tag:blogger.com,1999:blog-34323687.post3469133129647925016..comments2024-03-29T09:24:42.731+00:00Comments on Macro Man: New Underlying Inflation Gauge From NY Fed Supportive of Dudley and "The Dots"Macro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-34323687.post-54289197703258613122017-09-28T03:23:53.418+01:002017-09-28T03:23:53.418+01:00So finally tax reform is announced. Why is the top...So finally tax reform is announced. Why is the top individual rate going down? Political suicide. Why no details on how the cut would be paid for? Because there is no way without BAT and it's dead. I get the potential growth = more revenue, blah, blah. Nice assumption. I ain't the one they have to sell this to. No Dems will back this up unless the top rate stays put. Rep budget deficit hawks will not either unless it's revenue neutral. Sausage making begins. Gonna be ugly just like healthcare. I say equities take a breather. Oh, the cut is not retroactive, so no need for Fed to raise the rates in order to offset. Added some SVXY puts and GDX calls on this. I think GDX gets a double boost when DXY runs into resistance @ 94.IPAhttps://www.blogger.com/profile/14823892667440934141noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-64618610204787260542017-09-27T21:59:28.386+01:002017-09-27T21:59:28.386+01:00Sure Skr, didn't mean nothing more than just s...Sure Skr, didn't mean nothing more than just share something I found interesting. Didn't want it to come across like some criticism, the market is a judge tough enough, we dont need each other :)<br />By looking at that monthly chart it does look quite a bit like 2002, as IPA said. No position though, just sitting and watching now. I share the view that there are no really compelling macro trades as of now.MacroWatcherhttps://www.blogger.com/profile/03008114897146746147noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-91372080971473437442017-09-27T20:50:01.271+01:002017-09-27T20:50:01.271+01:00Guys, I'm not really sure how to respond to th...Guys, I'm not really sure how to respond to the above posts - I suppose thank you would be apt. <br /><br />I do however feel impelled to say that anyone who wishes to do a backtest of my views (and songs) over the past 18 months, is more than welcome. <br /><br />Anyhow, in my eyes we are all friends here, so it does take all sorts.:) <br /><br /><br /><br />Skrhttps://www.blogger.com/profile/15637819137472818789noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-73106573810182206982017-09-27T08:13:00.809+01:002017-09-27T08:13:00.809+01:00You want to know what dog stocks look like.....go...You want to know what dog stocks look like.....go no further than Crown and Hilton casinos. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-28636806454660464072017-09-26T21:27:39.766+01:002017-09-26T21:27:39.766+01:00Hi MW,
EDZ7EDZ8 steepener seems OK to me (I would...Hi MW,<br /><br />EDZ7EDZ8 steepener seems OK to me (I would look at the EDZ8 leg with an eye to relative value case for using surrounding months instead). My general thought on US rates is: 1) Yellen/Dudley want to hike to 0%-0.25% real next year and will do so, so long as inflation isn't trending lower; 2) Philips Curve isn't dead but it's so flat (maybe steepens <3% but we're still far from getting there to test that) that it's effect can't be the basis for a trade; 3) a lot of one-offs/noise are probably causing people to over-interpret and expound "inflation is dead" narratives; 4) I see some reversion-to-trend in inflation data from here. Of course, we could have a different Fed Chair and there's always the Chinese economy, which I'm expecting will be at least bit less supportive next year.<br /><br />This moment, I'm not seeing anything especially compelling in macro. Still think dollar bull market is over, but now isn't the time to press nor get short. My view is Yellen/Dudley may actually understand now (but will never admit) that easy money caused asset bubbles which caused the last two recessions. Asset bubbles are the evil, not inflation, ergo, you have to tighten now to lengthen the economic cycle. Assuming they understand that and execute on it, we get a super long cycle, and low but not negative asset returns. It's hell for anyone who wants to get rich quick in a bubble of systemically-large proportions or off volatile markets, but good for keeping marginal workers in the workforce.<br /><br />+USDJPY is probably OK. The Fed wants to hike real rates, inflation likely to moderately mean-revert (but nothing to cause a term premium panic), QE effects (Fed reduction, plus ECB tapering which grows likelier with USD strength/hawkish Fed), out-of-whack with global PMI high. Carries positively. Fly in the ointment is North Korea. So far, have to wait <24 hours for those headlines to get reversed, but ... what happens if a US plane is shot down next? This is the one thing keeping me from shorting gold right now.<br /><br />Good editorial by Munchau in the FT today on the German election. This German election is a bummer for the Europe trade, though I still like CAC vs SPX. I love the contradiction of Europe-haters -- "it's terrible," they say, but if it's so terrible then the smallest change in the right direction (as with French labor and tax reform) should be very significant.