Monday morning bullet points

* So Stanley Fischer is the latest Federale to state that while a lift-off this year remains the base case, that view is an expectation, not a commitment, and subject to a longer list of disclaimers than Happy Fun Ball.  It's getting to the point where when any FOMC member speaks, it's sounding increasingly like Charlie Brown's teacher.   There's not much point belaboring the issue much further in this space, other than to note that the communications strategy gets an F-.

* Put up or shut up time for Spooz.   We're back to the post-meltdown high, with the 100 and 200 day moving averages 31 and 46 point away, respectively.  If the comments section in this space is any indication, it's gotten to be quite emotional for some punters, which is rarely a good thing when it comes to profitable trading.  Just because you liked 'em below 1900 doesn't mean you have to still like them above 2000, especially with earnings season hitting full stride this week.  Again, you've heard it before....but the set-up looks better in Europe from Macro Man's perch.



* While the Fed hmms and haws and tries to leave ever possible contingency open, the short end justifiably seems to have realized that it overshot on payroll Friday.   The 2ns vs 10th eurodollar contract spread, highlighted here a week ago, has bounced nicely and is up around 10 ticks since first mentioned.  Even if this is only a correction, the 38% retracement from the June highs would take it up to 125.   Macro Man still likes it.



* This isn't exactly new news, but it's worth keeping an eye on trade data.  While Chinese data understandably comes under heavy scrutiny (and the next batch is due tonight/tomorrow, by the way), trade volumes throughout Asia and other countries have generally been poor.  Interestingly, the Malaysian data released last week is one of the few bright spots; small wonder, therefore, that the follow through in USD/MYR has been so robust.  The only three countries in the table below to show y/y rises in both exports and imports are Thailand, Vietnam, and, curiously enough, popular FX whipping-boy Australia.   The IB market is pricing in gradual easing for roughly the next year, despite the fact that Governor Glenn Stevens sounds fairly content with the current level of rates.  One wonders what that curve would do with a couple of decent Chinese numbers...
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Booger
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October 12, 2015 at 9:08 AM ×

AU is very interesting and I am watching closely. The divergence with Canada and Brazil is also very intriguing. What I've been waiting for is the FX market to challenge Glen Stevens. He has been saying, exchange rate all good, we are waiting for US to hike, no need for us to ease further. Translation: housing bubble, our macroprudential efforts have been lame, don't want to cut rates more. Seeing as the Fed are not hiking soon, the market may well challenge him about that stance and that will be interesting.

AU may rally to 0.75-0.76, particularly if there is a set of good Chinese numbers soon. Some bad retail sales will I think see the RBA move to cut rates and that would mark the next leg down. A leading indicator I am watching is auction clearance rates in Sydney, the epicenter of their housing bubble. Weakness there means the RBA can cut, and there will be pressure to if AU rallies and weak numbers start to come in. Although it has gone down considerably, AU is not at GFC levels (.0.6), CAD is the real whipping boy, it has been below GFC lows for months.

Aud.cad I think is very interesting as a short above 0.95.

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Anonymous
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October 12, 2015 at 12:31 PM ×

FT: getting a bit jittery...lightening some more...Dax toppish short term and INTC should disappoint wednesday, on guidance; on tech stuff, Fred Hickey is generally a good analyst (although he has been an equity permabear / PM permabull lately; he should stick to what he knows best)

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AL
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October 12, 2015 at 1:03 PM ×

I keep a strategic defensive stance on equities. Few parameters that served me well in the past are in place and I have to respect them:
1. 100 MA has crossed the 200 MA and both are DESCENDING on SPX, while on MXEM 100 MA has recently crossed 200 MA, which is flattening;
2. Macro both in US and lately Euro Zone has been deteriorating. CESIUSD has been declining since late August, while CESIEUR has turned south since late September;
3. EUR has been one of the pillars on which the earnings recovery in EZ has been built, but since April the EER has bottomed and recovered roughly 6% .... assumptions on earnings from exporters from here might be optimistic.
4. In US, even though expectations for this earnings season are rather depressed, I doubt that companies will issue a rosy outlook given macro uncertanties we are all well aware off.

Will see...

Good hunting all

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abee crombie
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October 12, 2015 at 1:27 PM ×

Booger, again just watch the Cad elections (Liberal should be OK but NDP wont be good), but i like the $AUD short at 75-76 regardless, which is where I think we are heading, along with Spoo's to hit the 200 day unless we get some real selling very soon.

In terms of World trade, the indicator I used to like as my leader was the Kospi, though with Samsung at 15% of the index it is a little skewed, but its had a nice run, now nearing 200day. But I wont get excited till I see it break 2200 (~10% higher) since its been ranging since 2011.

Until Oil, EM Equties, EM FX or High yield start selling off, I think US Equities can levitate assuming earnings do their normal beat lowered expectations

If only there was an easy liquid way to buy Vietnam. Its the biggest winner of TPP.

