin
July 31, 2013 at 6:30 PM ×

Today seems like one of those days to watch punters buying each and every possible hint of accelerating US economic growth. Then fading that move into Friday's
BLS data fest, where the hourly wage and hours worked data will once again reveal the truth.

Be my guest for the time being, send in the clowns..

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Anonymous
admin
July 31, 2013 at 7:25 PM ×

curious to see if you will be complaining about restaurant prices in Greece this year as well ;-)

http://www.shanghaidaily.com/article/article_xinhua.asp?id=153931

Matador

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Leftback
admin
July 31, 2013 at 8:22 PM ×

Another bizarre whipsaw trading day, especially in Treasuries. We assume that Untapering Partners might have made some money if they were active today.

As usual on Wizard days, we did nothing. As the close approaches, we would look to fade some of the equity market's recent irrational exuberance, as we look ahead to the real data on Friday.

Those of a skeptical disposition might ask oneself, if the US economy is really accelerating as the GDP number was recalculated to suggest, why was the Taper Genie so abruptly stuffed back into the bottle? (This was after all, a feat of impressive prestidigitation by the Wizard.... now you see it, now you don't).

The Fed has looked ahead to the possibility of a strong US employment picture, and has apparently just pronounced that you have two chances for the time being, Jack: Slim and None.

The fact is, nobody is looking at the BLS headline number any more, the focus is on full-time jobs, participation rate, hours worked and hourly wages. Don't be surprised if the latter are flat, and if the ADP number proves to be an over-estimate. They have a long history of missing to the up side, and this is the July number. The Sequester is out there biting a bit, and colleges have just spewed another batch of eager graduates into the market.

Curb your enthusiasm.

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Anonymous
admin
July 31, 2013 at 8:40 PM ×

What do you guys make of this. This is confirming TMM post a couple of posts back about weakening coal imports:

http://www.upi.com/Business_News/2013/07/29/Capacity-at-19-industries-in-China-cut-1400-companies-affected/UPI-28161375091904/

Low level raw material refining all around being shut down. Surely it will consolidate those that are left and leave the markets in fewer hands, perhaps make domestic producers more competitive to imports as well. I wonder if this is a cornerstone for the sustainable growth plan.

Could the result be rising inflation in China and EM? Good or bad for EM?

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Anonymous
admin
July 31, 2013 at 8:45 PM ×

Oops ment to write DM, not EM in previous post...

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Leftback
admin
July 31, 2013 at 8:56 PM ×

JC Penney credit problems hit the market late on today, lol.

Great week for Ackman. First, the short squeeze in Herbalife, then Soros piles on as a buyer to violate his nether region, and now a >10% plunge in JCP.

Who in their right minds would give this guy (Ackman) their money to invest? Judgement is questionable, plus his habit of using a megaphone to publicize his positions just attracts people who want to rip his face off. How does that make his investors money?

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amplitudeinthehouse
admin
August 1, 2013 at 9:31 AM ×

Enjoy, TMM...methinks it's time for me to take a holiday too..but before I go let me say thanks for your effort around the place..hope to hit you up one day...and while we're talking movie themes that reminds me ...to the spiderman outthere that once said through his stream " hit me up when you get here'...spiderman you have my word ..when I get off the plane not even the running of the Kentucky Derby will get my way!

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amplitudeinthehouse
admin
August 1, 2013 at 9:35 AM ×

Actually, they should put the Kentucky Derby back 2 seconds ...that's all it'll take!

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CV
admin
August 1, 2013 at 11:35 AM ×

Have a good one TMM! Let us see whether the traditional TMM holiday indicator works this year too ...

Batten down the hatches chaps!

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Polemic
admin
August 1, 2013 at 12:37 PM ×

Thanks amps.. and yes do hit us up when in town.

CV yes by normal TMM holiday indicator EURGBP tops this weekend.

Hey Matador, no Greece not on the radar this year. Field trip/ study to lands under Iberian sovereignty. Judging by your handle
May be your field of ecpertise.

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Leftback
admin
August 1, 2013 at 5:50 PM ×

More exuberance today. We'll find out tomorrow how rational it all is.

Not to restate the obvious (!), but this recent bout of central bank policy arb is just producing a lot of chop that makes it bloody hard to make any money.

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Leftback
admin
August 1, 2013 at 6:58 PM ×

Everyone now expects a “good number” tomorrow for NFP. Bloomberg consensus +175k, but the whisper number is higher. Expectations have been creeping up for this one. It’s been a good July and (so far) August 1, so why not ring the cash register tomorrow, especially as earnings haven’t been killing it?

