The Really Useless Thread

What do you think about the level of rate increase for tomorrow (FOMC)? Is it 0.25, 0.5 or .75?
I think it will be 0.25 for mainly two contradictory reasons: (1) Pro 0.25 increase: Donald Trump economic Plan will increase deficit by another 5-6 trillions which is against the interest rate increase; (2) Pro 0.5: the same plan will also increase inflation, which will make bonds (the vehicle by which the government borrows money) very weak if the level of increase is not compensating the inflation increase.
Any views or comments are welcome. Thank you!

some time ago I posted this chart.



up to now equities are above my very wide estimate of short/mid term extreme. In any case the rally seems very fishy. However, Im kind of getting confused of the rationale behind it - expectations of fiscal stimulus of DT + ECB QE. However, on DT: if he delivers =) higher growth + inflation expectations =) higher rates =) lower growth + inflation. It just depends whos gonna overweight who (JT vs. JY). Im not gonna call the top of course but It should be here soon. May FED mark it?

Basically the very rich, biggest corporation and largest funds (via investment banks) won the lottery with Trump.

1. First we have the real economy reasons. US printing the best numbers in almost every front in the last 8 years. full employment, very low rates, inflation on target and every single macro indicator in multiyear highs (or lows). Obama is leaving a rocket, loaded and ready to fly to the moon as soon as normalisation finally takes its course.
2. We have a market consensus since October (when DEC hikes were a done deal after the FED/Yellen) that this time hikes are on macro strength (even the most dovish of the doves accepted that the US economy was ready to walk alone).
3. What it should have been a choppy neutral Quarter on the highs, got short-circuited by Trump elections that triggered a fresh extension break out.
4. Short term we have a manic move as the largest hands are licking their fingers of what is coming in the short term. Tax cut for the rich and biggest corporations. Less regulations for the heavy industries and dirty sectors (including banking), a massive infrastructure package that will be channeled through the large banks (wonder why the Treasury selection triggered the biggest rally in this century in GS and friends), to a select group of mega corporations supporting Trump, and to put the cherry on top war, conflict and protectionism on sight that will make a killer for you know who and friends and all that blowing the fiscal balance with public money....
5. Basically we are going to have a crowding out from the fiscal side directly to very few mega corporations, banks and super rich investors all at cost of inflation, and if history and economic science is right, will benefit all but the average Trumpterer in the mid term.
6. What you do? you ride the pig and ask the questions later....they now have a guarantee sugar daddy even if things go wrong in the mid term. Was (is) a win win for stock markets.

However, macro fundamentals and macroeconomic mismanagement with protectionism, inward looking policies and conflict has never ever ended up good beyond the short lived, short sighted rally. Trading wise ride the pig if you are in (don't be the sucker going against a free ride for 'moral' reasons). Hikes will pull the first hand break and then if Trump keep walking his campaign talk, markets will delivery a very strong verdict sooner deeper and faster than the current rally ....

sisse

...surprise surprise? no not really.... we are set to roll around 1.061x as widely expected since the summer for the FED play (FA support on rates...@IMARICH? this is the expectation play 1.15 -> 1.06 !!!! ...not the crumbs from the last few days ).

Equities holding in the very highs for tomorrow. Bonds and Dollar well underway leading the way as its expected in RMT while commodities already trading 2017.

All maps are crystal clear for tomorrow and we are officially in no man's land. Expecting thin markets until the FED with short term bid and/or offers (depending on instrument) starting to vanish starting from today's roll so watch-out for soft hands getting caught on the wrong side.

If you are not already in, it's only time to look for mid term positions (if you still can) anything else below is just a sucker game....

--> I am reading the last few pages. WoW you guys really are taking that info to the next level. I am very glad some find it useful and more importantly that lots of traders around are incorporating some macro rationality in their trading discussions and plans.

--> We are officially opening Rates Chat Mode so why don't we listen to some of the maps for the FED play. Lets see if we can have a good discussion before the news and maybe most can grab or learn something in the play ...

Floor is open ...

sisse

I am looking for a modest vol pop and a brief 1-2 day pullback of maybe 3% max. Just because. I am sure bastards would like a little shakeout and another btfd entry, even if it's just a little dip. I had a lot of bullish equities (SPX & SPY) trades come off well last week and this and left sitting on bearish setups for this week and next - long vol via UVXY and VXX, short SPY and SPX....all cheap spreads and if we don't get a pause I will not suffer much.

