Dot-dot-dot, dash-dash-dash, dot-dot-dot

Well, that was....intense.

The Fed dropped the word "patient" and explicitly left the door ajar for a move in June should circumstances warrant.   However, the real sting in the tail was in the SEP, where the infamous dot-plot ratcheted lower in response to downgrades to the growth and inflation forecasts.

The end-2015 median is now at its lowest level since before the Taper Tantrum.


Market reaction was swift, and Yellen's press conference did little to dissuade the participants from buying securities and selling the dollar.  For today at least, score this one in favour of the monetary heroin addicts.

Probably unsurprisingly, the most vicious price action took place in the most-positioned market, EUR/USD.  Pre-Fed short covering evolved into post-Fed stop-lossing, which itself became a full-blown rout in the gray zone after 4 pm NY time.  Not since Bernanke pulled a volte-face in July 2013 have dollar longs been punished so swiftly, with so little liquidity.


From Macro Man's perch, price action in eurodollars was disappointing but not altogether surprising given the magnitude of the dot-plot downgrades.   They key question here is whether the market chooses to maintain a 10-20 bp "easing risk premium" in the ED market versus the dot-plot, or whether it's now happy to let the market price converge now that the Fed has apparently capitulated.

Macro Man has to confess that the dot-plot forecasts moved a bit lower than he had envisaged; such is life when ruled by a central bank that forecasts with a rearview mirror.  It's just as well that he had a last-minute bout of jitters and sold a few dollars and cut a little bit of rates risk before the announcement.

From his perch, he still expects a handsome snap-back in the data for April and March; while he doesn't think that will generate a hike in June, it could well be enough to swing the dot-plot pendulum the other way for 2016 and beyond.  Although he is tempted to add to some of his ED bets given this sharp rally, prudence suggests that it's better to be a day late than a day early, particularly if the market decides that it wants to price perma-ZIRP to feed the jones of all the asset-market junkies.

As for the euro, meanwhile, let's not forget that even at the peak of the gray zone squeeze, it was still down some 1.5% from February's close.   Scant consolation if you were the poor bugger selling in the low 1.04's last week, but less of a worry for more strategically-inclined investors such as your author.

Thus, from Macro Man's perspective, the SOS that you heard after Wednesday's trading was not a plea of "save our shorts" from underwater euro bears, but rather a weary, resigned "same old sh--" that we've had from the Fed (and BOE) over the last couple of years.

(As an aside, did anyone else find irony in Yellen's response to the chap from American Banker magazine?   Y'know, the bit about getting rid of incentives for excessive risk-taking....)
Previous
Next Post »

46 comments

Click here for comments
Nemo
admin
March 19, 2015 at 12:13 AM ×

They also added the phrase "and export growth has weakened". Which implies they care about export growth, which implies they care about dollar strength.

Ol' Yellen confirmed this during the press conference.

Reply
avatar
Macro Man
admin
March 19, 2015 at 12:58 AM ×

Well, it implies they expect exports to act as more of a drag than they previously thought. Whether they 'care', in the sense of actively trying to reverse it, was far from clear.

Reply
avatar
Anonymous
admin
March 19, 2015 at 1:04 AM ×

"FunnyMoney said... @washedup - Among other things, I'm also watching cable. Technically, we're looking a little oversold here... When this finally snaps back it'll be fun. March 13, 2015 at 6:56 PM"

Today: Circa 500 pip up-move in cable. lol.

Reply
avatar
Leftback
admin
March 19, 2015 at 2:01 AM ×

Today played out almost exactly as a few of us had suggested it might. The only surprising thing was the violence of some of the FX moves, which does reflect both the extreme positioning and leverage involved. The screamer in cable was a striking example.

I'd like to have another headless chicken day in FX tomorrow and a cliff dive in the UUP, thanks!

Reply
avatar
Nico G
admin
March 19, 2015 at 6:10 AM ×

HUGE decoupling US/Europe when both blocks traded in opposite directions

Yellen has just sucked some risk off Europe and put it back to motherland where it belongs

Reply
avatar
Anonymous
admin
March 19, 2015 at 6:47 AM ×

I think Ralph Wiggum puts it best:

https://www.youtube.com/watch?v=tAoPi8nbcmw

Reply
avatar
FunnyMoney
admin
March 19, 2015 at 11:39 AM ×

From Martin Wolf (ft.com): "We should view central banks not as masters of the world economy, but as apes on a treadmill."

V nicely said - bit harsh on the apes though.

