Thank you to all readers for the very kind wishes in response to yesterday's post. It may take your (erstwhile) author a few days to personally respond to everyone who reached out individually, so please bear with him. He also hopes to be able to announce where to find his stuff on the Bloomberg terminal in this space over the next couple of days: stay tuned.
In the meantime, feel free to use this post as a forum for commenting on the next 24-48 hours' worth of market action.
In the meantime, feel free to use this post as a forum for commenting on the next 24-48 hours' worth of market action.
49 comments
Click here for commentsdont forget to ask bbg to let you post here also with a delay
ReplyRandom (and I do mean random) comments:
Reply1. I guess you have sort of monetized this blog in a way - it led to the Bloomberg position (they could see exactly what they are getting :) ). Hope you got full value. There is some web site out there that is supposed to tell you how much your blog is "worth" (but those estimates always seemed ridiculously high to me).
2. Guess we (at least the uninformed masses) will finally learn your name. :)
3. Are you going to be on BBGTV at all (I have that in my Sling package)? Push for that (even if you are on at three in the morning!).
4. I remember your move back to the United States. Did you still have that (or a similar) job until recently (just wondering, because the material here is often of such high quality, I wondered if you were working on your blog full time).
5. Not sure they will allow you to post anything here, but if you have a page on the Bloomberg web site that links to all of your material (like all of the Bloomberg View columnists do), that solves most of the problem for those who want to follow you (but not the loss of community - hope you can figure out something to keep that alive).
I will bet MM will be back on this blog ( I hope he is), that is because he will find the BBG world very constraining.
ReplyMKS
Congrats MM. I hope that BBG works out well for you.
ReplyThank you for all you've done here in delivering a steady stream of high-quality and thought provoking analysis, accompanied by a wry view of markets and world events. I have learned something every day from you and the many excellent contributors incl 12yo.
One possible evolution might be for the Macro Man blog to become the Macro Men community, continuing its existence as a discussion forum rather than a blog. I haven't run one of these before, but I am told that vBulletin is straightforward and quick to implement at a basic level. If there is interest - and MM himself is comfortable with such an effort to sustain this community - I will investigate further.
Well, this still bites.
ReplyI've followed you since you began and although I don't really have a macro mandate, I've learnt a lot from you over the years. You had to go to bbg after I stop using it...I guess I might need to start trading OTC over IB to justify to myself the expense of reading Macro Man.
Reply"and the many excellent contributors incl 12yo."
ReplyThoroughly agree !
Long-time listener, first-time commenter, had to do it before the ship set sail. I appreciate everything this blog has stood for over the years and have learned a tremendous amount through not only the posts but the community of active commenters as well. fwiw, I full-heartedly second Celeriac1972's proposal!
ReplyMM thanks for the great reads. I've really enjoyed my time spent here, an excellent investment and education.
ReplyIt's been quite a trip. From ACL blow outs on through the seat moves and TMM phase (thanks to pole and gang) with some impateriate diary posts followed by a surprising return.
Again thank you very much.
I'm not a terminal user but do hope to find a way to continue to follow your work, maybe by way of Bloomberg weekly?
Also thanks to all involved in the comment section you brought me back here throughout the day.
Cheers
Started reading here when I began my investments career in 2008. Thanks to both MM and the community for being my school of thought through the years.
ReplyIts my hope this blog remains a forum for debate in your absence. For now though, go grab a larger audience for a time then bring them back here and monetize. Happy to pay the greens fees.
Best of luck on BBg, you'll be a light house in that maelstrom.
@MM:
ReplyCongratulations and best of luck! It appears you've pulled yourself out of this pit of digital deplorables and moved to greener pastures... I kid, I kid. This blog has been an incredible source of information and wit; indeed, I would argue that the signal-to-noise here is the highest of any content channel (paid or free) across which I've stumbled.
I would love to see delayed data from your work with BBG, but I understand the hurdles of distributing your thought pieces via various channels.
