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The Really Useless Thread

  • #142,981
  • Sep 7, 2016 4:30am Sep 7, 2016 4:30am
...and back to earth with a flop in manufacturing and industrial numbers in Europe. Macro numbers everywhere are getting short-circuit in almost every front.

Those sharp overshoot followed by undershoot and by overshoot, etc etc added to the distorted moves in Bonds across the world are, by experience only, V. strong symptoms that something fundamentally is cooking in the macro structures. This wide zigzags in macro numbers are not healthy and usually happens before major shifts in the economy. In the particular case of Europe, uncertainty and jittery numbers after brexit are starting to make some cracks in economic confidence ....

Keeping a very close eye there. On the rest, session pretty much over with all markets holding steady till NY and as long as we keep riding good and bad news in Equities with free money is all 'fine' ...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #142,982
  • Sep 7, 2016 5:58am Sep 7, 2016 5:58am
Quoting sisse
...and back to earth with a flop in manufacturing and industrial numbers in Europe. Macro numbers everywhere are getting short-circuit in almost every front. Those sharp overshoot followed by undershoot and by overshoot, etc etc added to the distorted moves in Bonds across the world are, by experience only, V. strong symptoms that something fundamentally is cooking in the macro structures. This wide zigzags in macro numbers are not healthy and usually happens before major shifts in the economy. In the particular case of Europe, uncertainty and jittery...
Sisse, one Q on equities: so do you agree there r basically 3 states:

good news is good news, bad news is bad news = this should be the normal state when CBs are not involved.

good news is bad news, bad news is good news = in times when monetary tightening is involved (RMT)

good news is good news, bad news is good news also = when monetary expansion is involved (QE, rate cuts)

is there any other state/combination? - Im thinking good news = bad news, bad news = bad news

--------------

and so if we have the state of monetary expansion - extension short term on equities - just wondering.... it can end in 2 cases:

1. we ride out of fumes as no more money will be added via monetary policy (= I very much doubt that) - natural limit may be the limit of monetary expansion but that limit can be reached who knows when, e.g. negative rates, more QE, helicopter money.

2. can it be also because the CBs loose their credibility and control? - I mean.... can the monetary expansion ever become negative for equities and get us out of the good news is good news, bad news is good news also"? Or are the free money "infinite" drug which is gonna be ridden no matter whats going on in the background - i.e. no matter how big is the dis-attachment with macro and monetary policy effectivness?

Thank you if u have a minute to answer.
  • #142,983
  • Sep 7, 2016 6:21am Sep 7, 2016 6:21am
Quoting chester123
{quote} Sisse, one Q on equities: so do you agree there r basically 3 states: good news is good news, bad news is bad news = this should be the normal state when CBs are not involved. good news is bad news, bad news is good news = in times when monetary tightening is involved (RMT) good news is good news, bad news is good news also = when monetary expansion is involved (QE, rate cuts) is there any other state/combination? - Im thinking good news = bad news, bad news = bad news -------------- and so if we have the state of monetary expansion...
Obviously a lot more to talk about this, but shouldn't in this analogy
good news is good news, bad news is good news also = when monetary expansion is involved (QE, rate cuts) be
good news is bad news, bad news is good news also = when monetary expansion is involved (QE, rate cuts)
?
​e.g. interest rate considerations overrule the good news in an already overvalued equity market...
Don't be a hero. Don't have an ego. Always question yourself
  • #142,984
  • Sep 7, 2016 6:37am Sep 7, 2016 6:37am
Quoting USD-Bear
{quote} Obviously a lot more to talk about this, but shouldn't in this analogy good news is good news, bad news is good news also = when monetary expansion is involved (QE, rate cuts) be good news is bad news, bad news is good news also = when monetary expansion is involved (QE, rate cuts) ? ​e.g. interest rate considerations overrule the good news in an already overvalued equity market...
yes, thats the strange thing. but sisse wrote that we have now -- good news is good news, bad news is good news also and if I get it well its due to monetary expansion.
  • #142,985
  • Sep 7, 2016 7:33am Sep 7, 2016 7:33am
Quoting chester123
Sisse, one Q on equities: so do you agree there r basically 3 states:
Well you are making a very broad generalisation and you will need to keep a lot factors ceteris paribus in order to make sense of your idea. I understand where are you aiming to but I think you need to see it from a different angle if you want to make a general statement like that:

  1. You need to understand rates in cycles rather as binary events.
  2. You need to differentiate in +/- what part of the cycle the economy is.

    1. The correlation you are trying to make, will make more sense and is more inverse correlated at the beginning and end of cycles (e.g good news will be bad news if we are tracking the start of a new hike cycle etc)
    2. While in the middle of a cycle, etc there will be a direct correlation or fairly any correlation at all (e.g good/bad news will be good/bad news via rates)


  3. As I mention above, markets and particularly non FX markets don't only move because of rates policy. Monetary policy is very important of course for markets but don't assume all markets has a magic on/off switch via rates.

Quote
no more money will be added via monetary policy (= I very much doubt that) - natural limit may be the limit of monetary expansion but that limit can be reached who knows when, e.g. negative rates, more QE, helicopter money.

  1. First the expression ride the pig at these levels imply don't be the sucker calling tops (never ever call a blind top in Equities my 2 cents) and wasting the easy free money ride but more importantly track like a hawk the developments to be the first to jump out and let the laggers and 'average Joe' blind 'buy and hold' holding the turd (as it always happens when macro forces are in play).
  2. BOE still has room for more both via QE and rates. BOJ is in desperation mode and you know what usually happen when politicians and CB are in synch? Just the fact of mentioning helicopter money is enough to keep us afloat for a while.

Quote
2. can it be also because the CBs loose their credibility and control? - I mean.... can the monetary expansion ever become negative for equities ...

