Snowed in yet again, Macro Man has been left to peruse his bookshelves. In the children's section of his library he found a new volume, which has apparently been surging in popularity in certain parts of Europe. With apologies to Dr. Seuss and Art Buchwald:
Alexis Tsipras will you please go now!
The time has come.
The wait is dumb.
The time is now.
Just go.
Go.
Go!
I don't care how.
You can just default.
Don't pay the frau.
Alexis Tsipras will you please go now!
You can skip your debt.
You can keep your ships.
You can eat your hat.
But
Please go.
Please!
I don't care.
You can leave
The euro.
You can join
The RUB-RUB
Losers' club-club.
You can go
To the drachma too.
Just go, go, GO!
Please do, do, do, DO!
Alexis Tsipras
I don't care how.
Alexis Tsipras
Will you please
GO NOW!
Greece can go it alone.
You can join the Swiss
You can apply to NAFTA
If you wish.
If you wish.
You may go
By black swan's tail.
Or stamp yourself
And go by mail (assuming Greek postmen are still employed and delivering)
Alexis Tsipras
Don't you know
The time has come
To go, go, GO!
Get out with thee!
Please O Hellas!
You might like reneging to the ECB.
You can leave the euro
And devalue
Or
You can find some cash
In a bureau drawer
You can sell your shipping-fleet
And jets.
But if not, then you must go
Just get!
Alexis Tsipras!
I don't care how.
Alexis Tsipras
Will you please
GO NOW!
I said
GO
And
GO
I meant
The time had come
So....
Alexis WENT.
Alexis Tsipras will you please go now!
The time has come.
The wait is dumb.
The time is now.
Go.
Go!
I don't care how.
You can just default.
Don't pay the frau.
Alexis Tsipras will you please go now!
You can skip your debt.
You can keep your ships.
You can eat your hat.
But
Please go.
Please!
I don't care.
You can leave
The euro.
You can join
The RUB-RUB
Losers' club-club.
You can go
To the drachma too.
Just go, go, GO!
Please do, do, do, DO!
Alexis Tsipras
I don't care how.
Alexis Tsipras
Will you please
GO NOW!
Greece can go it alone.
You can join the Swiss
You can apply to NAFTA
If you wish.
If you wish.
You may go
By black swan's tail.
Or stamp yourself
And go by mail (assuming Greek postmen are still employed and delivering)
Alexis Tsipras
Don't you know
The time has come
Get out with thee!
Please O Hellas!
You might like reneging to the ECB.
You can leave the euro
And devalue
Or
You can find some cash
In a bureau drawer
You can sell your shipping-fleet
And jets.
But if not, then you must go
Just get!
Alexis Tsipras!
I don't care how.
Alexis Tsipras
Will you please
GO NOW!
I said
GO
And
GO
I meant
The time had come
So....
Alexis WENT.
67 comments
Click here for comments@checkmate's last comment to the previous post - do u see any catalysts for the uptrend in USDJPY to resume? Feel like at this point its more of a derivative of the EURJPY cross, so for that to happen the euro would need to rally.
ReplyLook fwd 2 ur thts.
To be honest I am really not that 'deep' when it comes to compression setups like this. That is , I don't position prior to breakout and I don't try to convince myself I can predict the direction based upon an argument like , the correlation has been therefore it will continue. I just wait for it to happen and then take the chance it won't be a false breakout although I think the latter tend to be news driven anyway. If it happens without news I'm happier about it's chances.
ReplyHey MM.. do you feel like Shakespeare must have done after his first performance of Hamlet only to find the audience discussing a different play?
ReplyMore like Francis Beaumont, a contemporary of Shakespeare's who is roundly ignored!
ReplyYup must have been. I've never heard of him.
ReplyWell I'll do my bit and say that was a lovely ditty.
Ha ha Polemic and MM ... that was a funny exchange. I enjoyed it mind, but I had to look up the references etc, so it wasn't intuitive to me ... .
