Stop Me If You've Heard This One Before

Stop me if you've heard this one before: the Fed shifts the dot plot lower, but still well above market pricing, Janet Yellen sounds as indecisive as the little old lady who takes five minutes to order a cup of coffee while ahead of you in the queue, and fixed income rips, the dollar sells off, and equities meander higher.

Yawn.

Shame on Macro Man for expecting anything different, and shame on them for continuing this farcical sham of a monetary policy regime, the goal of which seems to be to perpetuate the "everybody wins" mentality that pervades elementary education these days.  Perhaps in lieu of a brokerage statement, Macro Man can receive a participation medal instead?

The problem with everybody wins, of course, is that it works until it doesn't- and when it doesn't, participants find that they've made choices that may have seemed collectively rational but were individually pretty stupid.

Drawn from a blank sheet of paper, would current economic circumstances merit ZIRP?  Almost certainly not.  Yet whenever the Fed or those other fatuous fakers, the BOE begin to talk tough, their "threats" prove as empty as a beer can at the end of a college party.

We cannot, of course, trade the world that we'd like to see, merely that which we do so.  And in that world, the mistakes of the past are writ large, as ostensibly intelligent people blithely ignore the policy error that landed them in this corner to begin with.   And so, having started this post by quoting a Smiths song, it is perhaps only meet to end it with another:

Dip-buyers of the world, unite and take over.
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Leftback
admin
June 18, 2015 at 4:15 PM ×

Yes it's all becoming rather painful.

Let's take a stab at rationalizing where we are. The US recovery continues to be uneven and more stop-go than the FED would like to see, and certainly it isn't ripping along. However, if we weren't all looking over our shoulders at Schäuble and Tsipras arm-wrestling, it's entirely possible Dame Janet would have hiked already this week, with the US and world economy generally having benefited from a 10% lower US$ in 2015 than where we are. Now, let's allow for the possibility that Mangler and Hollande work the phones, Putin waves roubles in the direction of Athens, and as a result we see some kind of Grollover, Grextension etc. quite soon, hopefully before July 1. This really is a priority now, so that Euro pols can get back to planning their beach holidays or banging their mistresses, etc, all of which seems entirely sane and reasonable unless you are Schäuble. Then if we assume a deal gets done, fear of Grexit takes a back seat again, and 30-50bps spikes in the bund and the US10y are probable over a few weeks, possibly as much as 75bps.

At this point, one of the remaining obstacles to a Fed hike has been removed, and we will see another very strong rally in USD as Mr Market suddenly realizes that September isn't very far away and that December is three months after that. As suggested above, we should all keep our eyes on the yield curve, especially the front end (T-bills to 2y), because once that really starts moving, the Fed will simply get in line. Additional commentary about the size of the balance sheet might also be forthcoming if they want to be more involved, but it would be better if they simply let the market do the work.

As far as trading goes, forget it for the time being. We are entirely in agreement with the excellent Mr Dalio, who suggested that this is no time for concentrated bets, and we can only concur with this pearl. A couple of very obvious trades will arise later on this Summer, once a few of the dominoes have fallen.

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Error404
admin
June 18, 2015 at 4:29 PM ×

Yep, fewer convictions out there than a Spanish prime minister. My only unshakeable belief about anything is that when the market finally decides to care about how utterly clueless and/or disingenuous our monetary central planners really are, the snoozefest should end with a bang louder even than LB's 'Euro pols' and their mistresses can manage.

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amplitudeinthehouse
admin
June 18, 2015 at 5:05 PM ×

Nice summary of world economics, LB. It has taken me 12 months to dig myself out of the dog shit I stepped into, and I don't care if your God or King, there's no way in the world I'm getting suckered again. Make me.

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FunnyMoney
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June 18, 2015 at 5:35 PM ×

FunnyMoney said: ...Recent US economic data is terrible, Equity markets remain bid, There is no end to Central Bank easing... any hint that equities might fall is met with more easing. Conclusion: The Fed will NOT raise rates...
April 29, 2015 at 8:55 AM


FunnyMoney said: ...No doubt many of you will blindly sell in May and go away, to watch in bewilderment as stocks get driven higher...
May 17, 2015 at 4:06 PM


Brethren,
Has it not come to pass as I foretold? Am I not merciful?
US corporates are clearly unhappy with recent USD strength. Yellen has obliged by trashing the dollar and instructing the Fed to buy equities.
In FX-land, Sterling is also strong this week, well here's another 'prediction' for you: the BoE is once again talking rate hikes - not gonna happen.

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Mr. T
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June 18, 2015 at 5:44 PM ×

Nice post MM. It's a hard time to be running money. Some of the recent strength has to be positioning before the inevitable weekend stick save by the euros. But on a larger scale Yellen is becoming a known quantity - a fed president who appears more than willing to follow the lead of wall street wherever they take her. Its hard for me to understand how she can say the last hike cycle was too slow (in hindsight) and not see any parallels to now. Given this, I'm positioned for a Shenzen-style rally in US risk assets, with my eye more on 5yrbreakevens than on the short end. The short end is about as useful as JGB's now for signalling. The only way the feds gonna start driving this donkey is if they feel they are behind the curve, and thats gonna show up on the long end / breakevens before the short end. IMHO of course.

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k1
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June 18, 2015 at 5:49 PM ×

LB said: "30-50bps spikes in the bund and the US10y are probable over a few weeks".

Or maybe over a few minutes? Go Bundie Go!

Unless I am confused (entirely possible) we have both FM and LB right at the same time. .

