A bit doo-lally

Macro Man isn't quite sure what to make of things these days.   Since the poor, illiquid payroll data, the USD has surged back, with punters evidently having seen the downdraft as a buying opportunity.


Curiously, the DXY retracement has not been matched by any sort of move in US rates; EDZ5, for example, is still pretty close to its highs of the year (albeit a few ticks off of last Friday's levels.)


Macro Man frankly didn't see that much in the Fed minutes to justify the rebound in the dollar, insofar as he has always assumed that the Fed is keeping their options open  as much as possible.   Perhaps others in the market needed a reminder of that fact.   Moreover, it's worth remembering that FX is always a story of relative rather than absolute relationships, and for better or for worse the $ still looks like the best game in  town- particularly if the economy picks up steam in the current quarter, as your author expects.  He suddenly feels rather underexposed to the theme, such is the vehemence of the dollar recovery this week.

No doubt there will always be some observers who will feel that the Fed's hands are tied by goings-on elsewhere.  Forget the idea that Europe might enjoy an upside growth surprise (which would surely give back some of what the strong dollar taketh away) or that Asian stocks are going a bit crazy.   Indeed, China appears to be using the equity market as a policy tool to goose domestic demand, and as a few of you have noted, things have gone a bit doo-lally.  



Of course, nothing could ever go wrong with assuming ad infinitum asset market growth, and the Federal Reserve needs to keep uber-easy monetary conditions out of a sense of solidarity with those economies stumbling through weak growth.  Or so, no doubt, some commenter called "搞笑的钱" will no doubt tell us.....
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Polemic
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April 10, 2015 at 7:53 AM ×

I think we have huge tidal flows from long term reserve managers that swamp shorter term correlations. This usd buying is part of that bigger picture.

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checkmate
admin
April 10, 2015 at 9:14 AM ×

"Just keep buying, then buy some more, and buy some more after that"

Anon, yesterday defined mom 'investing' ...LOL ...the behavioural elements are already there to see as every guy who raises pigs for a living suddenly knows how to buy 'companies'. Of course the mom definition means it keeps going until well runs dry one day and then it's landslide ahoy.

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theta
admin
April 10, 2015 at 11:20 AM ×

搞笑的钱
LOL! :)

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Polemic
admin
April 10, 2015 at 11:24 AM ×

I wonder if 搞笑的钱 picked up the name at a Shanghai branch of Scores.

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Anonymous
admin
April 10, 2015 at 2:38 PM ×

FT:
Would anyone in his right mind buy gold because the apple watch edition is sold out?

Funny money anyone?

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Anonymous
admin
April 10, 2015 at 3:55 PM ×

搞笑的钱 is a really terrible sounding Chinese pseudonym btw, funnymoney.

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amplitudeinthehouse
admin
April 10, 2015 at 4:08 PM ×

"Macro Man isn't quite sure what to make of things these days"

Let me take a guess.The feds showing solidarity among others to keep the S&P from losing future returns and if any thing comes close to obstructing dividends at these low rates after such a long period of protecting the S&P that they're going to have to swallow a poison pill; one that locks them into a wall street market that only wants to take gains year on year without objections from CB around the world. Do as we say, not what we do.

See ya Wall Street boys...the footy's on.

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amplitudeinthehouse
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April 10, 2015 at 4:31 PM ×

After the watching the S&P climb and climb with help from various sectors; anyone entering the US stock at these levels is swallowing a gigantic poison pill.To little too late to try and pull in QE, its gone.



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搞笑的钱 (FunnyMoney)
admin
April 10, 2015 at 4:35 PM ×

Whilst I had to smile at this: "搞笑的钱", I think MM got it wrong in the last paragraph.

The point is that we do know something can (will?) go horribly wrong with ad infinitum asset growth - and that's why I believe CBs are now somewhere between a rock & a hard place. If they normalise monetary policy the economy will not recover. If they don't normalise they stoke bubbles.

So what will they do? I believe they will do more of the same. Every major CB is easing - that tells you something. This 'bubble-trend' will continue until it ends. That's when the fun will begin.

