Global Macro Trading Journal

I believe this guy is incorrect here
http://blogs.wsj.com/marketbeat/2011/05/31/first-rate-hike-in-2013/

The fed has acted 'weird' with regards to the UR in this cycle. They didn't do anything about it in 2010(before QE2) even though the UR was at a peak and their own forecasts said it was going to be high for a long time. If they really cared about it QE1 would have been extended or QE2 would have come sooner. Truth is, QE2 only showed up when iexpectations and inflation tanked(but specially iexpectations)

The Fed's is being more conservative in this cycle due the balance sheet fears. So in my opinion they care more about iexpectations/inflation than the GDP growth or the UR. Which is why I believe the first hike comes in next year unless some kind of double dip or significant slowdown comes along
 
Quote from Ghost of Cutten:

But the Rogoff examples did not cover anything like the EU. The EU is not a nation state, it does not have any debt, and so on. Greece does not have its own currency, so it is not comparable to an emerging market nation with its own currency (e.g. Argentina, Russia etc).

The Rogoff examples would apply if Greece exited the Euro, this would then be equivalent to something like Argentina or Russia abandoning their dollar pegs before their eventual defaults. However it is far from certain that Greece will exit the Euro, there are alternatives like simply defaulting while staying in, getting bailed out by other EU nation-states, pursuing radical austerity etc.
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In some ways I agree with that, that there are alternatives. The ones that I fear the most as a short are fiscal transfers. The mere mention of no reprofilling by the WSJ sent the EUR back at 3 week highs or something.

So yes I'm aware this ain't no free lunch, I was talking about this scenario last year while every analyst was claiming 'greek will default 100% guaranteed', fiscal transfers can solve their problem but I'm not sure they will happen to a large enough extent. This new package should provide more information on how the political will is working it out
 
The way this is going to work at the micro level is EURs being sold to buy USDs/CHFs/etc as capital flees not just Greece but also Germany/France as their banking system won't be stable enough. This would happen in a Lehman scenario. Even though Greece doesn't have their own currency the EU as a whole is correlated with the pigs due the banking system exposures

Its possible though the people will just buy bunds and not sell their euros
 
Marc Faber in his latest on how one should take everything experts say with a huge grain of salt and the unpredictability of the future:

"In 1876, a Western Union internal memorandum stated that ―this ‗telephone‘ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.‖ In 1895, Lord Kelvin President of the Royal Society- opined that ―heavier than air flying machines are impossible.‖ Before the First World War, Marshall Foche thought that ―airplanes are interesting toys but of no military value.‖ An associate of David Sarnoff (RCA) said in the 1920s that ―the wireless music box (radio) has no imaginable commercial value. Who would pay for a message sent to nobody in particular.‖ Harry Warner exclaimed in 1927, ―who the hell wants to hear actors talk?‖ In 1943, IBM President Thomas Watson‘s view was that ―there is a world market for maybe five computers‖ and as late as 1977, Ken Olson- the founder of mini-computer leader Digital Equipment, opined that ―there is no reason for any individuals to have a computer in their homes."
 
Let's take a look at what's happening on the other side of the pond. Moody's threatens a downgrade review, still no progress on debt ceiling, ADP massive miss, and general econ conditions are turning over. I wouldn't say this marks a trend, but if US conditions keep deteriorating with EU concerns, the next possible downdraft could be much more severe than thought.

Sector rotation is somewhat confirming this, and the only saving grace is that commodities have moderated here. QE 3 I believe to be a tail event, barring a double dip, but I find it hard to believe that the Fed won't look to ease in some way, shape or form if econ conditions worsen.

And then there's China. If the RE situation there is much worse than expected, chinese banks will be bailed out by their govt and a chinese slowdown would lead to commodities taking a breather, giving Bernake the go ahead to keep FF low longer.

So summing up there's:
1)EUR breakdown - risk off trade, short EUR
2)US downgrade - risk off, short USD
3)China RE collapse - comms fall, long FF, long gold

I'd like to see holes in my thinking, but it looks like the global macro situation is polarized here. It's either currency devaluation caused by fiscal problems or a bust in commodities/slowdown leading to more stimulus. I'm not a goldbug but I'd think that smart money sees the global uncertainty as well, so the only trade I can think off here that would do well in all scenarios is, long gold.
 
Quote from jj90:

Let's take a look at what's happening on the other side of the pond. Moody's threatens a downgrade review, still no progress on debt ceiling, ADP massive miss, and general econ conditions are turning over. I wouldn't say this marks a trend, but if US conditions keep deteriorating with EU concerns, the next possible downdraft could be much more severe than thought.

Sector rotation is somewhat confirming this, and the only saving grace is that commodities have moderated here. QE 3 I believe to be a tail event, barring a double dip, but I find it hard to believe that the Fed won't look to ease in some way, shape or form if econ conditions worsen.
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The Fed will 'ease' by holding the balance sheet steady since they are in the 'stock' view that says the asset purchases matter because they remove USTs from the market
Like last year it seems that the debate is whether they will remove 'extended period' this year, not whether they will raise rates, thats off the table with

-Debt ceiling politics and the austerity that will lead to
-Housing double dipping
-Commodity prices selling off
-Econ data weakening

I still think the media obsession with QE3 is unwarranted. Unless the slowdown gets stronger they will just keep the current 'accommodation' in place
 
It'll have to be a popular revolt because the politicians and bureaucrats just kicked the can down to 2014. Game over unless a revolution occurs. They kicked the bums out in Ireland and the new gov't took about 15 minutes before bending over for the eurocrats. Unless we're talking about Sinn Fein taking over in Ireland or the Reds in Greece, I don't see it happening.

As for Germany, the parties who would take over from Merkel are more pro-European than she is. Where is a voter to turn. Take up arms?
 
Who bought dollars (or sold euros, loonies, or aussies) after the jobs report? Market behaving as if QE will continue (whether or not one wants to call it QE3). LOL.
 
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