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washedup
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June 18, 2015 at 6:20 PM ×

LB/T agree with the rates idea - I think operation un-twist is on for the next few months - I fail to see how that is positive for risky assets anywhere, but the market is the market.
And FM, I wasn't being disparaging with my response in the previous post, just pointing out that the Fed would have a problem knowing that they are the markets bitch and not the other way around - a point that was just made rathe more eloquently by LB and T.
Other than a hunch that the 30 yr selloff may get a bit out of control in the next few weeks, don't have much to contribute.

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amplitudeinthehouse
admin
June 19, 2015 at 11:49 AM ×

Macro Man says.."Stop Me If You've Heard This One Before"

Amplitutudeinthehouse says.."Have I said this before..the shit-talkers have been thrown out"

Virus eradicated.

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Dan
admin
June 19, 2015 at 2:15 PM ×

It all makes sense if you consider the policy of dollar proliferation.

The US will throw money at any foreign crisis because each crisis presents an opportunity to crush a competing currency and further entrench the USD's local usage and savings abroad. In a world of reified value, the only way demand (think electrical base load) arises is through usage (custom) and contractual obligation.

The only argument is how strong the terms of the IMF will be before they dish-out just enough cash to start a new negotiation. Currency is the premier instrument of FoPo today. Each currency needs to be considered as a social network platform and scale matters. No scale and no network effects. If you have user base scale, you persist through financial attrition.

Strategic default is the only option for a dissenter out there. The Greeks are having one hell of a time defaulting, but give them some time.

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Dan
admin
June 19, 2015 at 2:21 PM ×

The USD is winning because of Gresham's law. The Fed is there to ensure the dollars are there for anyone at the precise moment of demand and not a moment earlier or later. They manage scarcity in a world with negative short term rates and the capacity for the masses to barely cover their cost of living.

Rent inflation is beginning to wreak havoc in the US, so we aren't too far from the moment when the housing market really gets whacked in an unrecoverable sense. Then the IRS will be collecting on GSE debts.

No one can collect better than the IRS!

Caveat emptor!

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Anonymous
admin
June 19, 2015 at 2:51 PM ×

Rent inflation is beginning to wreak havoc in the US

Dan, can you elaborate a bit on this ? I am not US based.

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Anonymous
admin
June 19, 2015 at 3:09 PM ×

SHCOMP is now in correction territory.

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Anonymous
admin
June 19, 2015 at 4:14 PM ×

This week represents why I have not been doing so well lately. I didn't see the Fed statement as particularly dovish at all (my mistake, apparently). It actually seemed rather hawkish to me. Five of the forecasters predict an FFTR of 0.875 percent by the end of the year (either they are completely incompetent, or I am), and combined with another five who expect 0.625 percent, that means that almost two thirds of the participants expect two (or three) rate hikes this year. I just don't think the market is ready for that (JUNE 2016 Fed Funds futures are trading at 0.625 percent at the moment). Someone is very wrong (I am guessing the Fed - their livelihood doesn't depend on them being right), which will require a major adjustment of expectations.

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washedup
admin
June 19, 2015 at 4:32 PM ×

anon 4:14 - it was a fairly dovish statement in that yellen all but assured everyone that the timing of the first rate hike is irrelevant and on average rates will stay very very low for a considerable period of time - also the dot plot includes estimates from the non governing council members who lean hawkish and don't have a say - frankly its just 2 or 3 dot plots that matter, obi including yellen's. The market also interpreted data dependency as a nod to the greek influence i.e. if things get out of hand we won't raise.
The overall impact (given inflation and jobs prints) rationally should be to steepen the curve a lot, to reflect the lack of hawkishness in the front along with a grinding normalization in the economy that can only be reflected in the 10's or 30's - we have been seeing some of that last couple of days. This is also why the market likes buying financials (higher NIMs) and is reluctant to own the dollar.

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abee crombie
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June 19, 2015 at 7:40 PM ×

School is out, summer is here. Forget about anything going in the market till September

Currencies and oil are range bound. US equities are grinding as are interest rates.

EU equities is maybe the one place where there is still some volatility

See you at the beach

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Dan
admin
June 19, 2015 at 11:12 PM ×

Rent Inflation

The first step to price inflation is to clear excess supply and now the anecdotal stories I am hearing, with regularity, is that people can't find properties at a reasonable rate.

The stories run the entire spectrum. @DBasch is a very intelligent person who has been enamored with the price changes in his market. He is probably the most interesting person to check in on concerning SV.

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amplitudeinthehouse
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June 20, 2015 at 12:45 AM ×

No one here has mentioned the benefit of this weeks FED meeting. I'm happy to enlighten you guys that due to the ambiguity of the FEDs plot dot chart, it has not only proven it's self to be a waste of time, but finally stepped up and anointed itself as 'DANGEROUS'...and with that we can all take comfort in knowing that all we have to do know is study on our strengths in the markets..the rest will take of itself. This means the 'FED' plots are never ever coming back into analysis...the virus of ambiguity has been eradicated, it's back to business.

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Anonymous
admin
June 20, 2015 at 2:36 AM ×

@Dan, thanks for that pointer to @dbasch. I'm in SV myself, the state of real estate affairs here is totally out of hand. I'm lucky -- we have a house with a low LTV. Rents are very high, vacancies very low, and I have no idea how anybody, even with a good job, can put together a down payment unless they hit the stock-option lottery where they work.

- Whammer

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Anonymous
admin
June 20, 2015 at 4:04 AM ×

What are stock options?

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Anonymous
admin
June 20, 2015 at 5:46 AM ×

@Anon at 4:04 AM, I'll assume you're not yanking my chain ;-). It is fairly common in tech companies for employees to be granted stock options as a sort of "signing bonus", or also something called a Restricted Stock Unit (RSU). Stock options set a price where you can acquire a share of the company's stock in the future. RSU's are a grant of shares to you that vest over time.