I'm just surprised so many people insist on adopting a viewpoint that assumes normal market functioning, rather than the structurally impaired markets we see before us on a daily basis.

Onto the markets... As usual I closed my US equity positions too early. Because I like punishment, I also took losses on some FX mean-reversion trades (if anyone was long USD, please email me next time & I'll wire you the funds direct & save us all some time). Have a nice w/e.

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Anonymous
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April 10, 2015 at 4:47 PM ×

Farmer,

The rising DXY is puzzling. Is it because of Greece, since EUR led the downward spiral? And ECB's policy meeting is next week, maybe it is the expectation of Mario Draghi's big mouth, scaring the hell out of dollar bears!

Finally FM, some good insights on equity and CB. And it is nice to learn some Chinese here. lol

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Macro Man
admin
April 10, 2015 at 5:18 PM ×

FM, not to be pedantic, but the Fed is not easing and Brazil actually put rates up a few weeks ago.

I really don't see how you cannot characterize the US as not recovered from crisis conditions. Does the economy remain impaired relative to pre crisis trends? Yes, but that has zero to do with monetary policy.

Moreover, I really believe that you and others are missing the point that some on the Fed (perhaps led by Fischer, perhaps?) have at least a token realization that the correct solution to a global financial crisis precipitated by asset bubbles is NOT to blow up as many more as possible.

The apparent belief that the only alternative monetary policy prescriptions are ZIRPworld or a restrictive stance is badly misplaced; if anything, the impairment of the credit impulse makes it safer, not less safe, to bump rates modestly, because there's not a lot of growth coming from rate-sensitive sectors anyways.

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Polemic
admin
April 10, 2015 at 5:21 PM ×

I'm with MM on that. And the other extension of it is that as the risks of shock caused by Fed policy diminish so does the need to examine their every potential bp change.

Federale naval gazing may be distracting us from more exciting things going on in the world.

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Leftback
admin
April 10, 2015 at 5:39 PM ×

Very amusing, MM.

It is only going to take one real stinker in the Q1 earnings season to
dampen enthusiasm for US equities for a while. Next week we get BAC,
C, AXP and GS earnings, not too sure if those will blow the doors off
after a challenging bond trading environment.

The big one, of course, is AAPL on 4/23, on a huge earnings report
day. It's the most important stock in the major indices, so if they
miss (or merely under-deliver on the whisper number), the rest will
all get dragged down in the undertow. Why do we think this will
probably happen? Start with the USD, think about the growth of their
Asian competitors and go from there. Too expensive to short AAPL or
CAT, so just short QQQ.

But perhaps earnings will go up forever and it will be 大团圆结局 after all.

In answer to anon, yesterday, LB is still dollar bearish but
crucially, HAS NOT EXPRESSED OR ACTED ON THAT OPINION DIRECTLY this
week, therefore avoiding Cold Steel, although LB is exposed to a
higher dollar via emerging markets and Europe. But looking at the
performance of those markets recently, and recalling that equity
markets tend to rally ahead of the respective currency, we're not too
bothered at the moment.

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Leftback
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April 10, 2015 at 5:45 PM ×

If we have to discuss the Fed, I will state the opinion that Yellen's Fed is now simply emulating Carney and the BoE after the big run-up in £. The Fed wants to stall as much as possible here, until the global capital markets finally realize that SPX earnings are a bit cack and the US economy isn't reaching escape velocity and then punters will do the Fed's work for it by selling US equities, $ and even Treasuries, cf. what happened in the UK in second half of 2014. With the pressure relieved and DX at least 10% lower, the Fed can then continue to inflate the usual bubbles.

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Anonymous
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April 10, 2015 at 5:47 PM ×

MM, there will be some large homes on sale in Fairfield in the next twelve months as the GE Capital fire sale gets started. A large number of arrogant wankers are going to be adding to the U-3 number.

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Mr. T
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April 10, 2015 at 6:03 PM ×

LB, I'm not so sure that stinker qtrs will actually be considered bad. If there is one or two that are bad it'll be company specific, fx related, energy impacts, or some other temporary distortion. If its some important majority it'll be evidence that the economy is not strong enough to point the liquidity hose elsewhere. Part of me thinks the only way this is going to end is when policymakers finally get their wish of inflation, then stronger inflation that forces them to push their hands. At this point I simply cannot see a scenario that would bring on the selling US equities, $ and even Treasuries.

