Party like its 1999 - A Late cycle resurgence

In the financial markets, participants are always looking for analogies or historical examples to glean information from. Technical analysts look for chart patterns, value investors prefer a process and often talk of "checklists" and algorithmic traders follow a set of rules most often optimized or at least tested on historical data. Practice makes perfect in most areas of life and participating in financial markets is no different. However sometimes the inexperience of youth can be a blessing, as there are no "bold and old" traders on Wall Street and many Nobel Prize winners did their best work when they were young. So always remember there are lots of ways to skin a cat in this business. Moving on.

Wednesday's ISM headline number missed expectations coming in at 55 vs 56 expected but still increased from December. If you are going to focus on one economic statistic, I think ISM is probably it. Even though its released from a non government agency, it has data going back to 1948, is widely used in many quantitative models and most importantly gives an up to date reading of "supply management professionals", those managers highly attuned to the current business cycle. You can find more information regarding the release along with some interesting anecdotal comments directly from the ISM website.


WHAT RESPONDENTS ARE SAYING …


  • “Demand very steady to start the year.” (Chemical Products)
  • “January revenue target slightly lower following a big December shipment month.” (Computer & Electronic Products)
  • “Strong start to the new year. Production is increasing and we are adding capacity.” (Plastics & Rubber Products)
  • “Business looks stronger moving into the first quarter of 2017.” (Primary Metals)
  • “Economic outlook remains stable and no current effects of geopolitical changes appear to be penetrating market conditions.” (Food, Beverage & Tobacco Products)
  • “Sales bookings are exceeding expectations. We are starting to see supply shortages in hot rolled steel due to the curtailment of imports.” (Machinery)
  • “Year starting on pace with Q4 2016.” (Transportation Equipment)
  • “Business conditions are good, demand is generally increasing.” (Miscellaneous Manufacturing)
  • “Conditions and outlook remain positive. Raw material prices are stable resulting in stable margins. Asset utilization remains high.” (Petroleum & Coal Products)
  • “Steady demand from automotive.” (Fabricated Metal Products)


  • The headline index is a composite index which includes various sub indexes on Prices Paid, Inventories, New Orders, Employment, to name a few.  Below is a chart of the New Orders Index, resized so that a reading of 50 is plotted at 0, given that 50 is typically used as the difference between expansion vs contraction for this survey. 



    The circles in red denote recent times where New Orders did a quick dip below 50, only to bounce back hard, outside of a recession. The observation in 1998/1999 coincided with the LTC/Russian Ruble/Asian Tiger disaster, 2012 with the Euro Crisis and last year with the Oil/EM debacle. 

    What is interesting to note is that these observations occurred in what can be characterized as a latter stage of the economic cycle (though 2011 was far less than last year). However given the nature of the ISM survey, which essentially asks managers about their business activity on a month over month basis, the series tends to rebound quickly, peak and then go lower. Its mean reverting by nature as business conditions often don't get better/worse month after month for too long. 

    We can see the ISM New Orders index bottomed in October of 1998, at 48 and then peaked in September/November of 1999 almost a year later at 63. Notably, when the US Equity market peaked in March of 2000, the New Orders index was already down 7 points from the high, at 56.2.

    If we look at the 1998/1999 experience as a guide for today's market that would imply that the December 2015 low of 48.8 has probably made a high ~ 12 months later, at the last two readings of 60.3 & 60.4. While history never repeats exactly, it often rhymes.

    Btw, good times in 1999. I figured even the yougins know Prince's song. I doubt many here remember this ;)

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    February 6, 2017 at 2:06 PM ×

    For info we currently have no length in EU equity indexes and have tightened stops in US equity indexes (a solid breach/end of day close under SPX 2250 will close us out).

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    Ira Pfeifer
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    February 6, 2017 at 4:03 PM ×

    Still got that on vinyl, but speaking as a former warehouse DJ, the Kaycee remix is better.

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    Celeriac1972
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    February 6, 2017 at 4:42 PM ×

    This one: https://youtu.be/Y9_XW7JynU0

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    IPA
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    February 6, 2017 at 5:17 PM ×

    abee,

    China Caixin PMI may have already topped. 52 has been the reversal level.

    https://d3fy651gv2fhd3.cloudfront.net/embed/?s=chinamanpmi&lbl=0&v=201702030240s&d1=19170101&d2=20171231&type=type=line&h=300&w=600

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    abee crombie
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    February 6, 2017 at 6:43 PM ×

    Cheers for the video/links! yeah chinese PMI may have topped but I wonder how much ppl and computers pay attention to it given that there are 2 PMI's (the Caxin and Govt ) and they both seem to be in the dumps for the past several years. Though new orders in China look to be near local tops as well

    http://imgur.com/DD8U0pq

    I'm looking for some divergence between these high frequency stats (PMI + Asian exports/ Chinese commodities) and risk markets, even though as nico pointed out, perhaps the next correction comes without any advanced warning.

    If anyone else is interested in writing a post here, please contact MacroMan. I think this blog is at its best when we have at least 2 posting a week. Cheers

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    MoreLiver
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    February 6, 2017 at 7:51 PM ×

    Damn. Is it really so long after Binary Finary? I suddenly feel old.

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    johno
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    February 6, 2017 at 9:31 PM ×

    Whoa. Henrietta Hindsight was just telling us what a no-brainer long equities was last week, and now she's saying she'll stop herself out if the market falls less than 2% from here? Care to explain that HH? I presume from the swagger of your posts, you've been long equities for most of this bull market, and from very good levels. So I am really curious how 2250 changes what has been such a brillant call, to date.

    Lots to think about today. Biggest question is what might come from the Feb 10-11 summit between Trump and Abe. Does Trump bring up Japanese monetary policy? That alone should be good for a push lower in USDJPY (for which I'm now positioned). How would Abe respond given BoJ independence? On the topic of mis-priced currencies due to monetary machinations, it was interesting to see Schauble agree with Trump and place the blame on the ECB.

    You see the latest poll with Schulz in the lead? Short rates, long EUR on that, I'd think. IMO, Merkel has been a weak leader for the EU and Schulz would be positive for eurozone cohesiveness (ironically, the one area where Merkel really led, on immigration, has been disasterous for EU cohesion).

    Regarding Brexit, I was reading this weekend that Steve Barker sees 27 Tory "rebels in waiting." Given the 16-seat majority, is Brexit really the slam-dunk certainty I thought?

    DXY held up well despite Friday's AHE #s. Especially taking average weekly earnings for non-supervisory workers and the ECI together, I don't know how one argues for accelerating wage inflation right now. Focus on Yellen's HH testimony next week will be a focus, but IMO her importance is fading -- the big question on the US monetary front is not whether it's 2 or 3 hikes this year; it's who Trump is going to appoint to the Fed and what it tells us about the ultimate Chair and Vice-Chair decisions next year. If he appoints a dove, I will hedge all my assets to non-USD FX, in like, 30 seconds.




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    johno
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    February 6, 2017 at 9:58 PM ×

    Just one other observation/question. The point was made elsewhere today that markets are freaking out over France even though polls have 65/35-ish outcomes in the likeliest runoffs. Outcomes, not odds. Meanwhile, the votes that have everyone worked up were ones where polls had differences of a few percent in the outcomes, i.e. 52/48, 53/47. So, what will be the best way to fade this? Maybe premature to ask that question.

    Separately and related, I read Hamon's support has increased markedly. Anyone have a view on the likelihood of Melenchon backing Hamon so that we potentially get a Hamon-Le Pen 2nd round choice? French equities really wouldn't like that ...

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    TraderJim
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    February 6, 2017 at 10:37 PM ×

    GS comments....

    https://www.bloomberg.com/news/articles/2017-02-06/goldman-sachs-says-trump-rally-curbed-as-economy-lags-enthusiasm

    This exuberance is probably peaking, writes Charles Himmelberg, Goldman Sachs Group Inc.’s chief credit strategist, who cites several signs of cooling sentiment

    "For the first time in this expansion, we suspect markets will soon be discovering and digesting a mix of low growth, rising inflation and tighter monetary policy," concludes the strategist.

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    IPA
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    February 7, 2017 at 1:52 AM ×

    No wonder Goldman is getting worried here. Pelosi, Warren, and Waters have united to fight the repeal of Dodd-F*ck. Has anyone expected anything different? It's going to be a protracted mess, to say the least. DJT hates those gals, and I am sure they hate him back. His constant verbal abuse of Schumer can't possibly help things. And let's pencil in at least a handful of senate republicans who don't like DJT and will be eager to stick it to him on any crucial vote (in order to greatly diminish his power). Watch financials here, the most important sector by far. I would not be so quick to expect them to continue rallying on simple "hope".

    http://www.latimes.com/business/la-fi-dodd-frank-demoocrats-20170206-story.html

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    abee crombie
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    February 7, 2017 at 3:16 AM ×

    IPA I think lots of PM's are looking to buy the dip in US financials. They would have to go down a lot before those guys get scared. I suspect rates would need to go lower for that to happen. But agree they should be watched, bc they are also the key to the "value" trade that has propelled the market higher. While growth stocks are leading in 2017 so far, many arent making new highs (yet), save for the $sox geared stocks...which dont stop

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    Rossco
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    February 7, 2017 at 9:29 AM ×

    These markets are like watching paint dry , though in saying that, my shorter term model went short crude today for the first time in a long time. There would seem to be *some* gap risk in that, given the waning momentum and the vol compression. What equities do with a move in oil I am not sure, but the bid tone in the long end likely firms up a bit imo.

    If one believes, as I do, that the inflationary impulse of late has been driven by the lagged 100% odd rally in Crude, then a stumble here would suggest a deflationary impulse rather quickly....given (as previously mentioned) the base effects now falling out of the data.

    The move in OAT's doesn't look particularly risk on to me either but most risk assets seem rather oblivious.

