Top Ten Reasons the Santa Rally Failed Yesterday

1) A trio of burly repo men skedaddled up to the North Pole and took Santa's sleigh after he couldn't afford the payments with the new, higher interest rate.

2) Santa was busy attending the premiere of the new Star Wars flick.

3) Santa was waiting to see where 3 month LIBOR fixed on Thursday but doesn't pay the new exchange fees; now that the regulators have given LIBOR to a for-profit administrator, if you don't pay you can't get the fixings until the next day.

4) Santa went over to Martin Shkreli's house to listen to that Wu-Tang Clan album and was arrested along with his host.

5) Santa got so hot in that heavy fur suit that he had to turn around and change into Speedos.

6) Instead of watching the equity market, Santa flew to Stamford Bridge to submit his application to be the new Chelsea manager.

7) Santa sold a few thousand Dec 2050 straddles on Monday and is just trying to pin the strike.

8) After the most recent weakening of the loonie, Santa has gone on strike until he gets paid in American, rather than Canadian, dollars.

9) Santa was too depressed to look at screens after having to move Christine Lagarde from the "nice" to the "naughty" list.

10) Santa doesn't actually exist, and it's all just stochastic noise driven by the Fed and option expiry event risks.

EDITBonus reason 11)  Santa was kidnapped by the Grinch, who preferred to focus his efforts on the JPY instead

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23 comments

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Leftback
admin
December 18, 2015 at 7:59 AM ×

No words. Just a big shit-eating grin after we won the football tonight. Nice post.

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Rossco
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December 18, 2015 at 8:31 AM ×

what will $/JPY , Nikkei punters be calling Santa this year

strewth

https://www.youtube.com/watch?v=af7LwnA913g

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Hotairmail
admin
December 18, 2015 at 8:41 AM ×

It was the Mourinho sacking.

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Anonymous
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December 18, 2015 at 12:20 PM ×

Don't the CB;s know European Opex is over?

Someone get on the blower!

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Booger
admin
December 18, 2015 at 12:42 PM ×

yep, it's that wind down to Christmas. My stomach is already getting too big.

Chewing over what I missed the other day, a gutsy move by Dame Yellen. She massaged expectations and pulled it off well.

Arguably at a similar juncture in 1998 after the Asian financial crisis led to LTCM (this time China slowdown/Yuan deval--->oil/high yield implosion), her predecessor Greenspan went completely prostate and opened the monetary spiggots leading to the 1999-2000 tech-led blowoff in equities.

So this time Yellen hikes, so perhaps no equity blow-off? Hard to see how it does not put more pressure on the Chinese though, but at least they have room to move (their interest rates could move closer to zero and they could devalue their exchange rate further).

Will it be enough to send commodities and EM into the rabbit hole? Or will it take a few more months.

One thing is for sure, those CB balance sheets are not getting smaller anytime soon and QE might be the biggest and stinkiest TBTF entity out of the lot.

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Macro Man
admin
December 18, 2015 at 12:46 PM ×

Booger, can you send me an email at mrmacro@gmail.com pls. I have something to pass along to you.

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Booger
admin
December 18, 2015 at 1:00 PM ×

Back to Nico's 4 rate hikes: they may feel that they have left it long enough to be confident that it won't be one and done abortive cycle. The market disagrees and in the last year when the market and Fed expectations have disagreed the market has been more accurate about the eventual outcome.

Nothing compelling out there except maybe to watch for oil reversal at some stage.

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Booger
admin
December 18, 2015 at 1:05 PM ×

voila MM, email sent!

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abee crombie
admin
December 18, 2015 at 1:51 PM ×

Oh snap, Shkreli messed with the WU and now karma comes back. Who is this guy anyways?

How about Santa's new cowboy boots dont feel so comfortable when black gold is under $40. The longhorn state is gonna have to cut back on BBQ reindeer steaks.

