A visit from Donald Trump

It's that time of year again, and as a comeback special Macro Man is pleased to unveil this year's holiday poem:

'Twas the night before Christmas and the house was a dump;
"Let's leave," said the wife, "to escape Donald Trump."
The boxes were strewn through the house without care
In hopes that the moving guys soon would be there.
The children were nestled all snug in their beds
While visions of Ireland danced in their heads;
For Mamma had sold our place in the UK
In a big fit of pique on post-Brexit vote day.
When from the TV there arose such a clatter,
I sprang from the bed to see what was the matter.
Away to the living room I ran in my socks;
As I grabbed the remote I gazed up at the box.
The screen was as bright as a brilliant full moon
And I squinted, and stumbled, and started to swoon,
When what should appear but the leering visage
Of a smug politician- it was Nigel Farage!
And next to him, orange in the face like a prawn
I knew in a moment it must be The Don.
His hair danced like a kite in the stiff New York breeze
As he cleared his throat and read obituaries.
"Bye Bowie!  Bye Rickman! Bye Cohen and Glenn Frey!
"Bye Ali! Bye Prince! We can all hear the doves cry!"
Then he turned to his mate and said "Any from you?"
And Farage brayed out, "Bye-bye to the EU!"
As I dry-heaved and flipped on to my trading screen
To see stocks in free-fall gave me a pallid sheen.
But then up to the top-right of the chart they flew
While The Don took the credit he knew was his due.
Because, in a twinkling, the story it changed
And sellers turned buyers like madmen deranged.
'Cause for years Congress said that the deficit sucks
But now they and The Don will spend a trillion bucks?!?
I studied old Trump as he grinned on the channel
With his camel-hair coat and his scarf made of flannel.
A bundle of promises issued, forsooth;
Did they matter at all in this time of post-truth?
His eyes- how they glittered!  Trump Tower- how shiny!
His face, powdered orange and his hands were quite tiny!
He was jowly despite his claims to great health
And I pictured him shirtless in spite of myself;
A wink of his eye and a nod of his head
Suggested that liberals might have something to dread.
He started to speak and went straight to his work;
And I thought "the Chinese will think this guy's a jerk."
And laying his finger aside of his nose,
And giving a nod, up the dollar it rose!
So too, bond yields, as longs started sellin'
And I thought "there's no way he'll re-appoint Yellen."
But I heard him exclaim as he walked though a gate
"Happy holidays all, and let's make macro great!"

Happy hols everyone, and best of luck in 2017.

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27 comments

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The Wave
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December 23, 2016 at 2:16 PM ×

Quite excellent! Looking forward to following you on Bloomberg!

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Anonymous
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December 23, 2016 at 2:21 PM ×

maybe the best one ever

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Leftback
admin
December 23, 2016 at 4:38 PM ×

I see that you have been busy.... nice one, squire!

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Cheesehedge
admin
December 23, 2016 at 8:45 PM ×

Macro Man, as a long time fan from the days of "I do not want your CDO" and "Sherlock Holmes and the Case of the Missing Bid", I have to say that this is among your best literary parodies yet. Your writing is so fine, and wit so keen, that I am thrilled that Bloomberg will be giving you the platform and audience that your work deserves. Yet it also says something about the sorry state of our industry that an incandescent talent such as yours is not continuously engaged in managing money. But ability always wins out- I am confident you have a "yuuuge" career ahead as a media personality. You are light years more interesting than anyone currently employed in the financial press, or by the banks for that matter. I wish you the greatest success in your new endeavor, and wish you and the Macro Family a Merry Christmas and much prosperity in 2017.

Warmest regards,

Will Slaughter (@MilwaukeeBonds)

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IPA
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December 23, 2016 at 9:33 PM ×

Picture perfect cup and handle has developed on Nat Gas monthly chart (less the long tail on Nov candle). One dollar distance above the neckline would take the price to $4.50-ish area (stupendous target). This could be a very rewarding trade from risk reward perspective depending on where you place the stop.

Words of caution... Nat Gas is not for the fainthearted. Know that you are trading a very volatile commodity affected by many variables. Before you bet your entire account on this trade, take a note of the following inputs: full dependence on the weather forecast (unpredictable as it may be and greatly affecting demand) during winter, current contango structure, storage reports (bullish lately), and dare I mention Trump who is looking to roll back Obama's coal emission rules (would be somewhat negative for nat gas). So, a lot to watch for...

Not feeling comfortable with the contract size and margin? You can play it via mini futures (less liquid though), UNG (highly skewed by contract rolls though), and my favorite - CHK. Options on CHK are going to give you most bang for your buck. I'd like to buy a pullback on CHK to $6-ish area (bottom of the uptrend channel), especially should the overall market pull back in January (selfish wish). A breakout above $8.20 takes it to $9-10 area (top of the uptrend channel). I personally think it can go much higher than that, but can't get too bullish here because of my overall bearish short-term view of the market.

Good luck!

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Anonymous
admin
December 23, 2016 at 10:20 PM ×

Freaking briliiant!

Style, wit, substance, (parody)....all going to BBerg!

Bummer.

Pardon me while I sedate myself...

Really fun writing (always has been) - thanks, and many (truly) best wishes to all the Macros and community here.

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IPA
admin
December 24, 2016 at 2:17 AM ×

JohnL,

Great point, totally agree. I would love to buy the pullback, whatever triggers it. This being said, there is a model that is now predicting Arctic cold air coming down from Alaska after the New Year. With high draws we'll burn through the stocks. The pullback may be shallow or non-existent.

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CV
admin
December 24, 2016 at 9:44 AM ×

Bravo! Have a great Christmas MM!

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washedup
admin
December 24, 2016 at 2:05 PM ×

@cheesehedge - nice to find you here after many years - a good email to send u a pvt msg?