As an employee joining the company, the hope is that you have managed to find a company with a stock that appreciates dramatically in 3-7 years, so you make a lot of money on that equity. You take that money and buy yourself a gangsta mansion like this in Mountain View for $2.7 Million. http://www.movoto.com/mountain-view-ca/1823-van-buren-cir-mountain-view-ca-94040-100_81469863/

-Whammer

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amplitudeinthehouse
admin
June 20, 2015 at 12:56 PM ×

That one needs to be cancelled. No way am I being stuck with that.

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amplitudeinthehouse
admin
June 20, 2015 at 12:58 PM ×

Son, you married it.

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amplitudeinthehouse
admin
June 20, 2015 at 1:24 PM ×

Can you believe this, I have use this blog to broadcast decisions to block catastrophic circumstances coming into my life. I want don't your money, I want don't your daughter, and I want don't anything to do with your family. If you want to push it and make a c%nt out me, go ahead. It's not up for discussion anymore because for me I'm in survival mode now..and I will do what it ever it takes to survive, and if that means I go down , so be it...I'm going down MY WAY , not yours champ.

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Anonymous
admin
June 20, 2015 at 2:31 PM ×

Tom McClellan is predicting market peak in August, bear market through 2016:

http://www.financialsense.com/contributors/tom-mcclellan/stock-market-peak-august-2016-bear-market

Rossmorguy

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amplitudeinthehouse
admin
June 20, 2015 at 2:53 PM ×

Son, I really think you and I need to go one on one..you win, I'm your slave, I win , I'm free.

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amplitudeinthehouse
admin
June 20, 2015 at 3:02 PM ×

I'm done with it. Let's go our own way.

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amplitudeinthehouse
admin
June 20, 2015 at 3:05 PM ×

And last of all, I don't believe any of you anymore, period.

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Anonymous
admin
June 20, 2015 at 6:07 PM ×

Amp luding out?!

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Anonymous
admin
June 21, 2015 at 6:00 AM ×

Wassup amps, trouble at home and in the markets?

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amplitudeinthehouse
admin
June 21, 2015 at 6:13 AM ×

Brumbies were blowout winners in SA last night and during the game I had nothing better do.Sorry.

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Anonymous
admin
June 21, 2015 at 7:02 PM ×

Jim Rogers predicts mother of all crashes in next 1-2 years...

http://www.peakprosperity.com/podcast/93027/jim-rogers-turmoil-coming

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Anonymous
admin
June 21, 2015 at 7:27 PM ×

Sure - this blithering idiot has predicted about 50 equity crashes in the last 15 years - oh and how is the gold bet working out Jim?
Al these kooks have the same great way to make money - bet against the guys who own the printing press for it - genius.

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Anonymous
admin
June 21, 2015 at 8:59 PM ×

Tom McClellan is no kook, of course. I am not familiar with the indicator he refers to, which he himself calls exotic. In the few years I've followed his work, I never recall him making a similar generally bearish call.

Rossmorguy

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amplitudeinthehouse
admin
June 22, 2015 at 9:29 AM ×

Are you telling me that mutt trader is coming back to the market?...no chance.Take ya fifty and shove it up you ass.

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amplitudeinthehouse
admin
June 22, 2015 at 9:30 AM ×

oh, you don't understand english. TAKE YA FIFTY AND SHOVE IT UP YA ASS

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amplitudeinthehouse
admin
June 22, 2015 at 9:31 AM ×

oh, you don't understand english. TAKE YA FIFTY AND SHOVE IT UP YA ASS

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amplitudeinthehouse
admin
June 22, 2015 at 9:31 AM ×

oh, you don't understand english. TAKE YA FIFTY AND SHOVE IT UP YA ASS

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amplitudeinthehouse
admin
June 22, 2015 at 9:34 AM ×

I don't care what the son of god says. TAKE YA FIFTY AND SHOVE IT UP YA ASS

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amplitudeinthehouse
admin
June 22, 2015 at 9:51 AM ×

F##K off , SON.

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amplitudeinthehouse
admin
June 22, 2015 at 9:57 AM ×

I may be alone trading these markets since the big fella is gone, but you don't tell me what to do. I'll take you on anytime and anywhere, you name it.

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amplitudeinthehouse
admin
June 22, 2015 at 10:36 AM ×

F##ck you...I've sat here at this desk and rotted for the last eight years since released, and your going to tell me someone else has to pay you to pick me up. LOL. Shove ya fifty up your ass. I don't wont your help.

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Rossco
admin
June 22, 2015 at 12:08 PM ×

Amps you ok mate? A bit concerned about you

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amplitudeinthehouse
admin
June 22, 2015 at 12:20 PM ×

It's simple Rossco, money talks and bullshit walks , and when you come up against both at the same time..it's time to walk away.

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amplitudeinthehouse
admin
June 22, 2015 at 12:45 PM ×

And a note to Daddy Fifty Shades of Grey..the day I get out from behind this desk, I'm going to remember you, HARD.

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abee crombie
admin
June 22, 2015 at 3:11 PM ×

Amps, you are a funny guy. I have no idea what you are talking about, but its funny

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FunnyMoney
admin
June 22, 2015 at 4:04 PM ×

FunnyMoney is having a good day.

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Anonymous
admin
June 22, 2015 at 4:59 PM ×

Abee..you know I have an unrequited love you.But Im not for sale..

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Anonymous
admin
June 22, 2015 at 5:16 PM ×

Tell you whats funny Abee..the son manipulation to keep me coming back to this blog and putting me on show..little tests here and there..how did i go today son..was it the result you expected..so than you can back it tommorrow and tell the world im all alone and im stuck with you..fuck you..so what if im by myself..you money wont buy my loyalty

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Anonymous
admin
June 22, 2015 at 5:54 PM ×

Have you got the virus too son

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Leftback
admin
June 22, 2015 at 6:17 PM ×

Funny Money having a good day, of course and rates leaping skyward as predicted by LB, on latest Greek rumors. It's going to be a while before we see something worth buying in this old market, innit.... awesome for the day trading fraternity, pretty much of a nightmare for the value/income investor and any form of macro punter other than 5 minute Macro.

