Global Macro Trading Journal

Quote from ralph00:


Fair enough. Point remains that Bernanke felt the need to leak this stuff to him right after the first market decline of the year. A pretty clear signal Ben will step in if anything serious develops.
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So, following this logic, a strong jobs report on Friday would actually be bearish, as the Fed's hand would be further stayed -- whereas an outright shitty jobs report would be bullish, as Uncle Ben would then feel compelled to lean closer.

Government manipulated markets, whee!
 
Quote from darkhorse:

So, following this logic, a strong jobs report on Friday would actually be bearish, as the Fed's hand would be further stayed -- whereas an outright shitty jobs report would be bullish, as Uncle Ben would then feel compelled to lean closer.

Government manipulated markets, whee!
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I was also thinking maybe Bernanke got an advance look and the number was an ugly one, so just wanted to let markets know - inflation be damned - we're ready to rev up QE again and will use some fancy footwork in regards to "sterilization" and "reverse repos" to appease the hawks on the Fed and in Congress.

Unmentioned today was a really ugly number in this morning's productivity report. Unit labor costs up somewhere around 3% last quarter. So now labor costs are rising faster than the core rate of inflation. The Fed doves have said without labor costs going up, it's really not inflation. How now Mr. Chairman?
 
Quote from ralph00:


Unmentioned today was a really ugly number in this morning's productivity report. Unit labor costs up somewhere around 3% last quarter. So now labor costs are rising faster than the core rate of inflation. The Fed doves have said without labor costs going up, it's really not inflation. How now Mr. Chairman?
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The other fly in the Chairman's ointment is $6 per gallon gasoline and the impact of rising oil prices on consumer spending and global growth.

If the magic ministrations are just smoke and mirrors, there's no real effect. But if animal spirits are successfully stirred, then so too is the oil price, which in turn weakens the real economy that much faster.

At some point it all goes to hell...

mickey-mouse-mop.jpg
 
A correction in a recovery is almost always because of fear of Fed tightening. Markets normally go down in that case if the employment report is strong. This is a known and very common thing. Happens in all cycles.
In the funhouse mirror environment we're in now, this would mean no QE3, it looks like. Withdrawing QE is de facto tightening now.
 
Can someone put the bear case? For example:

1. Solid reasons that earnings will fall, and concrete evidence that they are doing so now or in the near future

2. An alternative place to put investment capital that is superior to stocks at current valuations

3. Bearish market action

4. Very frothy speculative sentiment all over the stock market

Any takers?

Remember, the S&P is flat over the last 12 months - that means it could rise 15-20% from current prices and still just be in line with the average 2 year historical return. It is down over the last 12 years. Earnings are rising. Bonds, cash, and corporate bonds are providing pitiful returns. Interest rates are at record lows. Stocks are below their historical valuation range. The market is making higher highs and higher lows. Isn't this all pretty bullish?
 
Not sure if I've mentioned this before, but I think there's an excellent secular buying opportunity in Greek stocks. The Athens General index is currently at 745 down from a year-2000 high of 6500 - down 88.5%. It's back to levels last seen in 1993.

Few weeks ago I took a small (1%) position in GREK, which covers only a subset of 20 stocks rather than the full ATG. It's so rare to see a developed-world (I mean I know it's Greece, but still) stock index beaten down so badly that I really want to boost my position to maybe 3%, as there's quite considerable potential upside - almost 1000% to recover the 2000/2007 highs. A fine return over twenty or so years, and that's not counting dividends. It could of course make only a fraction of that progress and still be a decent enough investment.

Risks that come to mind:

- Political: Nationalization/expropriation of foreign shareholders, or measures such as punitive taxes on foreign capital and capital controls. Seems possible, but Greece is still connected to Europe. As long as the EU and 'European Community' idea survive in some form with Greece as at least a peripheral member, I don't see them as too likely to go whole-hog down this path.

- Bankruptcy: 32.5% (as of Nov 25, it is likely lower now) by market cap of the FTSE 20 index on which GREK is based consists of banks and financial companies. It is entirely conceivable that these will go to zero with all shareholders wiped out.

- Hyperinflation: Greece returns to the Drachma and hyperinflation takes hold. However the real losses might actually be less in this scenario than if bank shareholders were wiped out (after all you own a share in the bank getting first access to the wheelbarrow loads of printed paper).

In short you have to be prepared to lose the whole investment and a 50% drawdown is very likely - which is one reason I haven't put any more out just yet.
 
Quote from Ghost of Cutten:

Can someone put the bear case? For example:

...

Remember, the S&P is flat over the last 12 months - that means it could rise 15-20% from current prices and still just be in line with the average 2 year historical return. It is down over the last 12 years. Earnings are rising. Bonds, cash, and corporate bonds are providing pitiful returns. Interest rates are at record lows. Stocks are below their historical valuation range. The market is making higher highs and higher lows. Isn't this all pretty bullish?
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What timeframe are you concerned with here? It's not entirely clear to me as you are referencing both short-term factors (bullish price action over the last 2-4 months) and very long-term ones (valuations, historical multi-year average returns, comparison with long-duration bonds etc).

It's a bit late now but I'll look at it more closely tomorrow.
 
Daal, while ralph is an ass most of the time, he also has a pretty good hit rate of his calls/links to research. I would assume you are familar with 'groupthink' as a phenomenon. At any rate, you know the old saying about : keep your friends close and your enemies closer?

My macro 2 cents is firmly in line with GOC. Data is positive even if it is ST data. While momemtum appears to be fading, the net result of Fed tightening may not be a selloff, it could mean an extended trading range in the indicies. I'm still reiterating my 70s repeat scenario since page 1 of this thread. If you are looking out 5+ years, go long stocks/comms. Under 5 years, be prepared for whipsaws, but unless SHTF (which you'll see the writing on the wall), this isn't 08' or anything close to it.

Edit: for actual plays im in or looking to initiate

Long PMs
Long bluechips or broad index ETF
 
Quote from Ghost of Cutten:

Can someone put the bear case? For example:

1. Solid reasons that earnings will fall, and concrete evidence that they are doing so now or in the near future

2. An alternative place to put investment capital that is superior to stocks at current valuations

3. Bearish market action

4. Very frothy speculative sentiment all over the stock market

Any takers?

Remember, the S&P is flat over the last 12 months - that means it could rise 15-20% from current prices and still just be in line with the average 2 year historical return. It is down over the last 12 years. Earnings are rising. Bonds, cash, and corporate bonds are providing pitiful returns. Interest rates are at record lows. Stocks are below their historical valuation range. The market is making higher highs and higher lows. Isn't this all pretty bullish?
More...

Hussman last 5-6 letters explain the bear case quite well
 
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