Fire the script-writer!

Kuroda and the rest of the NIRPsters ought to fire their screenwriters, because markets are not playing out according to the script.  Although the Nikkei and USD/JPY are still higher than they were before last Friday's BOJ announcement, the same cannot be said for Japanese banks, which have tumbled further since Macro Man highlighted them on Monday.  It's quite a contrast, really: banks were the star performer after QQE 1, generated middle-of-the-pack gains after QQE2, and are a steaming pile of dog dirt this time around.  Although perhaps not conclusive, it is nevertheless persuasive evidence of how the market views the impact of negative rates.


After QQE versions 1 and 2, USD/JPY rallied forthwith and never came close to touching its pre-announcement levels.  This time around, both the yen and the Nikkei have retraced sharply, and it seems only a matter of time before last Thursday's levels are reached and breached.  Indeed, it's looking increasingly like Kuroda's gambit may have been the opportunity to get short USD/JPY as alluded to last week.

Not that the pain is confined to Japan, of course.  The SX7E plunged to a new low yesterday as markets are coming perilously close to entering "DB deathwatch" mode.  Macro Man has yet to hear any rumours of counterparties failing to take DB's name, though in fairness he is not in the best place to be cognizant of them even if they are there.

In any event, yesterday the SX7E broke 100 for the first time since July 2013, which might be notable if every other banking index weren't also tumbling including that in the US.  If Macro Man has done his sums correctly, something like 10% of the stock of global government debt currently offers a negative yield.  Given the regulatory incentive to hold these securities (which surely outweighs the monetary incentive to sell them), is it any wonder banks are getting crushed, beyond the margin considerations raised yesterday?

Naturally, as is so often the case, the micro-incentives faced by economic actors in the real world fall outside of the models espoused by policy-making theoreticians.   The bitter experience of the last several decades has demonstrated that these externalities usually bear negative consequences.

Although the academic and policy-making tide appears to be firmly in favour of NIRP at the moment, Macro Man cannot help wonder if at some point economists will ask not whether the US can afford to have modestly positive short rates....but whether Europe and the rest of the world can afford not to?


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Anonymous
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February 3, 2016 at 8:23 AM ×

Check out the Japanese life insurers - they are not having a great time either...
Query, does anyone know what is up with Deutsche Bank CDS?

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Gnome of Zurich
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February 3, 2016 at 8:30 AM ×

I am still not sure if the market has just got a 2008-style panic attack with regard to banks. Sell the high beta stocks and all that. Of course NIMs are shrinking, but the multiples of Pre-Provision-Incomes to market cap are now very, very low. Equity ratios are higher and self-financing through deposits is way better. Are Euro-area banks really as bad as in 2012? CDS don't say so. And U.S. banks are better capitalized than ever in the last 30 or 40 years. There was no bank credit bubble in these markets during the last few years, on the contrary.

Banks in other regions with had double digit loan growth, booming balance sheets and housing bubbles on the other hand... I won't touch Canadian, Aussie, Swiss or Scandinavian banks, not to speak of most EM.

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Anonymous
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February 3, 2016 at 8:47 AM ×

Central bank buy programs in operation in most DM equities today. They are defending this and last years lows.

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Anonymous
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February 3, 2016 at 8:52 AM ×

Simultaneous buying in oil and usdjpy - probably a coincidence lol

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Anonymous
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February 3, 2016 at 10:11 AM ×

@BoJ whisperer - get them to buy some European banks...

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Anonymous
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February 3, 2016 at 11:11 AM ×

http://www.marketwatch.com/story/this-man-wants-to-upend-the-world-of-high-frequency-trading-2016-02-02

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algomoron
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February 3, 2016 at 12:21 PM ×

JGB is in the market selling Yen!

Buy programs are coming online!
Sell programs are going offline!
Hold programs are dividing by zero; throwing floating point exceptions

I am now long 500, short 600, and long 100 contracts ES

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Anonymous
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February 3, 2016 at 12:28 PM ×

Hmm time for a cheap nibble here methinks, in the event of a classic fanny bottom materialising.

