tag:blogger.com,1999:blog-34323687.post4112506099189352194..comments2024-03-29T03:19:56.674+00:00Comments on Macro Man: May post-mortem and a busy start to JuneMacro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-34323687.post-19513912815513347362007-06-04T08:37:00.000+01:002007-06-04T08:37:00.000+01:00Agustin, I'd concur that not all rises in market i...Agustin, I'd concur that not all rises in market interest rates are created equal, and that a growth-driven rise is more benign than an inflation driven rise.<BR/><BR/>That having been said, a sufficiently large rise in government yields, even if not accompanied by a deterioration in credit, can still exert a downward influence on equities- if for no other reason than asset allocaton rebalancing (i.e., maintaining benchmark weights in equities and fixed income.)<BR/><BR/>If recent trends continue, I'd expect a fairly healthy asset allocation flow at quarter end, selling equities and buying bonds in the US and Europe- perhaps there will be a trade there in a few weeks.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-42191941256116739962007-06-02T06:42:00.000+01:002007-06-02T06:42:00.000+01:00Cassandra. Suppose that participants in the credit...Cassandra. Suppose that participants in the credit market get new --and very positive-- information about the state of the (global) econommy. It is not unreasonable to think that pricing power at corportations would improve. How would spreads react? Well, they would most likely go down: sell Treasuries, buy corporates. Perfectly logical to me -- and not necessarily bearish in terms of risky assets such as stocks. This is one way to look at the current situation.<BR/><BR/>Go stoicists go! (I used to read Seneca myself). Regards, Agustin.Agustinhttps://www.blogger.com/profile/16209146710306589853noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-37730371746165669482007-06-01T20:57:00.000+01:002007-06-01T20:57:00.000+01:00Agustin, If I might take the liberty of paraphrasi...Agustin, If I might take the liberty of paraphrasing you, you seem to be suggesting that increasing interest rates are not presently "bad" because liquidity decision-makers (of all variety) are choosing to purchase financial assets (thereby diminishing risk spreads) creating a bullish virtuous (!?!?) errrr circle , rather than say spending them on "things" such as a new water treatment plant, bacccarat crystal, a nautilus machine, public transport, a new <I>Saturn</I> IconoclastMobile or a fleet of new 787 Dreamliners, where expenditure on the latter would presumably cause a rather dramatic vault in price indices, wages and wage-demand-expectations, interest-rates and interest rate expectations, causing a rather unvirtuous rise in real interest rates and associated destruction in liquidity. Is that about right ?"Cassandra"https://www.blogger.com/profile/17412381249313151515noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-88210933619122608872007-06-01T16:58:00.000+01:002007-06-01T16:58:00.000+01:00Macro Man. Kudos for the blog & the results! I sti...Macro Man. Kudos for the blog & the results! I still think that your views on interest rates and risky assets are too simplistic. Let me put it this way: interest rates can increase for "bad" reasones (inflation expectations, budget deficits) and for "good" reasons (capex boom, innovation). How do we know? By looking at spreads. Despite the rise in Treasury yields, spreads are generally ... declining! Take CDS spreads, Treasuries vs. Moody's, or plain Treasuries vs. inflation-indexed Treasuries: the story is the same -- and it is a bullish one. Regards, Agustin (www.liquidityblog.blogspot.com).Agustinhttps://www.blogger.com/profile/16209146710306589853noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-2118155941039524372007-06-01T13:16:00.000+01:002007-06-01T13:16:00.000+01:00Thanks for your kind words. Sadly, no sign of any...Thanks for your kind words. Sadly, no sign of any super alpha-generating powers at the moment....Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-56682917052668935112007-06-01T13:04:00.000+01:002007-06-01T13:04:00.000+01:00Good going. Your blog is a joy to read. Keep up th...Good going. Your blog is a joy to read. Keep up the solid work Macro Man (your name sounds like a superhero.. I guess your special power would be the ability to generate large quantities of alpha!).Anonymousnoreply@blogger.com