    For those of an fx bent, AUD/JPY, which has been realising stupidly low vol vs it's history as the Asian time zone's fx p and l murderer, is showing every sign of medium term trend exhaustion. With the RBA seemingly out of the picture for a long time, there are worse ways to have an anti-carry bet to play any risk off imo.



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    Nico G
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    February 7, 2017 at 10:51 AM ×

    nothing like field work to sense a nation at work - did interesting findings in Japan those last 3 days and the 5 Japanese i asked, out of 130 million did not trust Abenanigans and consumption is weak. Favourite luxury brand is doing shit. I hope you guys appreciate getting all this subscription-quality insight for free

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    IPA
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    February 7, 2017 at 4:53 PM ×

    We have a divergence on daily US equity charts today - making new price highs on lower momentum high. I am sure not a single dog on the street cares.

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    washedup
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    February 7, 2017 at 5:51 PM ×

    @IPA just today? They've been building for months now. At this rate we will soon have spoos at 2350 with a 20 RSI and 10 MFI!
    Welcome to post Math technical action.
    @Nico I do appreciate it - in as much as Shinjuku station is cleaner than my living room and their kids are well behaved and great at math and science, its never been clear to me why they give a s@#t about nominal growth anyway. Worried about debt? C'mon - that's so 2011.
    In the meantime the land of the free is one minor terror attack away from Mr Trump pulling an Erdogan.

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    johno
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    February 7, 2017 at 6:18 PM ×

    One friend's observation on the French Presidential race: "Hamon is the archetypal guy who would lose to Le Pen." I think Le Pen risk is going to be a huge fade, but a runoff against Hamon is the one node where you'd probably not want to make the bet.

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    IPA
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    February 7, 2017 at 6:24 PM ×

    washedup, I hear you, this is all going to puke at the same time one day though. I'll just follow the transports, retailers, and builders to stay in this trade. They can't lie to me there, keeping a pulse on the beast.

    About our land of the free. I agree with you!! It's beyond unimaginable point of no return here. Scaring the daylights out of me (and Ray Dalio). All those who are saying they just keep on investing and care not to bother with politics are the same folks who will be puking the stuff in integers one day and acting all surprised. The day is near, very near...

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    CV
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    February 7, 2017 at 6:31 PM ×

    Good post Abee, a classic vol seller's market this, right? I mean, until it isn't, but it is heavy work on both sides of the fence at the moment. I think you're fading the rally in cyclicals/financials and buying defensives in equities.

    As for FX, remember that the EZ puke is about bonds not, currency. It is very likely that EURUSD will go UP if we see a real panic, as the money will flow back to the mothership (i.e. Germany). Spreads will blow out, though.

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    abee crombie
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    February 7, 2017 at 6:52 PM ×

    Gold looks to be holding above $1200 and Bitcoin is over $1000 again... finally got a chance to take a little off

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    Leftback
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    February 7, 2017 at 7:16 PM ×

    Nice post, Abee. Thanks for filling the recent void.

    LB is watching the global bond markets as usual, and will report back in detail on Mr Bond's progress after the completion of the week's three Treasury auctions, beginning with todays' offering of US3y and culminating in the long bond auction on Thursday. Note that we refer to global bond markets b/c a review of spreads (FRA-GER, US-GER, HY-IG) is especially timely at the moment.

    MM had a few notes on BBG this morning noting the firm tone in the Treasury market in the absence of news, and regarding the recent divergence between Goldfinger (Killing It) and Bond (Laying Low). OK, we saw that too.

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    washedup
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    February 7, 2017 at 9:57 PM ×

    if this API print (+14 Mm? I honestly used to think 12 was an upper ceiling given pipeline constraints…) is confirmed tomorrow WTI bulls (and dare I say, bond shorts) could be about to be subjected to a ghost pepper wedgie. We will see - oil may then have to rely on Trump waging war against Iran later this year to go to 60+.
    Or not - lets not forget that unlike earlier dumb presidents, he also plans to loot their oil fields and distribute the proceeds to truck owners in the midwest. Blimey, how uncertain all of this is - lets just stay in super safe nasdaq instead.

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    Rossco
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    February 7, 2017 at 11:51 PM ×

    @Nico - I love a good anecdote on a sample size of 3 - keep em coming :}

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    johno
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    February 8, 2017 at 1:12 AM ×

    Just a tidbit on WTI for washed, from GS's analysis of Jan 24 suggests: "On Day 1, our analysis implies the initiation of a 20% border tax could push WTI prices sharply higher, with the maximum impact a $13/bbl increase in WTI oil prices and no change to Brent prices." Thought I'd mention it since I hadn't seen it mentioned as upside risk scenario for crude. I'm not positioned one way or other, besides through -EURNOK (which I took half off late last week).

    I have a feeling that if rates break higher, it'll likely be after the market's fear-of-missing-out has subsided. With positioning being what it is, that'll take quite some time going sideways with negative carry/roll wearing specs out or a nasty shakeout. And then there's the possibility that Trump gets stuck over Obamacare or with budget hawks or whatever and we go back to secular stagnation. Not positioned, but my guess is LB is on the right side of this.

    Looking at BBG's FXFC, I see no bank (not one!) is forecasting USDTWD <31 by year-end, even though spot is right there now. The average/median is at 32.9. Just putting on my geopolitical hat, I'd think Taiwan is going to refrain from intervention to stay on the right side of Trump (they made Treasury's list last year). Why can't this one prove the whole Street wrong? What am I missing?

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    Nico G
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    February 8, 2017 at 7:40 AM ×

    pretty eerie that three weeks after inauguration Trump doesn't have a cabinet - only 5 out of 15 nominees have been confirmed

    Warren got silenced at Sessions' confirmation hearing today (she quoted MLK's wife) - DC much much more volatile than Wall street

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    Rossco
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    February 8, 2017 at 8:58 AM ×

    is it just me or does eurostoxx look like its about to leave a turd in the pool ?

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    Nico G
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    February 8, 2017 at 9:31 AM ×

    it is certainly triangling hard - with such wedge and ES still at the highs... any further weakness will be ugly

    am still camping at 3156 bid

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    Celeriac1972
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    February 8, 2017 at 12:08 PM ×

    Yep. EZ banks also.

    I like the popular equity shorts right now. They stack up technically - I will concede that they have for a while - and now have added dislocation potential courtesy of Trump/Hard Brexit/EZ populism etc. Whilst we can grind sideways for a while my view is that the asymmetry is strong.

    Despite the occasional excitable posts here, no-one who has built a position since (say) mid-Dec has yet experienced any real pain relative to the prospect of even a garden variety correction. Mid-Dec is 3200 on EZ, 2250ish on SPX and 7000 UKX. All to play for imho.

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    Leftback
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    February 8, 2017 at 1:32 PM ×

    Mr Bond is looking perky again this morning.

    The 125 level in TYH7 that MM flagged yesterday as an important inflection point has been left behind, and there is a good chance of stops being run today if the auction of US10y is anywhere between orderly and enthusiastic.

    In addition, should the price of crude continue to crater this week, the main driver of US inflation expectations that is not named Donald will be heading South for the winter and taking 5y5y forwards with it. We have 60 degree weather on the East Coast today (in advance of a snowstorm), and after a mild winter heating oil demand is down, gasoline demand is down, stockpiles of crude and products are at record levels. Bye-bye, oil bulls, bye-bye short-term bump in inflation expectations. As Dame Janet would say, the recent rise in inflation is "transitory".

    We will be back to chart all of this later in the week.

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    IPA
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    February 8, 2017 at 2:49 PM ×

    Never short gasoline during a maintenance season. Looking to go long RBOB @ $1.44
    Hoping for a puke on the upcoming inventory report. We are at a normal seasonal trough on demand here. The same thing every year, just rinse and repeat, keep it simple. Target scaleouts 1.51 1.54 1.57

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    Polemic
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    February 8, 2017 at 2:59 PM ×

    Hey LB, you mean that Big D's Trumpflation will only occur if them 'Mooooslim' countries promise to cut back oil production? I wonder if they reeeeealy have much incentive to cut production now? I suppose if oil does hit $10 bucks then at least those import tariffs will keep things at $60 for the domestic consumer. Thanks Mr T.
    He may fall into the Scottish Trap - thinking that you can go it alone because of decent oil prices only for that dastardly rest of the world to screw it up for you.

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    Polemic
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    February 8, 2017 at 3:03 PM ×

    As for API data - I've lost faith in it's correlation to price over the past 2 years. And if you think fundamentals means price will fall, ask DeBeers for a lesson on price/stored supply economics.

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    johno
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    February 8, 2017 at 3:38 PM ×

    Another one: Thai bhat. 7% current account surplus, cheap, runs a large trade surplus with US, BoT heavily manages it, and not one (not one!) bank is forecasting USDTHB <35 by year end despite spot being 35.01. Along with TWD and KRW, an interesting bet on possible regime shift in Asian central bank intervention as a Trump trade.

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    Leftback
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    February 8, 2017 at 3:46 PM ×

    It is very hard to see crude oil staying above $50/bbl this week in the wake of the recent supply data. Screw fundamentals, say some of you, but let's look at positioning. Everyone and their uncle is long, [and fast money is also leveraged], and yes, they are all losing money this week. Once these positions are closed out, and other participants (momentum traders) start to sell, things will move quickly. No, my friends, unless Tillerson suddenly declares war on the House of Saud, LB believes that we are in for another of those sudden lurches lower in $wtic, as fast money is forced to unwind its bets.

    That in turn should provide impetus for a significant move to lower real (and nominal) rates. Just as everyone is long oil and small caps, everyone is also short bonds, in size and often with leverage. This could end up being a squeeze to remember….

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    IPA
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    February 8, 2017 at 5:57 PM ×

    Heads up! XLF crawling below 50 dsma. KRE already there and weaker now. Is she gonna puke already???!!!

