Public Enemy as financial commentators

"Base?!?!?!  How low can you go?
Death row!  What a brother know?"

     - Public Enemy, "Bring the Noise"  (well, kind of)

Little did Public Enemy know when they recorded the opening lines to 1988's incendiary "Bring the Noise" that they would be providing trenchant financial commentary nearly 30 years later.  Imagine the first line being rapped by Jim Mora, and it seems an apt reaction to anyone trying to call a bottom in any of a myriad of financial assets.

Macro Man touched upon oil yesterday, and whatever his merits as a commentator may be, at least he didn't ring the bell for the bottom.  However, there are a number of other markets in freefall that merit comment.  We all know that Greece is a basket case and has been for years.   While there have obviously been tactical buying opportunities along the way, Macro Man has studiously ignored them on the theory that a turdburger doesn't magically turn into a steak sandwich, so why bother taking a bite?

Still, even he was surprised when he saw a chart of the Greek bank index yesterday....


Gotta say, that's a very Lehman/WAMU/Fannie 'n' Fredie looking chart.   As noted in the comments section yesterday, the situation with European banks generally doesn't look much better, as the chart of the SX7E indicates:


What's interesting (or depressing, depending on how long you retained your bullishness, if any) is that the banking index at least looked like it was trying to form a base in the aftermath of the August/September swoon....only to get kicked in the groin with an iron-tipped boot by the ECB in December (indicated by the arrow.)   More than 20% later, the rest, as they say, is history.  Incidentally, the downside of the Eurostoxx dividend trade highlighted the other week is that for maturities out more than a couple of years, you're basically just trading the banking index:

Macro Man would agree that BTPs look like an attractive short, especially spread against something less stinky (or at least less threatened by contingent liabilities from large banks with dodgy balance sheets.)   Then again, Macro Man has found it insane that 10 year Italy has traded well through the US for a long time now, thus calling Keynes' famous maxim to mind.  Still, if there were ever a catalyst for something like UST vs BTPs to work, an equity meltdown led by European financials would be pretty high on the list.

Of course, the ECB meets on Thursday, and after a tumultuous six weeks or so since their last pow-wow it will be curious to see how much has changed.  Obviously the sharp decline in both oil and risk assets (at least in terms of potential impact on banks' ability to lend) has implications for the ECB's forecast profile though it seems difficult to believe that they would adjust policy again so soon after the last cut.  Then again, the last policy move was widely seen as a derisory gesture; if the ECB were to deliver the rest of what was expected last month, could that help catalyze a bottom?  Very possibly, particularly given that it would be largely unexpected.

Speaking of central bank expectations, there will be some fireworks in Canada tomorrow, where the BOC announces policy tomorrow and markets are perched on a knife edge, pricing just over a 50% probability of an easing.   It seems close to tautological to suggest that the CAD will trade according to the decision, and for sure the knee jerk reaction will clearly depend on the immediate outcome of the meeting.   As always, however, the commentary will provide a more forward-looking window, and Macro Man would not be surprised to see a lot of jiggery-pokery in the event of a dovish hold, for example.  He has been somewhat surprised to hear anecdotal evidence of punters being out of court from fading USD/CAD too early, particularly given what's going on with oil and BOC expectations.  While the theory perhaps is that all the bad news is in the price, it does highlight the peril of fading price action just because you've never seen the number before (or haven't seen it in more than a decade), particularly in the absence of a well-defined (and relatively close) risk parameter.

Finally, any round-up of melting asset prices and hapless economic management would be amiss to omit sterling and the Most Overpriced Man in the World, Mark Carney.  Carney's latest attempt at forward-guidance-that-isn't-really-forward-guidance-after-he's-proven-wrong-yet-again has of course pooh-poohed the need for any rate rises and the economy's ability to withstand them.   Why lift a finger when you can get paid the same for doing nowt?

