tag:blogger.com,1999:blog-34323687.post4078246373146432499..comments2024-03-28T12:22:11.704+00:00Comments on Macro Man: The euro breaks higherMacro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger29125tag:blogger.com,1999:blog-34323687.post-15293572421651029312015-05-04T22:37:07.574+01:002015-05-04T22:37:07.574+01:00Washedup: Uncle Warren, what do you think we shoul...Washedup: Uncle Warren, what do you think we should do here?<br />Buffett: Is that even a question? Buy US stocks, as many as you can, twice on the the days when the market is closed.<br />Washedup: Really? Is that a slam dunk?<br />Buffett: Of course it is - has been for 40 years, will be for the next 40 - own a slice of corporate america and shut it, man.<br />Washedup: And valuations?<br />Buffett: Are you listening? look at rates - all about rates young jedi - with rates this low you would be nuts not to own equities - seriously you are beginning to bore me<br />Washedup: Nice - I am getting pumped up with bull juice just listening to you - what about bonds?<br />Buffett: Sell 'em - sell 'em till your head caves in - short of the millennium - if i could find a way to do it efficiently I would too<br />Washedup: Awesome, will get on it right away - what happens to rates when everyone sells bonds, by the way?<br />Buffett: Dunno - go up a bunch I suppose - its fish in a barrel, really - Bill Gross agrees<br />Washedup: But isn't that bad for equities, Uncle Warren?<br />Buffett: You are f@3ng ugly - where is Becky Quick? who let you in here anyway? Security, security....washedupnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-72090947493994452142015-05-04T20:45:54.193+01:002015-05-04T20:45:54.193+01:00The long bond is still trading weak as the rush in...The long bond is still trading weak as the rush into US$ denominated assets has taken a breather for a few weeks now. The 200 day average was broken and TLT pierced the Bolly bands. Perhaps we will see one more wave of climactic selling this week before US fixed income is a buy again.<br /><br />Mr Market seems to have come around to the Good News is Bad News model again. Risk once again seems to be embodied by the possibility of stronger US jobs data this week.<br /><br />Washed, I actually like the mini-stagflation idea. There is a whiff of reflation in the air and as usual the US bond market is ahead of the game. 5y5y break-evens have picked up a bit off their lows in the last few weeks.<br /><br />I think I just saw Polemic's yacht go by - as bund yields begin to creep up after bottoming close to zero. Silly safety trades will hurt desperate punters every time.<br /><br />We are still sitting long Europe and EMs for now, but the trigger finger is getting a bit itchy. This isn't going to be an easy year like last year.Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-58210005692614346952015-05-04T18:48:02.132+01:002015-05-04T18:48:02.132+01:00http://imgur.com/1w23mTo
NYSE #new 52 week highs ...http://imgur.com/1w23mTo<br /><br />NYSE #new 52 week highs (Blue) <br />S&P 500 Yellow<br /><br />Agreed washedup, rate raise are a big issue and in that scenario, no one is going to ring a bell at the top (ala Nasdaq 2000 or Japan 1990). However the fall out is likely to be much less as well (20 -30% decline, is my guess)abee crombiehttps://www.blogger.com/profile/13320039155613443039noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-66063490979913700942015-05-04T18:32:09.801+01:002015-05-04T18:32:09.801+01:00"just on the last point. Equity investing is ..."just on the last point. Equity investing is pretty much the default option for long-term wealth accumulation in the US and has been for over 30 years. Why change now (unless we are on the verge of an inflationary collapse?)"<br /><br />Abee - can't really disagree, but would point out the benefits seem to accrue to fewer and fewer people every cycle, which creates lessened political support over time (citizens united notwithstanding!).<br /><br />I don't think you need a full on 'inflationary collapse' to take equities down materially - if inflation breakevens and rates pick up appreciably and sustainably at some point, CBs still sitting at ZIRP will be increasingly seen as cornered - positioning would take care of the rest - I find it ironic that people forecast 1% 10 yr rates and equity crashes as if somehow that would be concurrent, using previous playbooks, when the highest probability outcome for the global economy is a grinding normalization, small wage pickups, and declining output per worker - the market bull cycle would then end with a whimper, not a bang.washedupnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-4780874362724072282015-05-04T18:04:42.830+01:002015-05-04T18:04:42.830+01:00just on the last point. Equity investing is pretty...just on the last point. Equity investing is pretty much the default option for long-term wealth accumulation in the US and has been for over 30 years. Why change now (unless we are on the verge of an inflationary collapse?)abee