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Bruce in Tennessee
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February 3, 2016 at 1:34 PM ×

http://www.frbsf.org/economic-research/publications/economic-letter/2004/december/october-6-1979/

According to Lindsey et al., Volcker returned from the annual IMF meetings in Belgrade in early October “with his ears still resonating with strongly stated European recommendations for stern action to stem severe dollar weakness on exchange markets.” Volcker decided to call a special meeting of the FOMC, a meeting that was not publicly announced, to be held on Saturday, October 6.

By the time of the secret October 6 meeting, inflation continued to remain high, the value of dollar had declined significantly, and the monetary aggregates continued their rapid growth...

Associated with a greater focus on monetary control was a significant widening of the range for the federal funds rate. At the meeting in September, a range of 50 basis points, from 11-1/4 to 11-3/4%, was set for the funds rate; at the October meeting, this range was increased to 400 basis points, from 11-1/2 to 15-1/2%....

Lessons

Today, central bankers recognize that maintaining low inflation is their primary responsibility.

...Morning. There are lessons, and there are times when the textbooks have been exchanged..."money aggregates continued their rapid growth"...perhaps Janet will come to the NIRP-side guys...

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Bruce in Tennessee
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February 3, 2016 at 1:49 PM ×

http://www.bloomberg.com/news/articles/2016-02-02/rates-less-than-zero-is-bank-stress-fed-wants-to-test-in-2016

"But in the stress test, banks would have to handle three-month bill rates entering negative territory in the second quarter of 2016, and then falling to negative 0.5 percent and holding there through the first quarter of 2019.

Not a Forecast

"This scenario does not represent a forecast of the Federal Reserve," the central bank said. It also assumes "that the adjustment to negative short-term rates proceeds with no additional financial market disruptions."

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abee crombie
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February 3, 2016 at 1:52 PM ×

Globally, financials are in the dumps, from Canada, Brazil, Singapore etc. And asset managers are feeling more pain than banks, as I guess investors take a beta bet on the markets as gnome pointed out.

However only 27% of S&P 500 stocks are over their 200 day ($SPXA200R on stockcharts.com). The only industrial that I have still holding on my watch list is GE, could be a tell for the market when/if it lets go. Auto group also getting killed, which is weighing on Euro & Japan

There already is a bear market in MANY stocks (>25% of S&P 500 stocks down 20% since 1/1/2014). The question is how much more it will go and what will be the reflexvie response in the real economy. Bc Banks, given the current outlook look cheap in most countries if you assume the same low growth outlook. Of course if you assume a recession, its much different.

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February 3, 2016 at 1:53 PM ×

https://www.ted.com/talks/yanis_varoufakis_capitalism_will_eat_democracy_unless_we_speak_up?language=en

I thought this may be both relevant and appreciated by some here.

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Anonymous
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February 3, 2016 at 2:25 PM ×

This is getting so bizarre now...

Goldman writes: "We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism."

"efficacy of capitalism"????

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Anonymous
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February 3, 2016 at 3:08 PM ×

So which USA bank is blowing up this time ? Money Center banks & the USD in freefall together

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Anonymous
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February 3, 2016 at 3:24 PM ×

http://www.marketwatch.com/story/chemchina-to-buy-syngenta-in-43-billion-deal-2016-02-03

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Anonymous
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February 3, 2016 at 3:25 PM ×

Japanese Stocks Crash 1000 Points, Erase All Kuroda's NIRP Gains

Hahahaha

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abee crombie
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February 3, 2016 at 3:35 PM ×

Regarding the 27% of US stocks that are above their 200 day, most are a classic defensive trade, with staples, leading the way and a few internet freaks that seem to print money (though even APPL shows you that game can only go on so long before the market gets bored)

Are Euro banks going to go back to 2012 lows? Panic in FX sure doesnt help.

I was reading a great book called the Structure of Scientific Revolutions where it talks about how paradigms change, most often with repeated anomalies that cannot be explained by the current paradigm. Kinda makes me wonder if that is what the markets are doing now.

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Anonymous
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February 3, 2016 at 3:45 PM ×

Looks like Central Bank support in S&P 500 futures at 1865

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CV
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February 3, 2016 at 3:52 PM ×

Tinfoil hat on, beans and guns at the ready!

FX markets are telling up yours to the BOJ and ECB, and the Fed is a big joke here ... I really hate the perma bears' Austrian notion that a rinse would be good, and the idea of broken clocks doing victory laps is nauseating (you know who I am talking about). But hey, don't knock until you've tried it right ;)?

