Inflation Expectations Are Heating Up
Seeking Alpha - 22 hours ago
But not the bund longs... yet.
Anonymous said...Great post.
Anonymous said...hmm.. unelected? you mean the commission i guess
Polemic said...err yes sorry ,, the unelected lot ( commisioners). Not the elected lot who run up expense accounts that would make a greek finance minister blush.
Anonymous said...I knew what you meant. In fact they practically are unelected, at least in the UK. Quel référendum?
Anonymous said...great post ... and the trade is?
Anonymous said...As some other poor turd called Richard once said, "now is the winter of our discontent."
Macro Musings said...How are TMM positioned (or at least directionally inclined) in the euro-dollar, if at all?
Anonymous said...For me the trade - and I'm deep into it - is short eurusd...
Anonymous said...short eur seems too easy, especially when the 'QE' at hand is also subsidized via China. That kind of ponzi squared would make even sir Charles blush...
Anonymous said...If we think it will mimic the effect of QE plus nationalization of the mortgage debt in USA I wonder if short bunds long Italy or some similar play on convergence of risk premia would make sense?
The short eurusd is just as much a trade on 'risk off' generally and doesn't depend solely on the acrobatics of ecb.
Of course I could be way wrong!
Anonymous said...Great post and good to see you back on the macro stuff.
The fx market may finally get some fear if they sniff out a European qe by stealth.
Qe though seems like a train coming down a hill, once you start and give marginal holders of bonds liquidity to sell into, how do you ever turn It off ?
The bearded illusionist has a massive problem IMO, he's taken out all the longs at the highs and now they are unlikely to help him out on the way down.
It was a much clearer picture before the central bankers all got a turn at the punchbowl themselves
Leftback said...If China experiences a full-blown credit crunch it will certainly take our minds off Ch. Eurobolleaux:
SHIBOR Increasing
Asian contagion, redux, anyone? It seems like there are any number of catalysts for a stronger dollar out there, including oddly enough, the potential non-appearance of a recession in the US.
The simple pair trade call of the year was probably TMM's Long DMs:Short EMs. Still delivering alpha.
Alen Mattich said...Can I suggest to the very clever folks at Macro Man that you set up a forum on your home page allowing readers to discuss what's happening in the market even when you haven't been posting?
Clearly, most of the goodness on this site comes from the blog posts, but the readers comments add that je ne sais quoi. A running forum (lightly moderated) run in parallel with the postings might attract even more loyalty.
Leftback said...We sort of do have a forum, Alen. Claus and LB just bang on here and try to be provocative until someone else comments or TMM lobs up a new post.
Today's action resembles the deep flushing sound that this market needed, especially in the commodity sector. There probably isn't that much wrong with the US economy that a 5% drop in gasoline prices can't help just a little bit. It's like having a temporary tax removed. Obviously, it was kind of BB to tax everyone on behalf of the oil companies and speculative community.
Once energy stocks and financials have received another flogging, we think morale will improve, already feeling a lot more constructive on US equities for Q3.
CV said...Agreed LB, the post quake lows have not yet been breached and this means the "buy the dip" put is intact. Realistically, in order for the Fed to get really scared we would need a move to below 1250 on the SPY.
At the moment it is all just sideways, volatile yes, but sideways in the end.
I am still long EWJ which also just seems to be poodling along with no direction. But I am constructive for H0211. I am thinking on Dr. Copper as well since with those very, very low SHFE inventories anything less than a completely shutdown in China will see imports getting back on stream.
Claus
Anonymous said...Yeah, after we price a dismal July 1st data release, there will be positive surprise on equity earnings I believe.
All things come back to oil and inflation. Saudi's increasing production plus DM reserve release are all designed to bring down inflation for a few months. Then a stage for more QE will be set up.
Leftback said...EWJ is well above the post-quake lows and is in the late stages of completing a massive declining wedge. Japanese small caps have bounced back even more strongly. An upward breakout would hardly be surprising, especially if it transpires that Honda and Toyota actually did make a car or two.
In the US, yes, I think that SPX 1250 is a reasonably good floor for this market for the time being. Not sure about the Fed, but a break below 1250 would certainly scare me. As long as GDP print tomorrow exceeds the yield on the 5y, I think Armegeddon will be avoided. At FVX = 1.45%, I'm not too concerned. I don't think this is 2008.
Polemic said...Alen, re your suggestion ..hmmm - could you email me please?
Cheers
Polemic
Anonymous said..."Chinese Premier declares inflation victory" - ft.com
So risk on for the H2
Anonymous said...Hans Gruber: I thought I told all of you, I want radio silence until further...
John McClane: Ooooh, I'm very sorry Hans. I didn't get that message. Maybe you should've put it on the bulletin board. I figured since I've waxed Tony and Marco and his friend here, I figured you and Karl and Franco might be a little lonely, so I wanted to give you a call.
Trichet: I thought I told all of you, I want radio silence until further...
Juncker: Ooooh, I'm very sorry Trichet. I didn't get that message. Maybe you should've put it on the bulletin board. I figured since I've waxed Greece and Ireland, I figured portugal and spain might be a little lonely, so I wanted to give you a call.
Tyler said...Cheers LB. Unfortunately for you...I agree.
Data won't continue to surprise on the downside forever. uptrend is still intact, signs of overly bearish sentiment (despite a modest ~8% pullback), CESIUSD bottoming.
The world is watching 1250 and everybody gets scared beneath those levels. Recall last year around this time everybody was watching 1050 and there was a washout/bear trap. A similar type of move gets you to around 1200. At that point the sky would be falling in the heads of traders and investors.
what say ye, TMM? still looking to short regardless?
Gold looks vulnerable.
WellRed said...@ Tyler.
Agree on gold, so does silver.
