Great expectations

The big day is finally here, and while this may not be the biggest payroll number since FOREVAH, it's nevertheless still pretty important.  With the market now pricing something like a 2/3 probability of a December hike from the Fed, there's a fair amount of "gamma" around this figure that move those probabilities a fair amount in either direction.   Given the recent fixed income sell-off and the fact we're closer to 100% than zero, markets are probably a bit more vulnerable to a figure that would argue in favour of no move.

Of course, given the Fed's apparent desire to nudge rates higher, the bar for maintaining rate hike momentum is probably lower than it was a few months ago.   Nevertheless, markets have a funny way of upsetting the apple cart on payroll data, so while your author was gnashing his teeth a bit yesterday to see the eurodollar curve continue to weaken and steepen, he appreciates the importance of sticking to the discipline of a process.

As for the figure itself, his model is, for once, quite upbeat, looking for an above consensus reading of 198k.  Should that figure come to pass with reasonable peripherals, you'd have to think it would take something pretty special to defer a December hike, particularly given the possibility that October's employment figure may suffer some distortions from the hurricane about to lay into Florida and the southeast.


In the comments section yesterday a reader asked what would happen if/when the core PCE deflator reaches 2% y/y.  Barring a meltdown in labour or financial markets, it's a given that the Fed would raise rates some more; the question is by how much.  Being the academics they are, the core of the FOMC would of course do more than simply look at the spot level of inflation.   They'd also consider the forecast outlook and other factors, among them the trajectory of inflation expectations.

Expectations are an important part of academic economists' understanding of inflation dynamics, and the FOMC was famously concerned around mid-year when expectations declined.   In defining "inflation expectations", let's dispense with both TIPS breakevens, which reflect market liquidity dynamics more than legitimate inflation forecasts, and short-run expectations, which in the US are dominated by trends in gasoline prices.   Fortunately, the University of Michigan surveys consumers on their expectations for inflation over the next five years.   You can see the downtick of the last few years that has alarmed the Fed.


As a reminder, the Fisher equality states that Rr = Rn -  i, where

Rr = the real rate

Rn = the nominal rate

i = inflation.

In modern policy circles, this can be reformulated such that

Rr = the natural real rate of interest, which can evolve over time

Rn = the optimal policy rate

i - inflation expectations.

The distinction between orthodoxy and neo-Fisherism is that the latter assumes that the real rate is largely fixed, so that changes in the nominal policy rate impact inflation expectations.  The orthodox crowd believe that that the policy rate must move in response to changes in the real rate to maintain steady inflation expectations.    This is why the shift lower in the latter has been so troublesome for the Fed.

Apparently left unasked is what actually drives inflation expectations?  Obviously, historical inflation plays a large part in shaping the public's expectation of future price shifts.   The chart below illustrates the entire history of the Michigan 5 year expectations series alongside the trailing 5 year headline CPI rate.

As you can see, trailing inflation generally tracks expectations reasonably well, though the experience of the late 70's/early 80's suggests that expectations move more quickly than the trailing data when there is a sharp change in the delta of inflation.  Still, it's notable that expectations have remained fairly steady despite a fairly sharp move lower in long-term inflation averages since the crisis.

For fun, Macro Man decided to build a simple little model based on the Fisher equation to explain the level of inflation expectations.  Note that he regressed levels rather than changes, given that high frequency oscillations in the series are in many cases driven by short term factors such as oil.  The explanatory variables employed were the trailing CPI average in the chart above and the nominal/real T bill yields used in last week's savings rate post.    Note that these were spot rates, not long term averages.  The fit of the model using the entire data set as in-sample is really quite good, with an R-squared of 0.89; the result and summary statistics are laid out below.

What Macro Man found really interesting about this is that the coefficients for the nominal and real yields were virtually identical.  The negative coefficient for the real yield is as the orthodox crew would have it, lower real yields raise inflation expectations, higher yields lower them.   On the other hand, the neo-Fisherians score a point with the positive coefficient of the nominal yield, which says that all being equal a lower rates would reduce expectations.

Of course, as always it is difficult to attribute causality in a simple regression.  Still, the fact that nominal and real yields appear to impact/are impacted by inflation expectations by a similar magnitude is another reason to be skeptical of the apparent fetishization of R* in some policy circles.
For fun, Macro Man ran regressions with smaller sample windows:  1990-2007, and 2000 to the present.    The results are set out below.

