What did you get?

The Macro boys, like most children in industrialized countries, remain out of school this week.  However, when they return to their scholarly endeavours next Monday, one of the first conversations they'll have with their school-mates is likely to be the age-old "what'd you get?" comparison of holiday loot.

It's a little-known fact that many of the world's central bankers have a secret year-end confabulation at a secret country mansion in Colorado known as "The Meadows."   One of the more light-hearted annual rituals at this meeting is an adult version of the childhood phenomenon described above.  On an exclusive basis, Macro Man is pleased to reveal what a number of key policy-makers revealed as their favourite gift this year:


 Janet Yellen:  Apollo 13 DVD.


A "routine" space flight becomes a desperate battle to survive in this breathtaking adventure of courage and faith starring Tom Hanks, Kevin Bacon, Bill Paxton, Gary Sinise and Ed Harris.

A useful guide for what to do if something goes badly wrong after  lift-off.







Mario Draghi:   Lezyne classic floor drive pump

 The Lezyne Classic Floor Drive Track Pump is a high pressure floor pump with an oversized 3.5 inch precision gauge. Lezyne's new ABS 2 chuck with bleed valve seals quickly and accurately to both Presta and Schrader valves, giving the exact amount of required pressure.  A machined aluminium base with steel barrel and piston and an extra long, high strength rubber hose with aluminium couplers make this a durable and stylish floor pump, designed for performance.

Macro Man can attest from personal experience that this pump is excellent at generating substantial amounts of inflation quickly.



Mark Carney:   Island slipper Mano men's sandals



The Mano features the Island Pro Black Lug sole and original foot bed design, with the arch, heel cup, and outside contour. The upper is crafted from oiled leather and lined with neoprene for comfort. After a short break-in period, the soft EVA insole will self-mold to your foot's unique shape. If you are looking for lots of mileage and a slipper that lasts, this is the one for you. Made in Hawaii USA.

What else for Carney but a flip-flop?  These will be useful when he retires to the Bahamas or Juan-les-Pins on his Bank of England pension.

Haruhiko Kuroda:  The Seven Percent Solution, by Nicholas Meyer


Back in print to tie-in with The Canary Trainer, this "rediscovered" Sherlock Holmes adventure recounts the unique collaboration of Holmes and Sigmund Freud in the solution of a mystery on which the lives of millions may depend.

We know Holmes is pretty handy with solving financial mysteries.  If he can get a 7% solution, then solving Kuroda's conundrum on how to get inflation to 2% should be a walk in the park.




Zhou Xiochuan:  Swimline 30" Suntanner Window Rider

 

  • 30" in size.
  • Reflective Suntanner.
  • See-through window.
  • Assorted colors.
**Color comes "assorted"-- You will receive one out of two possible colors at random.** 

A float that is very clearly made in China: small, cheap, and it's totally random what you actually get!

Alexandre Tombini:  Monopoly


"Arrived now is a Monopoly board game with a totally new and fun version of the 2014 FIFA World Cup that captures the experience of the greatest sporting event in the world."

Useful, because if Brazil doesn't get a grip on its twin deficit and inflation problem, the real will be as worthless as Monopoly money.


Glenn Stevens:  Lump of coal


  • It's the perfect stocking stuffer for anyone on your "naughty list" this year!
  • Red velour draw string bags with embroidered gold lettering.
  • One bag says "You've Been Naughty", the other "Merry Christmas".
  • Bags measures 6 x 3 1/2 inches; perfect to use as a stocking stuffer. 
This present was no doubt from fixed income longs hoping for another rate cut.    Stevens is hoping in more ways than one now that the price of coal and other commodities rebounds a bit.
Macro Man wishes all readers a happy new year, and he'll see you in 2016!
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25 comments

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Anonymous
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December 30, 2015 at 2:52 PM ×

Alexandre Tombini?

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Gus
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December 30, 2015 at 7:16 PM ×

MM: I hope the best gift that you got this Christmas is a prosperous and healthy 2016!

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abee crombie
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December 31, 2015 at 3:31 AM ×

Haha, tombini, is a puppet like everyone else in brazil.

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Leftback
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December 31, 2015 at 3:53 PM ×

A tasty reading from the Chicago PMI for December - 42.9 - Cough: recession, cough. So that definitely fits right in with everything the Hikers and Hawks Club have been spouting, which we have been telling you here for some time is Absolut Bolleaux. There is also a NFP number coming up on Jan 8 that might not be exactly the rip-snorter that H&Hers are expecting.

Cough: buy the ten year, cough. Mr Gundlach, would you care to weigh in here? Mr Shilling? Can you say massive squeeze at the long end, chaps?

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Macro Man
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December 31, 2015 at 4:14 PM ×

LB, I know that climate change is real and all, but I am still surprised that on new year's eve the fruit trees have blossomed enough to go cherry-picking.

As for the 2 authorities you cite...well, when have they not been pimping bonds?

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Bruce in Tennessee
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December 31, 2015 at 4:34 PM ×

Lefty,

Just don't out-think your trades in 2016...having followed your agile insights all these years, I don't think you will...you know you are arguing apples to oranges, don't you?....it is not whether the economy might be getting weaker, the question is has the Fed made up their mind to hike?...these are really two different coins, not sides of the same coin..