Under Carney's "stewardship" cable has now plumbed new lows.  In fact, Macro Man is kicking himself for not being on top of this earlier, as US/UK rate spreads started moving decisively against sterling around Thanksgiving, well in advance of cable's recent shellacking.  (Interestingly, the 2y spread, suggests that sterling is now overshooting to the downside.)


Macro Man does wonder, however, if Carney has an ulterior motive.   He has now lived in the UK long enough to understand the calendar of school holidays, and he is no doubt observant enough (insert joke here) to note that much of the country scarpers off to the ski slopes during the February half-term break.    It raises the question of whether the Governor has devised a cunning plan.

If we observe trends in sterling since the last February half-term break, we can see that thanks to Carney's litany of ham-handed commentary, sterling has weakened against the currencies of every major ski area.....except one.  No, there's one popular ski region where Brits need not take out a second mortgage merely to enjoy a slope-side Spaghetti Bolognese, and there's no prerequisite to sign your soul over to Satan just to afford that second apres-ski pint of Stella.

Yep, you can still afford to ski in....Canada!  Perhaps Carney, having overseen Canada's descent into economic mediocrity, has actually been sent to the UK as an agent provocateur with a mandate to so thoroughly trash Britain's purchasing power that Britons are forced to ski in Canada, thus providing badly-needed tourist revenues and throwing a life-line to the economy of his homeland.   Far-fetched, perhaps...but then again no more so than some of Carney's behaviour over the last few years...

Macro Man will summarize the results of yesterday's survey later today.
Previous
Next Post »

65 comments

Click here for comments
Bruce in Tennessee
admin
January 20, 2016 at 4:09 AM ×

Interesting to follow the comments MM...it is interesting that so few here, who are obviously students of the game, have had the nerve to short these markets. Fog of war I suppose. It isn't something I'm comfortable doing either...it just seemed like something one had to do vs missing the money to be made on the retreat...

Reply
avatar
abee crombie
admin
January 20, 2016 at 4:18 AM ×

Thanks for the comments on the pound. I was looking at the chart and wondering what is going on. I thought it was more Brexit fears. Anyways, we are coming up on major support vs USD. at ~1.40. Also the risk aversion trade, GBPJPY has gone bonkers as well. FX has led the move the past 3 years, so it does pay to keep it high on the list. Thanks MM for keeping us well informed

EUR looks like its getting ready for a nice move. Very small ranges even as everything else blows out.

For those interested in history, the current set up in S&P looks a lot like 1966, IMO. Either way we are at the point of a complex top in the Spoo's. From my brief analysis, it seems like you dont get complete capitulation on the first move down outside of the range, that usually comes later on in bear markets, though as seen in 1966, not always. FYI the 66 bear was followed by new highs several months later and a kind of blow of top in 1969.

Reply
avatar
Nico G
admin
January 20, 2016 at 4:36 AM ×

tut tut sensing a lecture on CAD here or isn't it? MM it was not FX speculation but investing into real estate. Not that you care anyway.

the CAD locked (too soon) vs. USD and EUR has been put to work on Whistler RE. It looked cheap at 1.39, cheaper now, who cares i take a 40% 'discount' anytime. Even if a cheap CAD is likely to stay as the only way to save Canadian oil exports. Amen.

talking about top FX timing this time - London property was sold in October 2014 and all GBP was taken out last year at 1.57 and 1.41 into USD and EUR respectively. Massively pleased with that as London main residence = many many Whistler chalets and other niceties.