 
What's interesting is that the two regressions with the best long-term fit both suggest that inflation expectations should be lower than they are currently.  On the other hand, the model that takes much of its sample from the post-crisis ZIRP period gives almost no weight to interest rates in shaping expectations (how could it?  Rates were stuck near zero for seven years!), which means that it is a very poor fit in prior eras.

Given how low inflation has been since the peak in the summer of '08 and how interest rates were pegged at zero for so long, the question the Fed should have been asking is not "why are inflation expectations falling", but rather "why are they so high?"
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Anonymous
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October 7, 2016 at 9:01 AM ×

http://polemics-pains.blogspot.co.uk/2016/10/gbp-goes-eurchf-whats-going-on.html

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PaddyJoe Macro
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October 7, 2016 at 11:24 AM ×

Hi Macro Man, I read the blog daily but seldom comment. However, I though this might be of interest:

The Irish Connection
Is Ireland the forgotten child in the Brexit Divorce?
As both parties in the Brexit divorce start to harden their positions ahead of negotiations, this may well be posturing for advantage. The UK economy is no doubt enjoying a short-term boost from the immediate effects of a weaker currency on the fortunes of its tourism and other export industries, but the pass-through to inflation has yet to show up on the main measures. When it does, the BoE will face a terrible dilemma – it will have achieved its “goal” (higher inflation, albeit from a weaker currency and a rallying oil price) but the UK bond market will be very vulnerable to a sell off (very difficult to justify any more bond-buying QE as inflation moves higher).
With the Italian reform referendum due on December 4th and quickly morphing in to a plebiscite on Renzi, the EU elite and the Euro itself, political alarm bells should be ringing strongly across the EU capitals.
However, there is an even more toxic – if low-probability – outcome if current trends persist. Ireland is very committed to the EU, as every poll of its citizens consistently demonstrates. But what happens if sterling were to crash to £1.20 per Euro and stay there for a while? The situation for Irish agri-business would be very dire indeed, with many job losses. That will really put pressure on a small, open economy like Ireland that also happens to have an unstable political arrangement currently (a minority government).
Despite much success in redirecting trade away from just the UK over the last few decades. Whilst the UK share of trade has fallen by value, UK trade measured by number of jobs dependent on it is still very high (Agri/Food sectors etc.) – and employment is one of the key drivers of the national political discourse.
So in the event of such a development on the FX markets, what policy options are open to Ireland, helplessly strapped to the mast of the good-ship Euro?
1. Plan A – suck it up and hope for the best. This is what will no doubt happen, just as Official Ireland talked incessantly of a “soft-landing” in 2006/2007 and took no evasive action with the limited toolkit available to it. We will just hope that sterling finds a bottom and rapidly reverses course. Unfortunately, given that sterling is already weakening, even with the UK still in the EU, a protracted 30 month negotiation (six months to Article 50 being triggered and then 24 months wrangling after that) will probably not deliver a rapid rally.

2. Plan B – Ireland has to leave the Euro to get its currency back in line with the reality of trading patterns. This would open the Pandora’s box of a currency leaving the Euro. No doubt, Greece, Portugal, Spain and Italy would all take a good look at using the opportunity to also jump ship. France would face a huge dilemma, as a Euro shorn of all the problem children might start to rapidly increase in value, leaving France dangling from the side of a rapidly rising hot-air balloon. The short-term shock on the banking systems in the leavers would be very ugly – but from a Government debt perspective, it would be rather attractive to now owe a lot of money in a currency that is devaluing.

Certainly, Plan B is an outcome that Brussels would do everything in its power to avoid. The ECB could be bankrupted as the assets it has bought with the Euros it has printed are worth so much less, not to mention the whole mess of imbalances in its internal Target 2 payments system
So the point is this – with so much at stake, causing Ireland to leave the Euro and the subsequent domino effect could be an ace up the sleeve of UK negotiators. Ireland, for political reasons around trying to maintain peace in Northern Ireland, will also be trying hard to get a decent deal for the UK. Could the child of the Brexit divorce mean much better terms for the UK on remaining in the Single Market than most people realise?