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Anonymous
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February 3, 2016 at 3:58 PM ×

So equities crash on bank probs, poor us data and falling USD. Fine. Crude data also bad. Just as the crash becomes severe, oil mysteriously catches a bid, USDJPY runs around, EUR falls and equities catch a bid.

Which fuckw*t thinks central banks are not behind this?

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Macro Man
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February 3, 2016 at 3:59 PM ×

Ermmm...anyone with a triple digit IQ that's seen an intraday short covering before?

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Anonymous
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February 3, 2016 at 4:00 PM ×

Multiple posters on finance twitter reporting central bank buying in oil.

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Anonymous
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February 3, 2016 at 4:01 PM ×

MM - you really think this 200 point rip in Oil on terrible EIA data is just "short-covering"? You astound me...

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CV
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February 3, 2016 at 4:04 PM ×

Ha ha, this is top notch discussion right here. Didn't we address the "direct central bank buying" meme earlier?

Central banks are not buying oil, nor are they buying U.S. equity futures. But, stories matter, and the way I read the FX (EUR and JPY) reaction today is that the Carry Monkies are still mightily unconvinced that it is safe to go fishing for yield financed by Draghi and Kuroda-san.

The ISM crapper didn't help of course.

There is hope, though. That push below 0.7% on the U.S. two year, is at the lower end of the very volatile trend UP, so maybe, just maybe Mr. Bond is about to get blindsided by Spectre.

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Anonymous
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February 3, 2016 at 4:06 PM ×

Oil ripped 7% in 20 mins. I wouldn't call that a normal 'intraday' movement.

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Macro Man
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February 3, 2016 at 4:07 PM ×

Um...ZH + retweets don't really count as credible sources. We got a bounce last week on terrible data too....and now we're a lot lower. It's almost as if there's a sell the rumor/buy the fact phenomenon going on....unheard of, I tell you! I see comment #3 on this thread claimed CB buying of equities at earlier (and higher) levels...how's that little theory working out?

Do SWFs participate in equity and commodity markets? Yes, though I would distinguish them from CB mechanistically intervening in these markets (which may occasionally happen on a local rather than global scale.)

What i do know, however, is that given a choice of "CBs behind every rally" and "Cbs behind zero rallies", the truth rounds to the latter, not the former.

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Anonymous
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February 3, 2016 at 4:09 PM ×

CV - I understand that most on this board think central banks don't directly manipulate markets, but then most people thought banks weren't rigging FX etc. And that sub-prime was fine in 2007/8. And that QE would be a short-term, temporary measure etc.

Forgive me if I don't go with the consensus...

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Anonymous
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February 3, 2016 at 4:11 PM ×

Maybe we should use the term "government controlled entities" for: CBs, SWFs etc. None of them are independent. It might make for a more accurate discussion.

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Macro Man
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February 3, 2016 at 4:12 PM ×

We might also want to consider that some of these guys in oil patch regions are almost certainly selling equities as they are forced to cough up some of their assets to plug funding holes...

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Macro Man
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February 3, 2016 at 4:14 PM × This comment has been removed by the author.
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negative volatility
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February 3, 2016 at 4:17 PM ×

might be time for a separate comments section dedicated solely to tin foil hat theories. just a suggestion MM...

growth really getting taken to the woodshed. some of these healthcare/biotech names are starting to look cheap (mylan, gild, celg, amgn) if you assume the next president isn't going to murder the healthcare industry. of course, i think that's a big assumption to make so staying away for now.

its funny that the crude/spoo correlation finally broke, but prob not how most had hoped. of course, i'm being naive looking at a 1 day sample size. the real issue is that there is a correlation skew and so i expect this to revert. at 30 dollar oil there is massive distress abroad and at 100 dollar oil a 3% drop in crude doesn't have nearly the same implications.

so after the above contradictory statements i guess i don't have a ton of insight. I continue to like owning spx fixed strike vol (which believe it or not was down on the year as of monday). while I believe US financials are probably undervalued here, there remains contagion risk from europe (and it will come bc there has been no decent solution put forward to the italian banking crisis thus far-mario asleep at the switch here). my switch to risk on will come once financials stop tanking relative to spx. i do think fin equity action in the US has been misguided, and that is evident when you notice that IG fins have tightened vs the broader index to the tightest levels since 2004. meanwhile the equities are getting reamed as though a recession is lingering (beyond the beat down the compression in NIMs and lower ROEs brings imo). can't fight the tape though.

