Get in there

"Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year."

If the put fly mentioned in today's earlier piece is ever gonna work, this should do it.  Other than Kocherlakota's preference for ZIRP on a Buzz Lightyear timescale, the statement was about as un-dovish as could reasonably have been expected.

Get in there! 
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Polemic
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October 29, 2014 at 6:16 PM ×

But the more undovish she is the lower oil goes!

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Macro Man
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October 29, 2014 at 6:17 PM ×

Err...unless you name is "Mr. B.P. Exxon", how is that a bad thing?

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Polemic
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October 29, 2014 at 6:19 PM ×

Its not but if her conditionality of rising inflation due to oil not falling anymore then peeps buy use and sell oil on that .. it sort of makes first point less likely ( negative feedback loop !)

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Leftback
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October 29, 2014 at 6:21 PM ×

Well played, MM. Pick that one out of the net, son!

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Polemic
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October 29, 2014 at 6:22 PM ×

Anyway .. I JBTFD on spx and am looking for the stupid rally that doesn't fit with the bleeding obvious ! - Eur/usd is holding on in there after first dip

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Polemic
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October 29, 2014 at 6:24 PM ×

And yes,. Great call on the fade the uberdovishness.

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Saul Bollox
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October 29, 2014 at 6:34 PM ×

It's all bollocks, this, innit, Mr P?

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Gus
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October 30, 2014 at 1:21 AM ×

http://nypost.com/2014/10/26/savings-week-has-very-little-to-offer/

"Recently, Ben Bernanke has been telling the super-wealthy investors that low rates are here for a long, long time. Some famed investors who attended those $250,000-a-plate meetings — including Carl Icahn, David Tepper, Paul Tudor Jones and David Einhorn, among others — heard his resounding theme that rates will have to stay lower for longer than people think, well past the guidance given by his successors at the Fed."

"Bernanke supposedly had a terse exchange with Einhorn at one of those meetings. Einhorn felt, as did many billionaires in the room, that there were diminishing returns to keeping interest rates at zero."

Bernanke reportedly told him abruptly, “You’re wrong,” without elaborating.

LOL!

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Nico G
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October 30, 2014 at 7:12 AM ×

i love how those guys catch up with getting rich as soon as they leave office. Bernank, Tony Blair.. The Clintons alone made $100m in 8 years after Bill left office. The message i get is 'right we wasted enough years serving the people for peanuts money while everyone got rich, now lemme have a chunk of it"

Bernanke is now being paraded blabbing the same old thing to old fans. It is as sad as Mohamed Ali these days.

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CV
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October 30, 2014 at 7:57 AM ×

Right Nico, at least he shouldn't need a refinance now :). Oh, and a belated +1 for the FOMC call MM.

On oil, I tend to agree with Polemic mainly because I think the nexus between high yield turds in the energy sector and a plunging oil price could lead the chain to snap somewhere if it continues.

Claus

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Anonymous
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October 30, 2014 at 8:46 AM ×

C says
It's all going to be about the dollar. If the end result of global rebalancing leaves the US with a stronger ,and better balanced economy than it's trading partners (Japan,Europe,China) then we are not looking at dollar mean reversion based on the last few years we are looking at trend continuance. If that really is the outcome then I don't need to spell out what it means for input costs elements (exc labour).
Some big IF's there ,but let's ask the questions which demographics do we prefer out there ,US or Europe/Japan? Which countries appear to have more control over the raw materials/energy side of production? Which countries have are better balanced in terms of debt/GDP servicing?
I could go on ,but for me this is a no brainer. Now will Yellen let this just play out ,no. Can she actually change those fundamental issues ,no. Therefore, can she do anymore than throw the odd log in front of them ,no.

