tag:blogger.com,1999:blog-34323687.post8203918190286805298..comments2024-03-19T03:05:57.184+00:00Comments on Macro Man: Show me the moneyMacro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger53125tag:blogger.com,1999:blog-34323687.post-33434971270450079582016-08-18T06:57:59.219+01:002016-08-18T06:57:59.219+01:00this is highly fictionalthis is highly fictionalNicohttps://www.blogger.com/profile/06532015745155347229noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-741496105673254132016-08-18T01:39:13.618+01:002016-08-18T01:39:13.618+01:00Sigma said: "On the positive side: I have got...Sigma said: "On the positive side: I have got late mornings, after lunch siestas, and, most importantly, early dozes of scotch, oysters, and cigars. All these while making double digit returns…"<br /><br />You do make it sound appealing, but are vol sellers just destined to be this year's Lazy Sunbathers?Leftbackhttps://www.blogger.com/profile/07728096415928915882noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-63278804281552123442016-08-17T23:48:14.119+01:002016-08-17T23:48:14.119+01:00anon 10:52
remarkable and 100% agreeanon 10:52<br /><br />remarkable and 100% agreeNicohttps://www.blogger.com/profile/06532015745155347229noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-90907034501178472002016-08-17T23:14:53.858+01:002016-08-17T23:14:53.858+01:00A bit challenging week. My risk exceeded the budge...A bit challenging week. My risk exceeded the budget nearly twofolds as of yesterday, but, thanks to Yellen, it reverted to the mean, as it always does. Have been there before - nothing new... Risks does pay off well. Thanks to Yellen and Co, again.<br /><br />The old days of Boy Plungers glued to the tape and looking for a thrill are over, especially, so in the FI world. All HFs are cutting off discretionary traders and, instead, relying on quants... Carry, vol selling, risk-parity, smart-beta, minimum vol, Black-Scholes, Markowitz...<br /><br />I know it is dead boring, but look at me - I have got no adrenalin and no addiction to the screen. On the positive side: I have got late mornings, after lunch siestas, and, most importantly, early dozes of scotch, oysters, and cigars. All these while making double digit returns...<br /><br />P.S. Fingers crossed for the momentum in FI and defensives to continue into European session tomorrow. I urgently do need spare cash to win in that auction for Picasso for my collection of the fine art. You know that it is impossible to get a cheap deal in the market where everyone wants to buy...Sigmanoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-60901711571640777162016-08-17T23:12:55.830+01:002016-08-17T23:12:55.830+01:00@Beach - re: How can it be a bubble when we all ge...@Beach - re: How can it be a bubble when we all get the same data, read the same press releases, read the same analysts and see the same trap<br /><br />you've answered your own question - wasn't that true for all the examples I cited also? the reason its a bubble is because absolutely no one would disagree with you, and yet there is is nothing in these facts that is novel or new, just that punters have completely embraced the idea, and far more importantly, already positioned for it. Someone mentioned the other day people are now buying bonds for capital gains to sell to someone down the line, and stocks for income (because of the former) - if you don't see that as abnormal I don't see what I could do to convince you.<br /><br />Forget that, just focus on the fact that just a recent 2 years ago people had huge positions on betting on 10 yr rates to go from then 2.7% to 4% - now the same crowd is betting the opposite but now they are correct? <br /><br />As for CB participation - their presence has zero impact other than to influence people like you and me to hold on to our length - if anything happens where we become forced sellers because for 10 seconds price went down they are irrelevant - its much more a house of cards than you seem to believe. washedupnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-85014799873152573492016-08-17T22:58:51.079+01:002016-08-17T22:58:51.079+01:00classic summer action... all day putting your bids...classic summer action... all day putting your bids or offers out and nothing back, no response, it's dead out there. is anyone even manning the desks? then bam, the one market everyone cares about ties up and size is flying through, multiple counter-parties, it's a broker-tastic frenzy. i feel like that just happened with this comment thread... <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-88576125197033451282016-08-17T22:52:41.050+01:002016-08-17T22:52:41.050+01:00Nico G interesting article about the dollar. Short...Nico G interesting article about the dollar. Shortly put, it's just my view but I've for some time begun to view 99% of US foreign policy (and generally, what's going on in the world) relating to defending the dollar system and the associated trump cards related to global hegemony, including