Macro Man has been up to his neck all week with real world stuff, and at this juncture doesn't have a lot of fresh insight to offer. However, given the BOE's decision to stay on hold yet again, as a public service he is pleased to present to following Carney-to-English dictionary for those looking to understand the governor of the Bank of England:
Rates may have to move higher at some point: Rates are on hold.
The economy may require easier policy: Rates are on hold.
Rates are on hold: Rates are on hold.
Honey, I'll help with the washing up in a minute: I'm going to sit on this couch and do nothing, other than think about rates being on hold.
Tell him I'll be with him in a moment (when receiving telephone call): Put him on hold.
I love gruyere cheese: Because it's holed.
Kenny Rogers is a talented singer: You've gotta know when to hold 'em....
etc etc etc.
On a more somber note, assuming the tragedy in Nice was a terrorist act, one can probably assume that it will do little but harden the resolve of Messrs. Davis and co. to hold out against free movement in their negotiations. At the same time, that Boris was booed at a Bastille Day reception doesn't exactly bode well for harmonious discussions, either. Regardless of your view on Brexit, the pas de deux between the Brexiteers and their Eurozone counterparts over the next few years promises to be fascinating...
Rates may have to move higher at some point: Rates are on hold.
The economy may require easier policy: Rates are on hold.
Rates are on hold: Rates are on hold.
Honey, I'll help with the washing up in a minute: I'm going to sit on this couch and do nothing, other than think about rates being on hold.
Tell him I'll be with him in a moment (when receiving telephone call): Put him on hold.
I love gruyere cheese: Because it's holed.
Kenny Rogers is a talented singer: You've gotta know when to hold 'em....
etc etc etc.
On a more somber note, assuming the tragedy in Nice was a terrorist act, one can probably assume that it will do little but harden the resolve of Messrs. Davis and co. to hold out against free movement in their negotiations. At the same time, that Boris was booed at a Bastille Day reception doesn't exactly bode well for harmonious discussions, either. Regardless of your view on Brexit, the pas de deux between the Brexiteers and their Eurozone counterparts over the next few years promises to be fascinating...
27 comments
Click here for comments"over the next few years promises to be fascinating... "
ReplyNext couple of years. Assuming the EU can actually hold it together that long ! I still am waiting to see exactly what conjuring trick the EU intend to perform to recapitalise it's banking system without setting aside the precedent that they set in Cyprus.
nice .. dont forget
ReplyWhere on the ship did you put the monetary policy? - in the hold.
I'm gunning for a markets turn lower. too much towel chucking and blind upward faith.
http://polemics-pains.blogspot.co.uk/2016/07/fifth-wave-or-sweet-sixteenth-and-sell.html
so all time high on expiry day uh?
Replyi did not think we would be given another glamourous short entry after brexit
loading max size short for a 2% dip where stop will be set at entry
100% long GBP and flat all other currencies - enjoy July friends , and avoid France
"Kenny Rogers is a talented singer: You've gotta know when to hold 'em...."
ReplyYou've gotta know when to grab that good chi........
I am with Pol and Nico on this one. Short SPX here, for a 2% move or the mudslide, I have been waiting for the latter for a while so am not that hopeful but one day we may be all surprised.
ReplyBonds are correcting after that massively overdone move, so I suspect it is only a matter of time before stocks correct under the heat of higher yields.
Nico is back! The resident EuroStoxx expert. I was wondering where the next top would be.. right at 150 day which has held before. nice call
ReplyThough I am still waiting for S&P to go below 2080 or so before turning really bearish
Looking at some fixed income, jeez there was a massive rush into lots of sectors already. Have to re-think how much more is left here...
Well, i am on other side of the trade, think we will see 2240 before 2080...
ReplyCarney at wedding nuptials: To have and to hold from this day forward
ReplyAs William Wallace: HOLD!!
When someone steals his girl: cuckholded
ReplyYou know what make of car Carney drives ? a Holden
What does Carney say when he's taking a picture -....And....hold it there
Carney sings along with The Stranglers. 'Hold 'em Down'.. actually I m off to do the complete song rewrite of that .. back soon
Ok, done. Carney's song ->
Replyhttp://polemics-pains.blogspot.co.uk/2016/07/carneys-song.html
Very droll, MM. The Full Carney, as you point out, consists of doing absolutely nothing at all, except an occasional bit of jawboning.
ReplyIn thin markets with low volume and no technicals to speak of, the tail often wags the dog, and the timetable of the options market has an undue influence on the behavior of the equity market. Hence my agreement with Nico on the importance of expiration, and yes we'll take a small short of EU banks, QQQ and IWM here; long vol, and short USDJPY on a renewal of the yen carry unwind now that weak yen longs have been torched.
The rig counts were up again, look for WTI to drift lower next week. Short USO. Long USDCAD.
US inflation, driven by gasoline and rent increases y/y is heating up here. The Fed isn't as far out of the picture as most appear to believe. Long UUP, short EURUSD. We would hazard a guess that the metals are due for a bath. Short GDX, SLV.
No position in US10y. Too hard to predict here. Short HYG, however, as HY defaults are rising, and sooner or later this will result in a nasty shock for the sleepy sunbathers who are holding this year's pink flamingo asset class.