Reply
avatar
Polemic
admin
March 19, 2015 at 11:48 AM ×

A sou say MM , the speed of me of those moves was .. well.. they just were.

Eurusd back to where it started is pretty impressive and I' wondering if it means that all the spikes will revert to starting levels.

Have to say this was once again a class example of the futility of putting on micro tuned US yield curve plays when they just get swamped by FOMC tsunami.

I put my hand up to getting hosed in bundland , and am finding it harder to work out what the next moves in anything will be.

Mr Whippy normally accompanies turns or trend accelerations. Trend accelerations in bonds are had to see and in equities maybe this IS the start of that 5th wave of bubbly stupidity that sees day trader TV programs hit BBC afternoon schedules.

Or not.

I'm seriously thinking that Cash may be the best place for the next few months until all this noise resolves itself, but of course i am too ADHD for that and see falls as missed opportunity as much as rallies. Fatal.

Reply
avatar
Nico G
admin
March 19, 2015 at 12:24 PM ×

beware of a spoon-ky lower high

they cleaned some stops last night, so what

Reply
avatar
checkmate
admin
March 19, 2015 at 12:38 PM ×

My view on US rates is it's an overplayed song. Any increase within the context of policy elsewhere globally is very limited. The fact that markets move has they are doing now on this issue is a big concern for the overleveraged as usual. However, with monetary policy likely to be very loose historically for a long time yet I would have thought any dollar induced flush outs are going to be jumped on.
On that note I dip my toe back into emerging market debt.

Reply
avatar
Custerluck
admin
March 19, 2015 at 12:46 PM ×

Perhaps morse code is not widely understood, however; I am surprised no one made comments that your dot, dot, dot, dash, dash, dash, dot, dot, dot spell out the international signal for SOS or save our ship.

Reply
avatar
Macro Man
admin
March 19, 2015 at 1:04 PM ×

Ermmmm...that's sort of what I was getting at in the last paragraph....

Reply
avatar
Mr. T
admin
March 19, 2015 at 2:40 PM ×

Didn't we at one point talk about dot plot revisions being the new easing? I suppose it's a little comforting to get a morsel of understanding these days but I can't say it's helped my book at all. As a U.S. centric guy I can't help but notice what looks like a large and growing disconnect between perception of fed control and the rest of the economy (at least as I choose to measure it). In social setting there is the occasional mention of FB stock or the biotech stock that is working well, but damn near everyone is an expert on fed policy. Either that's a reflection on the sorry sort of friends I keep, or an indication of an incredible amount of faith people are putting in the fed as an institution to keep the economy going. These are generally non-financial people. The thing is, while the fed still has plenty of power to move asset prices I'm not sure anything they have done since 08 has really done anything to improve the general economy. Outside of impact on portfolios, people don't really change their habits because rates are going to be lower for longer.

Anyways I continue to be surprised at fed reverence. I don't see any way that's actionable though.

US biotech continues to be crazy hot. I put a little short out a couple weeks ago that's now solidly underwater but am tempted to add. The deals being done in the space don't make sense, and many pipelines are priced with 100% approval certainty, high pricing and widespread adoption baked into the numbers. What's the upside from that?

GDX is getting uncomfortably close to my stops but was one of the few holdings that benefited from yayo-yellen. With oil in the low 40's (!) this is a nice tailwind. I believe metals pricing is plenty firm for these guys to produce some strong ebitda numbers going forward. Still long but not willing to change stops.

Lastly US utilities seem too cheap here given what looks like another bluff from fed. XLU @ 120bp over 10yr - why? Utility balance sheets are more levered than they were a couple years ago but not alarmingly so.


Reply
avatar
Error403
admin
March 19, 2015 at 3:20 PM ×

The pin has moved palpably closer to the surface of the biggest bubble out there - central bank credibility. ('Dot-plot-pop'?)

Reply
avatar
Dan
admin
March 19, 2015 at 3:38 PM ×

Re: 5th wave retail horde equity hoarding a la 1999

The retail horde was defeated in the y2k war, the surviving retail special forces were torched in the 2008-2009 implosion and most of the retail flag officers were court-martialed and executed from 2009-2015.

The bid in 2008/9 came from sovereign funds that were entrusted to privileged private institutions and investors. It wasn't just a US deal, it was any government that could.

At this point all of the privileged private institutions and individuals do not have the benefit of a retail horde to dump their longs to. Therefore, it was decided the losers of WW2 would provide the liquidity for the winners of WW2.

Russia wasn't invited to Yalta this time around.

Re: Where are we?