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wcw
admin
April 10, 2015 at 6:12 PM ×

'pick up?' now-casts look less steamy:
https://www.frbatlanta.org/cqer/researchcq/gdpnow.cfm
https://www.philadelphiafed.org/research-and-data/real-time-center/business-conditions-index/

Naturally, I am not putting my money where my mouth is: I've been selling bonds and refinanced my mortgage. But I'm not betting on liftoff, either.

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checkmate
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April 10, 2015 at 6:36 PM ×

Frankly, I'm not sure looking at equities v a Fed increase is the place to be looking if we are concerned with effects. The major difference in recent years has been the stonking flow into fixed income and via funds dealing theirin. As someone who took a major interest in this sector I've used the last 12 months to reduce that interest and condense what is left into a very small handful of very short maturity positions which I'd be happy to hold to maturity given the yields. Given the trillions involved even a 50bps might cause a bloodbath, because I am not convinced that many people have followed me in reducing maturity.

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checkmate
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April 10, 2015 at 6:40 PM ×

Let me summarise that. Some major capital losses coming.

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Anonymous
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April 10, 2015 at 7:52 PM ×

i'm trying to imagine a bloodbath in bonds that didn't spill over into equities. are people who didn't get out of the way of that freight train, going to jump into a frying pan?

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Polemic
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April 10, 2015 at 8:29 PM ×

Anon. Agree bonds first

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FunnyMoney
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April 10, 2015 at 8:57 PM ×

@MM - I welcome you (& others) challenging my views. To respond:
- The Fed isn't explicitly easing, correct, but interest on QE is still being accrued & paid to the Treasury. Also the Fed's guidance still maintains an "accommodative tone" to quote Yellen.
- Again, you're correct, I was generalising. But the first 2mths of 2015 saw a record number of CB interventions (reaching GFC levels).

Look, I fully agree with you that endless ZIRP & QE has counter-productive effects. (I'm sure the odd FOMC member sees that too). However, I still don't believe we will see rates normalize any time soon.

If the Fed raise rates before they reverse QE, they'll suffer capital losses on those bonds/MBS's (assuming they MTM). It'll also destroy the Fed's cash flow when it's forced to pay substantially more to retain those funds. Worst case we have a solvency problem at the Fed.

If the Fed reverses QE first, it clearly can't dump $3tn+ of bonds onto the market. QE ops ran over 6yrs, and would take a similar length of time to unwind.

Finally, let's assume the Fed can somehow raise rates w/o the above problems... firstly consider the effects on FX. There would be carnage. The inevitable USD strength would massively impact US multi-nationals & exporters. The FX & rates moves would likely result in corp bonds losing value & the stockmarket as a whole getting hit. Result more job losses (not politically acceptable). Retirement funds would also be damaged as equities & bonds fall, mortgage defaults would rise and banks would take another hit. Ultimately the Fed would be forced to intervene... and we're back to square one. As I remember, even Bernanke said there would be no rate normalization in his lifetime.

I appreciate I'm being somewhat pessimistic, but fundamentally what am I missing?

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Mr. T
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April 10, 2015 at 9:10 PM ×

I have to agree with FM here - the idea that we need rate hike to have ammunition to deal with the next soft patch is ignoring that for the last 7 years rates has not been the policy tool, its balance sheet. The only reason I see for the fed to actually want to raise is to stop asset inflation, which is exactly what they are trying to achieve in the first place.

June rise is never going to happen. 2015 seems increasingly unlikely. Perhaps there is some level of cumulative froth where fed will become uneasy, but I see no indications of that on the horizon. SPX2500? Spooz and Blues for ANOTHER year.

GE today is going to be seen as an example of successful monetary policy. Low rates are giving the flexibility for restructuring and reinvestment into industrial America. gag.