    Leftback, the API last night prepared traders for some shitty EIA. Not a single sole expected fuels to draw. It's all coming undone in one 4hr candle right now. Human weakness...

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    Nico G
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    February 8, 2017 at 7:48 PM ×

    from the Daily Shot

    - US Consumer credit (excluding mortgages) is approaching 20% of the GDP – a record from 4% post WWII and a 12% mark measured in 1962, and revisited in 72, 82 and 92

    a.k.a. House of Cards

    - China’s FX reserves have fallen below $3 trillion

    - It looks like the record net-long spec trade in crude oil is in the process of being unwound.

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    Leftback
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    February 8, 2017 at 8:03 PM ×

    IPA, that's all completely true but one day's leveraged trade of a commodity doesn't make any difference to the medium term direction of crude…. it is going down sooner or later, simply because we are awash in the stuff in the US.

    Untidy auction of US10y today. It is rare to have three strong auctions in the same week, unless there is widespread market panic, so it seems reasonable to assume that today was the weak auction for this batch of issuance.

    What is telling is that after reversing course for half an hour post-auction, the long bond has resumed its steady march towards lower yields. At one point today after breaching the psychological barrier at 3.00%, US30y was at 2.95% before backing up to 2.98%. Since then the long bond has regained momentum and the yield is once again below 2.97%.

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    abee crombie
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    February 8, 2017 at 8:19 PM ×

    Nice call on RBOB IPA... you trade quite a few markets i see. XLE looks to be bottoming to me, but perhaps i am seeing what I want to see.

    yes EU banks looking like a turd, but hard to think they will cause the equity tribe to puke up Spoos unless something really bad happens next week. Going through BNP's release was anything really that surprising? perhaps street just got ahead of itself. Please clarify where I am wrong

    KOPSI sitting near multi week highs. The poster boy the EM 'value' trade.

    Johno, Asia FX is interesting. Seems consensus to be short, yet as you point out market isnt cooperating. but nonetheless I have a hard time wanting to be long TWD/THB/SGD unless you are really bullish on global growth.

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    Leftback
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    February 8, 2017 at 9:30 PM ×

    LB continues to think that everything is a bit of a sideshow at the moment, except for USDJPY and BOND, but we do think that once this the carry unwind gets going that the sideshow will go pear-shaped and this will happen very suddenly.

    Mr Shorty has already experienced a bit of Cold Steel in fixed income and he might wake up one morning to find that he has been Edward the Seconded… not much news, price drifting upwards. We all know how this ends.

    As for the smaller, cacophonous market where punters place ever-increasing value on growth in eyeballs, snake oil, tulips and unicorn parts, the usual pattern over the years has been for volatility to emerge first in FX, and then for yields to fall, often for no immediately apparent reason, before finally the price of tulips and unicorns plummets one day, to the genuine shock of the media and general consternation among participants. We do not recommend catching Falling Unicorns, as unlike Knives, they can easily pierce Kevlar. However, 21 y-o punters may need to learn these lessons first hand.

    Back with some bond charts tomorrow, we hope.

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    February 8, 2017 at 9:56 PM ×

    Tried to post yesterday but it seems to have disappeared.

    Talking of Oil and FX, has anybody used the scandi pairs as an Oil proxy in via options in the past?

    I note a big difference in vols, which looked interesting to me as a lowly Equity option guy.

    March ATM USDSEK was 9.6% yesterday, while the WTI was closer to 29%.
    BBG tells me the beta is in the 25-30% range, so that probably explains the difference; but it still seems to stick out to me as a way to trade Oil and a few other themes quite cheaply.

    I know there has been some pretty professional FX Option knowledge on the forum in the past, so interested to hear any views on the trade.

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    johno
    admin
    February 8, 2017 at 10:04 PM ×

    Giving -USDTRY a go.

    Madness. Yes, quite possibly. The reasons to avoid Turkey or short TRY are many, and well-known. Everything going the wrong way -- terrorism, oil, tourism and the trade balance, loans to banks in the "other investments" of the BoP going negative, inflation, etc..

    Some reasons to give it a go. #1 The CBT has jack up the average funding rate to 10.36%, comparable in real terms to 2014. It may not be orthodox, but does it really matter? (TRY has appreciated since, so thus far the market says it doesn't) #2 5Y bond yields appear to have topped just over 11% as was the case at other turning points in TRY. #3 20-21 day MA has just turned down for the first time since September, so there's some case that momentum has turned. #4 The Turkish stock market is ripping higher. #5 On my model, the currency is very dislocated. #5 Would Erdogan meddle with the central bank (my nightmare scenario) with the still uncertain referendum ahead on April 9? #6 US wage inflation (average weekly earnings and ECI, in particular) and Trump's stimulus agenda going nowhere, so US rates not looking too threatening to EM now. #7 Yen and Euro xccy bases and LIBOR-OIS suggest the feared "dollar shortage" has eased.

    I admit, this one makes me queasy. But maybe that's a good thing?

    Using a fairly tight stop.



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    IPA
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    February 8, 2017 at 10:21 PM ×

    abee, you are giving me way too much credit, I am just a blind squirrel scavenging for nuts.

    On XLE, several observations. Who would have thought that OPEC cuts would result in XLE having a 10% correction? We did :) Interesting enough, this is the deepest decline since the bottom was reached last year. The rest of them were between 7% and 9%. Also, it has traded below 100 dsma only four times and had three consecutive daily closes below 100 dsma only twice since 3/10/16. Today is close number two. All resulted in a strong move above it.
    One thing tells me it may not do that here. There are still gaps below on daily that need to be filled. So I think it may fill the Nov 14th gap @ 69.85 and Nov 4th gap on @ 67.77 - the latter coinciding with the kiss of the middle BB on monthly. 200 dsma @ 70ish may provide a temporary support, as it has not traded below it since 4/18/16. The moving average may be eventually used as a stop scoop, imho. A possible upcoming overall market weakness (selfish wish) may just help XLE, as energy has led on the way down and players may start to buy it back first and hunt for high div yield.

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    Nico G
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    February 8, 2017 at 11:48 PM ×

    Hoisington

    Considering the current public and private debt overhang, tax reductions are not likely to be as successful as the much larger tax cuts were for Presidents Ronald Reagan and George W. Bush. Gross federal debt now stands at 105.5% of GDP, compared with 31.7% and 57.0%, respectively, when the 1981 and 2002 tax laws were implemented. Additionally, tax reductions work slowly, with only 50% of the impact registering within a year and a half after the tax changes are enacted. Thus, while the economy is waiting for increased revenues from faster growth from the tax cuts, surging federal debt is likely to continue to drive U.S. aggregate indebtedness higher, further restraining economic growth.

    The key variable to improve domestic economic conditions is to cut the marginal household (middle income) and corporate income tax rates. Due to the extremely high level of federal debt, if the deleterious impact of higher debt on growth is to be avoided, then these tax cuts must be expenditure-balanced to the fullest extent possible along with reductions in federal spending (which has a negative multiplier).

    Providing tax credits to the private sector to build infrastructure should be more efficient than the current system, but this new system has to first be put into operation and firms with profits must decide to enter this business. Moreover, all the various rights of way, ownership and environmental requirements suggest that any economic growth impact from the infrastructure proposal is well into the future.

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    Nico G
    admin
    February 8, 2017 at 11:49 PM ×

    However, if the household and corporate tax reductions and infrastructure tax credits proposed are not financed by other budget offsets, history suggests they will be met with little or no success. The test case is Japan. In implementing tax cuts and massive infrastructure spending, Japanese government debt exploded from 68.9% of GDP in 1997 to 198.0% in the third quarter of 2016. Over that period nominal GDP in Japan has remained roughly unchanged (Chart 1). Additionally, when Japan began these debt experiments, the global economy was far stronger than it is currently, thus Japan was supported by external conditions to a far greater degree than the U.S. would be in present circumstances.

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    IPA
    admin
    February 9, 2017 at 2:44 AM ×

    Nico G,

    SPX is ready to puke here. I really think that today is 9/6/16 or 9/7/16. I am no PTJ but this feels and looks very similar. 5% decline on cash peak to trough back then. I am looking for more but will take that on my first scaleout.

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    Up_Side Down
    admin
    February 9, 2017 at 3:28 AM ×

    IPA, main difference I see from Sept 16 is that Bond yields then were already trending gently up and jumped sharply higher from 8 Sept. Surely that would have amplified the impact on stocks.

    If we believe LB (which I do), he sees Mr Bond is in the ascendancy now with the Shorts at risk of coming to a sticky end, Equities bringing up the rear.

    If so, your / Nico (and YT here)'s worries about equities has to play out with a different background to Sept.

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    IPA
    admin
    February 9, 2017 at 6:36 AM ×

    I have seen this movie before
    It's time to short equities more
    Big players have expressed their doubts
    They fear the approaching dark clouds.

    First Dalio, then Klarman, now Fink
    Who next will worry, you think?
    Tomorrow we get to find out
    If other players decide to get out.

    When they exit long trade in dismay
    You don't want to stand in their way
    I am here to sound the warning
    This party may be adjourning.

    Good night,
    IPA

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    Rossco
    admin
    February 9, 2017 at 9:13 AM ×

    Some good posts here of late

    I have a model which seeks to predict a rise in equity index vol based upon fx vol, though it only looks at non-USD denominated indices. I started work on it in 2003.

    As much as I hate to say it, it is totally busted and is coincedent at best

    If I put in a 3 - 6 mo lag , maybe that will work.

    The only thing I can come up with as to why something that has worked very well should stop working well is because of passive index investment and dare I say it, especially that undertaken by central banks. Here's looking at you SNB, BoJ and whoever else

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    Celeriac1972
    admin
    February 9, 2017 at 10:41 AM ×

    Whilst the compression of the daily range on SPX appears anomalous and is attracting comment all over, the data I am looking at doesn't necessarily support this. Over the last 5 years the average daily range is 0.96%. Today's 14-day MA is 0.54%. We've seen this level several times previously, including 4 separate incidences during 2014 (January, June, September & November). In other words it is low, but it's not as glaring an anomaly as I had thought.