The currency war is a fait accompli, but we still have to go through all of the motions. Back in 2009, China didn't have deep enough credit markets or the legal super structure to challenge the USD or EUR as a reserve asset. The Chinese have made unprecedented strides to create a massive credit market of the scale to compete for international savings. As with previous systems, you have to build it to critical mass and then purge the froth.

Chinese markets are probably where one should look for a fifth wave because their credit market has exploded in size, but we haven't seen the other side of the balance sheet (equity) reflect this explosion yet.

The western societies have MASSIVE transfer payments and dominant negative future value industries which are like cement bricks fixed to the ankles of a veteran swimmer. Downward price adjustment is not enough to solve these problems.

Western fixed income won't lose its bid because of credit demand, conversely, it will lose its bid for more attractive substitutes. The UST might be the most attractive option ATM right now, but that doesn't mean we need to see her clad in lace either.

Reply
avatar
Anonymous
admin
March 19, 2015 at 3:54 PM ×

Central bank easing since Jan 1...

Jan. 1 UZBEKISTAN
Jan. 7/Feb. 4 ROMANIA
Jan. 15 SWITZERLAND
Jan. 15/March 4 INDIA
Jan. 15 EGYPT
Jan. 16 PERU
Jan. 20 TURKEY
Jan. 21 CANADA
Jan. 22 EUROPEAN CENTRAL BANK
Jan. 24 PAKISTAN
Jan. 28 SINGAPORE
Jan. 28 ALBANIA
Jan. 30/March 13 RUSSIA
Feb. 3 AUSTRALIA
Feb. 4/28 CHINA
Jan. 19/22/29/Feb. 5 DENMARK
Feb. 13/March 18 SWEDEN
Feb. 17 INDONESIA
Feb. 18 BOTSWANA
Feb. 23 ISRAEL
March 4 POLAND
March 11 THAILAND
March 12 SOUTH KOREA
March 12 SERBIA

Reply
avatar
Anonymous
admin
March 19, 2015 at 4:14 PM ×

Nothing on the NAIRU revision!? c'mon that's gotta be as important as the rest of the dot plot malarkey. Graham Turner's been talking about this one for a while too, am sure there are some others. New normal, whatever you want to call it, but wage growth sure ain't gonna be a significant driver for inflation no more.
Annoyed I missed some of the funs in fx land, but bonds are/were interesting enough.
Now look at Haldane talking about cuts, wtf?!
What's the widowmaker? Shorting JGBs or trying to trade short sterling which can be characterised as inteminable boredom punctuated by moments of sheer (PL) terror.
Another flamingo watch due?
Best
JL

Reply
avatar
hipper
admin
March 19, 2015 at 5:34 PM ×

Just one more small note from the statement (sorry for beating the already dead horse). I checked every statement from this year and from 2014 also and noticed that the last two statements also included a new term that hasn't been seen before:

"This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments."

I know there is now a common belief that the dollar, either directly or indirectly, is indeed playing a stealthy role here besides labor conditions, but just wondering if there are other possible interpretation on what this might mean, if not FX? For me it just seems to confirm that they indeed are taking into account what other CB's do besides the original mandates.

If that's indeed the case, it would look like the perfect excuse of last resort, as if it means what one might think it does then these "developments" won't be turning around anytime soon. The question I guess is whether this interpretation is correct and if so, how widely is Mr. Market yet aware of it and on this basis will we be seeing a longer series of similiar delaying tactics.

Reply
avatar
Macro Man
admin
March 19, 2015 at 5:58 PM ×

Yes, the NAIRU issue is clearly an important one...but cutting to the chase, that's why the dots moved down (among other reasons). Of course, a larger issue is that if your job competes against low-cost foreigners or computers, your wages ain't going go regardless of what Yellen does. The only wages that Yellen can really impact are those of the finance industry, via inflating the value of securities....and of course, she and the chap from American Banker sound like they want to put a ceiling on those.

Re: international developments, I see it as generic term that encompasses the dollar, domestic demand in Europe and China, Grexit, etc.

If the rumoured recovery in Europe surpasses expectations, of course, the meaning of the term could possibly cut both ways.

Reply
avatar
Anonymous
admin
March 19, 2015 at 6:49 PM ×

FT:

One thing we haven't seen in a while is Gold and Silver going up with USD strength....
The EUR retraced most of the post Yellen jitters and Gold held (only 2 days ago it would have been clubered) ; most notably, we saw a bit of follow through in Silver;

Are some chaps starting to think all currencies are a mess and looking for an alternative to richly priced equities or is it the looming Grexit?