In the meantime (and before the forum gets built... hopefully), could you point your readers to other like-minded blogs/sites?
All the best!
To use a football analogy it feels like as if Dimitri Payet signed for a Chinese club in the January transfer window breaking the record West Ham fee. Yeah, great for him and the club in financial terms but ...
ReplyFans can't complain though especially if they aren't season ticket holders ;-)
Mind you, I was willing to pay the subscription price here rather that getting your stuff in Bloomberg for free (I have a terminal) as I have the feeling that both content and comments will have to be "moderated" no matter the assurances you might have.
So thanks again for all your efforts in this space and all the best to your new endeavour. Please find a way to keep this space open even if it were just for comments.
Matador
Why we all thank MM for bringing us together let's not lose focus on markets. I am happy to continue posting here if words of caution amid markets overheating (now) or words of wisdom when markets panick (last February, and probably next year) are deemed beneficial to both MM experts and cubs.
ReplySome significant unpricing/mispricing is at works on equities here. Being so close to full employment there is no way Trump can both curb immigration and avoid wage push inflation. So we have monetary going against fiscal. Goldman is saying today what grandpa Nico wrote already last weeks (which worries me because Goldman market calls are repeatedly wrong and misleading):
"For equity markets, the potential for a swifter pace of rate hikes from the central bank in the face of meaningful fiscal expansion constitutes a “contingent knock-in” trigger for the “Yellen call,” or Goldman’s theory that rallies in stock prices would elicit more tightening from the Fed Chair that would limit further upside."
We witness one more occurence of equity divergence with FX and credit markets. Credit people - the smart money, unpolluted by retail/CNBC agitation - have already understood 2017 next rumble in the jungle:
Mohamed Monetary Ali vs. George Fiscal Foreman
Credit always lead equities by a few months. Credit double bottom in summer 2007 was a canaryzilla in the mortgage coal mine. ANd remember that we did not even have any geopolitical uncertainty back then, everyone was busy making the same money worldwide. Noone was trying to piss off China and speaking of China, we are 9 years of shadow banking opacity and gross policy errors and currency foulplay later. One of Trump's campaign most powerful motto was that China was screwing America, which is true in so many ways. It is eerie to see that a stronger dollar since election furthers the devalution cheat Trump was complaining and obsessed about.
If we ponder FACTS ONLY since election we have 1) stronger USD and 2) FOMC Yellen 3) China trade tensions already at work against US corporate profitability, while equities blindly follow animal instincts dear to Dalio, El Erian and Co. Animal instincts (Foreman) vs. facts (Ali). I am saddened and worried that once again, king market is inviting reckless speculation to chase current rally. All sentiment measures and fear gauges point to record complacency. You find tons of fully priced stocks still levitating in thin air (Caterpillar) while doomed companies stocks which got lifted on Trump euphoria have already reversed election gains (Macy's).
Merry Christmas and plan your trades now, before the holiday since January 4th could already be too late to get out. In late 2015 i feared operators had extracted the maximum wealth off markets by fixing bonuses at irrealistic valuations. January/February quickly undid that. It is remarkable to see they managed to repeat this a year later in the face of so much uncertainty both domestic and foreign, when everybody expected markets to 'sell off and wait' in the wake of a Trump election. Remember that, many people evoking animal spirits today are the same who predicted an extended market sell off if Trump won.
i've ordered my Dow 20,000 T-shirt.
MM ... allow me to be yet another punter to give thanks to you for all the years of reading your wonderful blog, and to congratulate you on your imminent bbg gig. It's been such a great ride, with so much mirth and yet so much worth for me. Thank you, thank you. Much success to you as MacroMan begins his new career path right at the dawning of 4-8 huuuuge years of Trumpenomics!
ReplyNico, you are spot on. Order a batch of those T-shorts, would more than pay for themselves when you think of selling than at any 15000. Sort of a spectator now myself due to local fuckups over the past couple of years. MM make BBC great again, plenty of work for somebody with a clear head. All the best.