As far as bonds are concerned, there are people out there who are set up – with leverage – for a “whisper number” of +250k. Far more likely we will get a “whiplash number” of +150k.

The Fed tapering threat is now thought to be safely in the rear view mirror. Volume has been low and VIX dipped sub-13 again earlier today. This is a great set up for “Sell the News”, whether or not people get the jobs number they are looking for.

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abee crombie
admin
August 1, 2013 at 7:23 PM ×

i've found that whenever European equities have a big gainer day near the high end of the range its usually a sign of caution not follow through. Lets see if that observation continues to hold. I agree LB, I would think its a good time to sell equities but I have been wrong many times before on them

Interesting thought C on the new EM in R2K. Valuations are quite a bit higher for R2K then when EM started but I do like the idea. As we are finally starting to see some M&A, that will give a firm bid as well. But listening to some in the Mezz space talk, seems quite a bit of exuberance in the mid cap space already.

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abee crombie
admin
August 1, 2013 at 7:24 PM ×

btw Ackman is opening a UK listed closed end fund soon too, ala BlueTrend and Brevan. I wonder at how big a discount it will trade at

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Anonymous
admin
August 1, 2013 at 7:41 PM ×

"lands under Iberian sovereignty": that could even include Catalunya ;-)

Si senor, my expertise is Med wrecks, capisci?

Enjoy your holidays and the vino tinto.

Geia sou malakas ;-)

Matador

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Leftback
admin
August 1, 2013 at 8:43 PM ×

Iberian sovereignty...? Spanish or Portuguese? Not likely to be Mallorca. Too many West Ham fans.

Madeira? Always fancied that. Cape Verde Islands? TMM have gone Posh?

It's been a great week for punters going large on 24 hour trades, wonder if the trend will continue?

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Anonymous
admin
August 1, 2013 at 8:51 PM ×

The jobs # does not matter. "too low" puts taper out to 2014+. "just right" keeps it status quo, "too high" means recovery is under way.

The fact that there was no timeline from FOMC, combined with their assertions that they will issue timelines and not surprise anyone means the september taper is highly unlikely - its at worst a september warning for a late q4 taper.

I think the surprise outcome here is there is a rollover from the deficit hawks in DC, with big outlays (what fed has been saying all along we need) and no taper until well into 2014 if then. SPX runs to 1850 by EOY.

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Leftback
admin
August 2, 2013 at 1:19 PM ×

Dangerously broad consensus this week that the market cannot decline. Even we don't think it will, but we do have some insurance, b/c it's cheap.

Just sayin'..

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Leftback
admin
August 2, 2013 at 1:42 PM ×

+162k. Behold the mighty US jobs machine. As usual these numbers are always essentially 0 ± 0.1%, which is very likely the margin of error. Hard to see why anyone would get excited about this.

Look at those Treasury shorts running for cover!

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abee crombie
admin
August 2, 2013 at 1:46 PM ×

Blackstone and Fortress say now is the time to sell; Fortress is preparing to IPO its holdings. Apollo and Blackstone also are looking to offload their assets. http://goo.gl/HgUag0

Is NFP ever going to be out of line again. Rigged by fed to lower overall vol?? Reversal in Avg Hourly Earnings

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Leftback
admin
August 2, 2013 at 2:14 PM ×

"The personal-consumption expenditure index, which Federal Reserve officials say is a more accurate gauge of inflation than the better-known consumer price index, rose 0.4% on the month."

This is more or less exactly explained by the consumer buying more expensive gasoline in July. At the same time, hourly wages fell and mortgage payments for new purchases rose substantially. Not exactly a rosy picture of the robust US consumer.

How much longer will punters keep on paying a premium to own "growth stocks" in a manifestly low growth environment?

The participation rate fell again. This is not very surprising to those who actually live and work in middle America, as apart from some closeted enclave where everyone works in finance and is a selective beneficiary of "trickle down economics".

US "Middle class" Boomers who lose jobs will never work again, while those employed will never retire, making it more and more difficult for young people to enter the work force. Now, who was supposed to buy all these new houses again?

Absent a few hot spots (Silicon Valley, DC suburbs, North Dakota) this is a picture of a flat economy. Let's see how long crude oil and gasoline can stay at these levels with plenty of supply and the seasonal driving blip about to decline.

By the way, am I the only one who smells a round of litigation for US banks on the way in the wake of the Fabulous Fab verdict? Does this pave the way for a prosecution of the biggest fixers of all time? The Tourre verdict sets a precedent for some very close scrutiny of the deals between J Paulson and GS that led to The Big Short. Many have long believed this to be the ultimate in illegal insider trading.