    I am open the hunt for more data and will share anything of interest.

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    Celeriac1972
    admin
    February 9, 2017 at 10:56 AM ×

    If it's happened before then the obvious question is what has happened subsequently? Goldman conducted a study going back to 1990 to find out what happens to VIX and the market after VIX crosses below 11. The median VIX level is only 11.4 one month after VIX crosses below 11. And 3 months after it’s only 12.1. SPX tends to have positive median returns over the same periods: 0.7% after one month and 2.3% after 3 months. The worst observation showed a loss of only 5.9%.

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    IPA
    admin
    February 9, 2017 at 5:02 PM ×

    Aggressively adding to shorts on this "phenomenal" rally today. I think the euphoria is entering a terminal phase of delirious ecstasy.

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    February 9, 2017 at 5:40 PM ×

    Aggressively adding to shorts on this "phenomenal" rally today.

    LOL

    Please do sell some more... it'll give the ES algo's more stops to take out as we spend the next 6 months pushing higher...

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    johno
    admin
    February 9, 2017 at 5:41 PM ×

    -USDTRY moving the right way, despite USD strength on the Trump "2-3 week" tax announcement remarks. Also worth noting that Erdogan's (usual) idiotic rhetoric on Feb 7 was only good for a one-day setback.

    Put on small basket long in TWD, KRW, THB and will hope for better levels to add. Doesn't feel like a great near-term setup given the move in January and the possibility of border adjustment in Trump's coming announcement, but I think this may well be the Trump trade that works, while everyone is focused on rates, yen, and equities. The relationship with the US is important for these countries for defense/geopolitical reasons, and so I think their persistent and mostly one-sided intervention is going to end to avoid tariffs and acrimony. Arguably CNY isn't as mis-priced, outflows are subsiding somewhat, and China is going to keep things humming (even if that means more debt-fueled growth) until we're past the 19th National Congress later this year, which is supportive for AXJ FX. I do worry that these currencies could backup on a reversal in equity inflows, however.

    Nico @ 11:49PM, the retort to Hoisington's critique of the Japan case is that flat Japanese GDP was an achievement given the epic bubble that deflated over that period.

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    IPA
    admin
    February 9, 2017 at 6:47 PM ×

    INTC :) Massive double top and it's below major daily averages here now, volume is picking up.

    Watch NVDA tonight. Semis may be ready to join transports.

    HH, I am so much better than you think, but we will continue our debate. I don't trade ES.

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    MacroWatcher
    admin
    February 9, 2017 at 7:37 PM ×

    Feel like managing risk is key now ( isn't it always). We are clearly reaching an inflection point and I think it will be economic driven but the way the market is moving one has to be very careful.
    As in the past summer people neglected signs of rising inflation in China and the effect of oil prices on inflation until it was staring them on the face, they are doing the same now but on the opposite side. US is at 4.9% unemployment, small business and all kinds of surveys at very high levels and hourly earnings are still weak. This tells me that the recent pick up in inflation was driven by China and not US-demand driven and as China is in no condition to carry on the inflation push , an ease of inflation expactions is about to arrive( plus the fact that oil base effects are about to disappear). Moroever, I tend to play close attention to the short term cycles of the US CITI surprise index and it is telling me the odds favour a slowdown. LT cycles for ISM also show a downturn is close.Same for Europe but there the situation is even more concerning, the output gap is still so large that I see inflation as no more than a mirage.
    As for trades, slowdown or no slowdown I have no will to short US equity indexes , it feels like I am trying to move a giant brick wall. US 5 years look good though, started to build a position carefully and will increase if it breaks 1.8% with conviction. Bunds also looking good here, more with the incoming risk events in Italy and France. Was short BTP's but covered for a strong gain. Retail is also a favorite mine to go short, besides a dead concept the inventory buildup is scary and doesn't go well with an economic slowdown.

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    thud
    admin
    February 9, 2017 at 7:58 PM ×

    IPA, semis to join transports as in ramping up on Trump's plans to pluck money from trees and rebuild the national airspace system?

    Or joining transports as in a nice technical setup to the downside?

    Still short transports, Mr. Trump's grand plan notwithstanding.

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    IPA
    admin
    February 9, 2017 at 8:11 PM ×

    Technical setup to the downside. I am already short INTC.

    Play semis via SMH. INTC and TSM are going to pull it down, and if NVDA (possible double top) joins tonight we have a big loser in a making. It's been a freight train, so be careful.

    I am also short IYT.

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    Leftback
    admin
    February 9, 2017 at 8:41 PM ×

    LB's post on fixed income has been delayed by the weather but we hope to touch down before the weekend. Interesting juncture for bonds, with the 30y yield sitting more or less right at 3.00%.

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    Jim
    admin
    February 9, 2017 at 9:37 PM ×

    FX, UST and Equity Volatility


    https://twitter.com/Techs_Global/status/829794304981868545

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    johno
    admin
    February 9, 2017 at 9:42 PM ×

    MacroWatcher, thanks for sharing your thoughts. DB making a similar point about China leading the cyclical upswing (a chart of OECD leading indicators of economic blocks illustrating the point by DB made zerohedge today). Still, while the impulse from China may fade, I doubt they're going to ease off the credit-driven growth until later this year. I have sympathy with your surprise cycle turnover view. I wonder whether the disappointments are going to be more in US or Europe. Nice trade in BTPs!

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    johno
    admin
    February 10, 2017 at 1:03 AM ×

    "Trump Aide Says Yen Manipulation Won't Be Priority in Abe Talks"

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    johno
    admin
    February 10, 2017 at 3:39 AM ×

    AUDNZD was written about here from time to time. The past days gave us reasons to go long. Anyone care to articulate reasons NOT to be long? I think I know the reasons to be long already, and they didn't work last time I had a go, though now we have RBNZ talking down its currency versus RBA saying its currency isn't over-valued.

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    Nico G
    admin
    February 10, 2017 at 4:07 AM ×

    so sad to learn Hans Rosling passed away this week he who made statistics so alive and captivating

    check this masterpiece:

    https://www.youtube.com/watch?v=jbkSRLYSojo

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    johno
    admin
    February 10, 2017 at 4:39 AM ×

    I just realized Henrietta Hindsight posted again. I warned you, Henrietta. I'm not going to let this go -- why did you claim a close below 2,250 would have you exit? What's so magic about 2,250? Why does it invalidate this bull market? Ridiculing people for not owning something that you say yourself you'd sell if it fell <2% just makes you look ridiculous. So please, educate.
    And if you're not going to, then make yourself useful by working up a counter-narrative to long AUDNZD, pronto. And go fetch me a coffee, with sugar. Brown sugar. Not white. Brown. Got that?

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    Nico G
    admin
    February 10, 2017 at 5:28 AM ×

    make it two coffees and don't wangle the change like last time

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    Rossco
    admin
    February 10, 2017 at 6:02 AM ×

    @Jono, having just read the SOMP, I get the impression that the RBA is easing back towards a semi comatose state, as it is prone to do after their 2 month summer holiday break and a significant increase in bulk commodity prices. Despite the last GDP print being -0.5% they are non plussed about a return to slightly below trend growth and seem unfazed about the lowest wage growth on record.

    During these periods when the market perceives them to be sidelined, the $A has been a tough short. As an aside, don't forget that this is the Central Bank that H I K E D twice in 2008 into the biggest deflationary bust most people will ever see. So when they are wrong, they tend to be quite wrong.

    Given that US fixed income has a bid, personally, I think it goes higher so I find it tough to argue the counter.

    @HH - make mine a skinny mocaccino de-caf - hold the froth

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    February 10, 2017 at 7:41 AM ×

    johno, nico, Rossco

    ROFL - keep shorting guys ! Nikkei's only up +2.5% in a day !

    I think we all know which of us is gonna be working at starbucks after you guys have been margin called ;)

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    Nico G
    admin
    February 10, 2017 at 9:07 AM ×

    meanwhile in Italy reality finally hits balance sheets

    UniCredit SpA recorded a fourth-quarter loss of 13.6 billion euros ($14.5 billion) after its latest balance-sheet cleanup

    no typo there

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    Nico G
    admin
    February 10, 2017 at 9:16 AM ×

    check two high brains at work, Van Reenen and personal favourite Jeffrey Sachs

    https://www.bloomberg.com/politics/articles/2017-02-08/le-pen-aide-briefed-french-central-banker-on-plan-to-print-money?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social

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    February 10, 2017 at 10:18 AM ×

    First, a commercial:

    I have added a follow-up to my post of two weeks ago.

    Sorry johno, but I am going to take the other side of your trade (and I have actually been long AUDNZD for most of the past year). With the New Zealand economy improving (I would actually agree with those who have described the outlook there for the next two years as "bullet-proof"), and (of course) dairy prices recovering, the near term prospects now appear more favorable to me than those of Australia (which actually looks a bit wobbly now). Also (my opinion), Australia has more exposure to the possibility of a China slowdown (exporting metals there) than New Zealand does (exporting food there). I (as always) remain skeptical of the longevity of "verbal intervention," and have used the recent weakness to my short AUDNZD position.

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    koolbong
    admin
    February 10, 2017 at 10:23 AM ×

    @johno... imho, there is NO reason to be long AUDNZD... I would argue that every reason you would put forward for wanting to be in that trade is basically a reason to be long AUDUSD...

    the only reason you'd pair that with a short NZD trade is RBNZ's desire to a) have a weaker currency and b) look through clearly improving data...
    I wouldn't put too much faith in a)... at the end of the day, the RBNZ has extremely limited options to weaken their currency at will, and the fact that by mandate they can only intervene when they are assured of success does not help their case...
    b).. is also transient... both Antipodean CBs are fairly pragmatic institutions which will not ignore clear data evidence in front of them for too long... if the data keeps improving the RBNZ's tone will change...

    so the key question to ask yourself is are you comfortable with a long AUDUSD position... if yes, then have that... if no, then don't expect the short NZD leg to bail you out when (and if) the 'phenomenal tax plan' comes calling!