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checkmate
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October 7, 2016 at 12:36 PM ×

Plan A ignores the fact that the attention of the market is notoriously short. Don't think for a moment that the specs won't be off chasing the next 'weak spot' just as soon as one shows up. Want a list of possibles just backtrack throught he blog and you won't be short of potential candidates.
Here's how this plays out.
The Uk makes a relative success of it's exit albeit 3 to 5 years down the road it will be pretty much economic zero sum.
Relative success though being the last thing the EU want to see is the first brick in the dominoe chain that tips the anti EU sentiment in a braod range of EU countries perhaps even starting with Italy.
The UK exit doesn't mean the end for the EU ,but an Italian exit on top would.
The death throes is the EU continues as does the Euro (adapted) and it involves what is a relatively small core of Northern European countries where economic and political convergence could actually happen without the chain of destruction we have observed so far.
In conclusion, even when you're right with something like this the length of time it can take to occur and the volatility along the way means you still might not make any money from it.
I'll stick with micro at the moment because macro looks full of 'noise' including mine above.

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checkmate
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October 7, 2016 at 1:08 PM ×

LB,
Might have an entry for a second tranche coming on the USD/CAN$ just need the appropriate EOD close. Think you're ahead of me on adding ,but I'll be along I think.

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Macro Man
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October 7, 2016 at 1:10 PM ×

@ PaddyJoe it would be far easier (and cheaper) for the EU to just throw more subsidies at the Irish agricultural sector than to incentivize the Irish to leave. While Irish concerns will probably play a scant role in the Brexit negotiations (Ireland is, after all, a small country, and the big boys tend to ignore them except when they cause trouble), obviously the EU and EZ have incentives to make sure that the whole thing does not crumble.

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Purple Haz
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October 7, 2016 at 1:54 PM ×

I don't think this NFP number moves the dial for the Fed, so with it out of the way I am slightly surprised the dollar isn't strengthening against JPY and EUR.

BoE in an interesting spot now with inflation surely coming and gilts selling off hard. The logic for the FTSE 100 doing well while GBP depreciates is clear, but I do wonder how long it can stay levitating up here when the rest of the market is pricing in a hard Brexit.

Good blog by Gavin Davies today on the FT re the end of QE infinity. https://www.ft.com/content/f36a1403-cfbc-3db9-a89c-14beef198e5f

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Polemic
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October 7, 2016 at 1:57 PM ×

Purple HAz.. I d argue that the other way around. With NFPs out of the way at the end of a stonking week for the USD and with them coming out on the headline soft side and considering how hyped everyone was getting post ADP for a stonking NFP. I am surprised that teh usd hasn't fallen more.
But it has started vs JPY and I am hoping that caught in a general USD end of week move lower cable may even be dragged higher.

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wcw
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October 7, 2016 at 2:37 PM ×

NFP a bit short of expected, mostly government, but still. Why wouldn't the dollar sell off?

I'm not sure it is true that non-neo-Fisherites believe the policy rate must move to maintain steady inflation expectations. The Fed's 2x mandate doesn't say anything about expectations.

It is absolutely the right question to ask why inflation expectations are so high.

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AB
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October 7, 2016 at 3:19 PM ×

Thanks for addressing the Core PCE / rates question.

Wouldn't we all like to know the relative size of the nominal and real coefficients for a 100bps rate rise?

What does the market do if Core PCE hits 2%? If the Fed continues to hold rates low does the market push the long end higher and risk something like the taper tantrum? If they raise rates faster than currently expected does the curve completely flatten or invert?

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washedup
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October 7, 2016 at 5:08 PM ×

Pol/Nico - don't know your view on GBP/USD, but panic lows usually get retested in any market - so I will wait to buy it at 1.15 sometime in the next few months!

It will be interesting to see how the selloff in gilts impacts govvies around the globe - this may be the first time in my life I have seen correlations through the roof across asset classes with overall volatility this subdued.

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Anonymous
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October 7, 2016 at 6:01 PM ×

wow those survey-answering people sure are dumb. ungrateful too. don't they see all that cb's are doing for them?

one reason inflation expectations may be "so high" is that respondents live in the real world, as opposed to the technically-massaged and selectively omissive one preferred by economists and politicians...

the real world is in stagflation.

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johno
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October 7, 2016 at 7:44 PM ×

@washed, the off-hours selloff in ZAR marked the low and turnaround in that market. But, you could well be right about the GBP.