USDJPY was shorted fot long term at 120 in the money for now and might have leg

meanwhile the EM basket is sucking ass but i am 300% of a massive USD reversal this year

Reply
avatar
Nico G
admin
January 20, 2016 at 4:42 AM ×

abee

2008 was the same, you got the first warning at MLT limit down on Globex at 1250 pivot that time on year

then market traded back up to 1430 in May. 1430 !! While Europe was uber down the poo pooh. This was the short of the year

I am not saying it will happen, but if it doesnt i will eat my balls raw for having missed in December the opportunity i had been waited for for years

having said that, it was noted in comments this week that the max pain trade is straight down to sub-1700 from here. Should it happen I believe people would bleed under 1700 and mark a lasting bottom

that would make me MM resident bullish for a change, i have not been bullish on US stocks since 2009-2011

Reply
avatar
abee crombie
admin
January 20, 2016 at 5:00 AM ×

Agreed Nico, on everything but Whistler RE. I'm not expecting a crash there but just think its expensive. If you enjoy it, good for you, who cares if its dead money.

The way equities are trading we might be at 1700 in a few days. ;-). Down again overnight. Perhaps at 1700 we get oil in the low $20. With the shipping and Dubai price discount, the middle east overlords would be ~$10 realized. I cant see Saudi pumping out oil at the same pace, losing money on each barrel, just to send Iran or US Shale a message. Not for long at least. That would probably be a tradable bounce to say the least

What happens after that you have to ask master bruce

Reply
avatar
Leftback
admin
January 20, 2016 at 5:10 AM ×

Not looking pretty here in the overnight action. JPYUSD is bid again and AUDUSD Is weak.

Bruce, you know many of us are smart observers of the markets, and we were completely prepared for selling, so that we were in cash going into the year, but many found it very hard to convince themselves to get short ahead of the new quarter fund flows. After that, the extent of this has been fairly shocking. 7% was our base case for the correction, with 10% being the extreme case.

Reply
avatar
Nico G
admin
January 20, 2016 at 5:12 AM ×

Abee

last year they showed (in horror) what CAD1m would buy you in Vancouver. A shack. It was insane.

last Christmas i was surprised that there was no such bubble in Whistler with a terrific rental yield to boot - come winter and more so in summer. No speculation over there meaning seeing flash sale in that part of the world is less likely

we spent 4 months a year in the US but im spooked by the amount of violence. Who knows, Canada could always be a safer harbor in turbulent time and if you can get properties with a dirt cheap currency all the better.

Reply
avatar
CV
admin
January 20, 2016 at 7:02 AM ×

The market is definitely sick, perhaps even terminally ill. Can't really see anything settling down until we get a real flush!

Reply
avatar
Nico G
admin
January 20, 2016 at 7:35 AM ×

i beg to differ - there are unbelievable trading opportunities. Yes it is a traders market but nothing to shy away from if you size accordingly, tons of 2% segments up or down. I've made more money this month than last Nov-Dec

Reply
avatar
CV
admin
January 20, 2016 at 8:16 AM ×

What the what ... me and Nico flipping positions completely ;)?

I don't disagree with that sentiment as such Nico, but I do my best bets on a 6-12 timeframe (yes, some us actually look that far ahead ;)), and right now the market, tape etc are telling me to batter down the hatches and prepare for a storm. It could be a false alarm number xxth, but given that we are late cycle, these signs start to matter more and more now.

Reply
avatar
Anonymous
admin
January 20, 2016 at 8:17 AM ×

@Nico -- neophyte question. When you say "2% segments", do you mean a segment where you would allocate 2% of your trading portfolio to that segment?

- Whammer

Reply
avatar
Skyguy
admin
January 20, 2016 at 8:35 AM ×

Position going in to this downdraft and time horizon would seem to be the biggest determinants as to how shortable this thing felt 2 weeks ago.

Additionally, from my perch it sure seems relentless. At the close yesterday I was really thinking this would be bounce Wednesday. That... doesn't look likely.

Regards,

Skyguy

Reply
avatar
CV
admin
January 20, 2016 at 8:41 AM ×

Agree Skyguy ... bears firmly in charge. Too much hope of a rebound. Don't want to be a hero here.