Just a thought, on this August Friday. It's quiet out there, too quiet.....

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Leftback
admin
August 2, 2013 at 2:26 PM ×

Some of the more coherent thoughts we have read on the Fed's balance sheet expressed here by Scott Minerd of Guggenheim Partners:

The Fed's Balance Sheet

So the world's largest hedge fund doesn't have to MtM. But they still had a really lousy month. Don't expect them to sit idly by if rates continue to rise. The Fed has ample access to large supplies of cold water should they need to pour any on speculators.

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abee crombie
admin
August 2, 2013 at 9:36 PM ×

Amazon's stock is expensive, so is FB, and biotech is just nutty but I think LNKD takes the prize.. 673 p/e, though one could argue that Tesla is about 100x 2015E... funny stuff

before I didnt mind bc they were small market cap. but now they getting big..25B for LNKD put it in top 200 S&P companies... I dunno about that

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Anonymous
admin
August 3, 2013 at 1:20 PM ×

Good stuff, LB. It's funny, because steepening yield curve is supposed to be so good for financials' future earnings, even though it also means they're broke.

http://finance.yahoo.com/q/bc?s=XLF+Basic+Chart

Rossmorguy

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Anonymous
admin
August 4, 2013 at 6:16 AM ×

There's a pretty obvious divergence even in this simple chart, but I am sure it will be resolved in a bullish manner, as the Fed (and everybody else with any sense) marches on, pretending that all is better than ever.

I mean, look at the Transportation Index. Railroads are booming, full speed ahead. Moving a lot of oil for the first time since the original Rockefellah, back before they had pipelines. However, there are probably ten million more mouths to feed in the US since the Lehman moment, and I suppose they get a lot of their food by rail. Could be the Tansport Index is hopelessly broken now. Just sayin'

Rossmorguy

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Anonymous
admin
August 5, 2013 at 12:44 PM ×

LB, More on the housing recovery in the US:

http://www.financialsense.com/contributors/sy-harding/real-estate-mini-bubble-deflating-may-be-economy-s-next-problem

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Leftback
admin
August 6, 2013 at 3:06 PM ×

So. Here we are. August. Low volume. VIX sub-12. Slow summer markets always drift, up right? What could possibly go wrong? Other than the Taper, it’s all good, right?

Another of those interesting indicators is flagged at all time highs here. Dividing the OEX by the VIX yields a measure of complacency, the inverse of the perceived need for protection.

Blue Sky Index Shows Complacency Very High

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Anonymous
admin
August 6, 2013 at 3:21 PM ×

REIT investors don't all agree on rising rates as yet. MTGE is up 17% from its lows and nobody is selling AGNC or NLY any more, but CYS, HTS and TWO still having a hard time of it.

It will be interesting to watch these stocks as slower US data starts to appear. We have just had an effective 100 bps of tightening in a slow economy. It's likely that this will pin growth at 0.5% in the second half, and an outright mild recession this winter isn't out of the question.

Credit spreads are widening and rate-sensitive equities are already beginning to reflect the prospect of slower than anticipated US growth. These last two weeks there has been a decent bounce in shares of those companies that borrow cheaply at short-term rates, as investors realize the short end will stay pinned for a very long time.

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Anonymous
admin
August 6, 2013 at 7:38 PM ×

Noticed that, Anon. My MTGE buy on the Pine River news has worked very well, while other vehicles (DX, PDI specifically) get whacked.

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Anonymous
admin
August 7, 2013 at 12:04 PM ×

A good day for BTL rentiers. No sleepless nights abt your cost of funding for the next two years.

What could possibly go wrong?

DD

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abee crombie
admin
August 7, 2013 at 2:59 PM ×

nice turn around in cable!

yen looking to get to 95 again.. play the range? I think so

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abee crombie
admin
August 7, 2013 at 4:38 PM ×

no love for cys, nly or Muni land (mub)... I'll be looking to buy some on the next dip lower, but not yet. 30yr looking weak

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Leftback
admin
August 7, 2013 at 7:25 PM ×

Weak bounce again today. Still very complacent out there in the mass media. Everyone on TeeVee still pounding the table to buy buy buy.

Very revealing that bonds were strong ahead of the auction. This isn't the "Taper Trade" where we sell everything (stocks + all bonds + gold) and go to cash, aka "King Dollar" that we had seen this summer. It's the old flight to safety, sell (equities + junk bonds) go to IG + Treasuries.