Happy New Year all...

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Anonymous
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December 31, 2015 at 6:01 PM ×

For 2016, PIMCO's managers say they see opportunities in energy-related investments, including Mexican government bonds, and currencies such as the Russian ruble, Norwegian krone and Canadian dollar. Their forecasts include an expectation that oil will climb to a range of $50 to $70 a barrel.

“The next opportunity that gives you returns -- it’s staring you in the face. It’s energy markets and emerging markets. Sometime in the next 6 to 18 months is probably going to be the next opportunity", said Mihir Worah, one of 3 co-managers of the Total Return Fund.

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Eddie
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December 31, 2015 at 6:48 PM ×

Leftback,

I always appreciate your insights but imho Mr Shilling is a one-trick pony who just got lucky some 30 years ago. Had rates increased even further (remember, he took a levered positon in the long bond) he would have got toasted and not write books today where 1% of forecasted deflation is due to the fact that Mr Shilling made the prediction.

MM, thanks for the 7-percent solution. Santa missed that one.

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rp
admin
December 31, 2015 at 7:43 PM ×

yeah talking of one trick ponies, i'm surprised they haven't wheeled out Roger Bootle so he can peddle more of that book he wrote.

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rp
admin
December 31, 2015 at 7:51 PM ×

oh wait
http://www.telegraph.co.uk/finance/comment/rogerbootle/11503183/Dead-and-buried-but-how-soon-will-inflation-rise-again.html

"
Never mind. Although there have been a few near-life experiences since, I will take inflation at zero as vindication enough.
"
ugh

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Leftback
admin
December 31, 2015 at 8:11 PM ×

Uh, you chaps seem to have taken the bait. Hook, line and sinker... I thought you would have realized that whenever good ole Gary is mentioned, that's a signal that the comment should be taken slightly tongue-in-cheek..... still, flattening is ON, lads.

Chicago PMI was quite a shocking number though. To B in T, we offer a reminder that the Fed can rarely force rates to move, and all too often the FOMC is forced to follow the markets. Don't be too sure that Dame Janet can boss Mr Bond around.

MM, mate, I wish you a massively successful New Year, except at Upton Park on Saturday. LB's plucking good year more or less ended with a quite useful pub crawl during which a bird crapped on his white shirt. Happy Punting to all in 2016!

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Anonymous
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December 31, 2015 at 8:16 PM ×

Well, I sure hopt to find my 'one trick' in 2016...just saying.

I am looking at the commodity world and find ag being the most interesting for now. Talking about the irregular weather this winter, isn't ag the first victim of climate change? And you can throw the midwest flooding in there.

Oil did present a nice opportunity, but I still are waiting for the bankrupcy of CHK or SWN. No bottom without some blood on the street.

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Leftback
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December 31, 2015 at 9:37 PM ×

The general feeling here is that oil, junk bonds and long rates will make lows in Q1 or Q2. Bankruptcies, mergers, investor despair and bottom-fishing vulture capital acquisitions all seem likely to manifest in the domestic energy space before a real bottom appears. Reflation trades might be a better bet in the second half of the year, and the timing will depend to some extent on the trajectory of the dollar, and whether it falls in or out of synch with a rise in crude and metal prices.

It's customary for punters to be quite jolly in the New Year, but we think this winter is going to be a right old grind, and even the first week might be a proper struggle for fans of risky assets. Usually we are happy to get long equities ahead of the New Year's fund flows and ride the wave for a few days, but this year our asset allocation remains conservative. In fact we decided to take our proven Hammock Asset Management allocation model, which out-performed the benchmark handily in 2015, and extend this philosophy into the early days of 2016, until better opportunities and risk/reward ratios present themselves.

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Anonymous
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December 31, 2015 at 11:54 PM ×

http://www.chicagotribune.com/news/sns-wp-blm-china-stocks-a934de80-ae4b-11e5-b281-43c0b56f61fa-20151229-story.html

This should start 2016 out with a Chinese bang: "Regulators to allow major shareholders to sell their investments when a six-month ban imposed at the height of the stock crash expires January 8."

Technology companies are most vulnerable to a sell-off once the ban is removed since
the ChiNext small-cap index, dominated by technology and consumer companies, trades at 45 times estimated 12-month earnings (after jumping 45 percent since Aug. 26), while the Shanghai Composite is valued at 18.7 times.

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Booger
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January 2, 2016 at 12:16 PM ×

I hear you LB, the market is pricing a less than 8% chance that the Fed is one and done in 2016 and a 0% probability that the Fed will be forced to reverse course and decrease back to the zero bound by this time next year.

Which is why I am super wary of long dollar positions here. Unless there is some serious risk aversion, I can't see good risk:reward in punting on the dollar index rallying much further.

Spoos looks interesting to short again and I have a pre-NY starter position from 2060. If there is not significant fund flow in the first week of January, we could see a dump of that rather weak Santa pump ?