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Anonymous
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December 18, 2015 at 2:31 PM ×

Santa caught a margin call on his brand new Biomass factory.

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Srini
admin
December 18, 2015 at 3:53 PM ×

This is one of your best ever, and IMHO, that is a tough comparison! I remember one with Sherlock Holmes that was probably better.

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CV
admin
December 18, 2015 at 7:03 PM ×

Brilliant indeed! But it doesn't beat Mr. Holmes ... When are we seeing him again MM

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Anonymous
admin
December 18, 2015 at 8:26 PM ×

Santa and his VIX-en went antipodean (EWA) and are bringing us only Gold (GDX), Silver (SLV), and Solar (TAN).

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Leftback
admin
December 18, 2015 at 9:15 PM ×

Trannies in bear market territory. JBTFDers should exercise caution with the Kevlar for the time being. For us it is still hiding in US fixed income and Hammock Time™.

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AL
admin
December 18, 2015 at 10:15 PM ×

Price action is really REALLY ugly. Nevertheless I'm planning to further reduce the underweight in equities from 90% of the BM to 95% between monday and tuesday and bring this position into the first days of 2016 .... And then we will take it from there. Reading all the different outlooks for 2016, it looks like that the consensus is considering Q1 2016 as the last decent shot to ride this aging (dying IMHO) multi year bull market .... So how about a torrid first few weeks of January to change everybody's mind?

Overall I tend to agree with LB's idea that macro data will likely take center stage in the coming weeks as the newsflow from CBs will be "missing in action" and on that front the Eurozone seems to hold up reasonably well, while in the US I'm not so sure that we can conclude the same.

And for 2016 I struggle to find good directional ideas for the time being: should US data come in soft, playing USD on the short side (in my case would be hedging USD exposure against unhedged benchmarks) is one of most attractive ones to me as I feel "parity" will have to wait for quite a long time. This in turn could help commodties bottom out.

Fixed income side, well, I can play only on euro govvies and credit: duration above 7 for a YTM of 0,8% for the government side and duration slightly above 5 for a YTM of barely 1% on the credit side ..... It is THAT desperate in my investsble universe (IG only of course).

Looks like that some time in 2016 a good chunk of the portfolio in cash will be the most profitable position to have ....

Wish you a great weekend guys

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Anonymous
admin
December 18, 2015 at 11:07 PM ×

@AL

As a small time retail trader, can I ask you a dumb question?

What does "reduce the underweight in equities from 90% of the BM to 95% " mean? I am a little confused here. Thank you for your insight, which is very helpful for me.

Have a good weekend.

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AL
admin
December 18, 2015 at 11:25 PM ×

Let's say I have a portfolio which has a benchmark of 50% equities and 50% bonds. My current position on equities is underweight in a measure of 90% of the benchmark, i. e. 45% of the whole portfolio is in equities. I plan to further reduce such underweight to 95% of the benchmark, i. e I will increase the equity weighting of the portfolio to 47,5% from the current 45%.
The reason is that I do not want to start the year with a positioning that is too distant from the benchmark of the portfolio.

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Anonymous
admin
December 19, 2015 at 2:05 AM ×

Thanks AL, that is what I thought you meant, but helpful for you to spell it out.

- Whammer (not the Anon at 11:07)

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Anonymous
admin
December 19, 2015 at 2:06 AM ×

@LB, I'm trying to figure out your "football" comment above. There were no BPL games last night, and surely you aren't a Rams fan??

Was this some kind of "middle aged dudes" league you're in?

- Whammer

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Macro Man
admin
December 20, 2015 at 12:40 AM ×

Where is the defeated Youri Djorkaeff in the photo?

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Anonymous
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December 20, 2015 at 12:49 AM ×

Youri didn't show this week. He is good, though.

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Anonymous
admin
December 21, 2015 at 7:45 PM ×

Congrats! ;-)

- Whammer

Does Youri have a sister named Ima?

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