crombiehttps://www.blogger.com/profile/13320039155613443039noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-21255391264451407152015-05-04T17:58:50.265+01:002015-05-04T17:58:50.265+01:00is the oil reflation, China is going to boom bc of...is the oil reflation, China is going to boom bc of SHCOMP, sell 10 year trade over, or is it just the start of a trend. As Drukenmiller recently stated, that whenever he sees a stock market move like the one we had in Shanghai, it is almost always followed by an economic boom. <br /><br />I have to say I am firmly in the opposing side, but will give it some possibility. But it seems more to me the markets are just being unfriendly. Taking out all the lazy longs (or shorts in oil, EUR) etc and going to do a nice rinse and spin for the summer. The internals of the US stock market arent so hot with the number of new highs dwindling and still a high number of stocks down 20%. <br /><br />Charles, good points, the big thing I want to stress about investing in the stock market is that its now become the only game in town. The Fed isnt going to let it drop 50% and stay there for a long time. (Can you imagine the havoc on pensions, 0% interest and no money to be made on equity capital). So my point is join the party. can it go down one quarter by 20%. For sure. But over the long term we have entered into this new era of asset priced based monetary policy. And as long as valuation are reasonable, dont be a sore loser like ZH. <br /><br />abee crombiehttps://www.blogger.com/profile/13320039155613443039noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-40049134282291574452015-05-04T15:55:52.537+01:002015-05-04T15:55:52.537+01:00Bonds up
Metals up
Dollar up
Stocks up
Central Ba...Bonds up<br />Metals up<br />Dollar up<br />Stocks up<br /><br />Central Banks rock!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-2483140223998381042015-05-03T14:44:12.076+01:002015-05-03T14:44:12.076+01:00A most secret plan...so secret, in fact, that in E...A most secret plan...so secret, in fact, that in Europe only EU authorized persons have go to a U.S. embassy to read what is in it...<br /><br />http://www.euractiv.com/sections/trade-society/us-open-ttip-reading-rooms-across-eu-314175Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-61600103118388880172015-05-03T08:28:14.637+01:002015-05-03T08:28:14.637+01:00@abee crombie 8:34pm
" only ZH would have gon...@abee crombie 8:34pm<br />" only ZH would have gone with the flow instead of against it, lots of readers would have made money and been happy instead of being cynical of everything."<br /><br />This remark is on par with Marie-Antoinette's "Let them eat cake".<br /><br />To go with the flow, you first need a boat. I am prepared to bet that most of ZH readership doesn't have assets to play with, nor access to cheap credit through a prime broker. They are more likely to be young people who had the choice between not having an University education or borrowing to the hilt to grossly overpay it. Being readers of ZH, they don't even have the consolation of not understanding how they are being f...ed.<br /><br />The rest of my answer would be addressing the ZH readership who you are thinking about.<br /><br />"Then what will you say when the debt is essentially cancelled and their debt / GDP ratio looks normal at 150% or so? "<br />In such circumstances, it will be the M1/GDP ratio that will grow to huge proportion, so the "new new normal" will not really be a return to "normal"... yet !<br /><br />I note that Debt Jubilee through massive monetisation is actually quite a popular endgame scenario in ZH readership, so the answer to your rhetorical question will probably be : "Hurrah, hurrah, hurrah !".Your remark confirms my opinion that the difference between ZH readership and MM readership is not really where they see the game going (a turbulent and scary place), but how continuous the path from here to there is going to be. MM readership believes that they can dance while the music is playing because they are nimble enough to find quickly a chair when it stops, whereas ZH readership believes that one has to sit on the chair now to have a good chance of having a chair. An additional complexity to this is to define what constitutes a chair : a bunch of greenbacks, a pile of gold, a farm in new zealand, or a "moat" non leveraged business ?