To summarize, yes, it's back once more to our Rising Dollar, Risk Off thesis. Fade the reflation trade/s.
Turkey coup, nice timing...
ReplyWhen I said .. something . something was going to blow up and crater the markets (and on the 16th) what I actually meant was.. 'there 's going to be a coup in Turkey on the 16th'...
ReplyJeezus .. this is HUGE News. All the world's major political nightmares meet in Turkey
Syria - ISIS - Russia - US- EU - GREECE - ENERGY
Stand by for major fkfest.
It's possible Erdogan was actually finally getting ready to stop ISIS oil trafficking and cut off rebels. Big no no for NATO.
ReplyPol n nico u 2 Have the best timing lol
Reply>> Leftback: Short HYG, however, as HY defaults are rising, and sooner or later this will result in a nasty shock for the sleepy sunbathers who are holding this year's pink flamingo asset class.
ReplyI am just curious how you justify to your investment committee paying 6%+ p.a. for shorting an asset against its up trend without any possible turnaround in sight?
I assume that you understand that the credit spread is the compensation to take future realized defaults and recoveries and not the ones realized so far?
We are about to get over through the correction in fixed income. 10y bunds fought hard today to get the yield above the zero and, fatigued, just finished at zero.
Like 10y UST at 3% during the heights of the "taper" talk is now considered like god's gift, the zero on 10y bunds now will be considered like god's gift in a few weeks or so. It must be then clear that, as bunds and EU core (gilts will not be different) move back to negative territory, anything that provides extra income (HY, EMB, BTP, etc) will move in tandem to the new highs.
By the way, the CPI rate which is higher than the wage growth rate is actually deflationary. If you doubt, google for earning quidance from Swatch, Boss, Abercrombie, etc, as well as how their stock prices performed last year.
As for the S&P500, as I mentioned already, a lot of PMs heavily underperformed their benchmarks, it's a career risk for them now. The only way out is to bid up the best of what is out there, and the beauty is the S&P 500... Any dip should be bought, any spike in vol should be sold. One should safely target +20% return by the year end...
Nico, you're trading gold at the moment. Almost like you put a position on and the market gaps lower. Europe sure to gap on Turkey.
ReplyThe world is a mess.
The coup is getting messy this is not bloodless with police vs military gun fights.
ReplyWithout wishing to divert attention away fmo the MM blog, I've found it easier to put all my instant thoughts on it here
Replyhttp://polemics-pains.blogspot.co.uk/2016/07/turkish-coup-thoughts-so-far_15.html
rather than drown the comments column
Thx Pol - read your piece - much more dangerous than brexit eh - I guess we should prepare for 2400 in spoos by next friday then.
ReplyIs that Turkey stuffed.
ReplyIt's a fade.
ReplyDon't really know what the hell were they thinking... a few tanks and a helicopter...
Dear QE architect..ahem..Mr Bernanke,your QE matrix is at all time highs in S&P and 10year and I would like know which one is Zion..the S&P or the 10year. Because I support the theory that Zion is another level of the Matrix ( Matrix within a Matrix) and is not part of the real world at all. Therefore, the machine reboots over and over again after teasing the rebel short traders into thinking they have a buckley's chance of creating alpha after swallowing the red pill and taking a contrarian position to the "oracle of Omaha" who stated that Neo ...ahem Soros isn't the one. But if you could just gives us slight hat tip towards which of the two doors I should walk through to escape your perfect design I would very grateful, as I think we'll about to find out which one is Zion and as an corollary I'll be taking the otherside when the cycle reboots from nowhere.
Replyi must be going nuts cause amps is making sense...
ReplyMedium- to long-term implications of coup in Turkey for Europe: one extra totalitarian state on the EU borders (second to Russia) has emerged with a high likelihood of new military conflicts in future. Deflationary? Yes. So: buy bunds, avoid DAX and STOXX50
ReplyMedium-term implications for the Brexit: Is the Brexit on the top of the agenda in Brussels post Nice and Turkey? No. Deflationary? Yes. So: buy gilts, buy FTSE
As for US: can US economy disintegrate from deflationary trends? NO. So: forget FED and buy UST. Is the growth, however small, still out there? Yes. So: buy S&P 500, HY and EMB (btw, Turkey is 5% in EMB - a nice buying opportunity on Monday might present itself)
As for emerging market equities: forget. Never do I understand how people are eager to invest in those crappy state-regulated and corrupt companies with terrible balance sheet where the rate of share dilution is above any earnings yield. May-be people look at high GDP growth and equate it to high earnings growth because this is what they are taught in business schools. Leave those theories to entertain academics, just look at the price performance of tobacco companies.
With such a rosy picture, I am starting to believe that my original projection of 20% target return by year end is way too conservative...
Those who are short and, in particular, short duration and defensives (XLU, XLP), must understand what awaits you on Monday if there is any spark in risk-aversion? Please take a couple of extra shirts and pants with you in the morning as you will need them. By the end of the day, when you do receive the notification that your account is being liquidated by the IB robot, please remain calm. There is more in life than trying to outsmart other people at your own expense and, besides, you can always trade in the paper trading account.
USDTRY opening back at 2.9600. Was here in May .. really can't see Turkey being a better buy now than then
ReplySo I m JBTFD
Pol
Emmental is the cheese with holes, Gruyère is solid....
Reply