MM, mate, just send my royalties to Texas, I am on the road this week... the usual fee will be fine.

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FunnyMoney
admin
June 23, 2015 at 12:12 PM ×

Nice to see equities heading on to all-time-highs, and the FM model massively out-performing.

If the news turns -ve, Central Banks will leap in with more liquidity, if the news turns +ve we will all rejoice and buy equities with wanton abandon (lol).

Long (see what I did there?) live equities !!!

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amplitudeinthehouse
admin
June 23, 2015 at 12:29 PM ×

Funny Money, let the market make all time highs..but if the market crashes, I don't want to hear it. It's about time Greece moved forward, terrible terrible circle that Greece got trapped in with those Central Bankers. But I gather you're old enough know that once these things are seeded, (Greek swapping their debt from drachmas to euro) they germinate for years before springing up on you...and I've got enough seedlings worry about..a whole farm!

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Polemic
admin
June 23, 2015 at 3:38 PM ×

Greece, unless they have buried the debt in a lead lined coffin this is all just going to happen again.

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amplitudeinthehouse
admin
June 23, 2015 at 4:16 PM ×

You know what the funniest thing is about Greece, they actually thought they could sell their debt offering to International buyers. They kept ringing and ringing and ringing...LOL dummies.

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Nico G
admin
June 23, 2015 at 8:18 PM ×

funny money i shorted the spoos today

first time in a long time i touch that market....

see you a in couple of months

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washedup
admin
June 23, 2015 at 8:38 PM ×

oh snap - finally something worth selling tickets to - funny money vs dead serious money.
nico u still short chinese shares or did you cover them? you may actually have top ticked that one - quite brilliant

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Mr. T
admin
June 23, 2015 at 8:41 PM ×

In regards to shorting spx etc, I think the current environment is telling. There are many scary themes out there right now, but the only one anyone seems to care about is greece, which is about as scary as betting on the hero in a disney movie. Im not trying to say the market is being wrong to overlook the negative themes, but rather that the current psychology is all about finding the rationale (any rationale) for higher prices. Unless you have some way to determine that this crowd psychology is currently changing, it seems like a really hard short. Basically, there is no catalyst - or rather you may see catalysts but if the market does not care does that still count? I would say no, or the catalyst is too weak to matter.

Nico, I think you are a slow mover and not trying to play 5 minute macro but it seems like a tough trade. Just curious what you see.

PHK is getting spicy. With all eyes on the ETF/underlying liquidity mismatch are CEF's where its going to start? So many cef's trade at what appear to be structural premiums that I don't understand.

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Anonymous
admin
June 23, 2015 at 9:09 PM ×

Spoos cant be that tough a trade to short right now. It has gone nowhere on no volume all year. If it breaks range to upside kill the trade. If it breaks to downside, ride that pony. Vice versa.

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Anonymous
admin
June 23, 2015 at 11:25 PM ×

On a different note: "Man who created the pink flamingo lawn ornament dies"
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/11695090/Man-who-created-the-pink-flamingo-lawn-ornament-dies.html?utm_source=dlvr.it&utm_medium=twitter

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Anonymous
admin
June 24, 2015 at 1:12 AM ×

Nico is a fade

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Anonymous
admin
June 24, 2015 at 2:25 AM ×

Here's what I've learned shorting Spoos. Always buy the closest in the money next month strike at the top of the channel. There is no such thing as 'cheap puts'. Get out before it bounces at the bottom of the channel. Never hold over a weekend. Especially never hold over the weekend before OPEX. If you own heavily shorted stocks don't bother shorting Spoos as insurance. Only short Spoos when you can afford to indulge yourself, because you are right, and 'the market' is a bunch of 29 year old morons, and the moronic algos they programmed, and both will eventually get what's coming to them most likely right after your shorts expire worthless. (I'm not kidding, they are, and they will.) But you were right. It feels good to have the moral high ground. Also, the next week after you have lost a shitload shorting last week take a break. Consider selling puts on VXX. It's not nearly as exciting, but at least time is on your side. Good luck Nico! Remember you are right, and they are on borrowed time (and money.) Cha

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Nico G
admin
June 24, 2015 at 8:44 AM ×

anon 1:12 AM fade it please the spoos are working hard at inviting the very last buyers before summer

mr T half of chinese short is off the table as the timing was so lucky one could not be too greedy

i closed european short last week and went long on classic pre expiry 'wild move Thursday' bear capitulation but i am already out it has gone up too far too fast

Thursday move had a low to high 5% intraday range. And then Monday... it has been unbelievable volatility, and a run stop Coachella

those profits should help weather more idiocy in the realm of spoo trading. Shorting spoos is very hard

but it's ok if you do it from a hidden Greek cove

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Nico G
admin
June 24, 2015 at 8:51 AM ×

sorry the Chinese answer was for our favorite character 'Shantaram trader' washedup

cha 2:25 AM thanks for the input - former options market maker here so the fact that you only make money writing options ain't a secret it is how giga volatility books make giga money in those giga banks

and VIX is as close to the covered warrants scam as can be..

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Leftback
admin
June 24, 2015 at 3:01 PM ×

Once a decade giga banks get caught short giga vega and get a giga pantsing, followed by a giga bailout.

For the time being, concur with all the above comments. Markets continue to be: artificially propped, risk is mainly mispriced and hence most asset classes continue largely untradeable. This in spite of the fact that one of the main proponents of the propping claims to be getting out of the propping up business as soon as September. Who's bluffing who?