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CV
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February 3, 2016 at 4:18 PM ×

"Forgive me if I don't go with the consensus..."

Fair enough, I could be wrong. I just think the way markets play off narratives TIED to central bank policy is a much better way to think about markets, than assigning individual moves to actions by central banks.

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Anonymous
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February 3, 2016 at 4:24 PM ×

I understand the reluctance to ascribe market moves to CBs. Obviously we cannot know the reason for every move. But Oil ripping 7% in 20 mins (on bad data) and the Dow dropping 300 points from US session open only to recover 200 points as oil rips looks a little suspicious - especially when current FX moves are causing angst to the BOJ/ECB. Anyway will leave it there.

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Anonymous
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February 3, 2016 at 4:42 PM ×

If you look at a daily chart of US equities you will see that every dip is being bought. Equities will not be allowed to fall through the Jan lows.

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algomoron
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February 3, 2016 at 5:52 PM ×

Central banks are so predictable! They always make me lose money

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Anonymous
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February 3, 2016 at 5:57 PM ×

To the Oil/BoJ central bank whisperer:

"Oil Merchant ‏@EnergyRosen 1h1 hour ago

Refiners continue to cover their exposure on gasoline they must produce to meet obligations.

Selling RB Crack Spreads puts a bid in CL."

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Macro Man
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February 3, 2016 at 6:24 PM ×

Maybe CBs got bored of oil and equities and decided to defend the BOJ breakout level in USDJPY.....or b)

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washedup
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February 3, 2016 at 6:31 PM ×

spoos are slipping - clearly CB's need to visit the loo like everyone else - also, I heard someone screaming 'whatever it takes' from the last stall - assume the gentleman was referring to credit and not gastric distress.

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Anonymous
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February 3, 2016 at 6:55 PM ×

@anon 5:57 - Did everyone sell crack spreads simultaneously at 10:35? Maybe they sold their entire inventory to produce the 7% spike in CL? And maybe they also had a side-bet in USDJPY driving it down 300 pips?

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Anonymous
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February 3, 2016 at 6:59 PM ×

MM - Again, do you honestly think today's moves are in anyway normal? Do you really think today's USD move just happened due to a few FX dealers conducting normal intraday flow? I'm shocked...

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Macro Man
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February 3, 2016 at 7:10 PM ×

I think they are absolutely normal for a market that is frightened out of its wits and unwilling to provide any kind of liquidity, and it doesn't really require some bogus conspiracy theory about the Financial Illuminati to describe intraday price action when the market has a crisis mentality. here's a free history lesson: go look up what USD/JPY did on Valentine's Day 1994, 2 weeks after the first Fed tightening of that cycle and before HFT algos and the theory of central bank omnipresence were a twinkle in a bunker-dwelling conspiracist's eye.

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washedup
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February 3, 2016 at 7:19 PM ×

anon 6:59 (aka agent mulder) - i have just one question - if CB's are trying to so hard to buy equities and send them up, WTF aren't they succeeding?

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Anonymous
admin
February 3, 2016 at 7:29 PM ×

Never seen $DXY drop this much without any specific news or macro data ( let alone so few discussing )

oops, here it is:

"Dollar Plunges Most in 7 Years on Rate Hike Bets As Services Data Spark Economy Concerns" - Bberg

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Anonymous
admin
February 3, 2016 at 7:34 PM ×

MM/Washed:

This is NOT normal intraday price-action. Sorry...
USD has worst day in 7 YEARS.
Oil up 7% in 20 mins! (On bad data).
Dow now up 125 points last 5 minutes (and climbing)...

This is EXACTLY what the Fed want.
Lower USD = good for US earnings = SPX supported.
Oil up = SPX up (life support for energy sector).
Throw in some SPX algo ramps into the close and we'll see half of Jan's fall re-traced in Feb.

- Yours, Agent Mulder.

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Anonymous
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February 3, 2016 at 7:38 PM ×

Dow down -300 now up +200 - led by... yes you guessed it: BANKS and OIL. The two strongholds of the US economy. Normal price action, nothing to see here.

