tag:blogger.com,1999:blog-34323687.post8967631076114278141..comments2024-03-28T12:22:11.704+00:00Comments on Macro Man: Harry Potter and the FX reserve managers (Why is there no volatility? Part II)Macro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-34323687.post-54441632201691723862009-09-04T00:17:10.986+01:002009-09-04T00:17:10.986+01:00I liked the Harry Potter, lord Voldemort and Dumbl...I liked the Harry Potter, lord Voldemort and Dumbledore analogy. I could not agree more. It is really a surprise that the $1.65 trillion from China, India, Russia and Taiwan has no impact on the back end of the global fixed income market.stock markethttp://www.stockmarkettrading.com.aunoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-59212691968886777432007-02-14T00:07:00.000+00:002007-02-14T00:07:00.000+00:00love the voldemort analogy --at some point we shou...love the voldemort analogy --<BR/><BR/>at some point we should swap some data for market insight; you clearly have market contacts that provide a ton of insight, and, well, i have pretty good (and more comprehensive) global reserve data that covers more than your big four ... <BR/><BR/>not sure i agree with your "absent voldemort" euro/$ is at parity argument tho. I see the int. differentials story. but i don't see the non-official private sector flows that sustain the current US current account deficit. And without financing, the currencies of current acocunt deficit countries tank.<BR/><BR/>that said, i believe your basic flows story -- CBs intervene by buying $/ the oil folks get paid in $, so have to sell to keep portfolios balanced. But my strong sense that central banks and oil funds stop selling (ergo end up supporting the $) when private demand for $ dries up. that is clearly the pattern in the COFER data.<BR/><BR/>cheers brad setser<BR/><BR/>email brad underscore setser at msn dot comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-46364053918223460342006-11-16T21:04:00.000+00:002006-11-16T21:04:00.000+00:00I am not sure if the exodus of private sector curr...I am not sure if the exodus of private sector currency traders means that Voldemort(s) will be unable to recycle their dollars, leading to the collapse of world trade. Rather, it will simply mean that without private sector carry traders to take the other side of their purchases of EUR, etc., the dollar will at last fall catastrophically (as indeed it did when the Fed moved from tightening to easing in 94-95). Ironically, if the private sector then sees EUR/USD on its merry way to 1.60 and USD/JPY to 80, the specs will then return to the market with a vengeance...Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-39116540323646500062006-11-16T16:39:00.000+00:002006-11-16T16:39:00.000+00:00i couldn't agree more, and i'll tell you where it ...i couldn't agree more, and i'll tell you where it ends...<br />alpha is the market's cost for liquidity. managers buy/sell in a market becuase they belive there is alpha in it for them. the central banks are removing that alpha from the currency market and as a result money will dry up. 1) currency mandates will be withdrawn; 2) macro managers will spend their risk budget elsewhere than currency; 3) managers will leave the industry becuase its too hard. when that happens this hitherto considered infinitiely large market, the fx market, will dry up. the central banks will be unable to recycle the $, multilateral trade will not be possible, globablisation will fail.<br />you won't even be able to have a G7 to sort it out, because the world's leaders won't even be able to get a taxi from the airport because they won't be able to find any local currency!!!!! :(Anonymousnoreply@blogger.com