Anticipating a few large swift moves before the end of the summer. We are overdue for another moonshot for the USD, although it might follow on the heels of one last Euro squeeze courtesy of an upcoming Greek can-kicking.

I could have written this any time in the last two months. You know it's boring, when.... (tick tock tick tock)

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Polemic
admin
June 24, 2015 at 3:54 PM ×

Tis boring innit

the old themes of Fed rates, Greece, china bubble or not etc getting dull as none of them ever come to any resolution.

Why don't we start on something completely different?

Lets say.. the growth of the service sector and how it isn't being picked up in data ( Durable goods orders a classic example of overfocus on manufacturing) Manu PFIs etc. We don't need to make things when we can provide higher priced services to those that do.

Eg did you know that UK is second largest exporter of services after the US? The services sector is what is growing and yet we all look at making shiny things.

listen to this for a good take on UK services and how they should be lifted from invisible to visible.
http://www.bbc.co.uk/programmes/b05xxc08

How many of you folks commenting here actually have a job making something tangible?

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washedup
admin
June 24, 2015 at 4:12 PM ×

shantaram here just prepared some chicken tikka masala off a googled recipe - id say thats pretty tangible.
Rats Pol I just realized from my econ 101 memory thats a service not a good - you win again!
I concur on starting a meaningful discussion (since MM won't get off his stationary bike) - my obsession these days is the trade to GDP relationship and whether or not services trade is properly captured in those numbers or not.

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Mr. T
admin
June 24, 2015 at 4:22 PM ×

Durable goods orders a classic example of overfocus on manufacturing
Its a good point, but there is lots of research showing the multiplier on manufacturing revenue is several times the multiplier on service jobs. So if you want to grow GDP buy x its a lot easier to do it with some manufacturing (and the ancillary services) than via services alone.

Also, domestic manufacturing is important when foreign affairs get weird. Maybe the global supply chain is going to keep the world at peace forever, but maybe it isn't. What happens to AAPL if there are major supply chain disruptions between US and China? Its a tail risk but isn't that what this game is all about?

How about this for a theme - small rise in GC rates is enough to cause lots of marginal quant strategies to no longer be profitable, causing liquidations (at the same time of course). Yes, a derivative of the tired fed/rates theme but its one of the few real businesses that 25bp can make or break.

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Anonymous
admin
June 24, 2015 at 4:28 PM ×

Agree Pol,

I have a question on UK budget: will it repeat what happened after 2012 budget cut?

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Polemic
admin
June 24, 2015 at 6:13 PM ×

Mr T,

Yes good points and you are right, but if the world is changing and you just can't force your society to set up large factories employing 1000s with all the ancillary knock on benefits then why try? My new life has shown me that the 'hive mind' of business is out there and growing, rather than megachunk co's with high barriers to entry. I just wonder if that research you refer to is son going to be seen to be outdated and yes, it applied in a past world but not what is coming.

Supply shocks and national security of products is of course a big issue and we would be hard up without the gas turbines for our power stations more than most of the service industries. But many of the service industries aren't just advertising ,media and banking. Much of the intellectual input into R+D can be termed services.


Washed up - A CTM is very tangible and I m a buyer. Cant list it as durable though as I ll have scoffed it in minutes

Anon - I dont understand the budget question .. will what same happen? ( tbh the answer to what ever the q is will probably be 'i don't know'

Oh, and someone should take a look at the duration on durable goods. Most of the stuff i buy these days breaks within a year. Not that durable!

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Anonymous
admin
June 24, 2015 at 6:13 PM ×

Puerto Rico’s legislature passed a bill to immunize the GDB’s leaders against lawsuits.

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Anonymous
admin
June 24, 2015 at 8:00 PM ×

Bloomberg:U.S. Fed Has Legal Authority to Buy Puerto Rico Debt

Big bailout coming.

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Anonymous
admin
June 24, 2015 at 8:51 PM ×

Polemic and T, You bring up a huge issue with national security of products. Outsourcing manufacturing has created huge vulnerabilities for the U.S. The critical ingredients for most antibiotics are now made almost exclusively in China and India. The same is true for dozens of other crucial medicines, including prednisone; metformin, for diabetes; and amlodipine, for high blood pressure.

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Nico G
admin
June 24, 2015 at 9:29 PM ×

wasn't CTM invented for Westerners only? this is all too confusing

Veep comedy perfectly depicted the serious and level of competence of Washington. Wish the Seinfeld family at large (ex-Curb, ex-Arrested Development) would at last give Wall street the comical treatment it deserves

i have it in my head but have no talent to write it. Perhaps the MM crew ought to give it a shot and email a draft to Hurwitz/Dreyfus/David etc

kinda a healthy distraction until spoos break their channel

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Anonymous
admin
June 25, 2015 at 1:15 PM ×

Where's my job?

NY Times:
"In 2014, Chinese factories accounted for about a quarter of the global ranks of industrial robots — a 54 percent increase over 2013. According to the International Federation of Robotics, it will have more installed manufacturing robots than any other country by 2017.
Midea, a leading manufacturer of home appliances in the heavily industrialized province of Guangdong, plans to replace 6,000 workers in its residential air-conditioning division, about a fifth of the work force, with automation by the end of the year. Foxconn, which makes consumer electronics for Apple and other companies, plans to automate about 70 percent of factory work within three years, and already has a fully robotic factory in Chengdu."

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washedup
admin
June 25, 2015 at 1:59 PM ×

Great - so in a couple of decades we will get massive surges in manufacturing automation and robotics so that either 1) everyone is unemployed and has to be supported by Govt safety nets supported by really high taxes on aforementioned manufacturers or 2) the safety nets don't really come because conservatives don't let them, so we just get a restive population that is increasingly eager to pitchfork corporate CEO's.
This blogger site is asking me to prove Im not a robot so I can post this comment - are robots replacing non paying jobs too?