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Macro Man
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February 3, 2016 at 7:40 PM ×

Oh, so now the Fed is selling USD? Mulder, this price action is exactly normal "for a market that is frightened out of its wits and unwilling to provide any kind of liquidity", which, in case you don't understand, doesn't come around every day.

CBs buy equities when they go up? Funny, the empirical evidence is that equities are down on days the BOJ buys, and ancillary evidence is that SWFs are sellers in substantially bigger size.

I hate to pull this card out, but are like 22 years old? I have been trading FX for a long time, and trust me- in the good old days, there were plenty of episodes like this.

Sorry, Mulder...better retire again before your show gets cancelled.

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Macro Man
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February 3, 2016 at 7:43 PM ×

Congrats, anon: you've noticed that markets are more volatile in a higher volatility environment! I hate to break it to you, but on the time scales you seem to care about (which I, frankly, do not) you are capturing 98% noise and 2% signal.

Might I respectfully suggest that if you really believe this stuff and want to talk about it with like-minded others, you take it over to the dittoheads at ZH?

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Anonymous
admin
February 3, 2016 at 8:02 PM ×

MM, answering your points:
- "Frightened" = risk off = buy USD no? (Buy Yen also, but def buy USD). So the opposite of this.
- Low liquidity has been a recent problem in all asset classes recently, not sure it kicked in specifically 5 mins after the EIA release.
- Yes, CBs (or similar) appear to step in and bid equities when there is excessive panic selling (Aug 2015 & recently are good examples).
- Today's volatility is not noise. Expressing it so is not honest, sorry.
- Yes, I'm interested in low time-frames because (as several of your posters have noted) long-term trades in this current environment are difficult & good macro traders focus on accurate entries (see Druckenmiller).

In brief, the vast majority of market participants have agreed for some time now that we live in a CB-controlled world. To ignore this and believe their only actions are those they voice publicly seems naive. However, we're going nowhere with this so happy to take the hint & depart your 'hallowed halls'.

Agent Mulder out.

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Polemic
admin
February 3, 2016 at 8:11 PM ×

Dislocated blow off.
Attack on banks
CDS levels being quoted
People reading 2008 and 2011 play books.
PMI being taken as confirmation of recession .. errrr.
Dudley sounding conciliator towards mats
tech getting hit
some unicorns deserve to die but all of this to me is the market having its boil lanced.

I m buying
http://polemics-pains.blogspot.co.uk/2016/02/attack-on-leverage-clears-air.html

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Leftback
admin
February 3, 2016 at 8:16 PM ×

I wish we could stop the squabbles about CB participation and the PPT. Can we stop it, at least for a while please... ? Also if we are going to reprise that spooky show ("The Truth is Out There"), then I'd prefer the strawberry blonde agent please.

Not really loving this market at the moment, so we are taking stock from the safety of the hammock, as we see a possible correlation breakdown today and some signs of FX regime change. Can we go back to the Old School macro please? You know, something mindless like lower USD, higher EM and EZ equities? We like that one and it's easy to trade.

I have made public fun here of the Hikers and Hawks Club, in defending my Lower for Longer outlook (and the outlook for slow US growth that is shared by many F/I enthusiasts). Here, Dana Lyons has a go at the Rising Rates crowd and has some fun with it too.

Groundhog Day Again For Rising Rates

We are feeling there might be a bit more weakness in Spoos ahead after the ISM services data, and we don't want to get too brave with our appendages or anyone else's at the moment.

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Anonymous
admin
February 3, 2016 at 8:38 PM ×

This "market" (well, all "markets" at this point) is a sick joke.

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Anonymous
admin
February 3, 2016 at 8:48 PM ×

If M1-M2 $VIX hold backwards tomorrow it will be 1 month since inversion. That would outlast August/September scare

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Anonymous
admin
February 3, 2016 at 8:56 PM ×

Back to Basics? Earning s Watch...

