tag:blogger.com,1999:blog-34323687.post3946459734462939101..comments2024-03-29T12:26:35.581+00:00Comments on Macro Man: Buy back Tuesday?Macro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger42125tag:blogger.com,1999:blog-34323687.post-16488233496112037972011-10-05T07:51:47.249+01:002011-10-05T07:51:47.249+01:00C says'
Chancee...I understand your view.
Inde...C says'<br />Chancee...I understand your view.<br />Indeed I must as I have a tendency at the moment to set up short more than I go long.<br />However,markets do have two sides and this is why they do not usually go in straight lines .In this case the long side of the argument would say having put in a very high % monthly plunge just prior to the start of a season with a longside seasonal bias they have a rational for buying in this quarter at what they think will be the lower end of the price range.<br />Earnings season just in front will make that a choppy experience,but then it will be down to having made the right picks.<br />Essentially you see it's a bottom up view for a buy against my preferred topdown wait and sell .<br /><br />FWIIW,outside of counter trend rallies I don't see a build and buy market in equity until the Europeans inparticular get their banks fixed.Whilst that remains in flux we are liable to have volatile up and down trading markets. Historically,you don't get true bull markets without the bank/financial sectors being heavily involved.Should be no surprise about that really.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-44079388821882194802011-10-05T05:52:43.139+01:002011-10-05T05:52:43.139+01:00Looking at charts of the early stages of the 2000 ...Looking at charts of the early stages of the 2000 and 2008 bear markets I've sometimes wondered, why would anyone have bought those dips? Didn't they know what was coming?<br /><br />Yet, you can hear history repeating itself right now with people constantly trying to figure out where to BUY. Even with the US and Europe either already in, or headed into a recession. And even with the easy, slow- moving bear market rallies of the dot com crash long gone thanks to all the tradebots. Bear market rallies these days are brief and choppy... always waiting to be sank by the next tape bomb.<br /><br />And just like last time people always point to some of the data being okay in these early stages. But it's the data from now forward that will reflect what's really happening. It's a self-fulfilling event. -- just my two centschanceehttps://www.blogger.com/profile/02757578466531765652noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-20997455617618644672011-10-05T03:20:23.542+01:002011-10-05T03:20:23.542+01:00And as for "obviously not understanding what ...And as for "obviously not understanding what China's reserves are" - bitch please. When you can understand that countries with their own currency and limited external debt are a different game to the Argentinas and Greece of this world let know.Nemo Incognitohttps://www.blogger.com/profile/07345185457108156269noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-66001522857388118592011-10-05T03:17:13.460+01:002011-10-05T03:17:13.460+01:00mjm, the point we made is that you aren't buyi...mjm, the point we made is that you aren't buying into the probability of China having a general default, you are buying into their USD OFFSHORE BONDS defaulting. That is very different. Those bonds can be redeemed using reserves. Why?<br /><br />USD Account:<br />Assets: 3trn<br />Liabilities: 1.2bn<br />Net: ~3 trn<br /><br />Redeem the bonds and no FX changes hands. <br /><br />Now, RMB account:<br /><br />Assets: Useless SOEs that couldn't make money without subsidies if they tried, banks that lends to them.<br />Liabilities: Just about everything. <br /><br />Which admittedly isn't great. But remember you ARE BUYING USD CDS. If you want to bet on likelihood of China devaluing, selectively letting local governments default, or having insane inflation to make the bad go away by all means go ahead and do it but those are:<br /><br />1) Onshore bond shorting (hard)<br />2) Shibor payers<br />3) CNH options<br /><br />They are not China CDS.Nemo Incognitohttps://www.blogger.com/profile/07345185457108156269noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-52663444026146968682011-10-04T23:20:41.154+01:002011-10-04T23:20:41.154+01:00@LB, mjm123,