Here's an interesting observation. A few weeks ago, MORT and XHB were a leveraged rates play. If rates spiked, they sold off together. If rates fell, they rallied. [Hint: Hedgies in play]. Today, XHB is down hard even though rates are lower. MORT is trading in lock step with IWM. That's very bearish XHB, the HFs have left the building (stocks).

10s sold at 2.62%. More or less on the number. Yield is falling now. Punters who were scared before the auction are getting on board Treasuries, but high yield isn't bid. I wonder what it is that credit investors can see out there?

Crude is selling off. US crude inventories are very high for this time of year and US gasoline demand remains weak this year despite the normal seasonal trend. Sell US energy stocks.

$4 gas automatically triggers demand destruction in the new paradigm for middle America, where Joe Sixpack just got furloughed from his gubmint job and Josephine Sixpack's job is down to 29 hours to avoid health care costs.

Banks are always sitting on a pile of fixed income (Ts, corporates and MBS) just like the Fed is today. That lot all got marked down in Q2 and they'll not want it to deteriorate much further. Time to call up the kids on the equities desk and get them to dump some over-priced crap on the market?

Not a whiff of fear out there. This market goes lower.

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Anonymous
admin
August 7, 2013 at 7:37 PM ×

Enough people are feeling yennish today to drive the Nikkei down further, and this market a lot lower.

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Anonymous
admin
August 7, 2013 at 9:39 PM ×

LoL @ TSLA getting a bit ballistic here...

I can only explain this with that the world has really been lacking tech innovation for some while now, so everything new promising even a hint of modern age revolution will drive the crowds insane.

But historically all new inventions have only benefitted the consumer, not corporate profits as sooner or later the competition will wither the margins away. And BMW, Toyota, GM and friends aren't far away. Electric vehicles isn't a that new invention either. It's been around in forklifts, locomotives, ships etc. around for ages. The problem is still the battery tech.

I fail to see, what is the real competitive advantage for TSLA other than a little brand building headstart before the big playas get the ball rolling. Is it just me or anyone else seeing a connection to the dawn of internet age and stocks with crazy valuation..?

I would be more interested in the battery tech companies. Thats where the real winners will emerge, with vital patents and all.

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Anonymous
admin
August 7, 2013 at 10:26 PM ×

If this is an echo of the internet age, then TSLA will rally to 500, then buy F in an all-stock deal ala AOL.

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Anonymous
admin
August 9, 2013 at 2:31 AM ×

HD looks like a short. IBM a major short. Lots of tasty charts to short actually.

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Anonymous
admin
August 9, 2013 at 9:30 AM ×

C Says
Still playing See Saw and now looking for the Sore Saw.

Because I still struggle to see where value might be if monetary policy does not follow the complacency path I lack the conviction to be fully committed to direction on a longer B & H. Until that changes it's See saw for me.

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Leftback
admin
August 9, 2013 at 12:48 PM ×

Yup. Teeter-totter, we call it here, C.
Play small. It is August, after all.

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abee crombie
admin
August 9, 2013 at 1:51 PM ×

hahah on TSLA and F. Remember though TSLA stock price is nutty, mkt cap is still pretty small. Look what happened to PCLN. Also TSLA has a huge short interest.

And a high fixed cost business model means profits can improve a lot.

I think the bubble this time is more likely in biotech...but it probably still has room to go

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Leftback
admin
August 9, 2013 at 5:17 PM ×

Long-term Treasuries due for a rally? Bond sentiment is extremely low, even as TLT sits on long-term support, as per this chart from Chris Kimble:

TLT on Long-Term Support?

The long-running USDJPY rally seems to have suffered some serious setbacks, that's still the one to watch for now among FX pairs. Bucky certainly not pounding other currencies any more, and the EMs are starting to pick up as a result.

Our second half theme, Europe and EMs over US, seems to be off to a decent start in August.

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Anonymous
admin
August 10, 2013 at 8:39 PM ×

Europe is killing it; not sure about the EMs yet. Brazil looks interesting specifically.

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Leftback
admin
August 12, 2013 at 5:11 PM ×

We are long EBR and CIG in Brazil. Hope/think the bottom is in....

It's August. Mainstream media say "stocks turn mixed". How many more signs do you need to see that say DO NOT TRADE today?

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abee crombie
admin
August 12, 2013 at 7:45 PM ×

markets looking toppy here... all shampoo bottle technicians are coming out with H&S on US equities

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Leftback
admin
August 12, 2013 at 8:03 PM ×

One thing that isn't boring today? Take a look at gold miners, GDX and GDXJ. Melt up....

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