ReplyThanks MM - after experiencing your witty comments "realtime" all these yeas ago in Paris it was a great joy to find your blog and enjoying the same sense of humour paired with fantastic knowledge and tremendous market experience.
ReplyNever failed to amaze me how you highlighted market issues well before most other people even had them on their radar.
You will be missed as much as the Irons will be missed in the EPL next season (sorry).
Take care and best of luck at Bberg
Thanks GM...scary to think how long ago that was, eh? Btw, I am on a whatsapp chat with a few of the boys from Chicago...they pass their regards.
ReplyThank you MM for all these years of commentary. Wishing you all the best in Bloomberg. But if you do decide to one day come back for a paid subscription model, you definitely have a customer waiting here.
ReplyHopely crap vix at 11.45!!!
ReplyJohnL,
ReplyGift! What could possibly go wrong? Professionals are dumping on unsuspecting souls. Six consecutive daily outflows on IYT (transports) - longest since August of 2015 and on above avg vol. Can you say distribution?
ReplyCeleriac1972 - if the crowd want to go Vbulletin I have implemented a few of these so could knock up such a solution if the punters went for it!
Yeah, December VIX futures have been good to me. Bought enough to close all but ten contracts (which I kept for the settlement lottery) yesterday at prices as low as 11.43 (had opened more than fifty at 20.00 or more). Since I am in the Nico camp (significant correction ahead), I don't expect to see VIX this low again for a while.
ReplyFinal settlement value for December - 11.15
One of the lower settlement values, but there have been lower:
200611 10.27
200612 10.05
200701 10.71
200702 9.95 (lowest settlement ever)
201407 11.03
Bitcoin looking somewhat exponential (again). I'm sure that crypto-currencies are the way of the future and will be a great success. I am less sure that Bitcoin (or any one of the others out there) will necessarily be the winning horse. Even if Bitcoin is the winner in the long run, I'm far from convinced that this means that the purchasing power per unit will increase proportionately. So many risks - regulatory/technological/substitution etc.
ReplyMaybe it's just me.....?
Left, abee, CV, Nico whats the plan to exchange ideas going forward? it would be great if (as someone suggested) MM just put up his bberg column here with a delay, but something tells me bberg may have issues with that - migrate to Pol's site perhaps?
ReplyCeleriac, good questions about Bitcoin longer term but BRO, just go with the trend here. Its so simple. And the pop really isnt much today. yes its up a lot YTD but its pretty much like a penny stock. a few % is nothing
ReplyNico, I agree with most of what you said, but not sure credit guys are showing any sign of divergence here. CCC spreads rallying pretty hard and spreads across the ratings bucket are all coming in. BB spreads back under 300bps, near the 250bps low in 2014
http://imgur.com/a/Kvdu4 -- BB spreads
Replywashed - what's the address for Pol's site?
Reply@washedup: i am sure Pol would be delighted to host. Let's wait and see if MM is able to persuade someone with a terminal and time to write often enough to populate the MM space on line with a few posts per week, which would maximize keeping the community together (even witty 12y-olds). Polemic's Pains would be a more than worthy home for MMers, and might even trigger Pol to post more frequently and share some of his witty and acerbic thoughts on CB manipulated-markets.
Reply@abee: +1; our local credit guy is correct. There is no credit crunch; the spigots are absolutely wide open. If there is going to be a problem it will be in mortgage-backeds (housing is almost frozen temporarily), but a return to lower rates as the economy slows and Trumpflation fears abate will likely fix that (and it is coming). The response of the fixed income investment community to the rate spike has been calm and typically logical in a yield-seeking low income environment.