Along with TMM's posts, your com...@LB, mjm123,<br /><br />Along with TMM's posts, your comments are very informative. ThanksAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-56997193495637046442011-10-04T23:17:18.979+01:002011-10-04T23:17:18.979+01:00excellent, thank you again.excellent, thank you again.willemnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-71826812542455615502011-10-04T22:51:40.686+01:002011-10-04T22:51:40.686+01:00willem,
Most of my knowledge on the inner workings...willem,<br />Most of my knowledge on the inner workings of China's fx reserves have come over time from several books, sell side research notes and presentations, as well as conversations with certain individuals with intimate knowledge of this process. One of which (chief strategist at a major investment bank who used to be head of their fx and his close friend and biggest client was the head of SAFE) I just talked with and briefly discussed this topic. But Professor Pettis does have a couple great posts on this subject, unfortunately it doesn’t delve into detail on the mechanics of the fx reserves.<br />http://mpettis.com/2010/02/what-the-pboc-cannot-do-with-its-reserves/<br />and <br />http://mpettis.com/2010/02/never-short-a-country-with-2-trillion-in-reserves/mjm123noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-44574516662283706532011-10-04T22:38:26.794+01:002011-10-04T22:38:26.794+01:00Anonymous,
I read the argument as, "China wil...Anonymous,<br />I read the argument as, "China will never default b/c they have $3T in fx reserves". Whether the default is on domestic or foreign obligations is irrelevant for a CDS event. I agree that foreign borrowings are not the problem, the domestic RMB debt is. And in this case fx reserves actually increase the likelihood of a domestic debt issue b/c, as Pettis says, "financial crises are always caused by mismatched and highly inverted balance sheets, and the central banks accumulation of reserves is exactly that kind of balance sheet". Fx reserves only protect countries from a foreign debt or currency crisis not a domestic one.mjm123noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-90421663727596698732011-10-04T22:10:28.725+01:002011-10-04T22:10:28.725+01:00nice ones guys. Financial songs for the terraces.....nice ones guys. Financial songs for the terraces.. Now there's a whole new field of fun. <br /><br />mjm123 .. thanks for your comments. And we get your point and you made us stop and think .. dunno what yet .. but we are thinking . <br /><br />Right as for les marches , lets hope that Italian downgrades don't screw it all up by tomorrow morning. Thanks for Foxy back .. now wear this ..Polemichttps://www.blogger.com/profile/05985506596290073453noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-40948894976362110612011-10-04T21:40:27.198+01:002011-10-04T21:40:27.198+01:00Let's try this fitting anthem for the reflatio...Let's try this fitting anthem for the reflationistas and the inevitably upcoming "everybody else lost even more than we did" quarterly letters <br /><br />When you write your 10-Q form<br />Hold your head up high<br />And don't be afraid of the marks.<br /><br />When you write in your form<br />Gold not to the sky<br />And the sweet SILV thrust in your arse<br />Sell oooon through the wind<br />Sell oooon through the rain<br />Your '10 gains be tossed and blown<br />Sell oooon <br />Sell oooon <br />With hope in your heart<br />And you'll never sell alone<br />You'll never sell alone<br />Sell oooon <br />Sell oooon <br />With hope in your heart<br />And you'll never go bust alone<br />You'll ne-eee-eee-e-ver go bust aloneDee Dee Humbersidenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-81378590943089212952011-10-04T21:19:24.021+01:002011-10-04T21:19:24.021+01:00C says'
Dee Dee
Are you an old soul man by an...C says'<br /><br />Dee Dee<br />Are you an old soul man by any chance? Northern?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-39946781097164094712011-10-04T21:16:06.589+01:002011-10-04T21:16:06.589+01:00That's it, Humberside.