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Nico G
admin
December 25, 2016 at 5:24 AM ×

http://www.wsj.com/articles/some-honesty-at-last-about-americas-debt-1482098077?mod=djcm_fb3plus_12916

merry Christmas

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IPA
admin
December 25, 2016 at 4:30 PM ×

I dunno Nico G... The lack of substance in so many Trump policy assumptions precludes me from embracing the "greatness" of our next leader (at least at this moment). I appreciate his will and desire to undertake the task of eradicating the DC establishment's status quo on the budget deficit issues. But when I read his proposed tax plan, the details of it (whatever are available), the implications, and the unintended consequences, I understand why so many traders rushed to push the sell button on bonds with all their limbs. That being said, I think that the first phase may be almost over and I am looking to buy treasuries for a sling shot snap-back trade, and here is why. I started thinking as the traders are still pushing the equities and the treasuries around on the notion that the next Reagan was just elected... How does one expect the DC establishment to agree with the outsider (who will, by the way, propose to limit their term) on all of his ambitious plans, especially knowing that a majority of their constituents (he lost the popular vote) did not vote for him? Also, we are not in recession or stagnation, unemployment is at decades low (less participation rate worries), and our stock market is at all-time highs. Any self-respected macro trader should read the link below and extrapolate his own conclusions on the issue of national debt and how it may affect the acceptance of Trump's proposed tax cuts by the fiscal conservatives in congress. When you read the analysis you quickly understand that the devil is in the details, and this does not even take into account the proposed infrastructure plan. We are going to be on a perpetual DC government watch next year, and that's like watching a paint dry. Meanwhile, the reversion to mean trade may occur. I'll be shorting stocks and buying bonds as the eventual disappointment and the apathy among the market players starts to settle in. Here is the link:

http://www.taxpolicycenter.org/sites/default/files/publication/128726/2000560-an-analysis-of-donald-trumps-tax-plan.pdf

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Anonymous
admin
December 26, 2016 at 7:06 PM ×

Federal Reserve Flow of Funds account from the early 1950s to 1999: $1.70 of debt in the non-financial sectors generated $1.00 of GDP.
From 2000 to 2015, it took $3.30 of new debt to generate $1.00 of GDP.
In the last 4 quarters, from 3Q2015 to 3Q2016, there was an increase of 2.6 trillion of debt which increased GDP by about $500 billion dollars. In other words, it took $5.00 of new debt to generate $1,00 of GDP.



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Anonymous
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December 27, 2016 at 5:03 PM ×

Worth reading Odey's recent letter, where he explains that the era of the Central Banker with ZIRP and high asset prices is over:
http://www.zerohedge.com/news/2016-12-23/his-latest-letter-odey-refuses-throw-towel

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checkmate
admin
December 28, 2016 at 12:24 PM ×

If like Odey you can lose 48% in a year I'd just not say or write anything at all and hope no one notices you are badly out of step.

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Leftback
admin
December 28, 2016 at 1:26 PM ×

If Odey was a football manager he'd be gone quicker than Bob Bradley, whose tenure and style at Swansea was oddly similar to that of the parody American manager Ted Lasso*, who had a brief period in charge of "The Hotspur". Life imitating Art.

*Watch it if you haven't seen it. It's funny.

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Leftback
admin
December 28, 2016 at 1:36 PM ×

The New York Times story on Bob Bradley's sacking has the headline: Bob Bradley out in England, neglecting to notice that Swansea is in Wales. ("How many countries are in this country?" "Four".)

OK, LB will get back to commenting on rates after this week's auctions conclude.

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Macro Man
admin
December 28, 2016 at 2:39 PM ×

Any team that loses 4-1 to this year's West Ham side really does need to sack the manager post haste.

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checkmate
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December 28, 2016 at 4:24 PM ×

Maybe we should start a new thread devoted to Odey jokes.

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Anonymous
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December 28, 2016 at 4:29 PM ×

MM ... any chance for an update on your Equity Model?

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Nico G
admin
December 28, 2016 at 9:18 PM ×

Grandpa equity model:

'selling all your longs by December 28th' is starting to sound smart

as expected we could have a repeat of January 2016... we already have a repeat of post-Christmas 2015 weakness

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Anonymous
admin
December 28, 2016 at 9:32 PM ×

I'm buying the dip in equities. We'll be back to all time highs by Dec 29, Dow 20k by Dec 30.

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koolbong
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December 29, 2016 at 3:56 AM ×

MM... do you have the details on how we can find you on Bloomberg..?

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Nico G
admin
December 29, 2016 at 9:19 AM ×

anon 9:32

do you have any idea how much speculation Fed or worse, BOJ have encouraged in equities? just watch Toshiba and see how easy it is for margin speculators to all unwind at the same time.

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IPA
admin
December 29, 2016 at 12:33 PM ×

Nico G... Let me give you another one - NVDA. Juicy outside reversal on daily (engulfing candle). Disclosure: I am short SMH via put spreads.

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Nico G
admin
December 29, 2016 at 6:49 PM ×

if i were trading single stocks Nvidia would be the first short of choice... we're talking 1999/2000 movement here

and its stupid name means 'envy' in English

well done IPA

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IPA
admin
December 30, 2016 at 12:25 AM ×

Nico G,

I am actually using it as a proxy for shorting SMH. It represents a large enough chunk of the ETF and definitely is going off the charts (pun totally intended). The momentum is scraping the ceiling on all time frames, price suffocated above the bollinger band, and it is so overextended in a parabolic fashion uptrend that even a pullback of 30% from here would still keep it in a bullish pattern. I would not feel comfortable shorting the stock itself, but in a basket it gives me a cushion in case I am wrong.

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