Reply
avatar
Nico G
admin
January 20, 2016 at 8:51 AM ×

CV

absolutely then - if you meant 6/12 months there is too much dust around and if you traditionally go long lower entries are in the cards

whammer

by segments i mean 'bits' of the tape to be captured. Eurostoxx offers 2% moves every 24 hours these days. Phenomenal.

the trend is down no doubt yet i feel more comfortbale buying new lows and/or gap downs but those considerations are for a shrink

Reply
avatar
Anonymous
admin
January 20, 2016 at 9:11 AM ×

CAble falling because of CA (current account) not Carney
That's Macro!

Reply
avatar
Skyguy
admin
January 20, 2016 at 9:11 AM ×

Well, I'm really just looking for an opportunity to hedge without walking into a "faceripper". As has been said here before, things usually don't move in a straight line forever (testing that theory now), and shorts gotta cover.

For the record, attempting to find a decent omni-hedge for "an eclectic bunch of yieldy stuff" ain't easy.

Thanks for the feedback Europeans and night-owls,

Skyguy

Reply
avatar
Anonymous
admin
January 20, 2016 at 9:17 AM ×

re bruce 4:09
bruce, in terms of getting shorts on on lower levels the problems i haves faced are the V shaped rips of the last few years. i have been trading the short side (US) but the V shaped pops left a scar hence the reluctance to add at lower levels.
while remain short spoos i am adding to a few longs in europe( banking crisis and all that notwithstanding)
for now its lower lows and lower highs but as nico mentioned there are a lot of trading opportunities for the nimble and shot time frame punters.
one observation : to get a traceable bottom need some sort of gap down caputulation and recovery. so far the tape has had more gap ups which is easy pickings for a intraday sell.
europe new lows for the indices...but new lows haven't expanded...a few positive divergences for what its worth

Reply
avatar
January 20, 2016 at 10:11 AM ×

Cheapest hedge on euro banking crisis maybe put on Euribor6m...6bps negative???ahhah really stupid now

Reply
avatar
Leftback
admin
January 20, 2016 at 10:23 AM ×

This might be the gap down day everyone has been talking about. Europe very ugly.

Reply
avatar
Anonymous
admin
January 20, 2016 at 10:25 AM ×

Equities and oil melting down (these markets just can't can't catch a bid). BOJ starting to worry... Rumors on the grape-vine that a couple of banks are in serious trouble. BIS warned that we face a debt crisis more serious than 2007/8. Time to buy gold.

Reply
avatar
Anonymous
admin
January 20, 2016 at 10:26 AM ×

So far this year:
Spanish banks -17%
Italian banks -22%
Portuguese & Greek banks -32%

Lucky the euro crisis is over ;)

Reply
avatar
Nico G
admin
January 20, 2016 at 10:31 AM ×

you had been warned on European banks

there is just no decent acounting left, everyone is cheating o tempora o mores

Reply
avatar
Rossco
admin
January 20, 2016 at 10:31 AM ×

The BoJ meet on the 29th. All their QE work has been undone and their economy is likely bad enough to warrant another bout of lunacy.

Personally I am trying to block out the images of a bottom till then.

As far as spoos are concerned, it's amazing what happens when the buyback bid is taken out due to the earnings window. ....But I digress, the correlation of risk assets to the JPY is too large to ignore and that doesn't yet look to be something worth buying.

I agree w Nico, though not yet positioned for it, that a $ reversal will bring out a quite painful tactical rally in heavily shorted non dollar things...HSCEI looks a stand out candidate

Reply
avatar
January 20, 2016 at 10:33 AM ×

spread BTPS/Bund is working at least now

Reply
avatar
Anonymous
admin
January 20, 2016 at 10:47 AM ×

'Situation worse than 2007': world facing wave of epic debt defaults...

£41bn wiped off FTSE in first 2 hours this morning...

http://www.telegraph.co.uk/finance/financetopics/davos/12108569/World-faces-wave-of-epic-debt-defaults-fears-central-bank-veteran.html

Reply
avatar
Anonymous
admin
January 20, 2016 at 10:49 AM ×

yes, big move today in bund btp.