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    Rossco
    admin
    February 10, 2017 at 10:31 AM ×

    Henrietta, I thought I said hold the froth baby cakes

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    Nico G
    admin
    February 10, 2017 at 11:01 AM ×

    to see such weakness in Europe with US at all time high feels very much like Autumn 2007

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    MacroWatcher
    admin
    February 10, 2017 at 11:38 AM ×

    @johno I agree with you that they won't stop the credit-driven growth, actually I think that even if they wanted they couldn't. If they try to stop it will all blow up. However, I think that the marginal effect on inflation will be reduced. Their recent action tells me they are being very cautious about further yuan weakness. They were faced with the choice of either letting FX reserves go below 3tln or let yuan cross the 7 level and they chose to hold the yuan. Also, their PPI came from very low/negative numbers and is now at relatively high levels, so any marginal impact of further growth on world inflation is likely to be small I think.
    Regarding whether the economic letdown will be larger in Europe or US, I share your doubts but given the overall weakness of the European economy , odds seem to favor a bigger slowdown there.
    On your Asia FX idea, I've also been looking at it but for now trying to stay away from adding more Trump-related trades, which has been hard given it seems to be the major driver.

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    Eddie
    admin
    February 10, 2017 at 12:55 PM ×

    @Nico:

    Re Italy: the fun part is that Italian banks wrote down their stakes in Atlante (Italian bank rescue fund and wannabe NPL hoover) by 30%. The initial promise in August 2016 was 6% return p.a. on the Atlante investment...

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    Maverick
    admin
    February 10, 2017 at 1:08 PM ×

    @ Rossco
    Re your equity index vol predictor using FX vol - interesting.

    Taking implied SX5E 3m vol vs EURUSD 3m vol, it seems there was a big divergence around mid-Aug 2016 to mid-Dec 2016. Then again since early Feb. Is this what you are referring to?

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    Maverick
    admin
    February 10, 2017 at 1:17 PM ×

    *mid-Nov, not mid-Aug...
    i.e. initially following Trump, until Dec, and then again since early Feb

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    Rossco
    admin
    February 10, 2017 at 1:49 PM ×

    Yes, in part. Also in indices such as AS51 v $AUD and Nikkei v $/JPY vols as well as a few others. These relationships come and go of course, however, there is a robust framework that underpins these models and the underlying fundamental premise (I don't want to go into that here) is quite unarguable. ie. when the relationship holds it's for an observable reason and when it doesn't you're kind of left going "wtf?"

    There were also some highly statistically significant relationships that held between credit spreads and equity sub-indices like banks and autos (lots of debt and volatile equities) When credit markets were actually tradeable and priced according to risk.

    Once CB's socialised those risks those models went straight om the scrap heap too.


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    Rossco
    admin
    February 10, 2017 at 1:55 PM ×

    I get the impression that people don't care too much about the Chinese data ?

    Maybe they've already had their hard landing and are bouncing off the runway

    It's kind of like if a bullshit tree falls in a bogus forest did it ever really happen? If there is some truth to this then it strikes me that things like AUD/GBP and AUD/EUR can keep doing some work on the upside.

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    Eddie
    admin
    February 10, 2017 at 2:53 PM ×

    Quite the contrary. The latest crackdowns around foreign investments and bitcoin let me think that the Chinese get more and more desperate, so it seems the runway gets closer quite fast.

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    abee crombie
    admin
    February 10, 2017 at 2:56 PM ×

    well NVDA didnt dissapoint. the juggernaut continues in SOX. Yes INTC had an uneasy investor day yesterday, AVGO, another HF fav is doing fine. MU doing well too and even the hard disk drives are doing fine. So I am reluctant to call a top in Semi's just yet. But we are getting close.

    Looks like I luckily called a local bottom on XLE. I still think we end higher as the year progresses.

    Meanwhile SXXP, smaller cap EuroStoxx looks to be going for highs. Hard to see much bearish in this market yet. I think we need rates to go higher, which like oil I think might have finished its consolidation and be heading higher

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    IPA
    admin
    February 10, 2017 at 3:33 PM ×

    abee, NVDA double top with ugly daily engulfing. Targets: 107, 99, 95, 87 (ouch).

    XLE, nice trade! I am trail stopped out of my last scaleout which was bound for 68. I still think it is retracing here before a gap fill below. Will not short it here though (r/r too low). I want to buy it between 68 and 70.

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    February 10, 2017 at 3:43 PM ×

    Great to see US equity markets making new ATH's every day.

    Keep selling guys! LOL !!!!!!!!!!!!!!!!!!!!!!!!

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    IPA
    admin
    February 10, 2017 at 4:00 PM ×

    HH, you are interrupting my thought process.

    abee, on MU. I think a pullback to 20 is in order.

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    johno
    admin
    February 10, 2017 at 4:46 PM ×

    I said brown sugar, HH! Not white! Go get me another coffee, with brown sugar this time! Where do they get these interns? Oh, and I haven't forgotten that you'd have sold out of this no-brainer bull market at a close below 2,250. I'm still waiting for an explanation of that.

    MacroWatcher, good points on the Chinese inflation impulse. Re Asia FX as a Trump trade, one could argue that it's the easiest of them. Whereas short rates, for example, hinges on getting infrastructure and tax reform through Congress, which at the least may be delayed (and BAT looks unlikely too), long Asia FX doesn't require anything but the continued possibility of Trump's administration exercising executive power in the realms of security and tariffs. All that's needed is continued accommodation by the Asian/mercantilist central banks. One bank I can envision accumulating reserves is Malaysia's, but maybe that's in the price.

    Koolbong, thanks for your pushback on NZD. Much appreciated!

    Low inflation data in Norway today. Still hanging on to my halved position in -EURNOK thinking the positive economic data and over-heating housing market will keep the NB on hold. I've found that real rate differentials and Brent explain the cross very well, so inflation surprising lower and a NB not reacting to it as actually NOK-positive from that perspective. My model has it at 8.64-ish and still 1.3 SDs mis-priced.

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    February 10, 2017 at 5:02 PM ×

    I said brown sugar, HH! Not white!

    LOL - Is that the best you can do? C'mon, if you're gonna insult me do it properly. These last few jibes were rather like your trades: childishly planned, and poorly executed.

    Go show this report card to your Mom: 4/10 must do better ;)

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    johno
    admin
    February 10, 2017 at 5:44 PM × This comment has been removed by the author.
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    Polemic
    admin
    February 10, 2017 at 5:46 PM ×

    Meanwhile in oil.. remember the API inventory data record records etc..
    Again useless to trade on.

    Price not far off new highs.

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    Polemic
    admin
    February 10, 2017 at 5:46 PM ×

    Meanwhile in oil.. remember the API inventory data record records etc..
    Again useless to trade on.

    Price not far off new highs.

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    johno
    admin
    February 10, 2017 at 6:01 PM ×

    HH: "a solid breach/end of day close under SPX 2250 will close us out" of the greatest no-brainer bull market ever, with no explanation? 0/10.

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    February 10, 2017 at 7:20 PM ×

    johno: Somewhere out there is a tree, tirelessly producing oxygen so you can breathe. I think you owe it an apology.

    PS Don't fret about 2250 on ES, we'll probably never see the market trade under it again in our lifetimes...

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    johno
    admin
    February 10, 2017 at 9:34 PM ×

    Keep laboring, poor tree ;)

    So Tarullo is gone mid-April. In less than a year, Trump will be able to fill 4 of the 7 positions on the Federal Reserve Board. Wow! We could have a sea change in thinking at the Fed. I wonder who are Trump's likely advisers on the appointments, and how are they disposed?

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    washedup
    admin
    February 10, 2017 at 10:21 PM ×

    @johno "I wonder who are Trump's likely advisers on the appointments, and how are they disposed?"

    the answers to your question are 1) Goldman and 2) In a manner conducive to sending their stock price even higher.

    Tarullo clearly was not well liked by the vampire squid. I wouldn't hold my breath for the 'sea change' - if Trump really was that much of a disrupter he wouldn't have high fived the Dow 20Kers. These guys are all the same once they start sucking at the power teat, and frankly Trump is too dumb for wall street not to be able to run circles around anyway.

    The delicious irony would be if someone like John Taylor was appointed and had to restart QE during his tenure!

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    IPA
    admin
    February 11, 2017 at 3:58 AM ×

    washedup, LOL, but his cabinet has the highest IQ under any president. (Gov. Perry alone is worth half the score). Tarullo's resignation is one more risk factor to yet be priced into the fun still to come. I guess it is on the far back burner at the moment.

    On who DJT will appoint and the whole Fed dilemma. Don't hold your breath on him being rational on any of that (surprise). He does not like economists and may not even appoint one to chair the Fed.

    http://www.slate.com/blogs/moneybox/2017/02/10/donald_trump_demotes_the_entire_economics_profession.html

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    abee crombie
    admin
    February 11, 2017 at 5:16 AM ×

    IPA, I don't have an opinion on MU. Just pointing out that many parts of semis are working. Spot dram prices doubled since July but like MUs stock price, still down over lt ... Commodities look to be the market to watch. I think the steam is close to running out on the China base metals trade, with coal likely headed lower and then the rest follow. If so that might be a first drop of caution...then we might see some follow on in industrials. Who knows. HY still doing fine here, CCC outperforming and vol low so not sure things will change so fast.