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Macro Man
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April 10, 2015 at 9:25 PM ×

FM- Fundamentally you're missing the fact that the Fed isn't going to mark to market, so a big part of your doomsday scenario is a non starter.

They will see an increase in the the rate they pay on the reserves that finance their SOMA holdings, so clearly their NIM will shrink or possibly go negative, thereby incurring a modest operating loss. However, this will no be a solvency issue and in any case will be dwarfed by the accrued profits of the whole damned QE exercise.

As for the dollar, yes it will squeeze things a bit, but a) Corps can always hedge; indeed, that sort of activity is one of the reason the $ is so strong, b) it might offer an incentive for some of these multis to repatriate some of their cash, particularly if there's another amnesty ala the HIA in 2005, c) corp profits as a % of GDP are still very, very, very high, so while a hit to margins from the $ might cause upset to people who mindlessly buy equities regardless of price, as a public policy problem it's pretty frickin' far down the list.

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Anonymous
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April 10, 2015 at 10:13 PM ×

"Postponing action for fear of an adverse reaction is not an option. That would deepen the dysfunction and make the eventual exit even harder. The Fed may have no choice but to throw a few bond investors under the bus."

http://blogs.wsj.com/moneybeat/2015/04/05/broken-bond-market-complicates-feds-plan-to-raise-rates/

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Anonymous
admin
April 11, 2015 at 12:18 AM ×

alot of folks are just not prepared for what's gonna happen when they do raise rates, and as MM said what happens to those who buy equities regardless of valuation generally experience what happens to people who do that.

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checkmate
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April 11, 2015 at 9:06 AM ×

Anon 7.52
The question is not whether a bloodbath would spill over into bonds. I would say that is has close to a certainty as one get's in this business.
I was simply stating that due to the immense inflows into bonds chasing yield due to financial repression this has now become for me a larger issue than what subsequently happens to equities.
In effect what I am saying is if Yellen does not also get this and adopt a policy of miniscule raises then capital losses could be immense.
If you drop rates to say 2 or 3% and then start raising by 25bps the consequences for our current markets portfolio allocation are going to be different than if you drop to 0.5% and raise by 25bps.
Due to policy I would have no doubt in saying this market is over exposed to duration risk. Not least of course because of demographics where age and income requirements are more likely to push investments more into fixed income than equity. Before you say you know older people who invest in equity the exception don't disprove the general rule of behaviour here. Being older I feel qualified to make such a statement.

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checkmate
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April 11, 2015 at 11:21 AM ×

Mistype ...I did of course mean 'spill over into equities' from bonds.

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FunnyMoney
admin
April 11, 2015 at 11:49 AM ×

@MM - Thx for the reply; all good points. However, leaving aside any problems the Fed may face wrt reversing QE, I'm still not convinced a sustained rate rise is feasible in light of the structural problems out there.

To keep it v v brief: I believe that the developed world is caught in a debt trap (as a result of demographics & decades of loose credit conditions). I believe on & off-balance sheet debt levels are so high, they cannot be serviced at 'normal' int rates.

My belief is that CBs & govts were not fully cognizant of this problem pre-GFC, and following the crisis used QE to shore-up & recap the banking system. As a short-term measure it made sense, but the continued use of QE have been asset-price inflation and other -ve side-effects that impede the necessary deleveraging.

In summary, we now face a situation re: rate rises where we're damned if they do, & damned if they don't.

I hope I'm wrong. I hope rates can normalise & everything go back to the 'good old days'. I'm just not seeing much evidence of it anywhere. All I'm seeing is loose monetary policy, financial repression galore & politicians endlessly kicking the can down the road. We'll see...

Have a good w/e.


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Anonymous
admin
April 11, 2015 at 11:58 AM ×

Via Factset... 2Q15 EPS expected -1.9% on 3/31/15; sales -3.3%. FY15 EPS expected +2.2% vs +8.3% on 12/31/14; sales -0.7% vs +2.8%

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Dan
admin
April 11, 2015 at 4:19 PM ×

Huge squeeze coming in the T complex...all of you can't be so passionate and right!

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Dan
admin
April 11, 2015 at 4:24 PM ×

Everyone is talking like the June meeting is next week. October '14 shows what can happen in one morning, so I don't understand why everyone is so fixated on something months away.