I like the Apollo 13 tag to liftoff for Janet Yellen! Has anyone achieved escape velocity from QE though ? To me, QE seems to have a spooky resemblance to 'The picture of Dorain Grey'. "Whenever global central bankers try to turn off the monetary policy spigots, investors would see staring glances of that same disfigured market that was left behind in the wake of the crash and then papered over with doses and doses of QE". It could make a great movie. "The picture of the Dorian the Central Banker"-with guest appearance by Frankenstein at the end.

Perhaps deflation and recession in 2016, then QE4 when the Fed and the BOJ engage in a the final orgy of inflation creationing QE. Then the picture gets burnt, but due to the Faustian deal, QE can't be unwound until the end it seems.

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hipper
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January 2, 2016 at 12:18 PM ×

Happy new year all...

Declining profits for even high quality issuers, ballooning corporate debt and decreasing liquidity in the bond market could bring an interesting one as well. Although not the case in EZ anytime soon, it can still be following a similiar path eventually. As well as rising govvy yields could place pressure to reduce the current account deficit in the US, thus hurting the C/A surplus export led growth in EZ and Asia. The blind enlarging of the debt base is built on presumptions of current low rates and really, it seems that today there can't be any growth in DM without government spending growth.

Could these actually create a major drag on global capex and growth?

http://trueeconomics.blogspot.com/2015/12/311215-2016-bonds-market-outlook.html

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Bruce in Tennessee
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January 2, 2016 at 1:13 PM ×

http://davidstockmanscontracorner.com/2016-market-outlook-forecast-01-01-16/

...Nice summary of Lefty's ideas, in the main..(You aren't by any chance Lance Roberts, are you Lefty?)

http://online.wsj.com/mdc/public/page/2_3063-globalEconomicCalendar.html

..In regards to strength (or not) of the economy in 2016, I did note that December 30's release of US farm prices shows a y/y decrease of 9.8%...If you check the release of 1/15 you see that going into 2015 prices were stable for the previous 12 months...so agriculture has pretty much joined manufacturing as an unstable factor for next year...

2 cents..

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Anonymous
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January 2, 2016 at 6:27 PM ×

Fed signalling 4 more rate hikes as US economic growth gains traction. We will likely see US equities rally noticeably in 2016, while the US dollar strengthens and the US market receives considerable foreign inflows of capital.

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Leftback
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January 3, 2016 at 9:47 PM ×

Ha. Anon, I think you just recycled the 2015 forecast... that would have been largely correct, especially in the first half.

I wonder are you leveraged long USD by any chance? Also, what part of the US economy are you looking at that is suddenly gaining traction? The FED may think it is signaling 4 more rate hikes, but that's not what the bond market is saying, and the market has been a better forecaster than the FED over the years. People should be very careful about employment numbers. It is always a lagging indicator, and the government always ends up revising the numbers downwards after the fact, but only when we are in fact three to six months into a recession already, thereby redefining the onset of the recession. Take a look back at the revisions in 2007-08, for example. The USD may hang in there for a while, but if it does it will do so b/c of an influx of capital into Treasuries, not into equities (the flow will be driven by the rate differentials at the long end of the curve).

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abee crombie
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January 4, 2016 at 2:10 AM ×

LB, I see the data and your thoughts on rates however when you look at the price of 10year and Eurodollar, something doesnt fit, IMO. Perhaps it is a bunch of ppl trying get away from Fed hikes, I dunno, but I dont see any indication just yet. Eitherway, I think the better bet on a big slowdown like that is probably long Yen vs long US bonds, or short equties. I'm short some XLE as I do think more pain is in store and its a good "value factor" hedge. Though I think oil under 30 is a steal longer term. Steel & aluminium are in a different situation. China might close some capacity (you should hear more news) but generally its a losing proposition to be competing with the Chinese (1), in a commodity market (2), when they have over capacity. (3).

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Anonymous
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January 4, 2016 at 5:55 AM ×

"China's CSI300 stock index fell 5 percent on the first trading day of 2016, triggering a circuit breaker mechanism that would briefly halt trade. Stocks slumped after weak factory activity surveys soured hopes that the world's second-largest economy will enter the new year on better footing. Investors also dumped stocks ahead of the imminent expiration of a share sales ban on listed companies' major shareholders, which had been imposed during the market crash last summer."

Welcome to 2016 circuit breakers ...

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Nico G
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January 4, 2016 at 5:59 AM ×

they are just front running the short ban lift coming later this week

even January 2008 did not start that ugly - folks who waited so long to short are now facing a hole

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Nico G
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January 4, 2016 at 6:52 AM ×

after two weeks in Canada it was hard to not see a 39% discount to USD as horribly attractive

have become a mega, mega (now biased) fan of Canada and shorted a substantial amount of USDCAD @1.39

the two cousin North American economies... at rock bottom oil price - let's see how the pair fares from now on if anything a dirt cheap property in world class Whistler has been secured

Trudeau the Second vs. Trump to come? fabulous time

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Anonymous
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January 4, 2016 at 7:33 AM ×

@Nico, why short USDCAD vs long CADUSD?

Feel free to tell me that is a dumb question, because I am confident it could be.

- Whammer

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