Apologies for the lack of postings this week but Macro Man felt curiously uninspired by the ongoing rally in all manner of assets. Big-figureitis is a well-known behavioural phenomenon, and now that we've traded SPX2K it will be interesting to see if profit-takers emerge.
Of course, with the end of the summer upon us (the Macro Boys are already back in school), following next Monday's Labor Day holiday it seems reasonable to expect trading desks to be fully staffed full of well-rested punters looking to make their years. Indeed, it's become something of a depressingly familiar phenomenon in the macro space for traders to scuffle for the first eight months of the year before throwing a bunch of risk at the market from September onwards to snatch victory from the jaws of defeat. Strangely, "put it all on black to recover your year" seems to be absent from most marketing materials....
This year, the first eight months have been unusually challenging; from the moment the market opened on Jan 2, many punters have been underwater thanks to sharp reversals in last December's favourite trades.
This naturally leads Macro Man to wonder where markets are likely to allocate risk over the next few months in 2014's version of the race to the finish line. Naturally, he has his own suspicions, but he's curious what the informed readership of this space make of things. With the Fed outlook likely to come under particular scrutiny, there is of course no guarantee that the market pricing of the past few months will predict future pricing.
So what say you, readers? Please fill in the survey below. Obviously the answers are necessarily simple, so if you have a theme or specific trade that is not listed, click on 'other' and fill in the blank. If the form is working properly, respondents should be able to view the results.
EDIT: You can see the results here.
Of course, with the end of the summer upon us (the Macro Boys are already back in school), following next Monday's Labor Day holiday it seems reasonable to expect trading desks to be fully staffed full of well-rested punters looking to make their years. Indeed, it's become something of a depressingly familiar phenomenon in the macro space for traders to scuffle for the first eight months of the year before throwing a bunch of risk at the market from September onwards to snatch victory from the jaws of defeat. Strangely, "put it all on black to recover your year" seems to be absent from most marketing materials....
This year, the first eight months have been unusually challenging; from the moment the market opened on Jan 2, many punters have been underwater thanks to sharp reversals in last December's favourite trades.
This naturally leads Macro Man to wonder where markets are likely to allocate risk over the next few months in 2014's version of the race to the finish line. Naturally, he has his own suspicions, but he's curious what the informed readership of this space make of things. With the Fed outlook likely to come under particular scrutiny, there is of course no guarantee that the market pricing of the past few months will predict future pricing.
So what say you, readers? Please fill in the survey below. Obviously the answers are necessarily simple, so if you have a theme or specific trade that is not listed, click on 'other' and fill in the blank. If the form is working properly, respondents should be able to view the results.
EDIT: You can see the results here.
22 comments
Click here for commentsThe asset class with the most tailwind is long ex-US EAFE equities. If the ECB oblige next week, they will even add tailwind. And with equities +10% comng into September (vs. +20 in '13), more room to run and make up from long ground elsewhere should markets go that way.
ReplyTrade into the EoY is a bird if there ever was one ..
ReplyShort the fuckwit Macro Trader turn Pimp.
What is the feeling on USDJPY? A couple of figures higher and we could be off to the races. GBPCAD looks good as well to short.
Replydepressingly familiar but won't happen this year - Q4 will suck for risk
ReplyExactly..that fuckwit trade has probably set me back another year.
ReplyWELL DONE
But I "ll eventually trade my way out it and when I do I"m coming straight for you fuckwit!
ReplyC Says
ReplyAs the man holding the patent on the word 'f...t' I am formally declaring it offlimits. Any further usage will lead to legal consequences ;)
As I believe past human behavior is the best predictor of future behavior, the markets will do the same thing they have done after the money printing ended in the past QEs. Equities will tank and Long Term Treasuries will rally, for at least 2 to 4 months. Take the $85bn-a-month demand punch for financial assets and the psychologic effect it provides, we will see a correction in prices.
ReplyPedro Ivo S.
My Macro Washing line on to which i hang my trading washing ..