Last summer a lot of folks decided to raise cash - as much as was consistent with their mandates (Gundlach and others even told us what they were doing) - and then just sit it out - those folks were able to use the dip in price to buy more BB and CCC product in the last week or two, and in some cases also to move out along the curve. We have been buying IQI, LQD and TLT, yes even the Long Bond, beginning early on with the muni space and continuing well into the recent episode of Bondmageddon. The muni ETF purchases are already green, and we locked in >6% yield. The rest will be OK by the middle of January.
We are working on a post outlining our views on the "Trumpflation" theme, hopefully will offer it to someone (MM or Polemic) soon.
http://polemics-pains.blogspot.com/
ReplyHappy to host a discussion forum at my place with regular roll overs. If it happens I promise to post more regularly and take guest themes.
ReplyBut the reason I can't come back to MM is the commitment to a brand that demands top quality daily input. I don t have MM quality and I have a day job that doesn t allow full time peices. and I don t need the guilt of not doing it well enough or daily.
Pol
Pol
@Left/Pol thx for that - keep us posted - its been a privilege to be part of this community and I for one am willing to do the needful to keep it going.
Reply@Pol/ Left; as a regular follower of your respective posts / comments I'm 100% supportive of any initiative you guys can pull together that can keep quality debate up and alive.
ReplyVery much appreciate Pol's offer to host and our community to continue to post. As above, I am with @Upside: 100% supportive of every effort to maintain the dialogue going forward.
ReplyBefore everyone decamps, please stick around a bit longer. I have had a good response from potential contributors, so with a little organization there's a decent chance for a TMM mkt I I before long....
Replyi just talked to 12yoHF, Funny Money, Ghost of funny money and the famous Anon 1:01 (Yes, he was posting twice a day at 1:01 and we never realised the supercherie). We became great friends here and go to Cancun Spring break every year with fake IDs. Anyway they all agreed on $50/month each to keep on writing at every market top, which is still much cheaper than Bloomy and the most reliable sentiment indicator the last 8 years. They accept bitcoin payments even if 'they have no idea what bitcoin does'
ReplyLOL Nico G! Mr. Market is about to instill a healthy doze of humility into a jolly bunch.
ReplySpeaking of... Dr. Copper looks more like a registered nurse here. The Chinese 12yo have chased the red metal at an astonishing rate lately. Specs have built the longest position in 10 yrs while the producers are totally on the other side of this (according to the latest COT). Cheerful joy, a wonderful sight, the perfect double top formed on March futures (HGH7) with a neckline of $2.43 surving as a lifeline for the kiddos who are about to puke themselves all over back to the brekout backtest of $2.30 area. Warehouse stocks are ballooning, and last time I checked the bridges to nowhere were not under construction in US just yet. Happy days are indeed here.
thanks mm appreciate your efforts to keep the community together
ReplyCeleriac,
ReplyI beg to differ. So far crypto-currencies are basically the same as gold imo. They do not have an intrinsic value in the sense that some goods are priced in Bitcoins, say (I know, you can buy some stuff paying with Bitcoins but in these cases the vendor just turns around and converts then into USD or whatever). Right now it is a nice vehicle to speculate and maybe circumvent some capital controls, but that’s about it.
Jolly good one nico g lol, the trolling indicator! (Though 12y hfm is not part of that posse imho, we miss you man)
ReplyFully supportive of either macroman mkt ii or transfer to polemic pains, will publish and comments more often too in the year new (which may not add much quality, but at worst i'll strenghten the trolling indicator)
Merry xmas to all
Jd
@Nico - Why do you let the BTFD crowd get to you so much? You seem to have massive ego issues in your trading, always trying to catch tops (sign of huge ego) even though it repeatedly causes you to have losing positions. Also you have a lot of verbal aggression with the BTFD guys (again sign of ego) and constantly feel the need to tell people you made millions selling the last top (which is unlikely). The reality is that successful traders almost never talk about their wins, and don't engage in such behavior. They don't need to. The internet is riddled with losing traders who then congregate on blogs trying to pretend they are something they're not. My suggestion is to do something more meaningful with your life - you and your family will be happier for it.