<br /><br />I wished it was easy...charlesnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-46056067128105986242015-05-02T13:47:24.400+01:002015-05-02T13:47:24.400+01:00Washedup - great comment and thank you the depth. ...Washedup - great comment and thank you the depth. Bunds - -yes getting there but no significant P yet. and knowing my luck it will tease then kick me in the face again<br /><br />Oil as an indicator of general global demand? Hmm.. I m not one of those but more see commodities price collapses as a major cause of top line deflation. With a turn up the reverse will occur. If the likes of ECB are true to their mandates and are following inflation not growth then it will feed through to policy. <br /><br />Oil may well be being hoovered by funds but oil is a huge speculative trade in general. We managed to hang above over $90 for years on the specs filling the tanks and holding. The puke has been the reverse. <br /><br />Like your point that the cure for asset reflation is real reflation. <br /><br /><br />re comments further up about CBs buying equities. I like the idea that they do. It's the socialisation of big corp, a sort of partial nationalisation. Lets the State benefit from the success of private business and dilutes the sic-fi scenario of a few huge corps controlling the wealth of the world. Especially pertinent re mega-tech. Polemichttps://www.blogger.com/profile/05985506596290073453noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-42999575180550433842015-05-02T02:15:49.621+01:002015-05-02T02:15:49.621+01:00Pol - first off, glad to see your short bunds idea...Pol - first off, glad to see your short bunds idea beginning to find traction, I know its been a frustrating experience. I would like Bill Gross to come talk my book occasionally too, please!<br /><br />Obviously, there has been a self reinforcing re-flation theme at work in the last 2-3 weeks (really April 12 if you want to put a date to it) - crude has rallied because of hedge fund buying (brent length now at 265k lots and climbing, same as the highs from June last yr), which has convinced punters that 'rely' on crude as a signal that all is well with global aggregate demand - the idea, naturally, has been to sell bunds, the dollar (inverse correlation between euro and bunds is close to perfect last 90 days) and US equities and bonds, and buy EM and european stocks. Frankly, given that the entire US equity complex currently rests on a low rates forever backdrop, its tough for me to see its strength continue if rates march higher (I define it as say 2.40-50 for the 10 Yr). I hasten to add that it MAY not be a problem for european and japanese equities because it is likely to be seen as a side effect of QE a la US circa 2013, but I have my doubts simply because, well, is it really ever that simple?<br /><br />Clearly, spoos find it hard to sell off if their global cousins are rallying daily. but I think risk/reward on at least oil and US equities favors the bears currently, even if for a retracement and not meaningful lows.<br /><br />Ultimately, I see this entire reflation pricing as counter-trend, simply because even if US macro data is taken at face value, global growth is tepid but OK (my base case), and if US data hooks up the dollar will soon run out of sellers - I think we all know the best cure for asset reflation is actual reflation!<br /><br />Wages are another story - I firmly believe we are about to experience the phenomenon described in the article below, namely a practical manifestation of a mean reversion in Rich's ratio:<br />http://www.pimco.com/EN/Insights/Pages/Principled-Populism.aspx<br />I think it is quite possible the long running secular trends on wage deflation and productivity growth are close to over in the US because of skills mismatches, not to mention a minimum wage agenda in advance of everyone's jobs being replaced by robots, that will only grow into the election cycle. In so far as headwinds go, this is a far more serious problem for US equities than whether or not the fed hikes will happen in sep, dec, or never at all.<br /><br />Have a good weekend. washedupnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-35650218227696795702015-05-02T00:35:21.397+01:002015-05-02T00:35:21.397+01:00It's starting to crack and bonds are the San A...It's starting to crack and bonds are the San Andreas fault. <br /><br />Germany had a double dump in bunds and dax which showed the first break in leverage trades. Other positional faves have cracked too. USD, biotech and I am sure you can all add to the list. <br /><br />Throughout oil continues creeping up and commodity stuff is pushing higher. Iron has turned back a bit but its moving higher. <br /><br />I would love to think this is the start of the reflation trade I am positioned for but that doesn't make equity indices an easy call. Back to sectors. I would suggest a small down bias in the indices but a continued sector switch with commodity/energy remaining strong and the leverage tech taking a hit. Of course you get to a point where heavy selling in one are becomes contagious and we hit a tipping point and everything tips. But for now I m looking for seismic oscillations to continue until we get the landslide (unfortunate Nepal analogies). <br /><br />I can't actually see this change coming from watching CB policy which is becoming a bit futile. But playing the inflation trades probably the way forward. <br /><br />Have a very good week end all. <br /><br />Pol Polemichttps://www.blogger.com/profile/05985506596290073453noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-31670409413288964462015-05-01T22:38:10.257+01:002015-05-01T22:38:10.257+01:00M2 money velocity...how low can it go?