Reply
avatar
Anonymous
admin
January 20, 2016 at 11:18 AM ×

Nico, in my experience ,re your banks statement above,we are invariably held to be wrong ,quite often for years, before we eventually are found to have been right to be skeptical. Usually the MOM trade never wants to accept it was fundamentally wrong simply because it isn't about objectivity it's about emotion. Albeit the emotion mom trade typically has no shortage of players with no shortage of reasons why what they are doing is rational. Then rational meets drawdown meets margin problem meets fucked.

Reply
avatar
Macro Man
admin
January 20, 2016 at 11:34 AM ×

@ Nice, btw I wasn't referring to you re CAD, more HF guys who sold, are out of court, and have no idea where they are supposed to stop out.

Reply
avatar
Booger
admin
January 20, 2016 at 12:21 PM ×

Finally plonked on a punt short USD.CAD @ 1.465
The oil situation is priced in and from my crude (excuse the pun) reckoning, so is a rate cut. although MM figures indicate to him market pricing is 50/50 for rate cut, mine indicate it is 70/30. I would be surprised to see USD.CAD rallying much further with a 25bp cut. If they announce Canadian QE then that would be a stop out but other outcomes would be ok. If there is no rate cut, there could be a mother of a squeeze for long positions.

I see some good confluences to tilt the odds in the favor of a tradable correction back to 1.42ish if we are lucky, which includes :
1. spec interest high and prone to a squeeze
2. Oil $28, my well rally soon
3. sell the news, 25bp cut likely and that will leave them out of the picture for a while, despite QE talk, unless they announce a concrete plan/commitment or QE schedule which seems unlikely.

Reply
avatar
CV
admin
January 20, 2016 at 12:52 PM ×

The bravery of people here never ceases to amaze me Booger ... ;). Looking toppy for sure, though, godspeed.

Does smell a bit like capitulation in some names, also I am happily surprised to see some of the worst turds of mine actually holding their own.

Maybe some short covering into Draghi's dovish party tomorrow?

Reply
avatar
Bruce in Tennessee
admin
January 20, 2016 at 1:03 PM ×

http://www.bloomberg.com/news/articles/2016-01-19/s-p-500-correction-appears-small-in-context-of-history-chart

"The Standard & Poor’s 500 Index remains more than 5 percent above its 200-week moving average, and has not spent this long continuously above it since the 1990s dot-com era. When that bull run finished, the market fell to 38 percent below the 200-week moving average, while the 2009 crash bottomed out 48 percent below it."

...and yet I've been reading about how this is "at least 50% or more of the time corrections usually take place, so it is time to buy"..(no, not here)..

...What I think you may find is that this is an epic fail...that the ZIRP/QE complex has intruded into private markets now for 7-8 years and this is the private sector (stocks and bonds) shaking off this poor decision. In my opinion what we've done in the US is not radically different from what the Chinese have done, yet all who follow those markets see how difficult the controlled markets are to keep alive.
As far as shorting the markets, well we all approach the markets with different goals. My wife says I'm the luckiest SOB alive, and she's probably right. Sometimes gut instinct just wins the day...

...In summation from my rambling, I do think that YEARS of ZIRP/QE may make this correction one for the record books...The magic of compounding.....!!

Reply
avatar
Anonymous
admin
January 20, 2016 at 1:09 PM ×

Rationalization for falling equities everywhere...it's absurd. All we need to know is that equities were and still are expensive historically, and Fed is raising rates. Oil is coincidental. Chinese speculators going from panic buying to panic selling is coincidental.

Prices are falling because investments were made without taking into account demographics! Low inflation is not caused by any abnormality. It's a perfectly normal way for markets to adjust for populations of 2B+ going to their graves without babies taking their places. Atleast the Germans have a point here: deflation is to be embraced like palliative end-of-life care for the dying.