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checkmate
admin
April 11, 2015 at 5:01 PM ×

Actually Dan,
Your view is the problem in a nutshell.
When the view is we can exit the day before ,or the morning of the day and enough people share the same idea then bad shit happens.
The reason some of us start moving what in your view is a long time before is we would rather be out and watching the bad shit rather than be trying to squeeze through the exit door with you,

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Anonymous
admin
April 12, 2015 at 2:33 AM ×

thanks checkmate, very well put.

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abee crombie
admin
April 12, 2015 at 5:21 AM ×

Great posts from mm and the comments.

But why is the overall tone so negative and jaded still. I mean let's give it to bernanke. QE did work!!! I think it's pretty clear. Maybe it didn't work so well for some EM who are now dealing with the hangover but for the U.S. economy I think it did the trick. Without it yes we might have had a true reset but that was never politically possible.

Onto the Fed. It is going to raise rates. Will the world ends when it does. Perhaps and it is a reasonable tail risk but I wont bet on it. Duration will probably do ok as the curve will flatten unless US growth grew really picks up on the second half which seems like something everyone has dismissed. Currencies have already adjusted a lot. They can go more and are another source of concern but the current move has already been HUGE. Let's not forget that.

CB''s are going to use QE. Is it the most effective tool, probably not. Will it end badly, at some point probably. But for now eurostoxx , Japan and China are all strong. Investors are playing the game. No excuse not to. Interest rates are gonna stay low there for a long long time. So just buy their assets. VERY SIMPLE. The U.S. is a harder story to figure out. Equities are expensive and earnings growth is slowing. But there is no recession (yet) so tough to sell them. Just move money elsewhere for the easy trade.

HY bonds will be the tell when the economy goes in the shitter. When rates rise bc the fed is normalizing they will do OK. Be careful in that space bc we are probably closer to the end of the expansion than the beginning but there is still lots of slack in the economy and we could go 2-4 years still on the same path.





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FunnyMoney
admin
April 12, 2015 at 11:58 AM ×

Excellent interview with Stan Druckenmiller:
http://images.businessweek.com/bloomberg/pdfs/BN_0850499D_041015_19334.pdf

Basically this is what I've been trying to say; not surprisingly he outlines it all much better than I can.

The only caveat is that SD thinks it might be possible to salvage the situation. I don't. I think CBs are too stupid and we all crash and burn.

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Dan
admin
April 12, 2015 at 3:50 PM ×

@checkmate

I get it, it's school of whales here. Everyone needs to swim far ahead (very old calls) of the food supply to be positioned. At this point, it would not matter one iota if the bonds finally dumped because the same voices have been parroting the same trade about USTs for what is truly a market age. Thirty years into this bull market and the tide is going to go out with a whimper and the FRB is going to be the bagholder. 401ks and target date funds are the new smart money.

Got it.

Two months is an eternity on margin. Sellers have all the liquidity in the world, so do your civic duty and sell some extra!

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Polemic
admin
April 12, 2015 at 4:33 PM ×

Running long bonds in negative yield is like running long EURCHF against the 1.2000 floor. Marginal returns until their aren't.

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Nico G
admin
April 12, 2015 at 9:19 PM ×

'mark to market' ?

i thought mark to market died in 2008

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washedup
admin
April 12, 2015 at 10:30 PM ×

hey Left - have a question for u - u said:

"Start with the USD, think about the growth of their
Asian competitors and go from there. Too expensive to short AAPL or CAT, so just short QQQ."

Found it interesting that CAT made it to your list - if the dollar weakened or reversed and/or EM kept rallying, which is your whole premise, isn't CAT likely to go up not down?

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Anonymous
admin
April 12, 2015 at 11:31 PM ×

abee "qe did work" it worked for me, but i just saw a bankrate survey indicating over 54% of americans couldn't come up with $500 for an emergency. i don't think it worked so well for them.
watching equity markets trade especially up, these days reminds me of pong. i'm certain when it hits the fan those robots won't be there with a bid. the fed needs to move, because it's not the real economy that's afraid of rate hikes. it's the fake one, and that can only get worse the longer it goes on.

