Consensus Thinking II



"Alas, the chance of a robust opposition emerging from this miserable election campaign is vanishingly slim."

-"Labour is unfit even to lose", Bagehot, The Economist, May 20, 2017

Your investing brain lusts to buy into this kind of stuff. Full marks for the illustration, though.


Previous
Next Post »

8 comments

Click here for comments
June 9, 2017 at 7:55 AM ×


I cannot truly enable but admire your weblog, your weblog is so adorable and great.It has given me courage to try scarier things. I tend to steer clear of them but not anymore.
Packers And Movers Hyderabad

Reply
avatar
abee crombie
admin
June 9, 2017 at 1:35 PM ×

Yep, another concensus election result!

Johno (or anyone else), any thoughts on MYR. I am thinking its a good leading indicator for EM risk here. I'm thinking about trimming some of my EM exposure soon.

Reply
avatar
Leftback
admin
June 9, 2017 at 2:49 PM ×

The half life for these coalitions with razor-thin margins is usually quite short. Another election within a year? Quite how the Brexit proceeds (and who leads the negotiations) seems utterly mysterious at this point. Messy.

In terms of sterling we probably get a squeeze/relief rally in cable and then later on proceed to re-test the lows once the seriousness of the situation sinks in.

But… over on this side of the pond we are back to nothing but Fed watching… zzzz

Reply
avatar
johno
admin
June 9, 2017 at 2:55 PM ×

Hi abee,

Funny you ask about, MYR. I took off half yesterday. Really no change to view except getting less comfortable with EM risk on the margin. That said, I should probably just let it ride.

Some cons on MYR include: 1) oil exporter (admittedly other export sectors doing well), 2) early elections possible (?), 3) liquidity onshore is still light so fund managers desire to get back into the local bond market may be constrained by this, 4) BNM's reserves were drawn down a lot, especially when looking at the forward book, so they're going to look to rebuild at some point, 5) local bond market not especially compelling here (rates/curve shape).

Pros: 1) April saw 1st inflows into fixed income and currency tends to trade closely with those flows, 2) foreign managers can now hedge 100% onshore hopefully reversing damage to foreign interest in the bond market by last year's offshore market crackdown, 3) exporter FX conversion rules should be +ve, 4) my oil view is constructive here.

Reply
avatar
johno
admin
June 9, 2017 at 3:48 PM ×

That's FX forwards liquidity that's light onshore, if not clear what I was talking about in point 3 of the cons above.

Reply
avatar
Shawn
admin
June 9, 2017 at 4:55 PM ×

what is the carry on 1-3mo usd/myr ndf?

looks kinda cheap to me, esp against SGD, in my five minute cursory analysis.

Reply
avatar
johno
admin
June 9, 2017 at 8:27 PM ×

Carry is actually -ve in the USDMYR NDF through the 3M point. Still, I put it on because you had a defined catalyst (beginning April) and it had started moving.

Reply
avatar