Global Macro Trading Journal

Quote from Martinghoul:

I wouldn't have a problem with it, if there was an agency in the Eurozone that can deal with the intra-European imbalances. However, everyone has now basically said that it's the other guy's problem. Makes me extremely bearish about the EMU's prospects.
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Did you have problems with BOJs early hikes over the lost decades?Because to me this is like those, maybe even worse because Japan was running loose fiscal policy. I dont really know where the inflation is going to come from in the EU that Trichet is so worried about
Maybe this is a bluff to anchor iexpectations because its pretty much the only thing that could lead to inflation
 
CPI is a horribly flawed measure and pretty close to meaningless. Core CPI is even worse. It's one thing for bureaucrats to spend their days talking about it, totally different for private individuals to keep referring to it like some sort of beacon.

Don't know about Europe, but core (ha) CPI in the states is basically OER, which is housing. It's a politically designed gauge whose purpose is to assure that central bankers and politicians can always say it's contained.
 
Quote of the day
"This is a shock," said Silvio Peruzzo from RBS. "This raises risks for the eurozone periphery through all kinds of channels. Most mortgages in Spain are on floating rates."
 
Why is that the QOTD? That's the whole point in raising rates. Spanish re needs to be taken out behind the barn and shot. Hopefully this is the first step in central banks not propping up asset prices. Higher rates will allow them to fall to their true economic value and then we can start building a real recovery from there. Congrats again to the ECB.
 
Quote from ralph00:
Why is that the QOTD? That's the whole point in raising rates. Spanish re needs to be taken out behind the barn and shot. Hopefully this is the first step in central banks not propping up asset prices. Higher rates will allow them to fall to their true economic value and then we can start building a real recovery from there. Congrats again to the ECB.
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Well, this is mightily inconsistent of you, ralph...

Firstly, you state that CPI numbers are all bollox, but then you applaud the central bank that cares solely and exclusively about the number (EUR HICP). How does that make any sense?

Secondly, who do you think created the Spanish/Irish housing bubble in the first place, with their slavish addiction to the European average inflation? ECB kept rates too low for periphery, but just right for Germany which was going through the painful re-unification adjustment. They couldn't give a rat's ass about asset prices then and they sure as hell don't now.

Congrats to the ECB, indeed! What was that famous quote (attributed to Einstein, probably in error)? Insanity is doing the same thing and expecting a different result.
 
Quote from Shagi:

BOJ Governor Masaaki Shirakawa said yesterday worsening growth prospects in Japan are causing deflation to continue and said monetary policy plays a large role in fighting persistent price declines.

http://www.bloomberg.com/news/2011-...e-yen-worst-currency-morgan-stanley-says.html
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BOJ tested the waters a couple of months ago, but quickly found out the market doesn't lie. USD/JPY resumed the trend almost immediately. Not easy to out-ease the Fed. But that being said, I did put on a small long USD/JPY position last night, so we'll see how it works out. This thing is due for a breakout.
 
Quote from ralph00:

Why is that the QOTD? That's the whole point in raising rates. Spanish re needs to be taken out behind the barn and shot. Hopefully this is the first step in central banks not propping up asset prices. Higher rates will allow them to fall to their true economic value and then we can start building a real recovery from there. Congrats again to the ECB.
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This is not a desired or optimal solution, IMO. What happens when the pendulum swings too far the other way?
 
Quote from Martinghoul:

Well, this is mightily inconsistent of you, ralph...

Firstly, you state that CPI numbers are all bollox, but then you applaud the central bank that cares solely and exclusively about the number (EUR HICP). How does that make any sense?

Secondly, who do you think created the Spanish/Irish housing bubble in the first place, with their slavish addiction to the European average inflation? ECB kept rates too low for periphery, but just right for Germany which was going through the painful re-unification adjustment. They couldn't give a rat's ass about asset prices then and they sure as hell don't now.

Congrats to the ECB, indeed! What was that famous quote (attributed to Einstein, probably in error)? Insanity is doing the same thing and expecting a different result.
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The CPI is there to tell people not to believe what they see what their own eyes and pay out of their own wallets.

I applaud the ECB for hiking rates, even if doing it for the wrong reason. I also applaud them for hiking despite all the cries about what it will do to the poor overindebted. Boo-freaking-hoo. If someone's debts are barely serviceable at 1%, they've got a serious problem and it's not the job of a central bank to inflate prices across the planet just to ease that burden.

We are in the midst of another asset fueled boom/bust cycle brought on, again, by money rates that were kept too low for too long. Yes, another bust will happen, but it won't be because central banks hike, it will be because central banks caused the boom in the first place. Higher money rates don't cause busts ... Booms cause busts.

P.S. sounds to me like someone got caught long and wrong on euribor futures. either that or short euros.:cool:
 
Quote from ralph00:

The CPI is there to tell people not to believe what they see what their own eyes and pay out of their own wallets.

I applaud the ECB for hiking rates, even if doing it for the wrong reason. I also applaud them for hiking despite all the cries about what it will do to the poor overindebted. Boo-freaking-hoo. If someone's debts are barely serviceable at 1%, they've got a serious problem and it's not the job of a central bank to inflate prices across the planet just to ease that burden.

We are in the midst of another asset fueled boom/bust cycle brought on, again, by money rates that were kept too low for too long. Yes, another bust will happen, but it won't be because central banks hike, it will be because central banks caused the boom in the first place. Higher money rates don't cause busts ... Booms cause busts.

P.S. sounds to me like someone got caught long and wrong on euribor futures. either that or short euros.:cool:
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Well, actually, now that you mention it, I was long the fronts in Euribor, but managed to get out roughly flat yest, which was a result. Believe it or not.

As to the ECB, I just cannot understand how you reconcile the two last paragraphs you have written. As I said and as you seemed to agree, the ECB doesn't give a rat's ass about asset bubbles. So not only were they partially responsible for the boom, but they're hiking for all the wrong reasons, without an asset bubble to fight (certainly, there isn't one in the Eurozone). How you can applaud a CB like that is beyond me.
 
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