in Syria and the Middle East, Ukraine, China sea, the old Stans etc. It certainly makes the things going on and why they are going on a heck of a lot easier to understand. The media calls it protecting democracy, human rights etc. The dollar hegemony was born in the 1970s through the dollar-for-protection deals with the Middle East oil nations, which was a way to "restore" the dollar status after the necessary scrapping of the gold backed system. Everybody absolutely had to get dollars from uncle Sam to get what everyone needed, oil. The thing US is trying to prevent today is Eurasia from becoming united, developing land in between, settling people and generally booming in the vast fertile steppe lands, and the building of a new silk trade road from Asia to Europe, as it has the potential to make the US navy controlled waterways much more irrelevant. As does the potential arctic sea route between Russia and China, being shorter and safer excluding the permafrost still in place, but which is melting. The thing Russia and China are trying to do is precisely the opposite, getting Kazakhstan, Mongolia, Iran, Armenia and finally Syria into an economic/military alliance to counter balance the US led "west". Now Turkey seems to be swaying away, although this is a powder keg and very much unresolved. That's why its imo easily comparable to the British empire which also thrived on dominating the eastern trade routes with its navy and the riches from its colonies. So does the US today depend on controlling global trade routes and the goodwill of its "partner", and one thing it doesn't want are potentially very strong united competitors in Eurasia. I have a feeling empires will always tend go to extremes in defending their position which is why the general situation today is kind of worrying.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-78968317567708587442016-08-17T22:42:23.617+01:002016-08-17T22:42:23.617+01:00@washed: Is it really a bond bubble when we'...@washed: Is it really a bond bubble when we've had massive CB participation in markets? When Yellen has been quoted as saying that policy will remain accommodative even after the Fed sees inflation return to the targets, when the Fed will back off on raising rates for every scary shadow they see. How can it be a bubble when we all get the same data, read the same press releases, read the same analysts and see the same trap. If the Fed or any other CB gets aggressive, they will near a instantaneous fall in bond markets, equity markets, property markets, etc. This is not the world we live in anymore. No central banker wants to be known as the idiot who causes a crash.MrBeachnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-77568132790357523662016-08-17T22:34:54.946+01:002016-08-17T22:34:54.946+01:00CBs are the last buyers of 'their' respect...CBs are the last buyers of 'their' respective bond vs. other CBs selling their position in that given govie - a.k.a 'Battle ROyale'Nicohttps://www.blogger.com/profile/06532015745155347229noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-35877501160535846332016-08-17T22:32:36.675+01:002016-08-17T22:32:36.675+01:00@12 Yo HFM LMAO on this one:
" I must tell y...@12 Yo HFM LMAO on this one:<br /><br />" I must tell you that in all my 12 months of institutional experience I have never seen a 15% fall, and can't believe such phenomena actually exist :)"<br /><br />The wit is strong in this one.<br /><br />Mr Beach re: treasuries I think the unifying concept here is speed and the nature of the long participant in the UST market, which to LB's point has changed materially in the last 12 months - when a spec bubble is big enough, you only need only a couple of bid-less days for prices to fall so much so fast that the portfolio effect takes over with algos piling on - as long as we are dealing with financial instruments and rules based trading there is always a scenario where CB's simply cannot move fast enough before the PnL effect begets further selling - of course that market is far too important for CBs to not even try to stem a slide eventually, but given lopsided enough positioning a LOT of damage can be inflicted before jawboning and press conferences - I swear I have never seen a market where bulls have greater confidence that they are right and prices are going to the moon with zero risk - not dot com circa 2000, not crude in summer 08, not even housing in 2006. Hell I even think its a one way street, and I'm the one penning this note. <br /><br />This bubble in bonds is epic. Ignore this fact at your peril. washedupnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-26797547883453607432016-08-17T22:31:23.090+01:002016-08-17T22:31:23.090+01:00Here is a very amateurish thinking on the negative...Here is a very amateurish thinking on the negative yields and bond market:<br /><br />I believe that we can all agree that traders bought FI assets with a negative yields are hoping to sell to someone willing to pay a higher price, as CBs are the last buyers. So far, negative yields exist only on short term FX assets. <br /><br />Now when short term bonds are close to their maturity dates, the only one who do not mind losing money on this trade would be CB. Assuming all other private investors would get rid of their bonds with negative yields at some point of the life of the bond, unless CB could buy all the mature bonds in the market, someone is losing money on those bonds at the maturation. It leads to two possible outcomes: either CB eventually expands its bond-buying capacity and owns all the bonds to support negative yields, or bond yield goes back to positive. <br /><br />It would be a long process to reach each outcome. The risk IMO is that the process will not be gradual and orderly.