Is this a ...M2 money velocity...how low can it go?<br /><br />Is this a problem or does it mean nothing?<br /><br />https://research.stlouisfed.org/fred2/graph/?graph_id=236919Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-2084763233489167972015-05-01T22:08:51.705+01:002015-05-01T22:08:51.705+01:00All eyes on ADP on Wednesday. Of course there'...All eyes on ADP on Wednesday. Of course there's the euro manufacturing PMI's on Monday first but I think they really won't matter that much (unless they suck really bad, which they probably won't). The current bias seems stacked against the US, so the burden of proof is on them this time. Was manufacturing PMI a bad omen?<br /><br />Still not convinced that the major dollar trend has reversed for good, the counter bounce might just extend a bit depending on data. If fixed income continues its bizarre behavior on possible bad data (aka foreign selling along with dollar), it might be time to dip a toe in soon. <br /><br />Otherwise just sitting on hands with GDX and energy risk, for now. Oil might stabilize a bit here, but don't expect to be too much more room to climb. The more volatile drilling industry has had relief (following ESV earnings) and big oil seems to be doing more or less fine (e.g RDS, although it should be specifically noted that FCF isn't covering their divvy yet they decide to sustain it, but the time for nasty surprises isn't apparently just yet).hipperhttps://www.blogger.com/profile/10934536233703452719noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-64541166202427209062015-05-01T21:32:27.593+01:002015-05-01T21:32:27.593+01:00OK...who keeps selling US treasuries? What's ...OK...who keeps selling US treasuries? What's the story?Bruce in Tennesseenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-323867770083605752015-05-01T18:51:46.614+01:002015-05-01T18:51:46.614+01:00spoos declines:
oct - 9.6%
dec - 5%
mar - 3.3%
ap...spoos declines:<br /><br />oct - 9.6%<br />dec - 5%<br />mar - 3.3%<br />april - 2.2%<br /><br />Sure seems to me like we are setting up for a nice summer rally backed by the old standby's of dot-plots-lower driven by goldilocks data and dollar strength keeping rates lower for longer and adjusted estimates climbing back up based on a willingness to adjust ex-fx and generally strong enough economic conditions.<br /><br />Geopolitical is as calm as its been in years.<br /><br />Mr. Tnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-40385476501825597042015-05-01T16:36:06.700+01:002015-05-01T16:36:06.700+01:00great thoughts Bryan. I read something fro Zervos ...great thoughts Bryan. I read something fro Zervos yesterday implying it was the Bridgewaters of the world doing a little profit taking on their +15% YTD performance<br /><br />When you manage $100B, you cant get out in one clipabee crombiehttps://www.blogger.com/profile/13320039155613443039noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-82788409787316652462015-05-01T14:50:50.550+01:002015-05-01T14:50:50.550+01:00This reminds me of October, 10s go from 2.53 to 1....This reminds me of October, 10s go from 2.53 to 1.86 in 2 weeks after Gross is forced out. And pple think its macro factors, not positioning. Now we have what appears to be a few funds hammering euro and swiss bonds (bidding up eur and chf) and people are searching for some incremental eco data explanation. <br /><br />Confusion = hit bids in stocks. Misplaced confusion = scoop the dips.Bryannoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-7852369617972655042015-05-01T11:40:57.852+01:002015-05-01T11:40:57.852+01:00CTA definitely get burned in April. But they have ...CTA definitely get burned in April. But they have made so much money in the past 12m or so. 1M down looks trivial. The question is will they get hit continuously going forward? I doubt the major macro trend will change.Cityhunternoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-13550395900564145242015-04-30T23:06:43.697+01:002015-04-30T23:06:43.697+01:00@ Mr T