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Anonymous
admin
June 25, 2015 at 8:01 PM ×

washedup

Robots are already "writng" news stories

http://www.ibtimes.com/sxsw-2015-robots-algorithms-infiltrate-news-business-selecting-stories-writing-them-1847688

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hipper
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June 25, 2015 at 9:51 PM ×

Peter Schiff - bulls have pretty much nothing going on for them except for housing sales and living cost (rent) inflation. And high-end housing got boost from bad weather pent-up demand and Chinese buyers returning again, and domestic buyers piling up now "before mortgage rates are rising", which should be a one time effect? Needless to say he's been calling hike bluff all along, next year election year and maybe even worse economically than 2015?

Greece is a sideshow (best if every participant was locked into a windowless room and only let out after there is something tangible to present).

https://www.youtube.com/watch?v=y2T9JTdw45Q

Took a bit off the spoos table for cash and itching to switch more on the fixed income wagon, but is it time for that yet? I still have the mental deadline of September after which I will promise to no longer believe anything the Fed says. Just a hunch but after Greece gets done we might get back to business-as-usual in bunds falling over inflation expectations and relieving from the safe haven status, dragging UST's along but that should begin faltering again as the "end of QE3" starts becoming more obviously nothing more than a pause. Needless to say I have a strong anti-bias towards September but it's not over till the fat lady sings.

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abee crombie
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June 25, 2015 at 9:54 PM ×

LB, get the kevlar out soon. I think REITs and MLPs are starting to set up good buying opportunities. Yes rates are going to rise, but you are not going to see 7% yields again for a long time (unless you want to go to Sao Paulo of Medillin). So for all you closet yield hogs, get ready, there are some really intersting companies getting sold off that have very little interest rate exposure and nice juicy dividends

BXMT is just an easy to mention

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Anonymous
admin
June 26, 2015 at 4:50 AM ×

who in their right mind owns $BXMT @ huge premium to BV when rest of sector trades at 10-20% disco to BV

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amplitudeinthehouse
admin
June 26, 2015 at 10:57 AM ×

That markets bullshit. I shouldn't have to trade that. go F$%k youself son.

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amplitudeinthehouse
admin
June 26, 2015 at 10:59 AM ×

That Son has dragged me into quicksand.

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amplitudeinthehouse
admin
June 26, 2015 at 11:38 AM ×

Pay ya Fifty big ones, you'll never get from me what your expecting. Never.

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amplitudeinthehouse
admin
June 26, 2015 at 11:59 AM ×

told ya son, anytime anywhere, I just don't trust you anymore.

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Nico G
admin
June 26, 2015 at 12:15 PM ×

"What you need in a bubble is a 26-year-old. They think that a bubble is normal, that this is the way the world is, and that they are making so much money they think they are brilliant."

Jim Rodgers talking to Funny Money yesterday

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amplitudeinthehouse
admin
June 26, 2015 at 2:07 PM ×

Nico, I've been talking to Funny Money too.Too much.It's Friday night, my two footy bets just come in, and all I have to say to Funny Money is ........I LOVE YOU HAPPY VALLEY

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Anonymous
admin
June 26, 2015 at 2:25 PM ×

Bubbles also need people like Rodgers who sit on the sidelines and speak of gloom and doom when there's none to be. Just sayin...

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Anonymous
admin
June 26, 2015 at 3:19 PM ×

Another train is leaving that station...
Reuters:
India's state social security and pension fund, undeterred by trade union resistance, will start investing in equity markets next month, the labour minister said, part of a broader push by Prime Minister Narendra Modi to move away from socialist ways rooted in decades-old labour laws.

With more than $100 billion of assets from some 80 million members, the Employees' Provident Fund Organisation (EPFO) is one of the world's largest. It will begin by investing in Indian exchange traded funds, with the goal of earning higher returns.

"We are starting with 1 percent in July and by the end of this (fiscal) year it will go up to 5 percent" of annual investments, Labour Minister Bandaru Dattatreya told Reuters in an interview late on Wednesday.

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Anonymous
admin
June 26, 2015 at 3:35 PM ×

WHen I saw 87 comments I thought Amp had lost the plot again...

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abee crombie
admin
June 26, 2015 at 4:25 PM ×

re BXMT. so it is above BV. Big deal. So is AAPL, the S&P500 and lots of assets. If you pay more than BV for a 'bond' type asset you are just reducing your yield, thats all. So why would you pay for BXMT above book.

1) you are paying for blackstone RE, one of the best managers
2) floating rate exposure

you can decide for yourself if you want to buy it. I'm just saying to sell it off bc other mREITs are selling off doesnt make sense

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Anonymous
admin
June 26, 2015 at 11:33 PM ×

Nico "the douche" suffers from overconfidence

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Anonymous
admin
June 27, 2015 at 12:50 AM ×

Anon above me. I think not. More he is sick of the overconfidence of the bull market and those that are bid. Tsipras just shook that up with referendum call.

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Leftback
admin
June 27, 2015 at 3:32 PM ×

Well, MM. This certainly raises the threat level for Greece's creditors and the permabulls. Perhaps Tsipras came home from Moscow with a few readies and is prepared to play hardball. What Say Ye?

