tag:blogger.com,1999:blog-34323687.post8162846993233778539..comments2024-03-29T12:26:35.581+00:00Comments on Macro Man: Top 6 things spotted on the beaches of Europe this summerMacro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-34323687.post-13092209009068209502007-08-20T16:32:00.000+01:002007-08-20T16:32:00.000+01:00The US consumer has indeed been the White Whale to...The US consumer has indeed been the White Whale to many macro-men (note lower "m's").<BR/><BR/>Be that as it may, in the case of PCE, each spin of the wheel is rather than independant, likely to be path-dependent (the greater the past glory & extraction, the larger the future encumbrence). And while the US consumer may yet <A HREF="http://mlb.mlb.com/mlb/photo/photogallery/ws_top20_large/11.jpg" REL="nofollow">make a great save</A> like Brooks Robinson in the 70 World Series, or <A HREF="http://www.ezthemes.com/previews/r/rbull.jpg" REL="nofollow">pull a ummm (rabbit?)from a hat</A>, I am NOT heroically betting FOR it until I see more indications that the Feast of The Miraculous Consumption continues (and continues to be financed). Call me a sheep."Cassandra"https://www.blogger.com/profile/17412381249313151515noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-45020247485368874762007-08-20T15:46:00.000+01:002007-08-20T15:46:00.000+01:00CDN trader, I think the failure of the model to pe...CDN trader, I think the failure of the model to perform in the 70's is down to the impact of high, persistent, double digit inflation during that decade. <BR/><BR/>Ex post, interest rates didn't go as high as they needed to be until Volcker dropped the hammer, and as such bonsd traded rich throughout the decade. While sound similar to today's environment, the magnitude of overvaluation was much higher 30 years ago.<BR/><BR/>I suspect if the terms of the study were altered to evaluate RELATIVE performance of equities (versus bonds) rather than ABSOLUTE performance, the results would be more consistent.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-65132641733133368342007-08-20T15:39:00.000+01:002007-08-20T15:39:00.000+01:00I am not quite so quick to assume that the consume...I am not quite so quick to assume that the consumer's goose is cooked; the two worst macro bets during my career infinancial markets have been betting on the BOJ to tighten policy and betting against the US consumer.<BR/><BR/>I agree that wealth looks set to be a drag on spending, but it is important to remember that disposable income is about six times more significant an explanatory variable on spending growth than wealth is.<BR/><BR/>I suspect we are set for a period of tepid, below-trend spending growth, possibly for a couple of years. But that is, after all, what financial and global imbalance Calvinists have been calling for, and is not necessarily a bad thing.<BR/><BR/>But as I said in the post, I think liquidity remains, like Reggie Jackson in the Bronx 30 years ago, the "straw that stirs the drink." And my assessment is that those consitions are, on a macro perspective, still favourable, even if a) not as favourable as over the past few years, and b) micro-liquidity in various markets is causing distress.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-74864031284677473452007-08-20T14:49:00.000+01:002007-08-20T14:49:00.000+01:00MM - While we've been singing in harmony since you...MM - While we've been singing in harmony since you changed your tune on the Yen, and while I share your view that charts can be revealing, I have a nagging suspicion that US PCE is really errr, cooked. With no further refi gains to draw upon, and the ripples of housing start doldrums being felt earnestly in earnings, and employment, and ARM resets that will continue to to take their toll, not to mention the feeling of impoverishment (and negative equity) that many other existing homeowners will feel as housing collateral continues to be liquidated , bitch-slapping prices in surrounding neighborhoods for all to see, and bemoan. This will likely lead to a HIGHER savings rate, even though for many there is already precious little to save, something that has always a point of contention between Financials Calvinists (like yours truly) and the Laffers & Mankiws of the world extolling the virtues of fiscal laxity coupled with negative real rates. <BR/><BR/>This wealth effect will be particularly dramatic since as conservative AEI economists and apologists for America's persistently low (yes even negative) savings rate always pointed to real estate as the prescient hyper-constructive (no pun intended) alternative means-of-savings that never failed to turn (what to some was) a blood-curdling time series into a Panglossian Valhalla.<BR/><BR/>Alas, Roubini's right, a USA recession is nigh, and the resulting angst has political-economic turmoil written all over it, from protectionism and anti-china fears, escalating anti-immigrant-ism, to an emerging soak-the-rich (or at least tax them appropriately) policy platform that will yield no counter-cyclical benefit to say the least. <BR/><BR/>(oh, and while the outside reversal that underpins a weak wave "c" POV, note that all the Demark, mt & lt DMIs all appear to suggest this is but a bear bounce.<BR/><BR/>On this one, I'll gladly wait til credit spreads begin to converge, commerical real estate breaks its downtrend, and other liquidity correlated sub-classes begin to say this was a mere epileptic fit, and not a chronic condition."Cassandra"https://www.blogger.com/profile/17412381249313151515noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-52351506912916273732007-08-20T10:14:00.000+01:002007-08-20T10:14:00.000+01:00Macro Man;Recently read your post on the equity ma...Macro Man;<BR/><BR/>Recently read your post on the equity market "beta" study. Was intrigued by the differences in results pre- and post-1980. Do you think it is possible that the current economic environment is more similar to the 1970s than to the 1980s or 1990s? If you are interested in an in-depth study on the topic, I recommend John Hussman's recent comment, which can be found here: http://hussmanfunds.com/wmc/wmc070820.htmCDN Traderhttps://www.blogger.com/profile/11183653753709444967noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-85707971838619088242007-08-17T09:06:00.000+01:002007-08-17T09:06:00.000+01:00Ah MM - have missed your wit. Hope you've enjoyed ...Ah MM - have missed your wit. Hope you've enjoyed the holiday.<BR/><BR/>You were (at least for me) very prescient in your picking of the big Wave C ahead when you left. Let us know when it's over :)<BR/><BR/>You made the point of noting the first sunburnt guy wasn't you - but were surprisingly quiet on who might be accompanying the retired supermodel...<BR/><BR/><BR/>--QQuarrelhttps://www.blogger.com/profile/04966272626535388524noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-63542473819181951102007-08-16T22:57:00.000+01:002007-08-16T22:57:00.000+01:00Thoughts from your holidays are all well and good,...Thoughts from your holidays are all well and good, but what inquiring minds really want to know is if<A HREF="http://www.portfolio.com/views/blogs/market-movers/2007/08/16/carry-trade-unwinding--it-looks-real-this-time" REL="nofollow"> the carry trade is really over</A>. Since you were not on the job, <A HREF="http://ipezone.blogspot.com/2007/08/daddy-is-carry-trade-goner.html" REL="nofollow">Emmanuel had to go look at the charts himself</A>. But we are all still interested in your thoughts.Anonymousnoreply@blogger.com