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Nick
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October 12, 2015 at 2:31 PM ×

Nico, from what I can gather we have a similar background. Equity options, flow and structured products market making. The hard thing for me was to learn good risk management practice, one kind of does not need it when grannies from Sweden or punters from Turkey give you two way flow in vol.

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Anonymous
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October 12, 2015 at 2:59 PM ×

Regarding Vietnam, there is a Van Eck ETF - VNM.

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Nico G
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October 12, 2015 at 3:10 PM ×

hahaha Nick vol trading was clearly a Robin Hood à l'envers engineered to continuously fleece retail. I am still amazed there's never been a class lawsuit against the warrants mafia. Those guys used to unwind tons of vega with us and they were so fat they would not even care about .8 or 1.2 point when they would pocket 10 points from retail. We were the street hookers, they were the top end escorts.

good risk management practice er, i guess this is when the wife comes in

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Nick
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October 12, 2015 at 3:30 PM ×

yes, something like that, isn't it the only way to learn?

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Nico G
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October 12, 2015 at 3:38 PM ×

well testosterone clearly ain't compatible with risk management

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Anonymous
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October 12, 2015 at 3:40 PM ×

The following is a BS public relations story. There is an entity out there in real trouble. Care to guess?

"Glencore shares halted pending statement on proposed asset sales"

http://www.theglobeandmail.com//report-on-business/industry-news/energy-and-resources/glencore-shares-halted-pending-statement-on-proposed-asset-sales/article26768897/?cmpid=rss1&click=dlvr.it

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Nick
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October 12, 2015 at 3:44 PM ×

I know, there is another way, that's being a sales person, or working for a place with a sales oriented business model.

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Nico G
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October 12, 2015 at 4:11 PM ×

roger that i spoke on behalf of 'free lance' punters

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Nick
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October 12, 2015 at 4:21 PM ×

so the strategy is - punt around and make money but as a hedge run a "model portfolio" with exactly opposite trades, worst comes to worst can always look for a sales job based on model portfolio results.

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Polemic
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October 12, 2015 at 4:24 PM ×

Actually Nick I know of a Hedge fund that is no more that did the reverse. They ran a'model portfolio' but the only way it survived as long as it did was the traders punted around making money as a hedge. Worst came to the worst and they all lost their jobs.

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Nick
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October 12, 2015 at 4:31 PM ×

This hedge fund should have had very interesting quarterly performance review calls, something along the lines of really keeping the spirit of hedging alive

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Anonymous
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October 12, 2015 at 4:50 PM ×

any thoughts on why PMs have such a strong bid? don't feel it totally accounted for by 'lower for longer' given that has reversed in recent days

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Polemic
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October 12, 2015 at 5:24 PM ×

NON 4.32 Other than caught in the general 'metal/everything commosity' bounce and rate diffs I've no idea. Though there has been a sort of oil/PMs link over the ages and I wonder of the oil bounce ties in. Minnyou that feels hot now and is adding fuel to the 'that was the bounce that was' view. FTSE and commodities look as though they've turned back down but US stuff and VIX falls still pointing to a bit more up. Mixed inputs = minimal view = not playing.

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Anonymous
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October 12, 2015 at 6:22 PM ×

Gold pretty robust into this oil sell off tho...
Technicals there look pretty strong too, just broken out of a wedge
Miners have rallied less though, which argues for a retracement

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Polemic
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October 12, 2015 at 6:39 PM ×

Yes miners as reflected through the ETF I own are particularly disappointing considering the gold rally. Don't I know it.
Also, if China and India consumer really were completely screwed then you'd expect someone to be yelling about them not buying the massive amounts they are always touted as buying. Perhaps the Chinese are continuing to buy gold as fast as they are Mercedes. Perhaps China is not fkd. Perhaps..

PS, has Putin sorted out the middle east and returned home yet? No?

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abee crombie
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October 12, 2015 at 7:02 PM ×

Re; VNM, yeah its possible for ST but LT, its horrible. Since 2012, HoChi Min Index is up 60% in USD while VNM is up on 18%. Too much tracking error for me. There are some closed end funds in london trading, but no volume

"Those guys used to unwind tons of vega with us and they were so fat they would not even care about .8 or 1.2 point when they would pocket 10 points from retail."

hahaha, no more my friend, at least for me. Bbrg has a structured product pricing service ;-) Either way i never understood all the fascination with them barring the few occurrences when Vol was really high. Though I hear the the weekly options today seem mighty interesting as well

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Anonymous
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October 12, 2015 at 9:24 PM ×

Surprised by this move in back month vix futures? Some liquidations?

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washedup
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October 12, 2015 at 9:37 PM ×

anon 9:24 - no not really - they were looking way overpriced relative to prompt on Friday, so when we didn't come in with a 50 point drop in spoos that may have been the last straw for some - I don't think this rally turns into a melt-up by any means (beyond what it has already done I guess), but without a doubt max pain for this market is a very slow grind higher - could last a few days.

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Anonymous
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October 12, 2015 at 9:42 PM ×

"PS, has Putin sorted out the middle east and returned home yet? No?"

Better him doing the sorting than those a$$hats neocons running the US MIIC.

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