<br /><br />Everyone seeing this research about how 4% of stocks deliver all the gains? Now, imagine that narrative becomes popular like "stocks for the long run" in the late-90's or "safe as houses in the mid-00's"? FANG could go a lot higher, esp when GOOG and AAPL are cheaper than the Russell (the Russell being that collection of "the other 96%").<br />johnohttps://www.blogger.com/profile/11356400378252164259noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-58463571130790903632017-09-26T20:31:38.707+01:002017-09-26T20:31:38.707+01:00@MacroWatcher, I'm with you 100% there, Euroar...@MacroWatcher, I'm with you 100% there, Euroarea c/a surplus (or German export strength, if you prefer) + reduction or reversal of portfolio flows + continued tight fiscal policy + improving growth + REER cheapness relative to USD and CNY sums up to a pretty strong fundamental medium-term picture--that's why I am circumspect until we see a breakdown < 1.17 and/or evidence of diverging monetary policy. <br /><br />Tough thing about the price action this week is the FTQ bid from the Declaration of War Tweet (on North Korea, not Kapernick), Kurdistan, etc. etc. Seems like that theme ran out of gas this afternoon but we'll see how tomorrow plays out. Don't think Fedspeak is going to change much--several EM central bank decisions could move a few of those pairs though. EM Inflationistahttps://www.blogger.com/profile/13376753485910252234noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-59379986877138636452017-09-26T18:49:51.263+01:002017-09-26T18:49:51.263+01:00@SKR, and an abandoned baby soon to follow :)
@Ma...@SKR, and an abandoned baby soon to follow :)<br /><br />@MacroWatcher, are you a mind reader? You bring up an important issue. DXY charts on different timeframes are going to tear traders apart. I for one really wanted to go long on a close above 50 dsma or 8 wema (pick your poison). Been watching a close resemblance to 2009 weekly chart and thinking once the bounce starts it carries through. This being said, I am now starting to doubt it. The inverted h+s it's trading right now is shallow with a distance of only 1.5 points and a projected target of 94. After that I am starting to think it has more downside to explore. The culprit? Monthly chart of Mar 2015 - Today is now looking a lot like Oct 2000 - Jul 2002. Yep, look at that hammer ;) <br /><br />I was a big dollar bull until I decided to stifle my obnoxiousness and scrolled back to see the inevitable. Even though DXY is in much more different place today and I agree that you can't always draw parallels, one can't deny that future is nothing but a repeat of the past.IPAhttps://www.blogger.com/profile/14823892667440934141noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-75148735303056858352017-09-26T16:55:52.764+01:002017-09-26T16:55:52.764+01:00That monthly does look juicy but the backtest isn&...That monthly does look juicy but the backtest isn't very exciting, at least for my definition of an hammer -- https://imgur.com/a/4y4H0<br />Trying not to get too excited on the dollar here, feel there's better risk/reward in playing it through rates.Holding on to my EDZ7EDZ8. The only real argument I can make for the dollar is GSCI 1y changes pushing inflation up but I can make that for the euro too, as johno pointed out recently.<br />Also, read this recent report by JDI that makes a very good case for further eur strength.Recent strong improvement in EZ basic balance has been masked by bond portfolio outflows due to very low yields. As mid term real yields picked up recently, mainly in the fwd space, so have these flows and they should now allow for the basic balance improvements to shine. I see little reason for these flows not to continue improving.MacroWatcherhttps://www.blogger.com/profile/03008114897146746147noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-39227573192452557512017-09-26T12:05:09.728+01:002017-09-26T12:05:09.728+01:00I'm not much of a chartist, but the weekly DXY...I'm not much of a chartist, but the weekly DXY over the last four weeks is showing one of those 'pregnant women' things. A green week and it's one of those 'three soldiers' things. Or as a wise man said here last year "it's hammer time" on the monthly. :) Skrhttps://www.blogger.com/profile/15637819137472818789noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-61138681750711237452017-09-25T20:45:40.591+01:002017-09-25T20:45:40.591+01:00yeah that oil call was solid...as was DR's lon...yeah that oil call was solid...as was DR's long USD call (so far!). I mentioned in a sidechat that this German election might give USD a bid, I tend to agree w/ Johno it will be short lived but opens the market to any other usd positive trade winds. Still never a dull moment in US politics...Can I go Long USD/Short NFL? And one other thing...I get it is because of the party colors, but is there anything LESS Jamaican than a German political coalition? <br />EM Inflationistahttps://www.blogger.com/profile/13376753485910252234noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-52357663734665064442017-09-25T19:16:42.935+01:002017-09-25T19:16:42.935+01:00Nice call on oil, IPA.