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abee crombie
admin
April 13, 2015 at 12:47 AM ×

thanks for the link FunnyMoney. I would also highly recommend listening to Paul McCully on wealthtrack this week.

interesting thoughts I got from reading the SD piece, 1) when the rules of the game change so much, you have to bring in new blood. Perhaps SD realized he doesnt know how to play by the new QE rules (he isnt the first old time macro man to throw in the towel) Second, he was willing to go along with a bubble in Nasdaq and then trade later.

I might be a broken record here but equities just dont seem that over valued to me. yes they have run a lot and I would love to buy them lower but given where rates are, can you really say equity markets are so stretched? As for the looming crisis of higher rates, i used to be in that camp but I really dont see what is going to propel rates higher and pose a problem. Of course someday it will emerge and catch us all off guard, and by no means do I suggest buying 0.18% bunds, i'll just adjust my view when the facts change.

QE was never intended to fix the problems of poor americans. listen to McCully, he has some interesting thoughts on the subject.

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Anonymous
admin
April 13, 2015 at 12:58 AM ×

abee,
equities may not be horribly overvalued by the measure of zero, but i strongly believe that is the wrong measure.

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Nemo
admin
April 13, 2015 at 1:32 AM ×

When the discount rate is negative, the NPV of just about anything is infinity.

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Nico G
admin
April 13, 2015 at 6:58 AM ×

thank you Nemo a little math speaks a thousand words

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Anonymous
admin
April 13, 2015 at 8:50 AM ×

China Exports - has demand disappeared or replaced by Germany?

China Imports - Less exports for Germany?

If the export demand has disappeared and China are importing less...well...the cheaper euro isn't going to matter for the Dax...

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checkmate
admin
April 13, 2015 at 10:04 AM ×

Would have thought China Feb was such a distortion that March was a probability to undershoot. In this case smoothing is certainly a better take on the situation than looking at month on month change.

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Anonymous
admin
April 13, 2015 at 11:33 AM ×

http://www.zerohedge.com/news/2015-04-12/gold-backed-sdr-quite-likely-happen-lses-lord-desai-warns

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Anonymous
admin
April 13, 2015 at 4:20 PM ×

Pressure is building....

The $9 Trillion Short That May Send the Dollar Even Higher. http://bloom.bg/1Oqi6Dv

Margin loans to mainland Chinese investors now $385 billion, 2.5X higher than 6 months ago.

WSJ...Chinese exports plunge 15% in March, imports dive 12.7%

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Anonymous
admin
April 13, 2015 at 4:23 PM ×

They are kidding, right?

Macau YoY Gross Gaming Revenue:

January: -17.4%
February: -48.6%
March: -39.4%

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Anonymous
admin
April 13, 2015 at 4:37 PM ×

Macau gaming revenue is all about the rich and connected Chinese and Chinese officials. So the big drop is all about the anti-corruption movement in mainland, less to do with economy.

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Mr. T
admin
April 13, 2015 at 5:04 PM ×

Macau gaming revenue is all about the rich and connected Chinese and Chinese officials. So the big drop is all about the anti-corruption movement in mainland, less to do with economy.

As opposed to the 18k iwatch demand, which is all driven by the 'man on the street'. Sorry for the jab, but the entire Chinese economy is driven by the 'rich and connected Chinese and Chinese officials'. Going to Macau to launder a bunch of money might be clearly corrupt, but what about using your position of authority to arrange financing for your in-law to build a new facility in your home town? Is it corrupt to provide generous terms for your friends contracting firm to build a subway system in a town of 10,000?

I've got no skin in the game over there (unless sitting on your hands is a position), but I see this crazy SHCOMP action as some kind of final spasm.

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abee crombie
admin
April 13, 2015 at 7:22 PM ×

Nemo and Nico, if you are a European pension / real money manager, what are you to do beside move into Equities? Europe is Japan and rates are gonna stay low for a long long time. Playing the cyclical trade in equities makes sense, IMO but have to be able to dump it when the cycle turns.