ReplyOh and yes, what a sh't show in Europe! They will drive right to the end of the cliff the 28th of Feb I think. I mean, what do people think will Greece will look like if they default and exit. I have some Drachma bonds to sell you sir?!
@ CV "what do people think will Greece will look like if they default and exit"
ReplyIn 10 years, better than they do now, or will if they continue this tiresome farce with the Troika.
After only recently seeing the newsnight interview with fin Min V on youtube, he grew on me. Handled the binary answer seeking BBC brilliantly. Media after yes no answers when its all actually grey.
ReplyFind and watch it if you havent.
Having a populist political party representing the people may actuall make the populace realise that they personally have to do sonething..paying taxes being a start.. to sort it out. Either under eu enforcement or because thry are out and need to finance themselves.
How about a US style tax where greeks have to pay greek tax wherever they live in the world. And have the EU enforce it in the EU zone to help out.
Sorry typos.. phone and tiny comment box
ReplyAgreed. They would be better off out of it, with their own currency to print so they can reflate their tiny economy in part by relabeling their delightful holiday and agricultural offerings at a more reasonable price point free of the funny shaped € sign. Of course if they held hands with Vlad the Impaler for a decade or so they could have all kinds of fun at the expense of Brussels.
ReplyHowever... Brussels will blink first. Rolling one's bad credits over by lending more to the debtor always involves a haircut eventually. EU taxpayers are getting this one, it will be interesting to see how the politicians finesse it. This is a dry run for the next big election in Southern Europe.
No comment on the non-decoupling exhibited by piss-weak US macro data except to say "we told you so..." Short-term, US markets to stay afloat on hopes of delayed Fed rate hikes. Medium term, not so sure. USD disillusion starting to set in.
LB You have recommended emerging market bonds recently. Any good vehicles for this type type of investment for the retail crowd?
ReplyAbee Crombie is probably the best expert in these parts to discuss specific credits.
ReplyFor general punters there are at least three ways of doing this: the "safer play" - the EMB ETF is EM debt in $, EMLC is EM debt in local currency, so you add FX risk of a stronger USD. Both of these have a lot of global diversification so if one region or country defaults the effect on the ETF isn't that large. I think they avoid Venezuela! You could blend these to reduce FX risk and clip the coupon.
Another way to do this with more risk is to view the equity of EM banks as derivatives, since they are chock full of their own govies (see the post 2012 European playbook, buying Spanish banks etc). So for Brazil, ITUB is basically a leveraged play on Brazilian govies at the moment, then there is Sberbank (SBRCY) for Russia, etc. and to add more fun/risk/danger of losing your punting money you can always buy long-dated options if you like that sort of thing. Greece might be a good "emerging market" if you like to play the ponies, NBG calls being the vehicle of choice. Your mileage may vary.
@MM
Reply"In 10 years, better than they do now, or will if they continue this tiresome farce with the Troika."
Exactly. And I don't think it will take that long. They'll feel a lot better when they get Troika heel off their neck.
Aw MM - sry to make u feel unappreciated - from one family guy to another, I would have thought you would be more than used to the treatment.I know, I know, not a good enough excuse...
ReplyDo what everyone else does - learn to live vicariously through LB's rock star status.
Re Anon 9PM on EM Bonds
ReplyThere are quite a few ETFs/Closed End funds you can play in the EM Fixed income space. EDD and EDF are the ones I like. But at this point its all a game of where the Dollar will go. Below is decent chart of what most EM currencies have done. Maybe its time to step in, but honestly I dont have a clue. The good thing is at least you are getting carry/ dividends to cover at least a weeks worth of pain ;-)
If you are going to buy EMB you are pretty much taking duration risk unless you want to go short, as most EM bonds are still going to pay.
Lots of ppl are long EM rates thinking they will go lower, but I still havent found a play on that that is FX Neutral. have to get into the swaps market for that me thinks
http://imgur.com/KQAom9U
Blame the snow day on Punxsutawney Phil!