Stopped in EURCHF and USDA...Nice call on oil, IPA.<br /><br />Stopped in EURCHF and USDARS earlier today. Not fun. Was able to cut the former Sunday on the German election news but re-bought lower Monday and stopped on the NK headlines. My guess is a Jamaica coalition doesn't really change the general direction of German policy towards the eurozone, so probably worth getting long again at some point. Just hard to have big delta-one positions given the safe-haven bid we can get in this thing. Back to the drawing board ...johnohttps://www.blogger.com/profile/11356400378252164259noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-55244050340093445032017-09-25T18:44:13.388+01:002017-09-25T18:44:13.388+01:00Here it is - WTI $52 junction, at last. I say up, ...Here it is - WTI $52 junction, at last. I say up, above, and beyond this time. Not all in one shot, but you know what I mean. Keep an eye on XLE.IPAhttps://www.blogger.com/profile/14823892667440934141noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-28813336009169287662017-09-25T16:22:54.924+01:002017-09-25T16:22:54.924+01:00AMZN price is testing neckline of 145-point distan...AMZN price is testing neckline of 145-point distance head and shoulders. Ouch!<br /><br />Buy some SVXY puts and GDX calls. Equities are not happy here at all.IPAhttps://www.blogger.com/profile/14823892667440934141noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-63852024027590798972017-09-24T17:04:33.010+01:002017-09-24T17:04:33.010+01:00Hey, Kiddy Busson. Your welcome to come on here an...Hey, Kiddy Busson. Your welcome to come on here and give us your fund of funds sector rotation analysis for the week. Your welcome to it. <br /><br />ps.....where was that land again...Australia? LOLAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-39277641370596888282017-09-24T13:38:35.578+01:002017-09-24T13:38:35.578+01:00You mentioned data from the 90's. The only thi...You mentioned data from the 90's. The only thing I member from the 90's was Kiddy Busson dancing shirtless singing out loud in some underground French "rave" club...."follow me to this land called victory".....<br /><br />https://www.youtube.com/watch?v=jhpXCoGZrIwAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-77083117554444414892017-09-23T18:59:34.782+01:002017-09-23T18:59:34.782+01:00Big lag in reporting in the COFER data. Will be in...Big lag in reporting in the COFER data. Will be interesting to see the next print.johnohttps://www.blogger.com/profile/11356400378252164259noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-69509206660430914792017-09-23T17:01:02.176+01:002017-09-23T17:01:02.176+01:00sorta interesting graph on the reserve managers po...sorta interesting graph on the reserve managers point I saw yesterday. The % going to EUR assets has been falling for years. (it is the second chart, I think) <br />https://blogs.wsj.com/dailyshot/2017/09/22/wsjs-daily-shot-will-the-dollar-continue-to-fall/#TheEurozone<br /><br />But maybe this isn't so much a asset allocation decision by reserve managers as much as it is recycling the assets received in trade flows. Tough to discern one from the other. <br /><br />EM Inflationistahttps://www.blogger.com/profile/13376753485910252234noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-36218021810291628282017-09-22T21:46:08.241+01:002017-09-22T21:46:08.241+01:00Nice catch, Shawn. Thank you for pointing this out...Nice catch, Shawn. Thank you for pointing this out. Looking at core CPI m/m sa excl. shelter, I had thought the last print was OK. Neither great nor terrible. But maybe Yellen/Dudley are looking at other inflation "gauges," as you suggest.<br /><br />Saw a chart of Treasuries held in custody at the Fed for foreign/official accounts overlaying EURUSD. Suggestion is that central banks adding reserves are recycling some of those reserves to EUR. Guess you could look at this and say it's tautological, but if you think of the dollar against blocs, e.g. EM bloc as distinct from Europe bloc, then you could argue: China stimulus => EMUSD up => intervention => buy some USTs (Fed custody holdings up) and buy some EURUSD.<br /><br />If that causal chain is helping EURUSD (and I'm not saying it's the only reason it's up), then maybe it becomes less constructive before too long given 1) lagged effect from tighter policy in China so far this year, 2) fading effect from the shanty-town renovation scheme and subsidies, 3) general relaxation of investment post-19th Congress, etc..<br /><br />Seems to be a view (which I can sympathize with) that BoE is going to hike twice and it'll be a mistake. But if that's the case, why is the whole sterling curve steepening? Makes me very reluctant to think of shorting GBP here/now. Barnier comments today weren't terrible either.<br /><br />Very quickly stopped out of that -EURHUF position the other day. Question. Answer.johnohttps://www.blogger.com/profile/11356400378252164259noreply@blogger.com