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-67598720010393922342016-08-17T22:27:19.540+01:002016-08-17T22:27:19.540+01:00@Leftback:
IMHO, REITs are benefitting from the h...@Leftback:<br /><br />IMHO, REITs are benefitting from the hunt for yield worldwide. It is likely there will more long term tenants instead of macro tourists. (With some preference for mREITs over mall and CRE.) If a 25bps hike frightens REIT some weaker holders, then I think more hardier buyers will step in. I don't see this trend changing until the Fed demonstrates a real backbone (unlikely for a while). So I'm happy buying REITs on the dip, collecting my monthly dividend for my troubles, and enjoying the capital appreciation.<br /><br />On a different note, TWLO and ACIA are demonstrating late 1999 like dotcom bubble pricing. I'm watching this trend very carefully. If I see this spread to other stocks, then I'm going full 12yoHFM^3. So far since 2009, we haven't gone full-retard in equity markets. But seeing the gains in TWLO and ACIA and feeling left out could drive a lot of folks back into stocks.<br /><br />The question is what is the best way to play full-retard and capture a lot of the blow-off top? I don't have the time to read the Yahoo discussion boards (or their equivalent) today. Perhaps the fever will be caught by some of the more focused ETFs this time around?<br />MrBeachnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-77940647991740696282016-08-17T22:18:32.540+01:002016-08-17T22:18:32.540+01:00"Pound sterling was backed by gold issued by ..."Pound sterling was backed by gold issued by the Bank of England. It was the world money at the time. You could use a British gold sovereign, a one-ounce British gold coin, virtually anywhere in the world. And everything looked like it would maybe stay that way for the next hundred years.<br /><br />Then in a very quick sequence of events from the end of June to the end of July, the Archduke of the Austro-Hungarian Empire was assassinated by a Serbian terrorist backed by Russia. That event set in motion the events that led to World War I and the ultimate decline of the British Empire."Nicohttps://www.blogger.com/profile/06532015745155347229noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-83797137503031937292016-08-17T22:14:28.736+01:002016-08-17T22:14:28.736+01:00What makes this juncture in the markets especially...What makes this juncture in the markets especially interesting is the perception that there is only one possible Black Swan (the Fed), and since the Yellen Fed has actually proven to be La Paloma Blanca, then no such Black Swan in fact exists. <br /><br />This is the basic assumption upon which vol sellers and dip buyers and 12yo HFM are currently operating. As Mr Beach points out, when known risks are priced in, an unexpected incursion from left field is frequently the catalyst for market instability.<br /><br />12yo and others are behaving as though extrinsic economic shocks are as likely as giant asteroid impacts, but the historical record proves that we know this not to be the case.Leftbackhttps://www.blogger.com/profile/07728096415928915882noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-81916729174730643762016-08-17T22:11:36.305+01:002016-08-17T22:11:36.305+01:00"Knowing their bid is out is sufficient to ch..."Knowing their bid is out is sufficient to change market behavior" <br /><br />oui oui<br /><br />until they pile up so much leverage chasing so little yield that.. you know what, it would take only one (CLEVER) hedge fund to get out firstNicohttps://www.blogger.com/profile/06532015745155347229noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-8902105012980897122016-08-17T22:06:51.658+01:002016-08-17T22:06:51.658+01:00Mr Beach,
Love your commentary in general, and I ...Mr Beach,<br /><br />Love your commentary in general, and I am long mREITs (although we have trimmed our longs). But the REIT universe in general looks a bit shaky here, with the mall REITs weakening and CRE already taking some hits. We actually have some IYR shorts to hedge the mREIT exposure. This is one of many sectors that might be especially vulnerable to the (largely symbolic and psychological) effect of a (minuscule and insignificant) 25 bp rate hike. This is all 100% psychology here - it is musical chairs investing now, there are too many leveraged players and not enough seats for everyone when the music stops.Leftbackhttps://www.blogger.com/profile/07728096415928915882noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-22546796228708136102016-08-17T22:05:55.432+01:002016-08-17T22:05:55.432+01:00@Nico:
There really is no magic to the mechanics ...@Nico:<br /><br />There really is no magic to the mechanics of QE. The Fed authorizes an expansion of their balance sheet and starts buying in the open market. Knowing their bid is out is sufficient to change market behavior. 12yo is a canonical example.MrBeachnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-5084605043839759202016-08-17T22:05:54.643+01:002016-08-17T22:05:54.643+01:00@MrBeach: Appreciate your caution, but I must tell...@MrBeach: Appreciate your caution, but I must tell you that in all my 12 months of institutional experience I have never seen a 15% fall, and can't believe such phenomena actually exist :)12yo HFMnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-41366209935229996212016-08-17T22:01:03.396+01:002016-08-17T22:01:03.396+01:00@12yo:
Your position is more precarious than you ...@12yo:<br /><br />Your position is more precarious than you think. The low volume melt up is likely built on massive short covering post Aug-15, Jan-16, and Brexit. Could it grind higher - sure. But one swift kick of uncertainty from out of left-field and you can take off 15% in a heartbeat.<br /><br />MrBeachnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-91357002229603171382016-08-17T21:57:57.975+01:002016-08-17T21:57:57.975+01:00there you are, the dogma
"unlimited buying a...there you are, the dogma<br /><br />"unlimited buying ability "<br /><br />are you so sure? i have studied the modern monetary theory, it's all fancy and young and cool. like Hansel (Zoolander)<br /><br />but it is only a THEORYNicohttps://www.blogger.com/profile/06532015745155347229noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-70641838131498366182016-08-17T21:53:32.377+01:002016-08-17T21:53:32.377+01:00@Nico:
I see no bond market crash at all when CBs...@Nico:<br /><br />I see no bond market crash at all when CBs are ready to QE at a moment's notice. Why would anyone sell bonds when CBs with unlimited buying ability stand ready to jump in at at any time? <br /><br />I'm not saying 12yoHFM is right. But I'm not saying he is wrong either.<br /><br />The SNB was dealing with a peg that had become harder and harder to sustain. Perhaps the PBoC has similar problems today. But Europe, UK, Japan, US - fuggetaboutit - with no capital controls, the markets are pricing and acting completely rationally.<br /><br />Why would there be any panic at all in the bond market? <br /><br />I'm personally having an okay year sitting long REITs & Munis and short equity markets. <br /><br />MrBeachnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-36852036293291905652016-08-17T21:49:31.390+01:002016-08-17T21:49:31.390+01:00I love Nico's comments, the guy is savage. How...I love Nico's comments, the guy is savage. However I disagree entirely because his views are the opposite of mine, so if he's right I'd lose money which is unthinkable yo? <br /><br />The last 2 days saw a pullback in equities, where we BTFD (as outlined in my last post). FOMC showed once again that the Fed will do nothing re: rates, so equities will just grind higher. Bonds won't collapse for the simple reason that CBs own most of them, and will just buy more. And that's it folks. The only way you'll make money is to invest with 12yo HFM. Simples.<br /><br />12yo HFMnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-88417479439687033412016-08-17T21:41:10.645+01:002016-08-17T21:41:10.645+01:00i am not focusing on it per se - i'm just dead...i am not focusing on it per se - i'm just dead worried. I remember the fear in 2009, when people would buy farmland and guns etc and nothing has been in place to regulate markets so that we'd never go through such panic again<br /><br />do you really think 'helicopter money' - as a last resource - would help contain the panic of a bond crash? sincerely i hope it never happens BUT financial markets are (one more time) immensely fragile as we speak<br /><br />Abe has already failed, Draghi is fighting common sense.. and the Fed is cornered. This is where we stand.Nicohttps://www.blogger.com/profile/06532015745155347229noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-8810050253719523792016-08-17T21:36:38.768+01:002016-08-17T21:36:38.768+01:00Nico mate love your stuff but GFC the sequel ? Not...Nico mate love your stuff but GFC the sequel ? Not healthy for the wallet to focus on the end of the world.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-49491791078201199782016-08-17T21:34:01.334+01:002016-08-17T21:34:01.334+01:00One way street?
https://pbs.twimg.com/media/CqFiz...One way street?<br /><br />https://pbs.twimg.com/media/CqFizKgWgAAU6Sq.jpgAnonymousnoreply@blogger.com