Global Macro Trading Journal

HKD reval trade, points in favor

-QE infinity
-2015 pledge
-HK real estate market is hot(most expensive on earth)
-Speculative flows can only be stopped through money printing which will heat their markets even more
-So far regulatory and rule based actions to contain market have not worked
-Last HKMA chairman said peg needs to be changed
-Older pegs are more likely to be changed(According to historical studies)

Points against
-China is slowing and future economic growth is uncertain
-HK economy is slowing, tightening policy during that might bring a certain recession
-Inflation was high but have come back down to reasonable levels

Overall, it doesn't look like a likely event but these odds are too good to pass up. I'm treating the position as a cheap option and using a nearby stop(7.7560)
 
Sandy: Terrible for Individuals, but no Impact on Q4 GDP Growth

General Points

We expect that some economic activity will be delayed several days or even weeks, but this is an intra-quarter story with no impact on Q4 GDP growth.

The value of property destruction itself is not a negative in GDP. For example, if a factory with a market value of $1 billion is destroyed, GDP does not go down by $1 billion – although insurance company profits could!

The destruction of that factory does reduce GDP by the value of the goods that otherwise would be produced in that factory (per year), but this is usually much smaller than the property loss itself.

The rebuilding of the destroyed property is a positive in GDP, probably /spread over a year or two, but starting almost immediately.
Historical Comparison

Katrina is the grand-daddy of all US storms.
BEA: losses were about $110 billion ($90 bil private, $20 bil govt) in private and public capital; Insured losses of around $80 billion.
CBO: Reduced GDP growth by about half a point in 3rd and 4th qtrs of 2005.
Rebuilding was spread over several years.
But the initial disruption was centered in the gulf energy industry and there were upwards of ½ million laborers displaced for a considerable period of time.
For Sandy, we're seeing initial estimates of $5-10 bil in damages.

This is far less than Katrina and with no real hit on energy industry or longer-term displacement of workers.
Bottom Line

Sandy might reduce GDP growth by 0.1 - 0.2 percentage points, with a lot of that reduction being made up starting as early as within Q4 of 2012 and Q1 of 2013.

The storm is terrible news for individuals directly affected, but not a big macroeconomic story.

Our thoughts and prayers are with everyone in the storm's path.

Macroeconomic Advisers
 
If the US were a corporation there would be a hit to net income and book value but it seems that GDP accounting likes to have lots of + but no - so hits to book value(or national networth) might show up on the Fed Flow of Funds but not at GDP figures
 
Quote from Daal:

The value of property destruction itself is not a negative in GDP. For example, if a factory with a market value of $1 billion is destroyed, GDP does not go down by $1 billion – although insurance company profits could!

The destruction of that factory does reduce GDP by the value of the goods that otherwise would be produced in that factory (per year), but this is usually much smaller than the property loss itself.

The rebuilding of the destroyed property is a positive in GDP, probably /spread over a year or two, but starting almost immediately.
More...

Shows one reason why 'GDP growth' is a flawed measure of economic performance (see also: housing bubbles and government spending are GDP-positive). You can tell which analysts peddle absolute garbage by seeing who trots out broken-window-fallacy thinking when disaster strikes.
 
Quote from Specterx:

Shows one reason why 'GDP growth' is a flawed measure of economic performance (see also: housing bubbles and government spending are GDP-positive). You can tell which analysts peddle absolute garbage by seeing who trots out broken-window-fallacy thinking when disaster strikes.
More...

What is your macro outlook and what kind of bets are you making right now?
 
Quote from marketsurfer:

its not to late for MNST, says jim simons

http://www.streetauthority.com/valu...s-all-time-owns-3-million-shares-stock-459980
More...

Most market participants seem to be aware that the deaths are not a big deal as their drinks have less caffeine than regular coffee. What IS a big deal is all the negative publicity the drinks are receiving, this could affect sales. The stock commands a high multiple due its growth prospects, if that growth slows down thats a big problem
 
Back from a nice break with little more than golf clubs, books, food, and beer. Making a few portfolio changes:

Zillow - now out of all of it; went on their site last night and had some cheesy pop-up ad come up - tells me company is desperate for rev. growth. Happy with 90%+ gain since January and may get back in later.

Apple - taking proceeds from Zillow and buying AAPL sub-600. The market is not just pricing Apple as if it's the next MSFT (i.e., a lumbering, poorly managed POS with no serious earnings growth ever again), it's pricing it as if it were the next DELL. The market may be entirely correct, but I'm willing to take the chance it's not.

Google - can't stop slapping myself in the back for unloading MSFT and buying GOOG. Want to buy more, but Apple looks more attractive.

MReits - lower dividend scare over for the moment as the companies all report big increases in book values. Divvie cuts still coming. Will unload some more of these into strength.

GM- rocking and rolling. Can't believe I'm making money from old GM. Goes to show that at the right price, anything is attractive.

Mortgage servicers - continue to be the best opportunity of the decade. I only own one, NCT. Can't believe I've missed so many opportunities to get into NSM, OCN, WAC, ....

Big energy - stalwarts paying me 3% on my money and even appreciating

WMT - amazing company, only up 50% since I bought last summer, but the best buy of my life.

HKD - I heard there were a bunch of interventions over the past few weeks. If Obama is elected, the peg could be gone within months. Remain long.
 
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