    Where the dollar goes vs em, is interesting here. Many em looking like this is the make or break spot. Latam strong, no brainier Asia short trade strong, zar, rub, ils all strong. . There are quite a few with the same set up.

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    IPA
    admin
    February 11, 2017 at 6:58 AM ×

    abee, I hear you on the fundamentals and the long term trends, but I am going to go out on a limb and say that semis probably topped today. INTC and NVDA now have firm double tops with very ugly daily candles at those tops, pickup in volume, mini double tops on the short-term time frames as a part of larger time frame double tops, and diverging momentum. To add to this cocktail, NVDA was the best performing SPX stock of 2016. It has a cult-like following. The cult died today. The stock was trading at 29 X 2018 projected earnings and they expected it to blow out the report and guidance. Did not happen. The whole sector is now trading on so much hype that even a small economic slowdown or possible US showdown with China over too much control of semiconductor market (complimentary of Wilber Ross) will send it into a bear market in a short order. I could go on and waste the board's time by breaking down the other components' charts, some further developing underlying weakness, etc, but would rather point out that this is the best performing sector in this bull market, so take note of its possible upcoming weakness as semis and transports are two of the most cyclically sensitive groups (with transports working on their double top already). We rarely have a chance for heads up like this.

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    tester
    admin
    February 12, 2017 at 4:52 PM ×

    @johno What are your thoughts on RUB now and have they changed? I think oil's looking over-extended here but it seems the carry's too much for some to resist.

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    johno
    admin
    February 12, 2017 at 6:10 PM ×

    Hi tester,

    I exited before the CBR meeting. I didn't like how there was no follow-through after the announcement of the new FX regime, leaving USDRUB stuck in that 59-61 consolidation range. I figured if the change was as significant as I thought it might be, it would break through 61 shortly and carry on, but it failed to do that (reminded me of that PLNHUF trade last August, although USDRUB's move was even less convincing). I also don't like hanging around in consolidating markets. With USDRUB now at 58.3, having broken lower despite the news, it wouldn't be my style to be in this. But everyone has their own approach/way to make money ....
    Regarding oil, I'm not convinced either way. OPEC appears to be disciplined so far, and the rise in US product inventories is being ascribed to imports produced during the pre-cut production surge, so is seen as transitory. I'm assuming a BAT wouldn't make it through congress, but there's headline risk if that's included in Trump's announcement in the next few weeks (likely before Feb 28). WTI (not Brent) could be up materially if Trump included BAT in his announcement.

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    IPA
    admin
    February 12, 2017 at 7:10 PM ×

    johno, I wonder how the market can be so ignorant and rally into the "phenomenal" announcement which may include BAT. If BAT is announced what a sell the news event that would be. But, can the market be so stupid and rally all the way up to the actual date? Not to mention, the date of the announcement has not been set and who knows when the leaks of details come out (you know they will). I will sell the spike in gasoline with my eyes closed if BAT is imposed. Oh and sell transports (shameless plug), especially truckers and airlines. Demand destruction and recession to follow shortly.

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    johno
    admin
    February 12, 2017 at 10:00 PM ×

    I don't know whether Trump will include BAT in his tax plan, and I'm not sure oil would rally into that unknown. Just pointing out that it's a possible risk to being short oil.
    My guess is OPEC compliance, the dollar correction, and the strong economic data have all been supportive of oil YTD, and as I mentioned, the product inventory buildup is seen as transitory (a reasonable view).
    Regarding economic data, I thought the point JPM made in its Global Data Watch publication was interesting, namely, that these big Q1 disappointments that have roiled markets the past few years have been mostly revised away over time. Given that, I wonder whether markets won't look through any patch of disappointing data in the next couple months.

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    Polemic
    admin
    February 12, 2017 at 10:11 PM ×

    BAT effect on oil would mostly be a WTI/Brent spread trade wouldn't it? And it doesn't appear to have done much.

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    johno
    admin
    February 13, 2017 at 12:05 AM ×

    Pol, I haven't worked through the implications for myself, but note GS sees a maximum +$13/bbl increase for WTI and no change in Brent on day 1 (assuming the market immediately priced BAT).

    I asked in earlier post about who is going to influence Trump's Fed appointments. Interesting articles on Gary Cohn in the WSJ and NYT this weekend. Excerpts:

    * During that sit-down, on Nov. 29, Mr. Cohn briefed Mr. Trump on what he regarded as the chief hurdle to expanding the economy, according to people who were briefed on the discussion: a stronger dollar, which would undermine efforts to create jobs.

    * Speaking about the Federal Reserve at a conference last fall, Mr. Cohn commented that “we have successfully globalized the world, whether we like that or not.” That leaves monetary policy, he said, trying to solve a “global growth issue…with domestic policy. It’s not going to work.”

    * Meanwhile, conservative economists, who have played prominent roles in previous Republican administrations, are mostly on the outside looking in.

    * Among the ways he is amassing influence is interviewing candidates for a range of White House appointments, including top posts at the Fed and regulatory agencies. [my note: this is our guy to watch]

    * Taking over at the NEC, in a role that didn’t need Senate confirmation, Mr. Cohn quickly staffed the agency with veterans of finance and government [my note: sounds like continuity of mainstream]

    * A person close to Mr. Mnuchin agreed with Mr. Cohn’s assessment, adding that Mr. Mnuchin sees no daylight between the two on policy. [my note: put weight on Mnuchin's hearing statements on the dollar]


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    abee crombie
    admin
    February 13, 2017 at 3:26 AM ×

    why do you assume BAT will be sell the news. Likely oil will be excluded and so will some retail related stuff, IMO. Not sure Trump wants to raise gas prices that much on working americans..... and he wouldnt want to deal with the financial or popular consequences.

    IPA, lets see if you are right on semis. I am more cautious. Still think there might be room left to go. even still I doubt semis losing momentum will change many a bull thesis...hence why I think commodities are the one to watch.. but not oil. Coal, iron ore, copper.. anything heavily china dependent. In the oil markets the only price signal you are getting is what the supply growth is gonna be plus speculative flows. Similar problems with base commodities too but I think slowing China demand can only be disguised for so long which could lead to some interesting domino effects

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    IPA
    admin
    February 13, 2017 at 4:59 AM ×

    Since reporters were not allowed to be present during the golf outing, we are left wondering what's been said by the players. But I think their convo might have gone like this:

    Trump: "Shinzo, stop selling my treasuries, I have a wall to build."
    Abe: "Donald, just stand next to me as I grill little Un."

    https://www.bloomberg.com/news/articles/2017-02-12/america-s-biggest-creditors-dump-treasuries-in-warning-to-trump

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    Nico G
    admin
    February 13, 2017 at 7:16 AM ×

    The latest weekly survey of U.S. advisors by Investors Intelligence showed that the number of bulls rose to 62.7% last week, the highest level since December 2004. Investor Intelligence considers a number above 55% a danger zone, as it is a strong, contrarian warning of a potential market top.

    Bespoke posted a nice chart on Tuesday showing that the S&P 500 has now gone 80 days without a 1% drop; the longest streak since 2006. So make that 83 days as of Friday. This is also the longest the market has gone without a 1% intraday move, since 1970.

    Yellen is speaking Tuesday and Wednesday

    Meanwhile in Europe the IMF is telling FU to Brussels, Germany and Greece. That IMF got so agressive, while Trump called for Greece to leave the euro... can't be a coincidence. Someone (DB) is going to take a horrible hair cut.

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    Al
    admin
    February 13, 2017 at 9:35 AM ×

    Nico G - most sensible comment methinks. Combination of extreme enthusiasm, extreme low vol. and some great new stories being set up provide a heady mix. Not sure when exactly, but it does mean now is not a great entry point.

    By the way, my Mum told me to never short a Bull. God rest her soul - that piece of advice has saved me tons.

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    Nico G
    admin
    February 13, 2017 at 9:44 AM ×

    about the art of shorting check this fascinating read on Cohodes:

    https://www.bloomberg.com/news/features/2017-02-09/the-world-according-to-free-range-short-seller-mark-cohodes

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    Al
    admin
    February 13, 2017 at 10:14 AM ×

    Thanks Nico. Interesting. Although these frauds and malpractices do tend to come to light when things get tough (his biggest successes do seem to tie in with these periods) - Buffett's trunks and all that.

    Of course, the other big issue is sharp short covering rallies as one rabbit after another is pulled out of the hat...including banning shorting itself. And when your face no longer fits, your broker/lender pulling the rug from under you is the worst of all - I felt for him then. Not a method of making a living for the faint hearted.

    Whilst I'm sure people who know far more than me and it is their bag can make money in these times, I find it best to wait for conditions to suit the method. And whilst it may not be a great set up to enter the market long right now, it is a Bull. I'm going to channel Keynes now.

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    Rain
    admin
    February 13, 2017 at 11:01 AM ×

    Regarding oil (WTI), interesting to see back slapping headlines on opec compliance. Spec positioning is still extended to the long side. I think the April contract is a sell above $54.

    Interesting on DJT he appeased Xi with his commitment to the one china policy. Strikes me as more hot air cooling. @washedup, spot on with "These guys are all the same once they start sucking at the power teat"!

    Anyone got FB on their radar? I wondered why they were releasing ad data for an independent audit given its a couple of months since thy first had to reveal they'd provided incorrect metrics. It's an expensive company if they see any slowdown in ad revenue.

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    February 13, 2017 at 3:21 PM ×

    How're your equity shorts looking guys? EU equity indexes up +1% to +1.5% today, US equity indexes again making new ATHs...

    So I wanna request a favor. When you all bail your shorts or get margin called, can you please post here. I guess that will be the top of this bull run (at least for a while). Thx so much.

    Hugs
    H xx

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    IPA
    admin
    February 13, 2017 at 5:48 PM ×

    HH, even my broker doesn't know where my stops are. NVDA, MU, XRT, XHB are some of my major loosing short positions today :)
    You need to stop this silly talk. Giving yourself a pat on the back should be a quiet routine. Traders survive by being humble.