But...it could all change now: what is relevant this year and next is whether Europe gets 2M or 6M immigrants and how they're dealth with. Everything else is noise in comparison. The dynamic effects could blow out every projection either way. 1 person travels 1000 miles and suddenly is worth 5 to 10 times more to global economy. That is something to think about.

Reply
avatar
January 20, 2016 at 1:40 PM ×

Anon,

The dynamic effects could blow out every projection either way. 1 person travels 1000 miles and suddenly is worth 5 to 10 times more to global economy. That is something to think about.

Reeeallly. Are you blogging from the Arctic Circle then?

Reply
avatar
washedup
admin
January 20, 2016 at 1:40 PM ×

"As far as shorting the markets, well we all approach the markets with different goals. My wife says I'm the luckiest SOB alive, and she's probably right. Sometimes gut instinct just wins the day..."

Great call Bruce - the decision of getting out my shorts at year end to get into the year completely flat has cost me dearly - that said, its mainly opportunity cost. You are right about the bear market, but (with the benefit of the objectivity that comes from a flat posture) I am not sure about the 'one for the record books' part - for one, I wouldn't assume that just because the control asserted by CBs in the last 3 years seems counterproductive and shaky, that they won't attempt to re-assert it in myriad ways once TEOTWAWKI becomes the consensus view - second, the focal point of the crisis this time is commodities, which in the scheme of things is an easy problem to understand, and credit in China, which is impossible to understand but also notoriously easy to sweep under the rug.

Really whats changed in the last 6 months is market sentiment - none of what the market is bearishly reacting to now was not known last year.

Reply
avatar
Bruce in Tennessee
admin
January 20, 2016 at 1:50 PM ×

Washed:

Let me give you an example...as far as the record books is concerned. I read the other day how Abe is about to plunge government pension funds into the stock market. I am sure you did too. OK, if that works out, fine. Old people keep eating. What if it doesn't? What happens to the portion of the Japanese population who are too old to work? The young will have higher and higher taxes and yada, yada. You could see the 3rd largest economy in the world....ummmm...take a giant step rearward...

(The Nikkei was 40,000 in 1990...)

Reply
avatar
Bruce in Tennessee
admin
January 20, 2016 at 1:55 PM ×

Time makes it integral calculus, Washed....the area under the curve....

Reply
avatar
washedup
admin
January 20, 2016 at 1:57 PM ×

Bruce:
Thanks for your thoughts - so, to understand you clearly, you think that because Abe will soon go out and buy a lot of stocks, and since thats morally wrong at many levels and constitutes poor public policy, that therefore stocks will go down?

Reply
avatar
Anonymous
admin
January 20, 2016 at 2:16 PM ×

Finance news today full of f*ckwits demanding more QE from the Fed. Clearly they are losers talking their books - everyone knows that QE is what caused this asset bubble and thus this downturn. Let's hope the Fed raises rates 4-5 times this year and these guys go bust.

Reply
avatar
TBC
admin
January 20, 2016 at 2:17 PM ×

Couple of questions for the board..

1. Short BTP - What sees this trade NOT work, if risk sell off continues... CBs more nimble perhaps?

2. Looking at the historical performance of EURUSD - can anyone remember or enlighten me as to why the pair rallied right up until July '08? Equities had been selling off for months.

For those that are dollar bears and equity bears, can they explain their rationale? Tks

Reply
avatar
washedup
admin
January 20, 2016 at 2:27 PM ×

TBC - the EURUSD rally to july 2008 coincided with the crude rally to 147, which was naturally correlated to a burning desire to own all things EM - equities had been selling off since 2007 led by financials, and money was rotating to commodities and EM.
I personally don't see a dollar bear = equity bear scenario, unless there is a massive selloff in tech and massive rally in energy as the fed stands pat - low probability.

Reply
avatar
Macro Man
admin
January 20, 2016 at 2:30 PM ×

TBC, see this post from 2008 for an easy contemporaneous explanation

Reply
avatar
Bruce in Tennessee
admin
January 20, 2016 at 2:33 PM ×

No, Washed...I don't know where Japanese equities will go, as Lefty very nicely summed up a few days ago, none of us know that...we only hazard guesses...