  1. Yes thats what most investors, economist, analyst and policy makers are tracking and talking 24/7.
  2. We haven't been here before (extreme, extended and unlimited in size and scope loose monetary policy) ever in the history of modern economics. In strictly theoretical sense it's going to end bad very bad. Danger alarms are sounding in every front but we keep slowly riding and holding.
  3. Is it going to blow? ...yes we will..... Is it going to blow tomorrow? ...no, nobody knows...so what's the drama? ...well we have major shocks in play in Europe and Japan for next year and most of emerging markets are in recession/about to enter in one, bonds are out of this world and to put the cherry on top free trade and markets are losing ground against populist, protectionist and nationalist everywhere ....
  4. US elections are always important, but this time if Americans join the global backwards movement ... i wouldn't bet the farm that will hold beyond Q1 2017 ...

sisse

Pending conversations? PM for a chat...I am mainly in OTM now
  • #142,986
  • Sep 7, 2016 10:09am Sep 7, 2016 10:09am
I think it's worthy to read this: http://www.forexfactory.com/news.php?do=news&id=605881
It seems there are other options to boost the economy in addition to the new fiscal policy such as increasing the inflation target. It's not clear to me what does this mean and how will we get there?
The current inflation target is 2%. Increasing it to 3% for example. How will we reach it when we are enable to reach 2%? Any thoughts?
  • #142,987
  • Sep 7, 2016 10:49am Sep 7, 2016 10:49am
All longs cleared with the rule " don't be a dick for a tick" missed my level with a couple of ticks ...
 
After this one thing is almost a done deal ... Ecb might be a dovish one with what I guess should be of surprises which will breakdown e/u ...ecb still wants the e/u to be lower ..
 
A lot of surprises coming in a couple of session/weeks ... Stay tight and fasten your seat belts ...
Re-Incarnated
  • #142,988
  • Edited 3:17pm Sep 7, 2016 10:58am | Edited 3:17pm
London closed under .1240....still think this is a BEARISH signal. Lets see how NY closes.

EDIT: NY closed at .1240 as well.

I am looking at .112X being taken and back into chop zone afterwards unless ECB news drives it lower this week. I am not seeing much beyond that until we have more US data and EU data.

sisse did indicated that the EU breakdown will be more about EU's #'s and Monetary Policy as opposed to RATES in US. It will be a factor (rates); but, EU will drive its own train down if I understood this correctly.
  • #142,989
  • Sep 7, 2016 3:25pm Sep 7, 2016 3:25pm
EU forming H4 flag fyi, indicative of higher
  • #142,990
  • Sep 7, 2016 7:06pm Sep 7, 2016 7:06pm
Quoting NorthTrader
Edit: and here's another thing... if real money is pulling out of the 10-year bond market - as it looks like they have been since the start of August - then what are they buying instead? Not the S&P, because that's hardly moved!
SDR
  • #142,991
  • Sep 7, 2016 7:31pm Sep 7, 2016 7:31pm
Sorry for my ignorance, but what is SDR?
  • #142,992
  • Sep 7, 2016 7:33pm Sep 7, 2016 7:33pm
Quoting Ken A
SDR
Had to look that one up Ken: Special Drawing Right. Not to be confused with SPDR of course (a type of S&P 500 ETF). I'll look into it, thanks.
You reap what you sow.
  • #142,993
  • Sep 7, 2016 7:53pm Sep 7, 2016 7:53pm
Quoting Ken A
{quote} SDR
wb
  • #142,994
  • Sep 7, 2016 8:02pm Sep 7, 2016 8:02pm
Quoting NorthTrader
{quote} Had to look that one up Ken: Special Drawing Right. Not to be confused with SPDR of course (a type of S&P 500 ETF). I'll look into it, thanks.
Link to SDR

http://www.imf.org/external/np/exr/facts/sdr.htm/
  • #142,995
  • Sep 7, 2016 9:32pm Sep 7, 2016 9:32pm
Quoting Ken A
SDR
Here's an interesting and easy-to-read article about China's new SDR-denominated bonds, which were issued a few days ago. Have the Chinese government and/or large investors been selling their US treasury bonds recently in order to buy SDR bonds? It's possible.
You reap what you sow.
  • #142,996
  • Sep 7, 2016 11:24pm Sep 7, 2016 11:24pm
http://wtkr.com/2016/09/07/house-to-...-saudi-arabia/

Quote
The Saudi foreign minister warned lawmakers in March that if the bill became law, the country would sell $750 billion in U.S. assets, including treasury securities.
  • #142,997
  • Sep 8, 2016 12:43am Sep 8, 2016 12:43am
Worth reading it ....
 
http://www.forexfactory.com/news.php?do=news&id=606052
 
 
Re-Incarnated
  • #142,998
  • Sep 8, 2016 2:06am Sep 8, 2016 2:06am
Quoting Ken A
{quote} SDR
Nah, China, one of the biggest holders is buying ''stuff'' - Be difficult to bomb China if China makes the bombs.

Chinese firms go on a buying spree for American companies

The Biggest American Companies Now Owned by the Chinese - Fortune

Chinese acquisitions of U.S. companies - CNNMoney

China is buying up American companies fast, and ... - Business Insider
  • #142,999
  • Sep 8, 2016 2:12am Sep 8, 2016 2:12am
Quoting Ken A
{quote} SDR
Welcome back Ken
  • #143,000
  • Sep 8, 2016 4:33am Sep 8, 2016 4:33am
Quoting Sa7an
{quote} Nah, China, one of the biggest holders is buying ''stuff'' - Be difficult to bomb China if China makes the bombs. Chinese firms go on a buying spree for American companies The...
interesting stuff
"Bulls make money, bears make money, pigs get slaughtered"
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