tag:blogger.com,1999:blog-34323687.post7230351931419573392..comments2024-03-19T03:05:57.184+00:00Comments on Macro Man: Very ugly, very quicklyMacro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-34323687.post-48668451715652962322008-02-08T16:31:00.000+00:002008-02-08T16:31:00.000+00:002and20The market never thought the Fed was ahead o...2and20<BR/><BR/><BR/>The market never thought the Fed was ahead of the curve in the period you speak of , that's way off baseAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-30824330744217739782008-02-06T23:50:00.000+00:002008-02-06T23:50:00.000+00:00marc, i hear you and that is one thing that bother...marc, i hear you and that is one thing that bothers me...there does seem to be pricing power in a few lower priced industries. maybe it's just the trickle down effect from a dying consumer, that can still afford stuff that's only a few bucks, so maybe this pricing power disappears soon. not sure.<BR/><BR/>druckenmiller....at least back up your statement with some rationale.2and20https://www.blogger.com/profile/17253850117517112482noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-3752023889711311202008-02-06T23:22:00.000+00:002008-02-06T23:22:00.000+00:00Time to put on a curve-steepener trade in the Euro...<B> Time to put on a curve-steepener trade in the Euro debt markets </B>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-12891328990410659372008-02-06T23:01:00.000+00:002008-02-06T23:01:00.000+00:00You may be misunderestimating the price of banking...You may be misunderestimating the price of banking risk, too. Flies in the borscht? Enter the Brothers Karamazov? From the Moscow Times it seems some Russkies have appeared in the SocGen affair: 2 Russians Seen in SocGen Fraud Case<BR/><BR/>There's now enough liquidity, but still the drip drip drip of info out of banks is keeping markets unsettled.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-27050392295373238232008-02-06T22:25:00.000+00:002008-02-06T22:25:00.000+00:00I think you gentlemen are underestimating inflatio...I think you gentlemen are underestimating inflation. Last week Panera Bread Company raised coffee to go by 50%, small rolls by 58% and other small ticket items by similar amounts. The manager told me that another set of price increase were sent to the restaurant to take effect in another month or so. They are assuming prices are inelastic for these small ticket items. Place your bets gentlemen.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-61682723108283374262008-02-06T18:48:00.000+00:002008-02-06T18:48:00.000+00:00Hey MM,When you can spare a moment, can you please...Hey MM,<BR/><BR/>When you can spare a moment, can you please on "cross-market ratioed curve trade on, paying the back end of the US and receiving twice the bpv in 2 year Europe." tksAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-68167641532810144852008-02-06T17:54:00.000+00:002008-02-06T17:54:00.000+00:00erik,yes 10y futures and bonds can be considered i...erik,<BR/><BR/>yes 10y futures and bonds can be considered interchangeable for all intents and purposes (i use the futures usually).<BR/><BR/>i think the difference between now and 2001/2002 is that the market thought the Fed was ahead of the curve, and that the recession would be relatively short. so low rates were inflationary, hence the initial tanking in early 2002. it wasn't until after that that the market then decided that it was maybe worse than normal, and there was a lot of deflation talk, hence the huge rally (i think the 10y yield hit 3.07% or something close to that).<BR/><BR/>today, i think the conditions are a whole lot worse, and a systemic crisis seems more likely, as does a huge unwind of leverage, falling asset prices, and a deeper and longer recession. so my call is that the Fed has to lower rates much further, but they could be there to stay for a substantial period of time. at that the point, you'll get the inevitable comparisons to japan, and then 10y yields at 3% will practically look like a bargain.<BR/><BR/>anyway, that's my thoughts. in "normal" circumstances, yes, low Fed rates would mean I wouldn't want to be in the long-end, but i think it's "different this time".2and20https://www.blogger.com/profile/17253850117517112482noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-37864094003045376742008-02-06T17:30:00.000+00:002008-02-06T17:30:00.000+00:00Curious, for the past several years I have run a s...Curious, for the past several years I have run a successful absolute rturn strategy on an unlevered but relatively substantial amount of money. I started this blog a year and a half ago a) to aid me in organizing my thoughts, so as to improve my eral-life investment performance, and b) to demonstrate to myself (and others) that the skills required to manage a "real money" portfolio can translate into running a leveraged, hedge fund sytle portfolio.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-1444665294509875442008-02-06T17:15:00.000+00:002008-02-06T17:15:00.000+00:002and20:so being long 10y US at 3.60% looks like th...<I><BR/>2and20:<BR/><BR/>so being long 10y US at 3.60% looks like the no-brainer trade to me<BR/></I><BR/><BR/>Hi 2and20,<BR/><BR/>I have a question regarding the "no-brainer"-ness of a 10Y treasury trade. To start off I'm no pro and I'm going to assume 10Y note futures are interchangeable with the 10Y trades you're talking about. If thats all crap then never mind.