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Anonymous
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October 30, 2014 at 9:07 AM ×

Markets behaving like a stronger dxy won't unravel some crowded, illiquid carry trades ... how quaint

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Anonymous
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October 30, 2014 at 9:10 AM ×

C Says
I've been watching those metals ,because if we do get the dollar continuing they and the mining sectors et al won't be pretty. Indeed given what's been happening to global growth expectations in general one wonders exactly what's been holding them up even has laggards (clue)

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CV
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October 30, 2014 at 12:09 PM ×

Well, it has all gotten a bit TWIE in Europe today on account of Italian banks apparently realising that they might actually, you know, have to do something here following the AQR revealing, well, a whee hole in the balance sheet. EURUSD is offered, but look for the double-bottom at 1.25ish and then just go for it. Now, what could possibly go wrong with that ... ?

Oil is still not moving, and this is really the key for me, and it will also be interesting to see whether the RUB shorts will have to pay a little more to carry their positions after tomorrow.

Claus

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Anonymous
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October 30, 2014 at 12:24 PM ×

C SAYS
If US politicians had any economic nous that was not suffocated by ideology they would realise they have the opportunity to administer a coup de grace to the great recession. As monetary policy very slowly moves towards tighter they could step in and suck the downside out of that by any combination of; increasing capital allowances on R&D and decreasing corporate tax rates. In other words they should be encouraging US corporate investment to come home with all that that implies. Fiscal policy to counteract moderately tighter monetary policy.
Instead they get wrapped up in protectionist policy that doesn't actually lead to any positive outcomes just tries to prevent more negative one's. Basically ,they have a great opportunity here to grow their domestic economy and leave the rest of the world to try and eat each others lunch via trying export themselves out of trouble.

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Nico G
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October 30, 2014 at 1:16 PM ×

ah ! wrote the same a while ago - US needs to refocus internally, stop the buy back crap, trust capex etc

now - the politics in Washington - let's reset expectations to 535 clowns at Congress

as they've shown throughout Obama presidency they'd rather crash their country to the ground than make any concession

i have the horrible feeling that some folks out there want to make sure Obama gets the second worst legacy after Hoover

is there a racist angle to those republican efforts? yes, plenty

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Nico G
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October 30, 2014 at 1:43 PM ×

spoo 1975 the decider for today

can't believe they're still trying

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Anonymous
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October 30, 2014 at 2:38 PM ×

@C,

Here is a different likely future: the recovery part is finally over given the unemployment rate today. Now since we both agree that the growth would be rather slow in the foreseeable future, then corporations really have no incentive to spend big on domestic capital investment, even if they can bring their oversea profit back.
And given the low interest rates, corporations can simply borrow money to invest if they want, cash deposits in foreign banks really make no difference.

Now, to maintain profit margin and earning growth, corporations need to lower cost and find new markets, and since China is expensive now, hence we are looking at India, or other populated poor countries. And with oil boom and lower energy price, re-globalization is coming and we are going to repeat 2002-2007, the period after China entered WTO and became the destination of outsourcing. India and those other poor countries are desperately trying to repeat the China success on building their infrastructure.

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Anonymous
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October 30, 2014 at 3:02 PM ×

2-10yr now +180 ... thats a new 17 month flat and shows the big boys are pricing future growth MUCH LOWER

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Mr. T
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October 30, 2014 at 3:26 PM ×

Flattener does seem like a good trade, even here. I think the fed is not going to raise anytime in 2015 or 16, unless something crazy happens. Relative to other majors it would cause too much DXY strength, which we know fed is worried about. I could see the fed totally freaking out about 2s10s, and the next round of interventions is all about getting spread back and everyone will be wondering why the hell the fed was buying the long end in the first place. Where would bank earnings be with 2s10s @ 40bp like Japan? Its at what ~80bp now in Germany? The last thing they want is the market expecting an inverted curve. What a mess.

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Leftback
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October 30, 2014 at 3:40 PM ×

While we are doing "Get in There", here is a public service message from Putin to RUB bears: "Napoleon".

RSX calls in the money. Cheers, punters...