From where I'm sitting, many commentators here seem wildly optimistic about the UK's prospects. Theresa May's policy direction seems politically expedient in the short-term, but a terrible blunder. #1 she seems to be setting the UK on a course towards hard Brexit (won't settle for Norway/Switzerland-type arrangement). #2 financial services passporting is unlikely in such a scenario and May shows little regard for the City (whether one likes the City or not, it's one of the UK's few golden geese). #3 her rhetoric against shifty foreign elites should be bad for London (the UK's appeal to EM kleptocrats, etc., has been another of its golden geese, whether you like it or not). #4 all your ancillary services to the City and the kleptocrats, your high-paying accounting and lawyering jobs, are threatened. #5 Theresa May's rhetoric and the Conservatives to whom she now panders *revolts* precisely the kind of people you're counting on to create modern non-finance export industries (California is hardly a low-tax, low-regulation jurisdiction, but it is crazy left). #6 how is Scotland (with its oil piece of the balance of payments) going to stay in the union? #7 whether you like it or not, immigration has been a positive for GDP growth, and the prospects for growth drive investment, so you got that going against the UK too now. #8 despite an "austere" government, the budget deficit is running ~4% of GDP!

Hey, the US is a sh1t show too. No argument there! Heck, I expect to lose a significant portion of my wealth from taxes once this entitlement crisis ripens here. But all the bullishness I see for the UK's future seems misplaced. And if shorting the GBP hasn't been one of your top 3 trades this year, you have to question whether you're seeing things clearly.

Now please feel free to tear my arguments apart :)

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Anonymous
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October 7, 2016 at 8:32 PM ×

Time for some more political commentary here:

Did you know that Italy's most popular party is M5S (Beppe Grillo's Five Star Movement)?

M5S is riding a wave of populist anger at entrenched political elites over economic stagnation. Italy has had virtually no productive growth since it joined the eurozone in 1999. M5S blames Italy’s chronic lack of growth on the euro. A large plurality of Italians agrees. M5S has promised to hold a vote to leave the euro.

Meanwhile, the current pro-EU Italian government of Matteo Renzi is holding a referendum on changing the Italian constitution later this year. Voting against it is a way for the average Italian to give the finger to the EU bureaucrats in Brussels. Renzi has promised to resign if it fails.

If the referendum fails, M5S—the anti-euro populist party—will almost certainly come to power… and a pathway to the dissolution of the euro will be opened.

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johno
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October 7, 2016 at 8:57 PM ×

Anon @ 8:32, the last average of polls I saw still had PD ahead. Also, I'd look at the mechanics of forming a government ... I think that may be an issue for 5-Star.

Aside: I take back my "GBP should have been a top-3 trade" claim. Not fair at all. Just seemed that way in the moment, since I largely missed so many other great trades this year, like USDJPY @ 120, CL @ 30, IBOV @ 40K, etc..

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checkmate
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October 7, 2016 at 10:39 PM ×

I know we all like to think we have some special insight into whatever macro issues are facing us. In this case the Brexit. How the UK govt are going respond. How the EU govt are going to respond. We can parse very utterance and perceive the rational behind it. Every bluff and double bluff. Further we can see the significance of every fart from every self interest group involve and we can attach market significance to it.
In truth we know shit . We are nothings in terms of this stuff. We have no special insight. We have no ability to perceive where the future will take us.
I will qualify all the above by simply observing that these issues always create winners and losers, create arb opportunities which always get closed up given time.
Other than that I would say don't fool yourself with misplaced confidence that you know what is going on. It's not likely t make you money and at the end of the day isn't that what we are trying to do?

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Anonymous
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October 7, 2016 at 10:50 PM ×

re: inflation expectations too high

isn't the answer to your question "because cb extraordinary measures are working?"

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hawkeye
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October 7, 2016 at 11:00 PM ×

@checkmate -- that 10:39 piece is gold.

Buon weekend, all.

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johno
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October 8, 2016 at 1:18 AM ×

@checkmate, of course we know nothing and we certainly don't know the future. Despite that, we can trade markets. I've traded GBP from the short, the long, the short, and long side in the last couple months. I don't know and no one does.

I will say that I have a lot of sympathy for the Conservative's positions. In fact, I agree with many of them and perhaps with the spirit of the whole enterprise. It may well be that what they're doing is best for the country in the long run. I do think that these changes will be an upheaval, a highly uncertain transition, and that would seem likely to weigh on GBP given the imbalances.