From a well respected, formerly EU based HF manager:

We have found it difficult to participate aggressively in the key bull market of the moment, Europe, for various reasons. We find the highest/higher quality companies expensive for what they are; investors seem to have moved to discount a recovery quickly; we are better at analysing today's trends than ‘tomorrow's earnings power'; investor behaviour seems far more dependent on ‘bond yields are near zero, pay up for shares' than in Japan or the US; European corporates earn more from EMs, where trends are weak, than from the US; while, finally, the move in stocks is, above all, dependent upon a very weak currency. We find individual ideas in the US more attractive, where, however, the bull market is mature, and where currency, and energy-related drivers are a headwind for earnings, and have caused significant 2015 EPS downgrades.

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Anonymous
admin
April 13, 2015 at 7:54 PM ×

@Mr. T

I agree that there are many forms of corruption in China and no political campaign can root out corruption. But, Macau's gaming revenue is not always a reliable indicator of mainland economy. At least this time, politics is the main reason.

Genuine consumption is ok in China so far. Just look at cell phone sales, box office, and tourism. Luxury consumption is down but the huge crowds at Chanel stores in China after Chanel cut prices demonstrated that there are still lots of potential in domestic demand from common people.

The big uncertainty for China is actually politcal stability. The anti-corrcuption campaign is making so many very powerful people nervous that it could end in a very disastrous way. There were articles warning this danger on finanical times and wsj in the past few weeks. I will not be surprised if lots of rich people rush out of the country with their money later this year to wait for the outcome of this political infighting.

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abee crombie
admin
April 13, 2015 at 8:35 PM ×

From JPM on EU Equities

The Eurozone P/E multiple currently stands at 16.2x forward, the highest level since 2001. Relative to the US, the Eurozone P/E has not been this elevated in 14 years. What is more, the Eurozone sector neutral P/E has moved to an outright premium vs the US now. Will this constrain further upside for the Eurozone equities?

We don’t think so. Earnings are coming to the rescue. Eurozone EPS revisions have broken into positive territory for the first time in four years. We remain comfortable with the view that the extreme ROE and earnings differential between the US and Eurozone will start to close.

Great post anon on China. Jinping is consolidating power. Make no mistake. He is not the same reformer as Deng. But China internet is still a great place with secular growth

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Anonymous
admin
April 13, 2015 at 8:36 PM ×

The WSJ agrees with many here that the Fed will not raise interest rates until circa 2017:

http://www.wsj.com/articles/the-fed-can-be-patient-about-raising-interest-rates-1428875510

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Anonymous
admin
April 13, 2015 at 9:44 PM ×

ALERT: Tomorrow's Financial Times UK front page is embargoed and will be tweeted at midnight.

https://twitter.com/FT/status/587713760288251904

Greece default ???

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hipper
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April 13, 2015 at 11:48 PM ×

Oh it's time for the annual, semi-annual and quarter-annual Grexit-festival again, get out your Lederhosens everyone. It's already starting to sound like a broken record though. Dig your wallets everyone because the Eurocrats amazingly aren't that stupid that they'd be playing Russian roulet with the destiny of EZ, sorry I mean their own benefits of course.

Basically EZ is facing a simple conundrum here:

-yield to Greece -> other southern countries with their two to three years time leftist populist parties will run their own corresponding show -> ze Germans watch with shock and horror

-don't yield to Greece -> just default everything, other countries observe that Greece actually didn't wither away and die and it might actually be a viable solution for them too

Sooner or later it's going to happen anyway with both scenarios. The Euro-area would probably get extremely strained already with a hole Greece leaves alone, let alone not probably be able to survive anything too much larger than that.

Watch for the German political climate slowly beginning to boil over after a couple of more concession rounds are made, and certainly at the latest when the bigger guys start joining the party...

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Anonymous
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April 14, 2015 at 12:45 AM ×

NY Fed’s Potter: More ‘Unusual’ Intraday Price Moves May Occur ( official confirmation liquidity drying up / flash crashes increasing )

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Nico G
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April 14, 2015 at 6:55 AM ×

abee

you are really really reading sell side analysis?

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