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Anonymous
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October 30, 2014 at 4:09 PM ×

Gas deal?

http://imgur.com/PFAKrYt

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Anonymous
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October 30, 2014 at 4:16 PM ×

LB - any thts on gold here?
I like your RSX call idea - think could easily be 10-15% in the index if they try to pull capital in - think it will work better for RUB than for BRL - do think most of the currency appreciation will be vs EUR (being the main trading partner etc) and not USD tho.

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Anonymous
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October 30, 2014 at 4:20 PM ×

C says
Message to Putin from Rub bears "son,we can screw you electronically from heated offices thousands of miles away. Enjoy your winter ,we'll send you a postcard from the beach".

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Leftback
admin
October 30, 2014 at 4:42 PM ×

Sold RSX Nov calls today, but holding Jan calls. Not a very intellectual trade, basically, you see the winter in central Yoorp is cold and as Ukrainians enjoy the frozen ambience of a frigid Kiev, they will eventually have to pay the gas bill, which means a general European rapprochement with the Russian bear and making nice despite whatever the people in Washington are asking them to do.

The long USDXXX trade is obviously the central tenet of many investors philosophy today. Talking heads on TV making the obvious argument again that US QE over, EU QE just getting started, so USD continues higher, especially as the US recovery continues to gain momentum (Q3 GDP).

Of course this argument neglects several ideas:

first, that Mr Market is now already aware of these facts and has priced them in to DX, and

second, that Mr Bond is looking carefully at the global economy and sees slower growth ahead, not acceleration, hence the flattener.

third, there aren't too many economic data points ahead of us in the next few months to drive the USD much higher, maybe one or two decent jobs months but that's all, does anyone really think US Q4 GDP will be 4%? Stores are empty in the NE US.

fourth and most important, The FED wants the DX to stop here at 86, to prevent further deflationary pressure. That's what the Bullard "more QE" chatter was about. Look for more jawboning, movement of the dots and other silliness to address this.

Btw, Mr T is right to point out the problems posed by the flattener for US banks and hence equities in general. The reaction to this conundrum has probably already occurred to many of you. Since the long end is under control and is benefitting the US housing punter, what better way to induce a steepening than for Dame Janet to hint at J-Hole about a modest $300B QE4/5 program for 2015-16 ($25B POMO/month) that will target the front end and the belly? Of course there is no way that they can get away with this crap at the moment, but if we see 2y drift up to 75-80 bps by next summer, 5y up above 2.25% (as in 2011) but the long bond pinned around 3% or lower, then we may well see this piece of nonsense pulled out of the hat: "Operation Reverse Twist".

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Leftback
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October 30, 2014 at 5:05 PM ×

Btw, I second the comments of C and Nico on US politicians. They could kill the recession stone dead now by taking the baton from Dame Janet and using fiscal policy to grow their way out of recession, attend to crumbling infrastructure and at the same time benefit many other economies around the world. But of course they won't, they are d*ckheads who would rather throw paper darts at each other all day long than do anything useful. FAIL.

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abee crombie
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October 30, 2014 at 6:25 PM ×

MM, I am back in EDZ5. Short.

Thinking 2000 will be a nice S&P short too if we get there before End of Month tom.

So if US equities keep rallying, does EM and EU catch up?

The fed will tolerate a stronger dollar and will raise rates. what it wont tolerate is one way fast price action, IMO. In the words of Trichet, 'brutal' moves ;-)

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Polemic
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October 30, 2014 at 10:00 PM ×

This rebound has been a litany of "good levels to sell" spx

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Mr. T
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October 30, 2014 at 10:42 PM ×

I don't know what to call this rally in the spooz/trannies/q's but it sure does not look like something I'd want to make an outright short against. There has to be a better way to make a buck. Really a pretty amazing shift in leadership from the energy+tech names back to utilities, drugs and transports. You could probably make the case that utilities are historically expensive at 17x earnings, but they still are yielding quite a bit over treasuries and as people get into the mindset that even post-QE rates are going nowhere its a huge tailwind.

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Anonymous
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October 30, 2014 at 11:20 PM ×

Nico, are you a fan of Obama?