Ig Gold breaks 1200 without notable USD weakness, I think it's time to get in; same for GDX.

Reply
avatar
Leftback
admin
March 19, 2015 at 10:39 PM ×

Already in GDX with at least two toes. Might be some "Grexit"* premium in there, but GDX and silver seem to be anticipating a lower USD.

*"Grexit" is a traditional European festival. It seems to begin as a folk dance where Bavarians or Swabians jump around a lot in Lederhosen and abuse the Greeks, also dancing in traditional dress. At the end, the Germans give them money, and they all toast the "Festival of Grextension" with a round of ouzo and a Stein of Hacker-Pschorr Münchner Hell, served by Christine Lagarde and Mangler, dressed in the traditional Dirndl.

After the Festival of Grextension, most safe haven bond yields rise for a while, but Greek yields fall. The world continues to rotate, but after some time Bavarians and Swabians once again become concerned at the quality of Greek housekeeping, lecture them about the thrifty merits of the Schwäbische Hausfrau (a pantomime Dame played with gusto by Wolfgang Schäuble) and this eventually leads to a new discussion of "Grexit".

Reply
avatar
Anonymous
admin
March 20, 2015 at 8:57 AM ×

FT:

@ LB 10:39 Would you sir , by any chance, be a Jack Vance fan?
If not, this was was written in a style reminiscent of his better works.

In any case thanks for this humorous gem.

Reply
avatar
Mr. T
admin
March 20, 2015 at 5:23 PM ×

Sorry to harp on the biotechs again but the moves here are really something. I may be wrong but there are so many parallels to dot com. You have plenty of money losing names with $10bil+ valuations. You have your cmgi-like incubators with enormous valuations (CELG). You have your old school brick and mortar c-suites panicking about their futures (all pharma). You have lots of retail support, evidenced by markets moving after well-anticipated news. You have mgmts, analysts, investors all seeing an orgy of cashflows just around the corner. And you have enough examples of the winners (GILD) to make the story plausible for the rest of them, and a backdrop story about personalized medicine and true revolutions in medicine as an analogy to the internet changing everything.

I have a small short out, not enough to hurt too bad if we are in 1998 instead of feb 2000 but I think the more actionable idea here is to really see biotech as an important tell for the rest of the markets.

Reply
avatar
Leftback
admin
March 20, 2015 at 5:35 PM ×

Jack Vance = "Ellery Queen?"

Not one of my literary influences, as far as I know, but a prolific and gifted writer. LB's writing style has been variously described as "an astonishingly random stream of macroeconomic drivel, yet surprisingly articulate" (Macroeconomics Today), "socialist, anti-business, possibly Communist and dangerously un-American" (Bull O'Really?, Faux News) "what you get as the offspring if the FT had a drunken lunchtime tryst with Private Eye" (Cosmopolitan) or, perhaps more accurately as "Total Bollocks. Innit?" (Anonymous, possibly MM himself or members of TMM). We all enjoy a bit of Satyr* here at MM.

* Yes, we misspelled that on purpose....

Reply
avatar
Leftback
admin
March 20, 2015 at 5:38 PM ×

Mr T

Thanks for that, was just looking at the XBI:

1) It's been going f**king parabolic.
2) It is lagging the market today.
3) Highly leveraged.
4) Valuations are a joke, this is like Internet 2000.

When the market turns, one suspects that this sector is likely to fall harder and faster than the indexes.

Reply
avatar
Anonymous
admin
March 20, 2015 at 5:40 PM ×

The USD has fallen heavily today (currently over -1.8% down). According to financial media, this is a "relief rally" in EURUSD due to a Greek bailout. LOL !

Will somebody please point out to them the obvious Central Bank activity in the markets today...

Reply
avatar
Leftback
admin
March 20, 2015 at 5:46 PM ×

Having said all that, however, the real killer for the biotech sector will be the same thing that hammered them in 2008, and what always kills the leveraged start-ups, i.e. a true credit contraction initiated by tighter monetary policy. Not sure that is here yet.

In the immediate future, with the FOMC out of the way for now, the next significant events are the latest look at the GDP number for Q4 (downward revision?), the March jobs number in two weeks time, the start of Q1 earnings (lots of companies guiding lower) and the Q1 GDP number in mid-April (Atlanta Fed indicating 0.5% or so). The general expectations for that data cluster might require some modest revaluation of US share prices by Mr Market over the next few weeks, and that might also be accompanied by a sharp reversal of the Q1 King Dollar theme.