...What I am thinking is that Abe is taking a massive chance...that as much as the Japanese are doing everything in their power to force their economy higher, that the spending of funds set aside for pensions takes the risk level to another level...follow me here...

If you or I make a doofus move in the stock market, well we get our ass kicked. Hurts for a while. But you are now taking the means of the older population of Japan to live a reasonable older life and risking it in the stock market...

If that fails, these pensions are a fraction of what they would have been...and my example of 40000 Nikkei...well. Could the Nikkei go down by half from the level it is today? Sure it could, and the government is risking the economic foundation of these older people by deciding to raise the stakes.

It is a risk, in my opinion, he should not take. Government monies in pension funds are like life insurance. They are not for gambling...

2 cents.

Reply
avatar
washedup
admin
January 20, 2016 at 2:39 PM ×

Bruce - it only matters so far as the paradigm changes in a way that the yen actually becomes hated and weakens AS equities sell off - clearly that has not yet arrived, the recent moves in JPY being a case in point - in a fiat currency world you are only limited by how much your currency depreciation allows you to get away with - if you are Brazil you have a massive problem - if you are Japan, I would like to see evidence of risk aversion leading to capital outflow, before sharing your conclusion.

Reply
avatar
AL
admin
January 20, 2016 at 2:41 PM ×

Bruce,
I perfectly understand your rationale and common sense, which I share. On the other hand, and specifically on this case, one might argue that given the state of Japanese finances, money could be safer in equities rather than country's accounts in the long term.
But I agree in principles that, with the first pillar, you shouldn't play around too much.

Reply
avatar
TBC
admin
January 20, 2016 at 2:41 PM ×

Thanks washed & MM, some great stuff on the board today.

On the diagram you linked MM, I'm having trouble with the bottom right 'stage' particularly.

I can see how generic dollar weakness could lead to both Oil and EURUSD rallying together

But fail to see how tight policy in Europe leads to higher oil... The link seems too circular.

Either that or surely the higher oil can't lead to inflation as EUR has rallied, negating inflationary consequences

It seems to be an impossible diagram, unless broad USD weakness was the driver ...

Reply
avatar
Canadian saver
admin
January 20, 2016 at 2:56 PM ×

When Carney moved to the U.K.I wrote it here,"You can have him". Just a jawboner.

Reply
avatar
Anonymous
admin
January 20, 2016 at 2:59 PM ×

This equities/oil crash is starting to get v funny...
So QE... how did that work out for you? hahahahaha

Reply
avatar
Eddie
admin
January 20, 2016 at 3:00 PM ×

TBC,

I have been bearish equities for the last 3 years so take my comment with a pinch of salt.

Prices were simply to high in the sense that there was no risk premium and implied growth assumptions were rather high (corporate profits at all time highs relative to GDP... workers will never ever come and demand their share). If you are buy and hope you either find a greater fool to sell into a couple of years down the road or you end up with dismal returns, even after including dividends. If you bought and hold the S&P 500 back in 2000 you know what I mean, similar situation here. Otoh a lot of people have to invest and stay invested. So if enough people realize at some point that they just don't get paid what they expect they head for the exits... or so was my reasoning. Full disclose: I have been bleeding on my shorts far longer than I imagined.

I wouldn't be astonished if we see the much publicised face ripper at some point and make some new interim highs. Still, I think the bull market story ended in August last year.

Reply
avatar
Anonymous
admin
January 20, 2016 at 3:19 PM ×

Market looking very weak here... looks like HFT are running stops to push prices lower...

Reply
avatar
Anonymous
admin
January 20, 2016 at 3:36 PM ×

So are you all ready to flash crash thru the Aug 2015 lows?