Sing it, Gerry. This o...That's it, Humberside.<br /><br />Sing it, Gerry. This one is for battered longs and long suffering Reds fans everywhere:<br /><br /><a href="http://www.youtube.com/watch?v=8smO4VS9134" rel="nofollow"> You'll Never Walk Alone </a><br /><br />I think that's me Mam in the video, there....Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-30088037729712298412011-10-04T21:11:30.154+01:002011-10-04T21:11:30.154+01:00Same as with the parabolic expansion in gold a few...Same as with the parabolic expansion in gold a few weeks back, there will be great opportunities to be long TLTs and the like in the future. This is not it.<br /><br />Or, for LB: "At the end of a storm is a golden sky, and the sweet silver song of a lark. Hold your head up high, and don't be afraid of the dark"Dee Dee Humbersidenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-33042198126126028372011-10-04T21:06:01.312+01:002011-10-04T21:06:01.312+01:00I think that Mr Cold Steel and the Anonymous Proct...I think that Mr Cold Steel and the Anonymous Proctologist will be only too delighted to pay Mr Shorty a visit in the very near future. If the European fudge factories are busy overnight we might be in for a gap up at the open.<br /><br />Some of the tin foil hat brigade might find themselves waking up to a very sore posterior indeed..... <br /><br />We dumped the last of our Treasuries today, and we're thinking, you know that's a nice bit of business you've done there, for a daft Scouse lad.Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-38308592674499802612011-10-04T21:00:55.109+01:002011-10-04T21:00:55.109+01:00You gotta love the fellows at TinFoilHatMagazine.c...You gotta love the fellows at TinFoilHatMagazine.com<br /><br />"Reverting back to short. The sell-off this morning felt overdone, in HYG in particular. We bounced on Bernanke, but it wasn't with much conviction. Although BAC and MS bounced nicely off their lows, BAC hasn't been able to get green on the day, although MS has, but barely. With such weak performance from ideal short squeeze candidates, it seems clear that we are not out of the woods yet. I think the failure to trade up significantly means we go through the morning lows."<br /><br />As their namesake would put it: a question of etiquette - as I pass, do I give you the ass or the crotch?Dee Dee Humbersidenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-42756555756313644132011-10-04T20:56:53.239+01:002011-10-04T20:56:53.239+01:00Or this old chestnut:
Squeeze BoxOr this old chestnut:<br /><br /><a href="http://www.youtube.com/watch?v=a4Z3A53nY7Q&feature=related" rel="nofollow"> Squeeze Box </a>Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-68894183899935995352011-10-04T20:49:41.994+01:002011-10-04T20:49:41.994+01:00Looks to me like there will very soon be a perfect...Looks to me like there will very soon be a perfectly appropriate soundtrack for this chap<br /><br />http://www.youtube.com/watch?v=R8AOAap6_k4&feature=relatedDee Dee Humbersidenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-34271437387519690182011-10-04T20:38:08.792+01:002011-10-04T20:38:08.792+01:00This youngster is still putting on the spread wide...This youngster is still putting on the spread widener. I think he is a bit late to the party on this one, but it does show the diversity of opinion.<br /><br /><a href="http://seekingalpha.com/article/297401-making-money-in-credit-hyg-vs-tlt" rel="nofollow"> Credit Spread Trades </a>Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-73350308168490582472011-10-04T19:02:22.202+01:002011-10-04T19:02:22.202+01:00A few thoughts on various topics.