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checkmate
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October 9, 2016 at 9:54 AM ×

Johno,
I wasn't actually targeting you with my post,but since you responded to it then I suggest you reread your post at 7.44. In that you are trying to do exactly what you claim not to be doing in your post 1.18am. It's an easy trap to fall into, one most of us fall for at some point or other.
I'd remember we all probably have a view on this event and how it's going to go ,but to parse every utterance thinking we can piece that together meaningfully? Seriously ,you might just as well flip a coin to decide why you want to get into a trade or not.
Personally, I use a wide array of inputs when deciding to invest ,but to trade I lean heavily on charts and tend to avoid any idea whatsoever that I have an inside track on understanding something in a way that no one else does.

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Anonymous
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October 9, 2016 at 1:06 PM ×

Roger Bootle explain's in the Telegraph how those voting Remain (against Brexit), & those pessimistic on Brexit, were both disingenuous and wrong.

http://www.telegraph.co.uk/business/2016/10/09/the-uks-economic-interests-are-not-the-same-as-those-of-self-int/

MM might learn a bit here, as his political commentary has proved to be incorrect on most points.

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Macro Man
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October 9, 2016 at 1:40 PM ×

Has Brexit already occurred? Article 50 triggered, treaties negotiated, everything gone swimmingly? If not, then it is premature to render judgement one way or another, though one can of course look at timescales for other treaty negotiations as a template. Yes, the immediate impact has much less than I and others thought. That says relatively little about the longer term implications.

As for "political" commentary being "incorrect", what you mean is that you disagree with it. And while I was wrong about the immediate trajectory of the UK economy, I did present a model before the vote suggesting that cable would trade down to 1.26 should Leave prevail. Did either you or Mr. Bootle provide similar forecasts?

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washedup
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October 9, 2016 at 2:41 PM ×

@anon 1:06 - interesting article - the author seems to be missing a few considerations - I think before the May speech a few days ago, the general belief in markets was that politicians (most notably Mrs May) would wink, nod, and find a way to weasel out in a way that Brexit wouldn't even really happen - the asset markets reflected this. Even now, relative to the most business unfriendly interpretation of her speech, I'd say they are pricing in a very benign outcome, with a first level interpretation of a weaker pound and what that means for equities, for example. I think its early to call a verdict.

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scepticus
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October 9, 2016 at 6:21 PM ×

Democracy isn't easy; When it was first conceived by the Greeks democracy was essentially a defence against tyranny. A canary in the coalmine, so to speak, whose withdrawal is a sure sign to even the least well informed outsider that malign intent is at work.

Democracy isn't a very useful tool for making policy and for running things day to day, we have a technocracy consisting of a civil service, market institutions, central bank, police force, planning agencies etc for that. Voters (or market participants) cannot be expected to be sufficiently expert in these matters to exercise legislative or executive power.

As well as a last defence against despotism a healthy democracy occasionally forces a wholesale re-evaluation of beliefs about the system, fellow citizens and relationships. Uncertain and inconvenient? Certainly. Vulnerable to populism and misinformation, sure - historically these events have offered opportunities for those who would wish to subvert the democratic process. Being forced to listen to the views of fellow citizens and reach some accommodation with them is not a bad thing now and again, especially when one profoundly disagrees with them.

Regardless of the list of economic and political and xenophobic arguments and half-truths that surround this debate the simple fact remains the the European Commission and ECJ are profoundly undemocratic institutions (and the European Parliament simply a democratic fig leaf for the former) that appear to me to have taken the EU down a wrong turn in which these occasional democratic upheavals cannot be countenanced. In the past such developments would rightly have been viewed with extreme suspicion by most forward thinking people at any position on the political spectrum.

I personally am not averse to to living in a well run democratically accountable superstate with free movement, should it prove possible to build such an entity but we are not there yet. Sacrificing our canary in the coal-mine in the name of stability and short run prosperity or even for other potentially noble ideals, is a risky proposition and not a position I would wish to leave the next generation in (who would be most likely to suffer the consequences of such a decision).

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johno
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October 9, 2016 at 6:56 PM ×

@checkmate, when did I say I have a view that one else has? Look, there are different narratives of how the world works. None of us knows which is right. I articulated one narrative, a narrative that wasn't unique, that had been stated elsewhere by people who thought of it before me. I simply thought that not enough people had bought into that narrative.

Now you talk to me about charts? Dude, computers are able to process and trade on price data (which is what charts are) way better than human beings. And there's a zillion dollars out there trading on computer's analysis of data/charts. Where's your edge there? I, on the other hand, am trying to see the market in terms of stories, narratives that may or may not go viral in the minds of human actors in markets. I think I have a better chance of having edge in that game than competing against computers at what they can do best, crunching data. Computers are not so good at telling stories yet.