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    johno
    admin
    February 13, 2017 at 6:18 PM ×

    IPA, unless the administrator is going to delete HH's posts, it's just best to ignore her. I had some fun with her, but it's cruel. And it's likely a waste to try helping her. She needs proper help. https://www.psychologytoday.com/blog/your-online-secrets/201409/internet-trolls-are-narcissists-psychopaths-and-sadists supports one's intuition on the matter.

    Nice shorts, by the way. NVDA getting crushed. Not sure I agree with XHB as a short. My guess is long rates are taking a pause (I'm not convinced they'll rally though), the prospect of higher rates may push buyers to step up, and there's little existing housing stock to meet demand. Thought the comparison of new home sales to foot traffic graph I saw somewhere was interesting. Anyway, my views to be taken with a grain of salt as equity sectors not my forte.

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    IPA
    admin
    February 13, 2017 at 6:37 PM ×

    johno, couple of thoughts on XHB. All the answers are in your paragraph above. Avg selling price has been steadily increasing and is now at $360K. It's a pricey ticket for a first time buyer. Low housing inventory tells me existing home sales are too low for new construction to get the seasoned buyers needed to push them to the next level. Meaning, if they don't sell their existing house they live in now they won't buy the newly constructed one. Also, vacant land is so scarce right now that builders are overpaying heftily and it compresses their margins. Rates creeping up will eventually capsize the ship.

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    Nico G
    admin
    February 13, 2017 at 6:54 PM ×

    hang in there IPA

    if there was ever a better case for a reversal Tuesday it would be tomorrow when Yellen speaks - let's wait and hear

    the 10Y yield is not going anywhere, but certainly not going back down my money is on a move through 2.6 soon

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    Rossco
    admin
    February 14, 2017 at 1:26 AM ×

    I have put 220 volts under the sell button on my keyboard. It's getting towards the point though where i think I am going to have to just accept the pain and discomfort and push that sucker !

    I agree with Nico in that we will find out what Yellen is really made of and as such this is a relatively important statement to listen to.

    We know that she is market dependent
    We think that she is politically aligned against Trump
    We know that her influence vis a vis markets has taken a place in the back seat these last few months
    We know that her days are numbered.


    I don't believe that the Fed believes their own data, though in saying that, even by their own highly mobile goalposts they have to be feeling quite comfortable. Given that, I think she goes faux-hawk (that is not a haircut by the way) The bar for a March hike is low, lets face it.

    I think the curve is in a state of paralysis for sometime and I find it very hard to find a decent trade either way.

    Equities are just boring imo. I don't think theres anything to say other than the price is the news. Is a reversal at this 2320 area in spoos significant ? A lot of people seem to think so, personally, I have no idea. I think what would more interesting would be if that were to occur with a sharp drop in VIX followed by a high close. I would note that the Feb VIX future expires on Wednesday so at that point the roll down trade is out of the way.... temporarily.

    Commodities are interesting. Given the starting points from the 2011 onwards bear market , they do seem rather perky given a strongish dollar. Copper has held up a big middle finger to the bears, the Chinese have gone all in on Iron Ore, Wheat is getting up off the mat after a painful bear market and some of the minor metals are well off their lows.

    At least relatively, I think these things peform , even if it is as the market tries to protect itself against stagflation rather than buying them for a cyclical rebound. Iexclude crude from that list


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    johno
    admin
    February 14, 2017 at 3:56 AM ×

    Out a couple hours ago in WSJ: "Under the plan, the commerce secretary would designate the practice of currency manipulation as an unfair subsidy when employed by any country, instead of singling out China, said people briefed on or involved in formulating the policy."

    Pressed my bets on TWD, THB, KRW as soon as I saw it. This may be end of an era, folks. These guys can either stop one-sided intervention or get into trade wars with the country upon which they depend for security. Meanwhile, you've got the 19th National Congress keeping your China risk low for the next months.

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    koolbong
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    February 14, 2017 at 6:19 AM × This comment has been removed by the author.
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    Nico G
    admin
    February 14, 2017 at 6:34 AM ×

    FLynn just resigned - the first 'mini scandal' to hit the new president so expect Trump (and newly appointed Mnuchin) to strike hard tomorrow to divert attention....

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    Celeriac1972
    admin
    February 14, 2017 at 8:01 AM ×

    Removing the tax shield enjoyed by corporations on interest payments will hurt buybacks. Short PKW may be a good place to be if this idea continues to gather momentum.

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    tester
    admin
    February 14, 2017 at 8:06 AM ×

    Thanks @johno for your views. I doubt a BAT will include oil in the first instance given the likely impact on domestic gasoline prices and the refining industry - that's if it even sees daylight. Asia-XJ FX looks a good buy, I agree. With SPX valuations what they are and Trump trying to talk down the dollar, I think the DM-EM rotation will soon commence.

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    IPA
    admin
    February 14, 2017 at 2:50 PM ×

    My new short positions this morning: RY, TD, BMO, FB. All double tops candidates.

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    abee crombie
    admin
    February 14, 2017 at 3:14 PM ×

    funny how this wasnt in the red headline on bloomberg... "As I noted on previous occations". Waiting too long to remove accommodation would be unwise

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    IPA
    admin
    February 14, 2017 at 3:44 PM ×

    Still wanna buy TLT @ 115. GTC order is in.

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    February 14, 2017 at 4:50 PM ×

    Stocks unmoved by Yellen's comments, or rates/USD rise. Equity markets are telling us that if rates rise, equities will keep rising. To put it another way, the market is once again proving me right.

    Summary: the bears here will lose all their money and much more besides. I will grow rich and if you're lucky will spend some of it providing the "trickle down" effect Yellen hopes for. Now, who wishes to clean my dishes?

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    dfdsfiol
    admin
    February 14, 2017 at 5:20 PM ×


    Henrietta Hindsight is awesome! Sounds like a clown back in 2001 and 2007 at the peak. HH, I hope you know how to take profits.

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    johno
    admin
    February 14, 2017 at 6:18 PM ×

    Re USD, 1st off, let's get Yellen out of the way. Market moved up March probability 4% to 34%. The most interesting remark, to me, was the reply to some senator's pointed questions on March, where she said "it" could come in March, May or June. Sounds like she has in mind to raise ONCE in that range of meetings, which doesn't really suggest a much faster pace than expected. EDZ7 is rallying a bit from the lows, seeming to confirm that read.
    More generally, thinking about the USD, I note a few things. #1 the modal outcome priced by markets is 2 hikes this year. #2 in the SEP, the 5th dot which I take to be Yellen is at 2 hikes. #3 average weekly earnings and ECI both don't suggest much/any pickup in wage inflation. #4 the "dollar shortage" as proxied by LIBOR-OIS or xccy basis swaps is not happening. #5 Gary Cohn is interviewing Fed candidates and I read his March 2016 remarks to mean that the Fed should effectively target a stable dollar and not follow some Taylor-like hard-money path. #6 there is "no daylight" between Mnuchin and Cohn views, so you'll have those guys, probably along with Bannon, arguing against the fiscal/monetary hawk types. Two versus one wins. #7 Trump administration is considering a plan where the US Secretary of Commerce can designate FX manipulation as an unfair subsidy, which to me, means the mercantilists will allow their currencies to appreciate versus USD (anyone who thinks otherwise, PLEASE counter-argue this point as I don't care about being right, but having the right trade on). #8 one corollary of #5 would be a Fed on hold/going slow until global growth converged enough for other global rates to rise. #9 if the Fed goes gangbusters with hikes this year, it will surely look political (especially with average weekly earnings not breaking much higher) and jeopardize its independence at a vulnerable time (Trump plus Republican house and senate!).
    For all these reasons I'm running my TRY, KRW, TWD, THB against USD.

    In other news today, Renzi stepped down which means Italian event/election risk is pushed out to the fall, at the earliest, and probably 2018. I would not want to be short EURUSD if Hamon fails to make the 2nd round in France.

    Oh, my guess is while Abe is saying Trump endorsed the monetary arrow or Abenomics, Kuroda is goners next year and his replacement will quickly undo negative rates.


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    johno
    admin
    February 14, 2017 at 8:35 PM ×

    One thing I didn't address above: BAT. Bloomberg running a story citing a "senior Canadian official" following Trudeau's meeting as saying BAT "coming more from" Ryan than Trump/White House. Frankly, BAT seems VERY risky to me and I question whether Trump/Cohn/Mnuchin are going to trust some economists' views that it'll all work out nicely just because it's beautiful on paper. There's also the issue that it may violate WTO rules and generate a fine that wipes out much of the revenue benefit to Treasury. A VAT plus payroll tax reduction accomplishes the same thing and doesn't violate rules, although brings its own issues.

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    Nico G
    admin
    February 14, 2017 at 8:54 PM ×

    current Paris riots pave the way for le Pen's win - who already met French central bank boss to let him know that Banque de France will be required to print money to facilitate EU exit. La merde is getting real

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    IPA
    admin
    February 14, 2017 at 8:58 PM ×

    Donald started this rally, so it's his to kill. This Flynn mess is picking up some steam among the ultra-conservative GOP (never mind dems who are all over it now). Who knew what and when? They are scared as shit of contagion, I bet. You can be a bear or a bull here, but you can't be ignorant. Anyone here traded back during the Nixon days? I was too young... As the noise gets bigger, you gotta watch XLF, and most importantly, GS and JPM. The idea is the cabinet gets completely devoured by defending the presidency and loses the fight on everything else.

    Interesting is that materials (XLB) have not confirmed the new market highs here and have not gotten back to their respective high made on Jan 26th. I smell a double top.

    HH, buy a dishwasher. Preferably US made (make America great again).