I think the Twi...A few thoughts on various topics.<br /><br />I think the Twist has been misunderstood, or perhaps not understood at all, especially by those players whose understanding of the Treasury market approximates that of a pond snail (most momo traders, all commodity traders, a vast army of financial media hacks). Allow me to elaborate...<br /><br />Bernanke knows that a QE3 is to some extent unnecessary at present, as it has already been done for them! Eurostrich activity has triggered enormous panic buying of US Treasuries by European banks and pension funds etc... <br /><br />This has been a fantastic boon to the US Treasury, which has been able to sell a lot of cheap debt, and to the FED, which owned the short-term Ts and was able to start selling at a profit. The FED can now achieve a couple of objectives over the next few months:<br /><br />1) Slowly sell 1-5y USTs. This will gradually drive investors out of Treasuries and into higher yield short-term US corporate debt, thereby stabilizing the economy ahead of what is known to be a large debt rollover bulge that is looming in 2012. This will initially look like a mini version of 2009's credit squeeze. We recommend front running this trade by buying junk bonds.<br /><br />2) Buy 30y USTs and MBS. This FED action will offset selling by other market participants (Voldemort) and prevent the housing market from being smashed by higher mortgage rates. The aim here is simply to keep things stable at the long end.<br /><br />So, given our base case scenario of a mild US recession only, we don't think the steepener (long front end, short long end) is going to be the best trade in credit, as much as the tightener (long junk, short 5y Treasuries). <br /><br />Note that this model doesn't predict a lot of dollar weakness, so carry traders would have to jump back to selling the yen, so look for a revival of AUDJPY etc, and only modest strength in the commodity complex and emerging markets, which would only be revived in full by a sizable QE3.<br /><br />As always feel free to throw rotten tomatoes....Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-71646614766732471072011-10-04T18:45:17.180+01:002011-10-04T18:45:17.180+01:00"Significant, but not a game changer", s..."Significant, but not a game changer", say Bernanke about the 'Twist' -theglobandmail.com/report-on-business/economy/economy-lab.<br /><br />"We think this is meaningful, but not an enormous support to the economy". Recovery,"close to faltering".<br /><br />OT expected to lower int. rates by 0.2%. Is BB preparing the market for QE3?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-33433298632593048152011-10-04T18:18:00.455+01:002011-10-04T18:18:00.455+01:00mjm123, in case of external public debt of China, ...mjm123, in case of external public debt of China, FX reserve helps since 1) gov is the monopoly issuer of RMB; 2) RMB is not freely convertible yet; 3) fx exchange and capital movement are still highly controlled in China; 4) most of the FX are effectively in pboc's hand. <br /><br />Since I only talked about external public debt, the huge reserve+control over capital movement and transfer would be a pretty effective buffer for an external debt crisis. And could you give some examples of countries defaulting with large fx reserve ?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-68725219589988978452011-10-04T18:07:20.635+01:002011-10-04T18:07:20.635+01:00Anti piss-taking bill has protectionist implicatio...Anti piss-taking bill has protectionist implications. It's probably best if this doesn't get very far:<br /><br /><a href="http://news.yahoo.com/china-us-currency-bill-repercussions-090135830.html" rel="nofollow"> Currency Piss-Taking Bill Being Discussed </a><br /><br />Reminds me of the Buy British campaign, instead of cheap Japanese things that didn't work (this is the 70s, before the rise of China and before Japanese quality) we got expensive British things that didn't work. It wasn't a success. The German stuff was ten times better at twice the price. The French and Italian stuff was beautifully designed and very chic but broke immediately and couldn't be repaired. It was all a bit dire, really.Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-22947784568365318382011-10-04T17:45:24.851+01:002011-10-04T17:45:24.851+01:00Today has elements of an intermediate term bottom....Today has elements of an intermediate term bottom. Sentiment extremes, remorselessly negative media noise, longs throwing in the towel, definite signs of capitulation by some bulls, and very low 10y yields that have now reversed strongly. Most of the ingredients.<br /><br />I know what Anon @ 5:32 is thinking. Nothing like the Street whipping up a faux recession to shake weak hands out of their positions in income-producing securities and into the slow death of 1% yielding 5y Treasuries.....Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-79326415449122842342011-10-04T17:32:12.349+01:002011-10-04T17:32:12.349+01:00What if they gave a recession and nobody came?What if they gave a recession and nobody came?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-78120904996922968712011-10-04T17:07:39.862+01:002011-10-04T17:07:39.862+01:00mjm123,
excellent comments re: China's fx rese...mjm123,<br />excellent comments re: China's fx reserves. This is something I'd like to delve further into, gain a greater understanding of per se. Would you mind providing a resource as to where this view is expounded upon? I've tried Pettis's blog but to no avail. Cheers.willemnoreply@blogger.com