Global Macro Trading Journal

I'm referring specifically to the expansion of the QE, there was no reason to do it other than the cliff, econ data has not worsened materially. In fact, no economists to my knowledge even predicted this move in this meeting and everybody was very good at sniffing out QE. This time everyone missed. This supports the cliff insurance hypothesis
 
2 possibilities
-Market thinks Fed will offset any effect of fiscal cliff by expanding QE's. Bullish for stocks. Should be good for a 5%-8% run or so
-Market thinks since Fed is pessimistic about cliff they should too. Bearish for stocks

Hard call which way it plays out but I'd bet on the former. People love to spin things to the positive anyway specially during a bull run
 
Actually nevermind, bloomberg used a silly headline that made me think the Fed would expand QE3 while still doing OT. But they are dropping OT, which most economists predicted. I guess the real surprise was only the Evans rule, this is paving the way for a NGDP targeting over the coming years

Sorry for the confusion
 
Quote from Daal:

I'm referring specifically to the expansion of the QE, there was no reason to do it other than the cliff, econ data has not worsened materially. In fact, no economists to my knowledge even predicted this move in this meeting and everybody was very good at sniffing out QE. This time everyone missed. This supports the cliff insurance hypothesis
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I don't see much point in overanalyzing things. The Fed's magic pixie dust isn't working, we're well beyond the point of obvious diminishing marginal returns, and they're in outright panic mode. As of today QE3 - September edition has bought an advance of approximately zero in the SPX.

Failure to predict the specific character of the Fed's action could just as easily be interpreted as Fed members trying to front-run market expectations and get more bang for the buck - which of course is an endless self-reinforcing cycle.

As far as I'm concerned we're now well past the 'Rubicon' point where the Fed could potentially still halt the inflation. They are all-in, do-or-die mode at this point. I'm not sure exactly what that means beyond much higher gold and silver prices to come.
 
Nice opportunity in BRKB stock. Right now the stock is in the buyback range. Buffett has more than $50B in buying power to buyback stock(cash plus bonds). Should provide some kind of floor for the stock

Even if it doesn't you can always fall back on the fact that he thinks the stock is undervalued and he is one of the best stock pickers
 
Potential trade here?

From a game theory perspective Boehner schooled Obama last year by looking crazy as possible and being willing to go over fiscal cliff, that lead to the Democrats to agree with whatever he wanted and get a deal done. Obama learned from that and this year he is playing the crazy card as well, plus he is not running for reelection. So they are playing a game of chicken to see who backs off first

Boehner press conference might be just the start of the more of this "I'm crazier than you" game and should only increase as they get closer to the end of the year. Normally politicians try to inspire confidence and prop up markets but here it will hurt their political goals, as a result being short SPY/ES for the next few days might be a good trade as the uncertainty increases and they try to look as insane as possible

Still thinking about putting this one. At the very least I'm going to cut my equity exposure till I suspect they will put a deal out (which is likely to come at the last minute)
 
Quote from Daal:

Potential trade here?

From a game theory perspective Boehner schooled Obama last year by looking crazy as possible and being willing to go over fiscal cliff, that lead to the Democrats to agree with whatever he wanted and get a deal done. Obama learned from that and this year he is playing the crazy card as well, plus he is not running for reelection. So they are playing a game of chicken to see who backs off first

Boehner press conference might be just the start of the more of this "I'm crazier than you" game and should only increase as they get closer to the end of the year. Normally politicians try to inspire confidence and prop up markets but here it will hurt their political goals, as a result being short SPY/ES for the next few days might be a good trade as the uncertainty increases and they try to look as insane as possible

Still thinking about putting this one. At the very least I'm going to cut my equity exposure till I suspect they will put a deal out (which is likely to come at the last minute)
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A problem that I can see with this trade is that it's obvious by now that the bush cuts will be extended for people with incomes between $400K and $1M as they meet in the middle in order to reach an agreement. The market might see through the acting and bluffing

http://www.bloomberg.com/video/obama-what-separates-us-is-a-few-100b-rzXHMb1OSC6~5nWWCsZDXA.html
 
Republicans seem to not want any tax increases, ES went down as much as 3.5%. A replay of TARP might be needed to get them to accept taxes are going up. -1.5% might not be enough for them to act (ES is down that now)

Eventually the dip needs to be bought but the question is if there is still value in shorting the market betting on TARP part duex
 
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