ReplyMy guess is that Nico is simply italian
ReplyYawn….. LB continues to be fascinated by the prevailing sentiment concerning the perceived slow Death of Bond.
ReplyHey, MM, if you are reading, it occurred to me today that one day last summer when VIX was about 3, LB had submitted a post of a "musical" nature, that was a perfect fit for a quiet market day, low volume trading, markets at all-time highs, as well as other aspects of a silly season happy-clappy equity rally - just like this one!!! I am sure you remember the offering, can resend if you don't have it handy.
Can you perhaps dig it out, edit it slightly and consider posting it with its appropriate music video (there are so many versions of that song to choose from)? In the interests of you know, keeping the aspidistra flying…. :-)
Working on something of a more intellectual nature but it needs a bit more time - and charts/screen grabs...
anon 5:39
ReplyThank you for your concern, I will elaborate because weather is crap and i'm bored watching those markets. I started to save posts i write here, and store them like a trading dairy, this forum helps to formulate thoughts and i am much thankful to MM because i would not write otherwise. Can you choose a name? so that people can track you. Then try a few difficult contrarian trades and let the board here know about it. People with no name will show up to laugh at you and tease you twice a day everytime market trades .50% away from your entry. Believe me if you've had any long term success in this game you will end up reminding them of the good stuff you've done. Childish perhaps, or a matter of respect or else what, you turn your other cheek? I don't think so.
You might not be old enough to know that i was bullish (Spoos) in February, browse this website and find my posts. It is not about shorting highs only, it is about fading sentiment. I also bought Brazil when nobody wanted it. My proudest trade was to buy Spoos in March 2009 while scubadiving in Carriacou. Dangerous? Yes. To each their own trading style. Trust me i do not brag on this blog, if you could see you how i lived you'd know i can't be doing too bad on markets. Besides mentioning i (ve) live(d) here and there (which helps a lot for trading different regions) i am not douche enough to show off here like people do on facebook.
I can only tell you i trade 3x50 clips on Eminis, and 3x130 on Estoxx so that you can understand why seven figure happen up and down, luckily more up than down. Those size work very well on the two most liquid equity index future markets in the world. I do welcome debate over trading style, and market reactions, as long as people do not mock each other. Yes i use verbal agression if someone lacks respect, i can't help it. In real life i am unfortunately violent and it used to get me in lot of trouble (police, and wife). So you could call this ego, i call it courage and honor. Don't get me started on where this world is going with our spineless, egoless politicians (Merkel, Hollande, Obama). This world was not built by little egos. As far as i know Buddhists did not build New York city.
Talking about ego and NYC, i supported Trump all along and lost half of my friends doing so. Good riddance, they took the media bait, claimed the moral high ground by supporting a criminal (Klinton Klan), while Trump just played the game with everyone against him in the most commendable manner. Not one person has mentioned how brave that dude is. They just assumed it was easy you know, because he is a rich kid and all that. Sad. The irony about Trump now elected is that i wrote and i knew that he would be good for the US economy (while TV heads and Cuban and Co announced market would sell off if Trump got elected). But i still choose to fade the repricing at new high because markets are trading ahead of reality, as usual.
It is not about ego, it is just a view on market sentiment. We are eight years straight up in bull market and just as equities were not going anywhere, Trump brings you a blow off? Sure, but the least you can expect is a bit of volatility. Noone is calling the market 30% down. Now, when you choose a name and hopefully can still debate here, and follow each other's views, you might see that if market trades my way i do not show up here triumphant on 'how easy it was' and 'how dumb everyone else was'. This is what the BTFD does, they shit on people, and i will let them get to me every time and want to spank them.