244 companies (66.0% of the S&P 500’s market cap) have reported. Earnings are beating by 4.9% while revenues have surprised by 0.3%.
Expectations are for a decline in revenue, earnings, and EPS of -3.2%, -4.9%, and -3.1% (-2.3% last Friday). EPS is on pace for -1.4% (-0.1%), assuming the current 4.9% beat rate for the remainder of the season. This would be +4.6% (+6.2%) excluding Energy.
http://www.bearnobull.com/

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Anonymous
admin
February 3, 2016 at 9:06 PM ×

Chart: EM currencies rally across the board; table shows USD down against all these currencies

https://twitter.com/SoberLook/status/694984129482485760

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Anonymous
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February 3, 2016 at 9:53 PM ×




Leftback said...I have made public fun here of the Hikers and Hawks Club, in defending my Lower for Longer outlook


Then why did you leave fixed income?

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Nico G
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February 3, 2016 at 10:41 PM ×

brrr i am waking up to a lot of forum bickering and bad mojo

this is what the market does to you folks, stop all your trade attempts before the lift takes off with no-one on board

if you wanted a higher low followed by a significant reversal intraday on equities while crude still outperforms you had it today (Europe came 1% of January low before reversing, spoos fared better)

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Swiftie
admin
February 3, 2016 at 11:30 PM ×

Nico, what time zone are you in...

I don't think the vix curve has ever held its current shape (spot < m1 > m2 > m3) for this long before. Someone correct me if I am wrong. This kind of vix shape is usually the best possible sign of, well, a monster vix drop / steepen. But it's so rarely this extreme - inverted out to June, and June is above spot(!) - and it shouldn't take this long. I am getting a bit frantic about it.

Does anyone else remember a time when PPT conspiracy theorists were short, not long? Wasn't that a thing... when did that change?

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Rossco
admin
February 3, 2016 at 11:41 PM ×

The stress among delta punters is palpable on here.

The CB shenanigans seem to have gotten to the point where they are achieving the opposite of their supposed mandates. The more divergent and extreme their sound bites the more they guarantee a bid in fx vol. We know what that does to other risk assets

The fed seems to have adopted the stfu policy of late. Perhaps they get it.

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Nico G
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February 3, 2016 at 11:52 PM ×

Swiftie

middle of the Pacific so work 8pm to 2am on normal days

and 8pm to 5am on days like this one..

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rp
admin
February 4, 2016 at 12:05 AM ×

I don't get why the CB buying thing has come up again.

So how long have they supposedly been doing this?
and on whose books have they been holding it because I see no official record (obvs ex Japan).
If it's so obvious why don't you file an FOI or ask your MP to ask the Treasury to deny it.


(fwiw I don't want answers to any of the above because they will be bollox)

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Corey
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February 4, 2016 at 12:32 AM ×

Negative rates are coming to the US. Given how much confidence they've inspired in Japan, the toolbox is looking rather empty at the moment. X date on that put is getting v near. Shudders to think what Janet looks like naked. Vol looks high, but far from expensive.

Apologies, that must be the fear talking.

reCaptcha - Im afraid I may be a robot soon.

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Corey
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February 4, 2016 at 1:53 AM ×

Expecting markets to be caught again w their pants down on stronger than now expected jobs data (due to under recognized seasonal and temporary factors of course). Pol you have either gone loco or have v big balls. Not sure which.

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abee crombie
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February 4, 2016 at 1:55 AM ×

Nico I am with you, today was a nice move. But we need to see some follow through. And cyclical sectors start to outperform. Ie banks, ;). They don't inspire much confidence. And with fx going nutty ppl and machines stop playing. A lot of ppl on he sideline which is a good and bad thing.

Algos rallied today as oil reversed. But that's short term algo, they don't give a crap about longer term. If it's real money ideally you'd want to see follow through, imo...

Apollo Leon black is buying back shares as they see their stock as too cheap. Say what you will about buybacks, and ppl talking their own book but PE has some high return thresholds. If they think their public market stock is a good investment it tells you they think it's probably damn cheap..though they could be mortal like all of us and make mistakes. You be the judge. But they wouldn't be doing it if they thought the market was expensive. There is lots of value out there, imo, but the problem is that markets are still going down. Not a good combination unless you really know what you are doing.