ReplyGreat to see how all the "professionals" are missing this move in EU/US equities. Institutional types (never the brightest) are arguing about Grexit risk and Fed rate hike timings, blind to the reality staring them in the face. That reality is as follows:
Reply- Western Central Banks will NEVER allow rates to rise from ZIRP levels.
- QE is FOREVER. There will be endless bid in equities. It is NOT politically acceptable to allow EU/US stock-markets to fall, period.
Last week I posted my 200% long EU/US equity positions here. I am making money hand over fist - let's face it, it's not hard. Frankly anyone posting less than 20%+pa returns these days should be fired.
Since yesterday afternoon (15:00 UK time) the Dax is up almost 300pts. We're talking about a roughly 1%/hour rise (exchange hours). This week saw Oil up roughly 12% in 48 hours. LOL.
ReplyThis is as close to a free-lunch as you'll ever get people.
oh great one we all bow before your um wonderful greatness !!!
ReplyI am simply gr'e'atful to be permitted to suck oxygen on the same planet has your greatfulness.
He he he Checkmate, I echo that statement ;). But we did talk about how the inevitable CB response to lower oil prices could take us into the silly-season part of the cycle (usually the final leg). Need I say more ...
ReplyEnergy and banks are leading the charge in the Eurozone, sector rotation is still the name of the game. Of course, that DAX chart could run out of steam in the short run, but it has stated its intent I think, and it has stated it strongly!
What do we think ze Germans are really discussing amongst themselves in Berlin? This has now become a very high stakes poker game with a lot of nervous nellies in every EU government (especially in Dublin, given that they have towed the line so much) ...
ReplySo IF the new Greek government is successful in bypassing the Troika and delivering a real result for Greece, all of Angela's current chums in Lisbon, Madrid, Dublin and even Rome will be very worried - the very real (and rising) opposition in Spain (Podemos) and in Ireland (Sinn Féin and assorted Independents) will gleefully point to what is possible if only the people will give their mandate to anti-austerity parties...
The calculus for the Germans is becoming quite complex - yielding has serious political ramifications both inside and outside Germany - forcing a Grexit, on the other hand (and hoping, in a Machiavellian sense, for shocking TV pictures from Athens in its aftermath) may actually serve to keep all the other potential anti-austerity parties across Europe in line (not to mention quietening the domestic German noise)
the Greek situation is plain sickening
Replythe wealthiest guys are all abroad - the money is GONE into offshore accounts and London properties
and they thought they could tax the remaining populace into oblivion to recover them hundreds of billions
the whole system is sick
the ex-Lehman guy they put in charge of tax collection resigned after being threatened by the powerful guys he was trying to go after
http://www.telegraph.co.uk/news/worldnews/europe/greece/11381653/Death-threats-forced-me-to-quit-my-job-says-Greeces-top-tax-man.html
'funnymoney' world indeed. So sad
farewell from Japan
Hey Funny Money
ReplySave the braggadocio for the Yahoo/Bloomberg message boards, OK?
On another note, Interactive Brokers has sent the message this morning imposing -ve rates on all CHF account balances >100k CHF.
"On another note, Interactive Brokers has sent the message this morning imposing -ve rates on all CHF account balances >100k CHF."
ReplyNot to worry, you can just buy some high quality Nestle bonds with the surplus ... wait, sorry sir ... strike that!
The "student debt clause*" has once again entered the centre stage in Greece, and it makes sense. Why you ask ... well because it is the only way for Greece and the EU/ECB to walk away with their pride intact. QED, this is what we will get.
* Essentially tying repayment to some elusive level of income/output that will never be achieved or not for 10 years.
"
ReplyLast week I posted my 200% long EU/US equity positions here. I am making money hand over fist - let's face it, it's not hard. Frankly anyone posting less than 20%+pa returns these days should be fired."