PS: to be very honest with you, and without using this place as a shrink too much, i just cannot participate in a bull market. On anything. It is probably due to my modest upbringing (not Italian btw) but i just cannot profit from 'speculation'. The first job i ever got after academia, the bonus equalled twice my father's salary who was already at the end of his career. That, knowing that he was doing the most useful job on the planet. So twenty years ago exactly, i already knew that this job was a joke, That the whole industry was a joke. As the Fly puts it, the only thing that keeps bulls going has to be cocaine, because it is morally profoundly wrong to send sugar futures up 80% in one month (winter 2008/09), or buy any other risky asset and ride a bubble sitting on your ass and expect 20% performance fee in the end. We have to agree that this whole industry is a joke, and that the pay off is the very problem for it tempts most people (who can) to stretch markets beyond logic to maximise pay off (read, Santa rally !!). The money bankers and traders make is a massive issue and distorts economies everywhere. No trader should make 500x the salary of an electrician.
ReplyI dumped my first job to go travel the world while riding the internet bubble early, rolling 20% OTM calls on a grey Scandi market until March 2000. I do not need to invent things when i tell you that my first bonus invested, was up 6000%. I let it crash. I went from a fat 8 figures at the age of 27, to zero. It felt good.
Since then i need to feel that it is 'hard' to make money trading, I just can't join momentum and sit on my derrière. Now you know why i'm a contrarian, and it is not about ego, it is about some fucked up Judeochristian guilt. People with ego will probably jump on an 'ego' trend and ride risky assets up with no problem. The only time i buy risky assets is when people massacrate them. I would dare to say that if more contrarian showed up, there would be less bubbles and less crashes.
I think the idea that participating in a bull market is easy is flat out wrong.
Replyexcuse me T but the JBTD gang has told you so. Have you seen Spoos the last eight years? buy ANY V-shaped bounce with stop at entry and 'you never lose money' it's been higher lows the whole way.
ReplyI find the debate quite interesting as it reminds me a lot of similar arguments within my firm and team. I will side with Nico on most issues.
ReplyTo kick it off: Anyone, who is not able (or does not want) to allow fellow readers to track his statements over time, deserves little to no credit!
Now to the heart of the debate:
In my experience any investment style can be reduced to two simple investment rationales:
One rests on the assumption that past developments (price or fundamentals) continue into the future and therefore the investment conclusion is usually in one shape or form a trend-following one.
The other style is all about mean-reversion, using the tools of valuation or contrarian macro predictions to take an investment position that is contrarian to the prior trend.
Sure, there probably is some middle ground but in my professional experience any investors can at least be associated with either style.
My conclusion so far is, that both ways of investing have their merits. It is a lot about the individual’s emotional comfort zone.
Trend-following is the feel-good style. You are positioned correctly 80-90% of the time, you have winning positions, the world is looks beautiful, meetings with clients or your boss are great.
This is also the reason why the industry loves to herd. Plain and simple – you are less likely to get fired, when you look good most of the time and everyone else was in the same trades if it goes wrong.
The contrarian is wrong most of the time, in fact he looks stupid most of the time. It is a rare bread in large financial institutions these days, specifically because many trends across the whole spectrum of investable assets have been so strong for so long in this cycle.
But he makes big money when everyone else punches their screens and he loves it. (Nico, is that a fair description?)
In any case and as usual the dumbest thing to do is to drop a proven investment style after it has not worked for a period and jump on the successful opposite.
Research Affiliates has great webinars on youtube on this topic. (https://www.youtube.com/watch?v=jAPxr3LRZcg)
Now to the markets:
I will just drop one fact. The median stock’s valuation in the US is in the 98th percentile of history on EV/Ebitda. Trends can continue but the risk/reward is horrible the longer your investment horizon becomes.
You are buying historically high multiples on historically high EPS as a result of historically high RoEs, based on historically high leverage and historically low taxes and interest cost. The only thing that can save the day is a very strong top-line…
For anyone that still does not understand what has been going on here all year...
Replyhttps://youtu.be/0akBdQa55b4
Transfer the mentality, to the comments section of this (great) blog, and you really do get a great laugh.