Reply- Equities will keep grinding up boringly, but once past a tipping point, say 2150 on SPX, they will go spectacularly stratospheric in a hyperbolic spike as every Joe piles in on leverage (Zero Hedge rebrands as 'Infinite Hedge'). This happens just at the time that inflation starts to hit which also then careens higher leaving the Fed on the hop, and after trailing the curve for too long will hike dramatically stuffing global markets (includiing EM ) that by then will be fully geared for chasing micro-yield at the expense of risk. The resulting dump then triggers all the uber calamity theories with respect to the values of money, as the walls of state debt fail to withstand this final tsunami crashing into them. Meanwhile, the world will have been further weening itself off the Usd as the only currency in town and political global enforcement of US financial policy will have annoyed enough other countries to make them think twice before wanting to bail out the mothership again. throw in a few uprisings along the way and it's all change in the world.
I have divined the pig-entrails... here's what will happen by year end:
Reply- Fed QE will end. There will be no rise in interest rates until 2015. (PS In 2015 H1 rates will rise in the UK and US but by less than 25bps increase. There will be no further rate rise in 2015).
- The SP500 will correct again before 2014 year end, and everyone will say "this is the big crash". It won't be.
- Russia will conquer East Ukraine, making it "New Russia". This will be a repeat of the Georgia invasion. Nothing more will happen.
- Europe will have a difficult winter.
- US and UK politicians will rant about ISIS and do nothing, except remove more civil liberties and raise some taxes.
To keep the romantic theme going that we've had around here late ..this one is for you, have a good one.....
Replyhttps://www.youtube.com/watch?v=qEqqRtS3VLw
"The Dogs"
We started like children
Lost in the building by the wall
Hope lost to fear
And nothing was clear when lost it all
This is how, how we tried
This is where, where it died
This is how, how we cried
Like the dogs left outside
We were so cautious
Guarding the locksets viciously
I’m never breathing
Tender like ribbons obviously
This is how, how we tried
This is where, where it died
This is how, how we cried
Like the dogs left outside
I am too shy to cry
You gave her one kind to provoke
Even with balance
Losing the hope with you again
This is how, how we tried
This is where, where it died
This is how, how we cried
Like the dogs left outside
His words are like sharp knives
Reading on my rights every time
Crying to our son
I was just so wrong every time
This is how, how we tried
This is where, where it died
This is how, how we cried
Like the dogs left outside
https://www.youtube.com/watch?v=zxxz4EaDyAk
ReplyGuys, can we shelve the obscene rants please. They don't add anything, and while I am no stranger to 4 letter words I do try and keep this place clear of then. Thanks.
ReplyThanks for cleaning things up MM.
ReplyHow do you guys feel about the real rate component of the UST 10yr over the next five years? I simply haven't heard much about this.
I respect the moderators comment after going into tilt mode .. we would like nothing better to focus on our strengths and this comment section provides an element to that mosaic.
ReplyKeep to your strengths.
If anyone wants to know what that was all about , than I can only tell you that the RoC in the SP500 was directly proportional over time on a exponential curve to the RoC change of expected QE coming its way which was 0. Ps..don't you have any doubt about that old boy.
ReplyThanks to Mr T for making the link available. From the Fed minutes, September 2008:
Reply"But still, one of the things that we should probably be considering is that perhaps the economy has not been as strong as suggested by the real GDP figures. Real gross domestic income, which is output measured on the income side of the accounts, has risen about 2 percentage points less than GDP over the past year. And if we look at industrial production and compare that with the components of GDP that are, in essence, goods production, there’s about a 1 percentage point discrepancy there, with industrial production suggesting weaker figures than GDP..."
Hmm... has the real economy changed that much since 2008? It's interesting how much of the discussion was about liquidity provision, dollar swap lines and bazookas....
Mr P, you keep on banging on about inflation, but that's looking through the UK prism. We are all in the Hall of Mirrors, mate, but each country has its own weird distortion lens......
ReplyMr Market seems to be voting "Long USD" tonight.
ReplyLB, the market state heard somewhere ,and never a truer statement.
ReplyMean\Nasty\Looking for a fight