Ah, yes...at times it always seems like this, doesn't it? Short tale (absolutely true)..
Back in the tech bubble, my life was changed. I bet everything I had on it, and sold at the top. Stomach hurt every night. Would get up at 2 am to check the markets. Well, better lucky than good.
My buds, we all had the fever. When I determined it was time to sell, my buddies were, ummmm, not as convinced as me. My favorite anesthesiologist lost 3 million dollars over the next year. Urologist 4 million (of an impressively built up portfolio). Thoracic surgeon 14 million. One poor bastard lost 3 million on his own, turned the remaining million over to a pro, who lost most of the rest.
...Be careful when emotion runs high...
Re: Funny Money.
ReplyI see the bid in Dax/Stoxx and the weakness in US equities but there are lots of ways to skin a cat.
I wouldnt be surprised to see EUR bounce hard over the next few days, especially if something on Greece gets fixed (or fixed for the media at least). Lots of trend followers going to take some profits soon
"On another note, Interactive Brokers has sent the message this morning imposing -ve rates on all CHF account balances >100k CHF."
ReplyThe trend is catching on - I guess its time to start looking for pure plays on mattresses with hidden pockets.
But whats to prevent them in a few years from imposing negative convenience yields on cash? I.e. a friendly govt agent stops by every evening to inspect ur bills and 'make sure' you spent ur paycheck!
Oh, no, i've turned into z/h, twas a matter of time...
@Bruce:
Reply"My favorite anesthesiologist lost 3 million dollars over the next year. Urologist 4 million (of an impressively built up portfolio). Thoracic surgeon 14 million"
I don't what the other guy's takeaway from this story was, but I am shelving my plans to become an anesthesiologist and focus on becoming a thoracic surgeon instead.
SF Fed: We are babes in toy land when it comes to economic forecasting...
Replyhttp://www.frbsf.org/economic-research/publications/economic-letter/2015/february/economic-growth-projections-optimism-federal-reserve/
correct - why do u think MM uses Dr Seuss to explain things to us?
ReplyLB, abee crombie, Thankyou for your response on em bonds
ReplyThe Telegraph: The Croatian government will be wiping off the liabilities of around 60,000 of its poorest citizens in a move to provide a "fresh start" for its indebted low-earners and get the economy moving again.
ReplyGoing long AUD/USD and short Bunds .. wish me luck
Replyhttp://polemics-pains.blogspot.co.uk/2015/02/membership-applications-to-two-socially.html
Strong day for Greece today, led by the banks - National Bank of Greece +20.79%, Attica +18.75%, Piraeus +18.37% -
Reply@polemic
Replybund yields are what they are because there is a shortage of them relative to the total demand for EU-denominated debt. not only does germany have an austere disposition, frankfurt hard-wired the EU via protocol 12 to prevent member states from running irresponsible deficits.
the reason that yields go up when the FRB started/expanded a QE program was that the UST bolstered their deficit-spending. when the FRB has expired/reduced QE the yields on UST credit went down because the supply was contracting. the FRB has been ~ balancing the deficit spending with equal purchases. see UST budget deficit data and compare with FRB timing.
similarly, the FRB will raise rates because the demand at the short-end of the curve is there and/or anticipating actual organic (private) net-positive credit formation again.
the EU QE program is going to smash the entire credit curve to 0% unless the germans start running a deficit and/or spending down their reserves.
the FRB is trying to talk rates up so the stakeholders can continue buying at favorable yields. let's face it, who is the largest UST investor in the world? does said entity have inside information as to what the next policy moves are in advance?
oh yea, they make the policy!
ps - the FRB won't raise rates until there is actual organic (private) net-positive credit formation. contrary to popular perspective, they do follow the market.
ReplyThanks Dan. Well put.
ReplyI guess there is a shortage of European debt whilst people want to buy it. When they don't there won t be,
Did you like the bit about Goodhart's law though?