Reply
avatar
Macro Man
admin
January 20, 2016 at 3:36 PM ×

Agree Eddie, that is superb from HM

Reply
avatar
washedup
admin
January 20, 2016 at 4:17 PM ×

Eddie thx for that link - helps to put things in perspective.
MM have u run your equity model recently? Intrigued if its more bearish than it was say 3 months ago.

Reply
avatar
TBC
admin
January 20, 2016 at 4:20 PM ×

marks contradicts himself... He extols 'second level thinking' - I.e. Think behaviourally, play the other players etc. - but in this piece indicates the only things that matters are the fundamentals - I.e. buy if price is below instrinsic value ... Not what other people THINK are the fundamentals

Reply
avatar
Anonymous
admin
January 20, 2016 at 4:41 PM ×

@BiT, news story this past week wasn't about GPIF *just* beginning to buy equities - they've done that from the get-go albeit majorly bumped up the target allocation ~18 months ago - this very recent announcement you read was about them starting to managing a bunch of this themselves, internally, rather than outsourcing all management to others for a fee.

Reply
avatar
Anonymous
admin
January 20, 2016 at 4:54 PM ×

With apologies to Rorschach . . .

"Trader carcass in alley this morning, tire tread on burst stomach. This city is afraid of real markets. I have seen its true face. The Street is an extended gutter and the gutter is full of blood and when the drains finally scab over, all the vermin will drown. The accumulated filth of all their lies and maleficence will foam up about their waists and all the whores and politicians will look up and shout "Save us!"... and the Fed will whisper "no."

Reply
avatar
Anonymous
admin
January 20, 2016 at 5:00 PM ×

Unless one thinks we are going into the abyss, keep in mind that when this beating ends it will not let shorts out gracefully.

Reply
avatar
Anonymous
admin
January 20, 2016 at 5:24 PM ×

Incredible how the government of Greece has turned against the people...their banks are in real trouble now and there are no bailouts coming...all promises have been broken

http://www.nationalreview.com/article/429964/greek-lefts-idea-austerity

Reply
avatar
Anonymous
admin
January 20, 2016 at 5:26 PM ×

The Bullard Bounce of OCt 2014 under pressure here.

Reply
avatar
Anonymous
admin
January 20, 2016 at 5:26 PM ×

For my sins I have Spoos in the latter stages of its 4th wave correction currently. 2nd wave correction was 2011's tankfest. 3rd was the rip from then to the spring/summer 2015 highs. Which means higher highs to come, and Jeremy Grantham's ">2250 before the bubble pops" punt seems reasonable, with late Spring '17 fitting the timeframe.

Reply
avatar
Anonymous
admin
January 20, 2016 at 7:02 PM ×

Is this it? The time to buy is now?

Reply
avatar
hipper
admin
January 20, 2016 at 7:31 PM ×

The Howard Mark comment and reference to Ben Graham sound very sensible. The Intelligent Investor is a great book putting situations like these in context IMO. Like he said, the rules regarding securities might change over time, but the rules concerning the market participant never change, that's why it should still be relevant regardless of the time gap when it was written and present.

Lol Anon 4.54, pure art.

Reply
avatar
Anonymous
admin
January 20, 2016 at 8:42 PM ×

That is some bounce off the Bullard low.

Reply
avatar
Eddie
admin
January 20, 2016 at 9:09 PM ×

Wow... I didn't expect to read about the Intelligent Investor here. Now, if someone mentions Security Analysis I will be deeply impressed. :)

Reply
avatar
Skyguy
admin
January 20, 2016 at 10:54 PM ×

Some market observations:

Small caps (IWM) ended up, and small cap growth (IWO) ended up more than 1% (so much for that hedge idea).

REITS (VNQ) got beat down harder (fractionally) than energy (XLE).

I think there is some value buys here amid all this volatility... that I'm ill equipped to find by the open tomorrow.

Here's to hoping some of the pros with the bloomberg terminals can spin straw into gold.

Good luck,

Skyguy

Reply
avatar