"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.
8 comments
Click here for commentsYep, another concensus election result!
ReplyJohno (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.
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.
ReplyIn 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
Hi abee,
ReplyFunny 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.
That's FX forwards liquidity that's light onshore, if not clear what I was talking about in point 3 of the cons above.
Replywhat is the carry on 1-3mo usd/myr ndf?
Replylooks kinda cheap to me, esp against SGD, in my five minute cursory analysis.
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.
Replythanks for sharing
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In terms of sterling we probably get a squeeze/relief rally in cable and then later on proceed
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