@anon 5:11pm
Replysqueeze. let's not forget the numberous, and impressive, financial squeezes of 2008 and 2009. germany will blast greek equity, but they will capitulate on the sovereign debt to keep the EU together. the germans are the most fortunate beneficiary of the EU.
@polemic
Replypeople are buying EU sovereign credit because it is collateral and a claim on future cash. if you want to do business with EU entities, you still have to settle in euros.
Thanks Dan.
ReplyWhat do you think of Danish debt?
Notwithstanding his alleged "rock star status", LB had the most lousy January one can imagine, akin to being caned on the arse almost every single trading day (Note: since LB did not attend Eton or Harrow he finds this unappealing), although he was not dinged by the Swiss unpegging. Short USD long EEM was bad enough....
ReplyReaders will be shocked to find that not only do your dodgy supplements not do anything (Homeopathy much?) but they don't even contain the junk they claim it is on the bottle, perhaps b/c of.... dodgy suppliers in China? Is it time to join Ackman and short HLF? The entire industry might be vaporized in 6-12 months once people read this:
Herbal Supplements LOL
Of course, only the most pure, natural, wholesome and organic ingredients are used on this blog. Satisfaction guaranteed or your money back!
this is just my 2 USD cents, but i do not like Denmark and am bearish the nordics, in general.
ReplyDenmark will run a deficit to increase supply and hold yields positive. Denmark is not Switzerland, however, and they sure aren't Germany or the USA. They need to be very careful with their deficit spending or the wheels will come off.
I did like Dan's above analysis of UST dynamics. Clever and simple.
ReplyQuestion: Does Dan agree that German bunds at current yields are effectively a call option on a reintroduced Deutschmark? Just curious.
Second and follow-up question: How many times have we seen a lot of money lost on short term bets that the € will disintegrate?
Third and general question for anyone, to what extent have Greek equities in fact already been priced for the reintroduction of the drachma? One begins to wonder whether any kind of fudged "debt swap/maturity extension" agreement whereby Greece stays in the € will reveal a significant upside in Greek assets.
again, just my 2 cents.
Reply1 - Yanis Varoufakis is under Soros and Fraulein Merkel did not oblige Soros' when he asked her nicely to run a phat deficit. France is taking Greece's back because they also want Germany to back-off. Same with Spain, Italy, etc. An inversion of the 1953 debt conference seems to be the path of least resistance. So yea, I think we can call the German debt a convertible EU credit. I don't think it will go there, however.
2 - Euro should start weakening again as the launch date for the EU QE campaign approaches, but that's off in March and FX is making huge moves every day lately.
3 - A sustainable Greece will be stimulative to their economy because not that many people have the structure to manage their risk inside Greece today. Caveat emptor - BSC went down in March 2008 and Paulson's bazooka came out in, what, July/August 2008? LEH, FNM, FRE, AIG, MM/FDIC promises...all of that stuff preceded the October TARP-job and we still didn't find a low until the deficit spending plan was entrenched in March 2009. It's easy to be early to these big events.
Good thoughts. Thanks. Perhaps something has been learned from the ineffectiveness of 2008 and the delayed bazookas? Germany and Finland will no doubt want to "make someone pay" but wiser heads will probably talk them out of dismantling the Greek banking system.
ReplyFor punters interested in Game Theory but not that interested in losing money, the best way to play Greece might be to make money now trading options, but to be watching from the sidelines when the event actually goes down. Nevertheless, history suggests that to make sure the country keeps operating, at least one bank and the phone company are usually left standing.
Euro stronger into early March makes some sense, as this coincides with a period where we are likely to see a fair amount of weak US economic data.
ReplyLots of people here have asked me if I am bullish US equities and I can't decide, although at the moment I have to be bearish Treasuries. Maybe I should say, yes, long Spoos for a squeeze, but then - no idea, and would rather pursue Europe and EMs in 2015.