Agree with you on Euro, Eco momentum there...@ Mr T<br /><br />Agree with you on Euro, Eco momentum there has had a good run, prob about to take a pause, think it was telling that despite such positivity U-rate still pretty dire. As for US, looking for q2 bounce back is still the way to play, just because it is consensus doesnt mean it isnt right. At a very high level view, with WTI @ 60 I think shale makes a come back in next few months also US house prices yoy look to be turning up and as you note consumption is ticking along. May could be volatile esp for equities but big picture, reasonable growth, low inflation and plenty of liquidity means don't panic, save that for later in the year (like Sep/Dec) when Fed hikes.Antipodeannoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-29783933381910241122015-04-30T20:34:28.802+01:002015-04-30T20:34:28.802+01:00To the haters of QE (anon ZH linker), why dont you...To the haters of QE (anon ZH linker), why dont you just adapt to the current situation bc CB's are not going to stop doing it. If only ZH would have gone with the flow instead of against it, lots of readers would have made money and been happy instead of being cynical of everything. Yes Japan will monetize a great portion of their debt. And guess what, the Yen may not go to 200 or 300 like the genius Kyle Bass assumes. Then what will you say when the debt is essentially cancelled and their debt / GDP ratio looks normal at 150% or so? As for the CB's owning equities, do you really think they are going to sell it anytime soon?? <br /><br />We are in a world of deflationary forces because there is too much money and not enough assets. When CB's tell you they want assets to go up, LISTEN!<br /><br />Does it end badly at some point, for sure I have no doubt buy you can go back and listen to many smart macro guys talking about the buildup in debt from the mid 1980's onward and nothing major happened until 2008 (ahem robert prector). Currencies will be the ones who tell you when the current QE system stops working, the problem is that no one wants a strong currency and its a zero sum game so i am not really sure what happens. abee crombiehttps://www.blogger.com/profile/13320039155613443039noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-13277913339829453262015-04-30T17:45:52.475+01:002015-04-30T17:45:52.475+01:00@many anons - whats the point of posting every lin...@many anons - whats the point of posting every link to zerohedge? Is this supposed to be some clever find?<br /><br />A link, followed by your unique interpretation, might be more interesting.<br /><br />I see the read through on GDP as being stronger than the headline sounds, mainly because this was the qtr when we saw a big decline in oil capex, but I don't think the decline is going to continue. Consumption appears to be ticking along. Move in rates today seems to agree.<br /><br />I think the Euro is on borrowed time here.Mr. Tnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-90048893543208976532015-04-30T17:31:12.177+01:002015-04-30T17:31:12.177+01:00BOJ selling Yen and buying equities (again):
http:...BOJ selling Yen and buying equities (again):<br />http://www.zerohedge.com/news/2015-04-30/did-japanese-just-save-world-again<br />SNB has 15% of Swiss GDP invested long equities:<br />http://www.zerohedge.com/news/2015-04-30/swiss-national-bank-long-100-billion-stocks-reports-record-loss<br /><br />Central Banks are actively manipulating equities markets (having destroyed FI via QE). As their policies fail, expect them to just double-down and do more QE:<br />http://www.zerohedge.com/news/2015-04-30/albert-edwards-what-happens-next-more-qe-everywhereAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-7092899637700250462015-04-30T17:30:38.032+01:002015-04-30T17:30:38.032+01:0030 day TBills now NEGATIVE 4bps . 30 day TBills now NEGATIVE 4bps . Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-14113202996832397162015-04-30T17:20:32.563+01:002015-04-30T17:20:32.563+01:00Perspective on credit: Mar/Apr corp bond issuance ...Perspective on credit: Mar/Apr corp bond issuance = $365B, or 22% of all of 2014 sizeAnonymousnoreply@blogger.com