I mean, seriously, I look at charts, but I am honest with myself that probably 100% of computers trading markets now can analyze that data better than me. But, maybe I can analyze market-moving narrative better than some percentage of humans. At least have a shot there.

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scepticus
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October 9, 2016 at 7:24 PM ×

@Johno, the obvious retort is that its about having the right model rather than about on which substrate that model is executed. Then again, if machines can synthesise and test their own models...

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johno
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October 9, 2016 at 9:16 PM ×

I would assume that machine learning is to the point where computers are generating hypotheses about price data and testing them and trading them. I would be surprised if it wasn't. Really surprised.

Anyway, to each his own method. I know the statistics on my returns and everyone should know the stats on their own (best advice I can give anyone). If you're the kind of person who has sweeping views of things and sticks to them, eventually you blow up. Doesn't mean people shouldn't necessarily try formulating views though. Just have to always be open to being wrong. In my case, I usually am. I only make money low-40's percent of the time, and though I haven't measured it, I'm probably only "right" 30% of the time (I often am "wrong" but realize it and take off my trade while it happens to be in the money). Being extremely open to being wrong I'm able to make a lot more on my winners than my losers and not have sizeable drawdowns. Heck, the reason I post here is because I want people to tell me why my trading views are wrong.

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Anonymous
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October 9, 2016 at 10:40 PM ×

@MM - You're seriously trying to tell me that your view/"model" of cable is correct because a black swan flash crash in low liquidity Asian session moved price near your model's supposed value? Please - get real. You were lucky. Period. I flipped a coin last week & SP500 closed up twice in a week, far superior to your model!

As scepticus mentions above, the European Commission and ECJ are profoundly undemocratic institutions. Thus Britain is right to leave the cesspit that is the EU. If you fail to see that it's not because you understand/misunderstand the problem - you are the problem!

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Unknown
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October 9, 2016 at 11:14 PM ×

@anon 10:40
Ummm, cable hit MM's model target without taking the flash crash into account. Even right now, it's still trading 2 cents below that target.

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Unknown
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October 9, 2016 at 11:15 PM × This comment has been removed by the author.
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Macro Man
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October 9, 2016 at 11:36 PM ×

Frankly, I really do not care what you believe. The model said that in the event of a Brexit vote, cable would reach the mid 1.20's (from mid 1.40's). And so it did....before the flash crash, which I specifically wrote was about liquidity and not Britain's economic future. But perhaps asking for a bit of reading comprehension, or at least civility, is a bridge to far for you?

As for undemocratic institutions, presumably you are up in arms about the hereditary peerage and the first past the post system, which allows a government that got 36% of the popular vote to exercise unchecked power?

As it appears that rudeness is your chosen tongue, I will try to communicate in a way you can understand. Given your abject failure to display the reading comprehension of a half-way clever orangutan above, I suppose that things like "nuance" and "irony" are several steps too far for you.

It is possible to look at a complicated issue like Brexit (even more complicated than Dr. Seuss or Teletubbies!), see competing arguments for both sides that have merit, and ultimately decide that the arguments for one side are more compelling. Someone of equal intelligence and goodwill make make the same assessment and come out on the other side.

If someone is willing to make the argument as to why leaving the EU's undemocratic institutions for the homegrown ones confers more benefits than remaining in the single market and trying to change them from within, that's a conversation I am willing to have. But when the conversation starts with personal attacks or ad hominems, I've had enough of those to know that they don't improve from the first insult onwards. As such, they are going to be deleted so that the adults can converse in peace.

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Anonymous
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October 10, 2016 at 12:34 AM ×

"Britain's economy appears to be losing steam, with major business surveys showing a marked slowdown in the services sector and boardrooms beset by doubt about the future following the country's vote to leave the European Union. While the economy has fared better than most economists expected since June's Brexit vote - largely thanks to upbeat consumers - Monday's surveys will heighten concerns about its longer-term prospects. Key measures of business investment and turnover confidence hit four-year lows in the third quarter, the British Chambers of Commerce (BCC) said in its Quarterly Economic Survey of 7,000 businesses - the largest of its kind. The BCC said its latest survey - which was conducted between Aug. 22 and Sept. 12 - is in line with its forecast that economic growth in 2017 will amount to just 1 percent, half its average rate since the 2008-09 recession."

http://www.reuters.com/article/us-britain-eu-economy-idUSKCN1290ZV?il=0

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