Reply
avatar
Anonymous
admin
March 20, 2015 at 6:04 PM ×

FT @ Mr T

I think this is 1998 however July hasn't come yet....
I would think we will see a July 98 like dive within 2 to 4 months triggered by EM stress and the US recoupling with the slowdown in the global economy. This will lead the Fed to publicly repudiate any intention of tightening by Q4 of this year and then another 12 to 18 months of equities going to the moon.
In short, your shorts could work even if it's 1998.

Reply
avatar
Leftback
admin
March 20, 2015 at 6:16 PM ×

It's 1936, perhaps? 7 years have elapsed since the Great Crash. In the 8th year, monetary policy will finally be tightened, [or more likely not loosened] b/c of the upcoming election, and we will see a recession at last. 2016 will not be a good year for US equities.

Reply
avatar
Anonymous
admin
March 20, 2015 at 6:49 PM ×

The main thing that worries me about biotech is that I have a daughter in college who is hoping to get a job in that industry in 2016...

- Whammer

Reply
avatar
Anonymous
admin
March 20, 2015 at 7:20 PM ×

My impression is that the job market for bio-tech scientists is much smaller than for programmers. It is not like the internet boom creating a huge demand for programmers. Lots of talented young people in bio and chem fields are stuck as post-doc.

Reply
avatar
Anonymous
admin
March 20, 2015 at 8:08 PM ×

I remember the IBB panic last April got down to near $200 now $366

Reply
avatar
Anonymous
admin
March 20, 2015 at 8:44 PM ×

FT:

@Leftback 6:16 pm

You should be right about 2016 except that it's an election year; FED board member are overwhelmingly leaning to the left (although, ironically, their policies favor the uber wealthy); they will fight the cycle in 2016 with all what they have; the 2015 correction will give them the opportunity to fire a last salvo of QE (I don't believe HC will be elected and I think they will let the market go starting in 2017); The 2007/2008 collapse was perfectly timed to husher in Obama;

too many conspiracy theories in this view? Well, I don't believe in them but with what we are seeing nowadays (german yields negative ad infinitum, or almost, crude collapsing after the russians show their teeth....) I'm starting to wonder....

Reply
avatar
amplitudeinthehouse
admin
March 21, 2015 at 1:34 AM ×

You know what that Swissy just did? It threw me back to when being used as bowler to front run the price for another runner..when the form of a commodity is allowed to stride bowlers go out of business.

Reply
avatar
FunnyMoney
admin
March 21, 2015 at 11:55 AM ×

So the Fed removes the word "patient" and TEOTWAWKI (The End Of The World As We Know It) has not transpired.

Fed watchers predicting a June hike are being contradicted by the bond market. The BoE has reversed course on rate hikes (even hinting at further reduction). Equities are surging higher...

Folks, let me tell you how this all pans out. Fin markets have been repeatedly tested, and the outcome remains clear. As I have continually maintained, there is a permanent bid under equities. Learned investors are correct in saying that eventually risk assets (such as equities) will peak and fall-back. Yes, and when that day comes, the Fed will abandon all pretense at any rate normalization and unleash further QE with a fury that will shock you all. Simultaneously other CBs will join in a coordinated easing.

There will be, to quote Bernanke, "No Rate Normalization During My Lifetime".

FunnyMoney will rule forever, because as ZH quaintly put it: "Dumb money is the new smart money".

I bid you all a good weekend.

Reply
avatar
hipper
admin
March 21, 2015 at 4:11 PM ×

LB, the Grexit analogy is pure brilliance. Thats really what the EU is all about innit. Quoting former Commissioner Barroso:

"We must leave no doubt about the integrity of the Union or the irreversibility of the Euro. The more vulnerable countries must leave no doubts about their willingness to reform. About their sense of responsibility. But the stronger countries must leave no doubts about their willingness to stick together. About their sense of solidarity. We must all leave no doubts that we are determined to reform. To REFORM TOGETHER."

Put shortly, Germany has the incentive to keep it together, so does France, and in order to maintain status quo it's critical that no one in the periphery leaves as a catastrophic chain reaction is just around the corner after that first critical shakedown.

Reform or no reform, common fiscal union or not, 24 different languages or not, all irrelevant next to the power of the political bond. France already blew through the austerity bluff, so did Greece, and so will every other country that wishes to do so.

So it's time to write off those Grexit, Itxit, Spaxit, Porxit, Fixit and other scenarios once and for all cause they're never going to happen.