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abee crombie
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February 4, 2016 at 3:59 AM ×

nico I'll give you some credit for pointing it out... upon further review we do have a nice set up for a rally, at least technically and more than likely positional/sentiment

But it seems like we are all day traders now. Watching what oil will do or BoJ or something. The long term trend is very unclear, IMO

For the day traders MM was blasting, I feel your pain. What you guys need to understand is that the more micro time scale you go, there are different rules that apply, especially when longer term players are in the market in size. Either way, the more micro you go you need to realize that correlations break exactly when there are big moves (likely aided by them). Kinda like Einstein's theory of relativity for larger space objects vs quantum mechanics. Dont assume you can apply all the rules to each situation bc they are different. Hope that helps


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Leftback
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February 4, 2016 at 4:11 AM ×

Anon, we left fixed income too early b/c we made a mistake. It happens...

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Nico G
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February 4, 2016 at 5:25 AM ×

well abee,

the only thing you need to do if investing long term is to wait for capitulations, followed by a lot of noise and confirmed by a higher low (amid stupid forecast of more pain to come from idiots cf. Roubini and his 400 Spoos call as market bottomed under 700) . I believe we had one on oil. Done.

Banks might be getting dirt cheap too but banks are not normal companies, they can report pretty much what they want. There is no sound accounting in investment banks, just 'trust' from shareholders that they won't take stupid risks and fail to manage their risk (again).

In Europe banks have been in a severe bear market since 2007. Precisely, since April 2007 top when that dumb rumor of top French bank buying number two bank pushed SocGen price to 143. It went down to 17 less than 2 years later in 2009. That is 88% down. This is all what people should remember. You even had a lower low of 15 in 2012, they never recovered like US banks.

People need to understand how disfigured their trading accounts get when they participate in a late bubble. Banks were in a bubble worse than internet few seem to remember. Banks seem noble companies to invest in, but by 2005 you were investing in dens of cocaine-crazed gamblers. Whether this has changed remains to be proved seeing NO regulation effort have been made since 2009 and cocaine still gets you a long way in Manhattan.

Anyway personally i scalp and swing to keep every week eventful. There is a lot of money to be made as a day trader, even if it is not as glorious as making a macro call, buy a winner and sit on your ass for months. What are those hedgies paid for anyway? they should be paid well for defending difficult investment, but what is their 'added value' when they are just riding winners. Their 20% performance fee is the most abusive diktat in the history of capitalism.

In contrast day trading may feel like going to the factory every day. No glory and a bit repetitive but in that timeframe you have to eliminate all noise and trade the price. I had a long conversation with the wife today, pondering if one swing trade of 100 points was better than 10 scalps of 10, pondering what engagement/reward one should expect from trading short timeframes. There used to be a fascinating caracter in the blogging community called ragnar who once said that until you really know your timeframe the path to the poor house is damm short. Haven't heard of the guy since 2009 perhaps some of you have.

There is no real pain on broad DM equity markets as of now. Nothing violent like 2008 which makes it so difficult to envisage a lasting bounce, since repricing of 6 years of bull market should require a correction steeper than 10%, right?

The only long term play, something that has puked enough is crude and (it's correlated anyway) pretty much every currency in a sound nation that lost north of 30% against the dollar last year. I closed January with a ridiculous amount of CAD and NOK and JPY. I might be sunburnt crazy but having spent many months in those 3 countries i fail to see why they should be traded as trash. Those currency moves look like a formidable 'capitulation' to me caused by sophisticated market technicals and decoupling from the reality of fondamentals. Those are brilliant nations, with a 40% discount.

Ah did we mention day trading is a bloody solitary love affair with one's screen. Perhaps Pol is right and i should start a therapeutical blog.

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Whammer
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February 4, 2016 at 5:35 AM ×

@Anon, you could do a lot worse than pay attention to what Leftback says about fixed income. He might just be a random anonymous guy on the Internets, but he knows his stuff, based on my observations over the last 8 years or so... Not always right, but on average more right than wrong. Hard to complain, especially given his fee schedule....

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Anonymous
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February 4, 2016 at 7:40 AM ×

"For the day traders MM was blasting, I feel your pain" - thanks abee, all good points.

"There is a lot of money to be made as a day trader, even if it is not as glorious as making a macro call" - fully agree Nico.

I don't see any longer-term macro people making money at the moment, maybe that explains MM's angst. Either way, equities are higher following Asia as the day trader yesterday was indicating.

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Selvejo Kajt
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February 6, 2016 at 3:25 AM ×

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