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    IPA
    admin
    February 14, 2017 at 9:45 PM ×

    Quick thoughts on the retailers tomorrow. DJT is meeting with the retail big wigs in am. So they bought them today, naturally. I expect the retail sales before the meeting tomorrow to miss the expectations. This opens an opportunity to short right after the meeting is adjourned unless something "phenomenal" is announced. Thinking is they dump them as they walk out, or at any remote mentioning of BAT, and/or simply for the fact that retail sales are not going to get better no matter what DJT does with corp tax and infrastructure plans. I am already short, but should they ramp up into a laminate of upper bollinger band on daily and 50 dsma I will add to it.
    For example, the airlines are now retracing back to closes on their meeting day with DJT. Grounded :)

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    Harry H
    admin
    February 14, 2017 at 10:08 PM ×

    Can't believe how many f*ckwits here are still short equities and bleeding...

    Over the past few years I keep reading how macro is under-performing just about everything - judging from many of the comments here I can see why. Incredible.

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    dfdsfiol
    admin
    February 14, 2017 at 10:57 PM ×

    Market takes the stairs up and elevator down. The twits may be bleeding now but the elevator is coming.

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    Nico G
    admin
    February 14, 2017 at 11:09 PM ×

    Anecdotal evidence suggests that short volatility trades have made their way into the retail world. It seems that mom & pop investors are loading up on XIV – an ETN that shorts near-term VIX futures (just as bigger investors have apparently pulled out). The short vol bets have done well. The fact that it’s a derivative contract that lost over half of its value in 2015 over a couple of days doesn’t seem to bother anyone.

    They're doing it again. Everything is lining up to hurt retail. The young Harrys are actually needed at the end of every bullish cycle, young guys who started traded after last correction and only know up. Considering both time and price, i've changed campaign to 30% correction during Trump's first term. Moving bid down to low 1800s (spoos), buying a house in Hawaii and wishing everybody great luck.

    At this point it does not matter if we hit 2400 or 2500 and should market press up without one healthy correction, you are getting a serious accident down the road. I was originally playing a 'healthy' 5-7% correction around inauguration date, but we've reached full euphoria now and as the old wolves here know the aforementioned elevator will go down almost EMPTY.

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    Rossco
    admin
    February 14, 2017 at 11:56 PM ×

    @nico, I totally agree and that is an interesting tidbit on vol

    to me at least, the relentless drawdown in spot vix and concurrent performance of near month curve trades (rolling down) is even more abnormal that the relentless bid in spoos

    personally, I only think equity indices become interesting post the afore mentioned reversal in vix

    a reversal in higher beta credit indices would be a strong confirmation also. When credit turns, given the terminally damaged market microstructure post Volcker, I really wonder who the f they sell it to ??!!



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    Rossco
    admin
    February 14, 2017 at 11:57 PM ×

    can someone create a new post just to re set the comments thread shorter ? thanks

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    johno
    admin
    February 15, 2017 at 12:11 AM ×

    You may be turn out right, Nico, but I'm not sure I'd take "anecdotal evidence" of retail involvement in one ETF as a sign of classic late stage retail euphoria. Looking at the # of units outstanding of XIV, it doesn't look to be bubbling to me. The same Daily Shot publication where XIV was mentioned showed Yale's "one-year confidence" and "buy on dips" readings, and in both cases, institutions are WAY more bullish than retail. Also mutual fund data doesn't show much enthusiam for equities by retail either. I can certainly see a steady corporate bid and easy money continuing to squeeze stocks higher. That said, when the next recession comes, corporations will be highly indebted from buybacks undertaken and we'll likely have a Fed that won't entertain more of the academics' "innovations," like negative rates or money-printing to buy stocks (Cohn, who's already interviewing Fed candidates, thinks that stuff is "absolutely horrible").

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    koolbong
    admin
    February 15, 2017 at 5:01 AM ×

    #7 Trump administration is considering a plan where the US Secretary of Commerce can designate FX manipulation as an unfair subsidy, which to me, means the mercantilists will allow their currencies to appreciate versus USD (anyone who thinks otherwise, PLEASE counter-argue this point as I don't care about being right, but having the right trade on).

    ...am in a bit of a dilemma around this one... the broad arguments you outline make sense... yes, the current US administration fully understands the necessity of having a weak dollar (else all their other policies get negated)... yes, TWD, KRW, THB are most vulnerable because of the size of their current account surplus/GDP ratios... and yes, they can't resist beyond a point because they ignore the US and pivot to China like a PHP did - too much of history there...

    but the fact remains that none of these countries have a domestic consumption story... so they need the export driven growth... and a stronger currency hurts them... so much as they need to maintain the perception of non-interference, they cannot afford to let specs run away with their TWI... at what point do they say enough is enough... 10.00 on JPYKRW is not an insignificant level...
    also... at some point the phenomenal (or not) tax plan will come through... fiscal plans and probably border tax as well... and market reaction to that will depend on positioning... unless one has 'Nico-levels' of conviction (I don't, for any trade) one will get stopped out...

    so yes, I am fairly convinced the logic works... and the trade works... I am just not fully convinced it works today at 1140/30.60/35.00...

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    Al
    admin
    February 15, 2017 at 11:52 AM ×

    @Nico - you've said a couple of times about "retail involvement" in short volatility. Just looking at the 'mug punters' tool of choice....igindex, their client info suggests only 95% of 11-50 of their punters have a long position in the short vix etf svxy. A further 16% of 51-250 customers are short the long vix etf vixy.

    I suggest this is one of those areas where, if there does get to be a build up of increasing retail involvement, one bad experience will cull the numbers back pretty pronto. Retail is not known for its ability to accept drawdowns.

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    johno
    admin
    February 15, 2017 at 4:29 PM ×

    Anyone have color on how Trump's meeting with retailers is going/went? Body language? Smiles coming out of the meeting? XRT trading up in-line, so nothing untoward there.
    Big reversal in USD today following the CPI, retail sales data.

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    IPA
    admin
    February 15, 2017 at 5:20 PM ×

    Dunno johno, sold my tv to cover a margin call. Just watching the charts. Went red after the meeting adjourned. If retailers can't rally on good retail sales report then there must be a lot of pain for them ahead.

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    johno
    admin
    February 15, 2017 at 8:07 PM ×

    Answering my own question with the words of AZO's CEO, the meeting was "very positive and productive." Not much I could read from his or other CEOs body language, but XRT is +0.75% as I write. Trump also said the tax plan they're working on is "much simpler" and let's recall that he previously described BAT as "too complicated" (though had those comments walked back later). Trump is also under siege, as seen in the Flynn case and now Pudzer. I suppose it's possible BAT is included in the plan being drafted, but not something I'd bet on. In fact, I'm running the least USD exposure currently since 2010.
    One implication of no BAT would be difficulty getting the tax rate down to the 15-20% rate previously mooted. Analysis I've seen suggests base broadening, etc., can only get the rate down to 25%. Given the S&P's effective tax rate is around there, are taxes really much of a catalyst to stocks? We'll find out. While I'm not short the market here (in fact, my FX exposures make me net long that factor), I'd think it's just better to do merger arbitrage at this point in the cycle than be long. Buy Mead Johnson and go to the beach?




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    abee crombie
    admin
    February 15, 2017 at 8:45 PM ×

    Lots of ppl asking me lately about financials. Why aren't we recommending them, should I buy them etc. I expected this last push up and will look to start selling out of a big part of my long term financials position soon. They are just getting expensive. Not time to abandon ship just yet, but me thinks you should be scaling out. Buy low, sell high.

    Johno, yes MA is heating up, some decent spreads too. LNKD last year was a layup but not many ppl wanted to play it. MJN looks interesting too.

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    IPA
    admin
    February 15, 2017 at 8:59 PM ×

    Oh I remember the words "positive" and "productive" coming out of the DTJ's (then pres elect) meeting with tech co's only to be followed by the travel ban affecting those companies and the ensuing open letter/lawsuits/disgust by them about the H1B visas and their affected employees.
    XRT is up indeed with the whole market cheering the nirvana of impotent Fed and perpetual daily promises of something "phenomenal" in the making. I'll just watch the charts and I am leaning against the aforementioned daily BB/ 50 dsma laminate now on XRT. Discounters are not participating much today, scared of BAT.
    WMT, BIG, DLTR

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    thud
    admin
    February 15, 2017 at 9:43 PM ×

    @johno: If the tax plan isn't deficit-neutral, there will be trouble getting it through the Senate (and we're not even talking Democrats at this point, but rather the GOP fiscal conservatives). Perhaps a simpler BAT is still in the framework, because I assume that's an easy way to offset budget impacts.

    I'm curious how much House and Senate Republicans actually know about Trump's plan.

    The problems within the administration also warrant some thought as to how much time and effort will be spent on press control/spin, and how much will be spent on campaign promises. I believe a previous poster here mentioned similarities with the Bill Clinton administration... apologies for forgetting his/her name.

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    Nico G
    admin
    February 16, 2017 at 3:18 AM ×

    well done on the yankee financials Abee! As you saw banks are still dead money in Europe but the US counterparts have already priced in Reagan 2 deregulation and all-out white collar crime for next half term. It's very stretched and whether a 10Y at 4% will help them make money more than it will screw the entire US capital system remains to be debated.

    on that same note, seeing Goldman perform that much since Trump's election is well, ironic. Didn't they ban their top employees from donating to his campaign? Hell everyone at GS with stock options and vested shares owns him diner. More generally, it sickens me that so many liberals who tweet vomit on Trump are making so much money on current rally.

    is it ethical to make money on Trump when you call him a prick a maniac and a treator? haha o tempora o mores

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    Nico G
    admin
    February 16, 2017 at 3:42 AM ×

    there seems to be a lot of gamma shorted above 2300

    http://www.zerohedge.com/news/2017-02-15/multi-billion-trade-meltdown-here-reason-markets-inexplicable-surge?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

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