<BR/><BR/>Looking at the FF and 10 year note futures charts on CBOT shows me in 2001 after the Fed eased aggressively within a range similar to now (4% down to 2.5% in second half 2001), the 10 year note tanked for the first half of 2002 (from 112 down to 105) before rallying eventually up to 118 or so.<BR/><BR/>The last time the 10Y future was trading at current levels (117ish), the Fed had already eased down to 1%, suggesting all other things being equal that maybe the 10Y is already quite a bit ahead of the FF at least compared to last time. <BR/><BR/>I wasn't paying attention to this stuff back in 2001-2003 and don't know the background, but just by looking at the charts, this would suggest maybe upside is limited and there's lots of potential for downside in the short run.<BR/><BR/>Is this overly simplified? Were inflationary/deflationary pressures entirely different at that time?<BR/><BR/>erikAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-18360163055431573542008-02-06T16:10:00.000+00:002008-02-06T16:10:00.000+00:00macro man,great blog! i love reading your posts o...macro man,<BR/><BR/>great blog! i love reading your posts on the markets. out of curiosity, do you trade for a hedge fund, ibank or your personal account?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-32364235271110444842008-02-06T15:30:00.000+00:002008-02-06T15:30:00.000+00:00anonymous, i'm not so sure about the long schatz/s...anonymous, i'm not so sure about the long schatz/short us 10s trade.<BR/><BR/>whilst i don't have much of a view on schatz, i do think the ECB are going to be very reluctant to start cutting, so getting long 2yrs miles through ECB base rates doesn't seem a no-brainer to me.<BR/><BR/>whereas look at the US...absolute disaster over there, and only going to get worse. it seems to me the curve steepener has been over-played, just cos its the "obvious" trade to do going into a recession. bigger picture, you can get 3.60% on the 10yr, with the Fed at 3%, definitely going lower, and a massive risk of an extended recession/depression and personally i think almost guaranteed deflation...and even if we don't get deflation, i betcha the market will start talking about it soon. so being long 10y US at 3.60% looks like the no-brainer trade to me (i had it on the other week, took it off at 3.56% and just about to put it back on, fyi).2and20https://www.blogger.com/profile/17253850117517112482noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-60040789124688275612008-02-06T13:17:00.000+00:002008-02-06T13:17:00.000+00:00MM, I'm half Canadian myself, though raised mostly...MM, I'm half Canadian myself, though raised mostly in the US, so I'm familiar with the spelling issues. Canadians sometimes pick and choose spellings, so you get interesting combinations like "Tire Centre" (as opposed to yank "Tire Center" or brit "Tyre Centre") sometimes. It makes life more colo(u)rful, albeit more labo(u)rious.<BR/><BR/>Thanks for the Lg/Sm cap reference!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-64859971233082148852008-02-06T13:04:00.000+00:002008-02-06T13:04:00.000+00:00Bruce, see here.As for the spelling, I originally ...Bruce, see <A HREF="http://macro-man.blogspot.com/2007/10/large-caps-and-small-caps.html" REL="nofollow">here</A>.<BR/><BR/>As for the spelling, I originally spelled it the American way, then caught myself and changed it- hence the comment. That's the weird thing about living here for so long (though clearly not long enough to obtain residency/passport!); I still spell things like "center" and "meter" the American way, whereas "labour" and "colour" look better the English way.<BR/><BR/>And don't get me started on Premiership duh-FENCE or NFL DEE-fence.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-9094787488445190482008-02-06T12:55:00.000+00:002008-02-06T12:55:00.000+00:00MM,You must have posted this earlier, but I don't ...MM,<BR/><BR/>You must have posted this earlier, but I don't see it. What is your Large Cap/Small Cap trade, and what is the rationale behind it?<BR/><BR/>Thanks for your great stuff! And I loved the bit yestreday about "centred."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-33753609841047669012008-02-06T12:20:00.000+00:002008-02-06T12:20:00.000+00:00macro man as an aussie married to a pom..i feel yr...macro man as an aussie married to a pom..i feel yr pain mate..move down here and enjoy the beach, wife will be happy but you will be up working 24 hrs a day (minor downside)...glad to see you can see the sense inthe eur steepener...trade du jour (if not of the year) is long shatz short us tens...wild n bumpy but check out the 8yr correlation graph and you will see it is well out of whack and worth some serious conditional zero cost action..enjoy the home office ..Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-19164197274661853742008-02-06T10:47:00.000+00:002008-02-06T10:47:00.000+00:00To be honest, I don;t know if there's going to be ...To be honest, I don;t know if there's going to be a recession this year and quite frankly, I don't care. What I do care about is how the market reacts to its own worldview...and for the time being, the market is trading the recession view, and thus I am obliged to as well. In three months' time the world could look different.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-4313514754328196002008-02-06T10:39:00.000+00:002008-02-06T10:39:00.000+00:00told ya, you were acting like tony snow with regar...told ya, you were acting like tony snow with regards recession scenario. probably of recession this year is 99%. the 1% is the chance jugdment day comes before year endAnonymousnoreply@blogger.com