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Anonymous
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October 31, 2014 at 7:13 AM ×

C Says
Agree Mr T ,too many factors at this time against trying to short the broad equity market. I preferred to pick selective longs to see out the year and see if Mr Yogi had something going by way of a New Years good resolution.

I also think there is a damned good psychology experiment begging to be undertaken studying the behaviour of the central banks. They are the best 'card game' in town.

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CV
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October 31, 2014 at 7:33 AM ×

Arigatō Kuroda San ... much obliged ol'chap!

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Nico G
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October 31, 2014 at 7:37 AM ×

i am certainly not a fan of Kuroda...

how could i ever explain my kids that markets behave rationally

lol

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Nico G
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October 31, 2014 at 7:48 AM ×

one thing is sure though

the way they eviscerate bears on every QE announcement/rumor around the globe

make the next correction pretty scary to envisage

ive doubled my stoxx short this morning - not a reasonable size at all

Europe is 7% under Ali Baba level last time spoo printed current level

there is the idea of 'QE relay' around the world, and then there is real real shit (Europe)

I feel for Nikkei bears, or anyone who could liquidated in spoos overnight

there was so much case for trying to short a lower high in spoos... and Kuroda ran your stop

this is not a sane market and a GREAT gap close trade on spoos

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Nico G
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October 31, 2014 at 8:03 AM ×

DIsclaimer: i never trade spoos on the short side - i do not understand this market

another way to look at this is tactical - what levels do they wish for end of year

common target 2100 spx is now 4% away and we still have two months to go

unless you keep the same V rate of change and you'll reach 2800 spx by Christmas

haha

for the nimble (short term) trader there should be a bit of bony zip zag between Kuroda and Santa

don't you think

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Polemic
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October 31, 2014 at 8:18 AM ×

Today's 'great level to sell spx' is kindly sponsored by the BoJ. Be sure to take up this fantastic offer before tomorrow's 'great level to sell'.

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Nico G
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October 31, 2014 at 8:22 AM ×

lol

they'd squeeze anything, even their own balls, to avoid a red October this end of month

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Anonymous
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October 31, 2014 at 9:33 AM ×

Bank stress test, ebola, Ukraine, QE, Japan, all checked. Only European deflation left to talk about on the short side for now? (Draghi to sort that for Christmas?)And the insanity of this vertical move....

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Nico G
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October 31, 2014 at 9:58 AM ×

yeah looks like an Antares rocket

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Anonymous
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October 31, 2014 at 9:59 AM ×

Well , I was wrong, there , I said it. I didn't call the top for 2014, and I'm in tears.

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Mr. T
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October 31, 2014 at 12:06 PM ×

sick. I'm lightening up on DXY longs. 5/4 vote in BOJ? What to make of that? If it was 5/4 to end QE at the fed it would have been a totally different game. I hope that sometime before I hang up the reigns we get to trade in some markets that are not just playthings of a CB somewhere.

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CV
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October 31, 2014 at 12:19 PM ×

I got into the whole market and research thing in 2006, but only really started my professional career in 2009 (not much fun trying to do anything in 2008!).

Will I ever see anything but QE and ZIRP from the G4 CBs? I am beginning to seriously wonder chaps!

Claus

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Anonymous
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October 31, 2014 at 12:24 PM ×

Mr T, you remembered. It's good know that some people outthere still admire a good'ole banter without trying too show each another up. The money is not enough to put up with this shit.

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"C"
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November 2, 2014 at 6:47 PM ×

Hey C, why don't you start posting under C and cut the "C says" bullshit? It's annoying.
Here's some constructive criticism too: put some more effort into your posts, they kind of lack substance (and humility)

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Anonymous
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November 3, 2014 at 3:07 PM ×

c SAYS
Anon 6.47,
Criticism is justified in that I have not been communicating clearly. I know this to be fact ,because you have obviously identified me as someone who actually gives a fuck as to your opinion of me.

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