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Polemic
admin
June 27, 2015 at 3:35 PM ×

Hi LB ,, Dunno what MM has to say , but if it's of any interest I've just penned my thoughts here



http://polemics-pains.blogspot.co.uk/2015/06/and-so-it-came-to-pass-greece-part-n.html

the market that is going to go bid is most probably that of tear gas

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washedup
admin
June 27, 2015 at 4:32 PM ×

in between the china rate cuts (one of these days those things won't work and then the real fun begins) and greece i expect the us markets should be, dunno - flat? I have convinced myself there is a trillion lot 2075@2130 ES 2 way out there. Can't say any of the above were considered low probability events last week - i suppose they don't care till they do.
Where is our fearless cyberleader MM these days anyway? Did he spot a business opportunity in hawking mattresses in Athens?
Liked your blog post Pol - highly recommended reading - agree with the argentinian playbook being the right one.

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FunnyMoney
admin
June 27, 2015 at 4:56 PM ×

@Nico & Amp - lol

My "thesis" behind buying equities is following the "FunnyMoney" - as such, it goes without saying that differing equity indexes offer differing opportunities at differing times; something you have all seen & commented on at various points in time.
Right now the BOJ and ECB are leading the QE charge, Nikkei is at multi-year highs, and EU equities (having pulled back) last week broke nicely to the upside. I'm ashamed to say that I missed half of that initial +600pt upmove in Dax et al. Mid-week provided another opportunity to get on board. US equity indexes are more of a mixed bag & have provided less opportunity (you've all seen the range-bound nature of Spooz & yet the Russell is doing well).

Please briefly review this chart: http://www.finviz.com/futures_charts.ashx?t=INDICES&p=m1

To me that chart says it all, but in summary: I would be happy to see a decline in equities, but I won't be selling. Have a good weekend all.

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Anonymous
admin
June 27, 2015 at 5:23 PM ×

Rien ne va plus Mr Tsipras. I wonder where FDAX and FGBL will open Monday morning.

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CV
admin
June 27, 2015 at 7:36 PM ×

The Greek farce is, on balance, bullish in my view. Central banks will invoke the ghost of Lehman and do all kinds of silly things in the name "pre-emptive action" and remember ... we are already late cycle. This will be the inverse of the hikes that kicked an already slowing economy in the groins in 2007 (due to the spike in oil) ...

I think a Greek default within the Eurozone is untenable, and as a result ... Syriza will have to go. Remember chaps, their strategy strategy ONLUY work if Greeks wanted to leave, but they don't! Of course, if they change their mind ... they can just leave and default. That was always an option, as it was during the Greek bailout 1.0. Now, they have to decide. By the looks of it, I think Tsipras and Varoufakis have reached the end of the road.

Anyway, Polemic's musing are as good as anything I have read on this! The key is indeed ELA, and I think the ECB will have to shut it down. I very much doubt the banks will open on Monday (unless they do a massive u-turn tomorrow, but this is unlikely). Of course, in watching the Syrizan strategy with awe, we should never forget that if this blows up in the face of Shauble et al, maybe they will, with hindsight, think that paying less than 1% of Eurozone GDP to fudge Greece again was perhaps the better solution.

So, on Monday;

EURUSD UP,

Stoxx down,

Gold up,

Benchmark yields down

Right ;) ?

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hipper
admin
June 27, 2015 at 8:20 PM ×

The EU is like the mafia. Once you join you're in for life.

We're just on the depressive, deep trough portion of the whole manic-depressive drama episode, currently. By Friday everybody in Eurogroup will be singing kumbaya again.

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washedup
admin
June 27, 2015 at 9:50 PM ×

CV - i don't disagree that the markets may choose to interpret all this bullishly because it raises the odds of more CB intervention and easier liquidity - punters certainly have not needed encouragement on that front - I do think in the scheme of things the equity rally is at a very dangerous phase - smart money seems very long to milk the last 10% but just as convinced the end is nigh as the most ardent bear - not at all clear to me how participating with the assumption that they are smarter than anyone else and will have no problem exiting an instant before anyone else does is a good risk/reward proposition - I remember how everyone was super long in summer 2000 because there was supposed to be this final final meltup - similar in q2 08 as well - can anyone time these things so precisely?
The best equity trade right now may be to not be involved at all and see how things shake out. I am more intrigued by whether these goings on somehow rally the euro (risk off, stronger without greece, more of a proxy for the deutsche mark than ever blah blah) to the point where the eurozone recovery gets derailed - anyone who thinks the slide in the euro from 1.40 to 1.10 has nothing to do with the fact that they are growing at 1.5% (yay!) has lost their marbles.
The PBoC seems to truly be getting more and more desperate by the day - we are one disappointing market reaction to CB action away from a 180 change in global equity sentiment. You guys are seasoned enough to remember how quickly that can happen.

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CV
admin
June 28, 2015 at 8:37 AM ×

Look Washedup, I completely agree with. I just have the feeling that we can get one last push. Return wise, though, the best days are long gone. We are late cycle, inflation is going up and CBs will have to, eventually, take note. First comes the Fed. Incidentally, we need EMs to participate too I think, and this could come if the world doesn't end with the first rate hike.

Another point here, if you think that I am wrong on inflation, you are essentially arguing, as far as I can see, that Goldilocks will prevail FOREVER, and I don't believe in fairytales ;).

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Leftback
admin
June 28, 2015 at 2:27 PM ×

It's all very interesting but it remains, really and truly, a great time to be on the sidelines. Hammock Time.

Syriza are quite astute politicians, contrary to popular opinion. Going to the electorate gives them a new mandate, whatever the result. If the Greek people vote yes, then that's a vote for modified Austerity under Syriza and gives them cover to fudge a deal and continue in power in Athens. If the Greeks vote to reject a deal, then Syriza will be free to pivot to the Russians and Chinese, which then becomes a major political problem, not for Greece, but for the conservative hawks in the U.S. and the EU. Tsipras is making a very important point here, that democracy still exists in member countries and has not been ceded to the creditor "institutions". Creditors own debt, not the countries that issue it, and one day someone may get a painful reminder of this.