Reply
avatar
Anonymous
admin
March 21, 2015 at 9:21 PM ×

FT:

@Hipper:

when populist parties are voted in not only in Greece (which stretches the european patience and finances) but also in Spain, Italy and possibly France within 5 to 7 years, and they all say: "we won't honor the debt denominated in euros" , you might change your opinion; until then, it will be a volatile ride.

Reply
avatar
Leftback
admin
March 22, 2015 at 5:01 PM ×

It's way too happy-clappy out there after the latest Janet rally. With not-very-tasty earnings and Q1GDP just a few weeks ahead, it's time for Mr Market to pants a few irrational enthusiasts in US equities. This prospect has prompted LB to put on a small hedge for the time being.

We had several weeks in Q1 in which US equities, bonds and the $ all rallied together in an unnatural way. When this happens, it's a sign of funds entering the US from other places. Don't be surprised to see a few weeks somewhere in Q2 when all US assets move in the other direction. All it would take is some more weak (but not calamitous) US macro (keeping those dots moving out to 2016) combined with another Kick The Can for Greece and some mildly better EZ macro, fiscal stimulus from China etc.. in fact there are already a few signs that flows have reversed.

MM, if you mention the Man U match, all the toys are going out of the pram...

Reply
avatar
amplitudeinthehouse
admin
March 22, 2015 at 9:06 PM ×

LB, I've said this before , I'll say it again...

YOUR THE BEST

Reply
avatar
Macro Man
admin
March 22, 2015 at 9:11 PM ×

LB, don't think I won't stamp down on bad behaviour. I'll show you the red card in a matter of (38) seconds.

Reply
avatar
Bruce in Tennessee
admin
March 23, 2015 at 12:08 PM ×

http://www.bloomberg.com/news/articles/2015-03-23/mester-says-june-is-a-viable-option-for-fed-rate-increase

...Yes, Lefty, it is time to dust off the list of inverse funds...now where did I leave that old thing? I think my wife added it to the compost pile..

Reply
avatar
abee crombie
admin
March 23, 2015 at 1:17 PM ×

Mr T, I hear you on biotech but I am not ready to take a short, not in this equity bull. The best I thnk you get is like last year a big rotation and then you have to take profits quick

EM FX seems to have stabilized, along with WTI bouncing along the lows (brent not there yet) RTY leading and HY spreads back, so seems all clear. But if the Dollar here is just pausing, getting ready for some fun as oil is going lower, taking EM and HY with it.

Bunds going to 0%. It certainly seems like it

Reply
avatar
Anonymous
admin
March 23, 2015 at 2:29 PM ×

Now it's QE for FX...

"The Swiss National Bank is considering a form of foreign-currency quantitative easing, as suggested by the International Monetary Fund."

http://www.bloomberg.com/news/articles/2015-03-23/snb-is-open-to-imf-suggestion-of-foreign-currency-qe-moser-says

Reply
avatar
hipper
admin
March 23, 2015 at 11:57 PM ×

EM stuff, gold and other inversely dollar related stuff doing great for the time being. Oil on the rather hand still doing relatively weakly, or atleast could be doing better, showing true fundamental problems there persisting for the supply side methinks. Good for GDX.

Tomorrows PMIs will be quite telling whether the recovery is still on for Europe. EUR flight won't last very long purely based on the Greek "kick-the-can" festival and the dot-plot knockout effect might eventually be waning off.

I think there will again eventually, perhaps even the near future be a time to add some more weight on long dollar again and maybe lighten up on the inversely related stuff. Based on whether good EZ data / bad US data it might be pushed a bit further down the road or contra scenario earlier but it will eventually come. But OTOH I like to keep them on as a cash dollar hedge anyway. On US equities indeed probably better to wait and see what happens after Q1 and guidance before doing anything.

Reply
avatar
Polemic
admin
March 24, 2015 at 12:11 AM ×

Hipper. Oil stocks show the way for oil. And they showed a turn in oil last week. Not saying it s one way but watch the stocks too.

I'm still sitting on my positions waiting for the great reflation to occur

Pol

Reply
avatar
Leftback
admin
March 24, 2015 at 4:15 AM ×

Stick with the European energy stocks, and avoid the US, where there will be more pain ahead. This year might see a new record wtic-Brent spread until the US shale guys finally throw in the towel.

The Anti-Dollar RoW Reflation trades are coming along. Gold miners, a bit of life in emerging market debt, Russia, Brazil, etc., but offshore investors in the US have had a bad week. How long before we see a headless chicken panic out of USD-denominated assets?

Reply
avatar