If things work out as we envisage then we might see USD, USTs and Spoos all decline together for a while as capital flows reverse. For this reason, am going to try to be completely out of US assets (other than REITs) by the end of this week, certainly before Eyes Down for Friday's NFP bingo.
We are just beginning to see some pain among those who are short energy. If that was a strong dollar trade, then there will be more pain ahead.
I think the US equity train is loaded with punters and is ripe for a flushing.
ReplyOther than the US energy patch, things are looking good. US real estate is pretty hot and any tightening in there will hurt balance sheets, but will likely help renters and moderate the price squeeze. There is very limited inventory for buyers in the conforming loan price range.
One has suspected for some time that there were a lot of leveraged pair trades out there of the general form (short EUR: long USD) , (short wti: long USD), (short EEM: long USD), (short GGB; long UST), etc..
ReplyLooking at the markets today a number of these puppies seem to be unwinding rapidly.
@Funnymoney:
Reply"- QE is FOREVER. There will be endless bid in equities"..So what happened to commod producers? Especially Canada and Australia?
Seems I heard this before...it's magic
Reply“We’ve finally figured out a way to make a bond default-free,” says McQuown, a partner at eBond Advisors that’s producing the new security."
http://www.bloomberg.com/news/articles/2015-02-03/meet-the-80-year-old-whiz-kid-reinventing-the-corporate-bond
Cot info..Euro long was no-brainer:
Replyhttp://www.dailyfx.com/forex/technical/article/cot/2015/02/02/COT-Small-Trader-Record-Short-in-Euro.html
Just what I thought...it's coming
Reply*KOCHERLAKOTA: FED SHOULD CONSIDER QE IF INFLATION STAYS TOO LOW
SNB, Trader of The Month The Charts That Matter
Replyhttp://investir.ch/2015/02/snb-trader-of-the-month-the-charts-that-matter/
Eur usd back within pre ECB range. SPX 2050 ish. Oil back to 2014 close levels ...all we need now is eurchf at 1.2000 and we can pretend January never happened. It s the same every year. Last year it was EM that never hapoened.
ReplyGallup CEO calls out the big lie on unemployment in the U.S.
Replyhttp://www.gallup.com/opinion/chairman/181469/big-lie-unemployment.aspx
great calls all around LB - the correlation with crude to all these trades (EM, short $) is crazy, and i daresay that has been the catalyst for all these moves (with the usual toppling dominos subsequently which u predicted) - it has been quite the combination of things that have come together to make crude get off the mat (refinery strikes, rig count reduction, some comments by CEOs of majors etc etc) so I guess it all kinda depends on the sustainability of that move - we'll see.
ReplyOut of respect to MM, I will attempt a more toned-down post, and respond generically to some of the above comments:
ReplyTo those who are kindly pointing out that everyone's a genius in a bull market, and that all trends must end, I hear you - but - and it's a huge BUT... it all comes down to macro. Allow me to explain (& please excuse my grossly simplistic summary):
We have structural problems on an unparalleled scale. Aging populations in DMs, global trade imbalances, job destruction via technology etc etc. And politicians & society have taken the quick fix, namely: DEBT. Decades of debt amassed on a scale that can never be repaid.
Thus, indebted western govts need financial repression & inflation to erode that debt, hoping for a "beautiful de-leveraging" (credit: Mr Dalio). Thus ZIRP and QE.
Ofc it isn't quite working as planned. Thus more QE. Then currency devaluations. Then -ve int rates. Then more QE. This is where we are now IMO.
But politicians simply will not allow another 2008 GFC. And they cannot let int rates rise or they become insolvent, and so the game becomes ever more crazy. Sensible people point out that eventually inflation will rise - yes & our govts would love this! Imagine 10 years of 5% inflation. Goodbye 50% of govt debt.
Thus I believe US,JP,EU equity markets will rise much, much further. In fact further than we could ever believe. Perhaps that once maligned author of 'Dow 40K' will eventually have his day in the sun?