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Anonymous
admin
June 28, 2015 at 2:39 PM ×

@Leftback:
I disagree. Syriza (or Greece for the matter) doesn't control its destiny anymore. It could have done in 2012 (or therebouts), but, rightly or wrongly, most EU now believes that Grexit is survivable, possibly best for everyone. If EU gives enough cover to ECB to drop ELA (which, after IMF default is not that hard), Greece will either bow to creditors fully, or Grexit.

The Russian/Chinese card is overplayed. If Russia would get basis in Greece, Greece would have to be out of NATO. Doing so would likely strenghten NATO/Turkey ties which are weakening significantly, and Russia plays that game already, as Turkey is much more important to them than Greece ever will be. So the way to play it, is to support Turkey to nibble bits and pieces of Greece (who may not be covered by NATO/EU anymore) in exchange for cooperation with Russia.

China may pick some pieces, but they won't do so overtly politically. Most likely, they would just simply "provide humanitarian relief", both to score some infra hits and political points poking at EU. But remember, US can do the same, and it's likely going to be easier for US to do so than for China (for one, US has resources to deploy in Med, China doesn't).

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Nico G
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June 28, 2015 at 2:47 PM ×

Anon 11:33 PM

keep on with the anonymous insults. it brings bravado to the forum. your account limit is probably as small as your balls so expect some nasty margin call tomorrow or another day since you don't seem to believe in the concept of caution

MM folks have suggested before that alias be needed to post on your forum it'd make communication easier

anyway

Everyone here is Europe is shitting in their pants because this week end they finally understood what I've been warning about for ages: the determination of a rogue, hard left in a EU country. Who by the way is now giving a lesson of democracy to many 'liberal' countries who dread the idea of a referendum like herpes.

Greece is strategic - and the idea of Greece leaning to the East is an absolute nightmare to Brussels and the West. you can't be blamed for not getting the big picture if all you read is Western financial media that have relentlessly downplayed the Greek drama for they cater exclusively to the proud owners of equity portfolios. You Anon 11:33 PM whoever you are deserve to bleed every penny if a crash happens because you are what i despise the most, a cowardly cunt.

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Eddie
admin
June 28, 2015 at 3:02 PM ×

Nico, giving trolls names (or forcing them to choose one) won't solve the problem of trolling (I can tell you from another place where you have to pick a name... trolls still come around). Not feeding them is the best solution imho.

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Anonymous
admin
June 28, 2015 at 4:30 PM ×

Putin has more of an influence than people think. Tsipras was only there last weekend. He doesn't have the brains to play this to the last minute and then walk. This is Putin's payback for EU involvement in Ukraine. And Ukraine was Russian punishment for getting one over US in Syria.

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Anonymous
admin
June 28, 2015 at 4:32 PM ×

Russia has withstood the EU sanction onslaught. Can EU withstand Greek and UK exit?

Shorts may get a spanking tomorrow with intervention. When you hear Schäuble saying prepared to act to save markets....

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Nico G
admin
June 28, 2015 at 5:58 PM ×

"Shorts may get a spanking tomorrow with intervention"

would you bet a lot of money on this 'may' - at present do you really want to be long ESTX50 at Friday close level? no. Neither do many many other longs who just need to get out at auction tomorrow.

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Anonymous
admin
June 28, 2015 at 6:11 PM ×

Anon from above Nico and agreed with your Emini position. If Schäuble makes dovish commentary, I take note. Couldn't understand Esx strength end of last week. Auction will be mental but expect some intervention tomorrow in order to make a big statement.

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Nico G
admin
June 28, 2015 at 6:56 PM ×

i understand your taking notice - but as it is, when there is record margin on the long side, it is somewhat irritating to read another time 'the biggest risk is on the short side". where are the shorts to be spanked? there is not one bear around, and there is so much 'overconfidence' i.e. complacency from the bull camp.. i find it extremely unhealthy - worse than 2008 - noone seems prepared for the very remote possibility that CBs would let equities reprice risk, for once

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Anonymous
admin
June 28, 2015 at 7:59 PM ×

I think Nico got this one right

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Anonymous
admin
June 28, 2015 at 9:23 PM ×

FED READY TO PROVIDE LIQUIDITY UNDER STANDING FX SWAP LINES, FED HAS NO LIMITS ON SWAP LINES WITH ECB, OTHER CENTRAL BANKS - MNI - 2008 again. That is what you fight in the AM if you initiate a short is my point.

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Anonymous
admin
June 28, 2015 at 10:02 PM ×

and I am sure we will see more of this - just know that the equity market NEVER goes down because of shorting - we didn't sell off in 2001 and 2008 because shorts were pressing it down - equities go down because usually very passive longs decrease their allocations and raise cash, and some other institutions rotate into bonds - this market is naturally so invested that longs liquidating in small amounts far, far, overwhelms even record shorting - the only thing that matters, therefore, is sentiment towards risk taking - if that is intact stocks won't bat an eyelid - else fasten your seatbelts. For what is worth, everyone and their mom is long european equities this year because of ECB QE, so thats where the pain point is.

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Anonymous
admin
June 28, 2015 at 10:11 PM ×

MM will not post again until he sees the words Greek debt and 25 basis points vanish from the headlines?

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Anonymous
admin
June 28, 2015 at 10:30 PM ×

SCOTUS will make a decision on Greek bailout on Monday. Roberts holding up his finger determining which way the wind is blowing...err, consensus.

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hipper
admin
June 29, 2015 at 12:06 AM ×

So the great 0...25bps to 15...30bps lift off is off the table. Better luck for the next cycle.

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June 29, 2015 at 9:53 PM ×

Thanks for the post! Eye-opening!

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