@funny those are all good points, and clearly you have been right recently - the underlying assumption behind your narrative, seems to be, however, that CB's and politicians always get what they want, and control all aspects of the market in a surgical fashion - history provides enough examples where that worked till it didn't. There are equilibrating mechanisms that can prove to be huge flies in the ointment to the CB game - currencies, for example, cannot all weaken simultaneously, commodity prices can be responded to via supply, no one really understands algo trading, and technological growth in response to cheap venture capital is inherently deflationary.
ReplyLong story short, sure we could get Dow 40k - however, you will never do it in a fashion where the left tail of that distribution is anything less than a 20, then 30, then 40, then 50% selloff because earnings quite simply won't climb as fast because of those other things I described - of course if u feel like a bullish punt and are convinced its going up 100% I'm no one to stop you!
@washedup: In a normal world I'd fully agree with everything you (and many other posters here) say, but I'm with Hugh Hendry's thinking, to quote:
Reply"...the persistent upwards drift in stock markets is more a reflection of the steady erosion of the soundness of the global monetary system and therefore the rise in stock prices is something that is likely to prevail for some time..." and "...I believe they (Central Banks) are terrified: the system is so leveraged and vulnerable to potentially systemic price reversals that the monetary authorities find themselves beholden to long only investors and obliged to support asset prices."
I thought I might try and write something intelligent on the markets but I worry that I might show myself up. I'll content myself instead on appreciating your efforts MM but to confess, I've never really liked Dr Seuss. My wife can recite all the books on command. However, despite having a fondness for eggs and ham, I can't say it has ever appealed.
ReplyI have to say I honestly didn't think I would get a chance to buy more US long bonds at these levels. I love it when the market throws you an opportunity to back up the truck. Remember guys, sell offs in treasuries have been getting shorter and sharper all the way down. Nothing has really changed and oil's bounce has a definite hint of dead cat about it... Good luck tomorrow!
ReplyTreasury sell offs - short & sharp:
http://i.imgur.com/BS0EODP.png
Baltic dry vs stocks vs bonds (577 is a 20yr low print for BDIY):
http://i.imgur.com/ZT77fEx.png
Global DM rate convergence (to zero):
http://i.imgur.com/xy0WT7N.png
thought i'd share this too. interview over from last weekend with Felix Zulauf. well worth the listen if you can spare the time:
Replyhttp://kingworldnews.com/felix-zulauf-2-1-15/
Left - any comments on Matty's observation? what do u see as a decent re-entry point for the long dated stuff?
ReplyMatty - personally I am waiting for old resistance (2.50-55 ish on the 30 Yr) to start scaling back in - IF at the point DXY looks like its stopped falling that would give me added conviction - good luck.
@Dan 5:58pm
ReplyA bund is a call option on the DEM only if the DEM is a successor of EUR. Don't take this for granted, as there are many printing presses for EUR all across Europe, including in Athens. EUR could have the same fate than the USSR rouble, which was printed into nothingness by the Central banks of peripheral members of the ex-USSR. Possessing a long term bond in GRD bought at a negative yield can be a costly trade...
Also consider that this alternative is a good (the only ?) way for Germany to stick part of the losses to outsiders, like the Fed, Voldemort, the Central Bank of Russia, and Greek Tycoons.
I would argue that Danish govies are a call option on the DEM, as one would expect to re-peg to DEM (as they did before the EUR), whereas Bunds can remain denominated in EUR (if you were Germany why would you want to redenominate the existing debt to a stronger ccy?). Since Danish 10yr yields are about 10bp lower than Bunds, this is a relatively cheap option.
Reply@ Charles 6:52
ReplyYou are misunderstood about what QE is and is not. I would also offer that you are misunderstood as to why the peripheral printing that you referenced cannot occur within the Euro bloc.
To illustrate, please explain why the peripheral EU member Greece is not running the presses 24/7.
Protocol 12. Look it up. Either the "Confederates" (F-PIGS) secede or conquer the Union (Germany) outright.
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