The year is drawing to a close and maybe hedgies will try to take some profits soon. Anyway, I expect the Trump rally to either pull back or run out of juice into the end of Dec and I'd bet spoos 2,300 will be a max possible high for the year.

-> On the fundamental side

 

1. hike is a done deal , hawkish words to confirm a stronger rate path outlook in 2017 expectations .
2. Anything else like concerns about inflation targets and to lesser extent employment [last flop in AHE ...] is not expected
3. Any flop on hikes for this meeting will short-circuit the market especially in the Bond and Currency board
4. A positive outlook could trigger a sharp profit taking in Equities

> On the technical side

After Us election and ECB is clear currencies and equities board completed some major legs , Euro sitting around 1.06 after the swing low from 1.13 in a rather simple ride ... although we didn't break the low we have major mover and shaker to fill the dots and complete the mid term swing targets and this time with a stronger momentum in play .

-> For the actual flows

All micro and macro levels raised during this news

 

1. 1.097x strong resistance -----1.071x flip ------1.046x strong support // levels in between are micro
2. Below 1.050x the floor is naked but this time and as it held the bid many times , it would trigger an agressive leg ...
3. DXY held the 100.xx handle as expected after completing Dec RMT leg .
4. Hikes by default and hawkish talk will mark the high of the Month on the current high for EURO .
5. Only a major flop both from hikes and outlook will short-circuit the flow and it will trigger clear all short positions
6. For entries [if not already in] simple stop limit entries for momentum plays are the no brainer this time both for short and mid term legs

thank you for the explanation:

here is my map for tomorrow:

FA: hike + little bit hawkish FED expected = small revision to economic projections to the upside + indicating 2/3 hikes 2017.
TA: based on the short term map - see chart.
The flow? =

A: no hike = short circuiting the markets as is fully expected. Flow is to the extreme (085) and beyond (096)
B: dovish FED = lowering economic projections and dot plot or keeping it the same!!! = flow to the extreme - also locking the floor for the 2016.
C: inline FED = slightly hawkish = I expect the floor to survive and E/U to move lower of the short term range as we approach last very important numbers in 2016 = GDP and PCE of US.
D: hawkish FED = robust revision of dot plots and macro to the upside = we give up the floor for the 1st out of range target before the last macro numbers.

Here's what the one I posted over the weekend looks like now. I feel it will take something tantamount to JY slapping on a superhawk cape and flying around the press room to crack 1.046x. I'm not expecting it anytime soon. But I hope I'm wrong on that. My guess is tight chop for a while unless some dove meat is served. Then wide chop 1.09x a possible top for that near term, maybe tickling 1080 later. I might be mapping a tighter st range than you guys are.

@chester123 do you think it's more likely we sit at 1.066x than 1.061x at fed time?

On the fundamental side

1. Markets and expectations are heavily aligned for a 25bp increase, thus a limited knee jerk reaction is expected. For the conference, a neutral/slightly hawkish FED in Wait&See mode (DJT politics ?, Congress support ? ...) sounds the more logical and will change ST outlook in EU from Sell to Neutral.
2. A flop is not expected at all.
3. An unlikely 50bp increase will trigger legs to mid term targets on the currency board through DOLLAR and a sell-off on Equities.

On the technical side

1. Equities are trading air on the highs while currencies are sitting in their short term targets. Only an agressive/very hawkish FED will trigger continuation on DOLLAR. Otherwise, decent profit taking on DOLLAR (especially UJ) and Equities and smart money selling the news is expected.

The flows in EU

1. A 25bp increase and a neutral/slightly hawkish FED and we are set for a zigzag play : 1.061x → 1.046x → 1.073x with a probable extension to 1.097x before sitting for the end of the year at 1.073x
2. A flop will trigger a very fast and sharp leg to the top of the short term range : 1.061x → 1.114x / 1.121x
3. An agressive/very hawkish FED with a 50 bp increase will trigger direct play : 1.061x → 1.028x → 1.019x

Just to reiterate my view on the level of rate increase.
A hike of .25 will be considered dovish and send EU to 1.097. This scenario is most plausible to weaken the dollar
A hike of .5 is the expected rate and we will have a zigzag 1.06 to 1.08 to 1.04
A hike of .75 is unexpected, but it will send EU to 1.02.

With the scenario of .25 hike, Gold will go up to 1200 and then 1245.

Flows in EU for FED play

1. A .25bp increase and a slightly hawkish FED : 1.061x -->1.046x -->.056X
2. A .25bp increase with a neutral FED 1.0610-->.056X-->.073x w ext to .083X
3. Flop will trigger a fast leg to : 1.061x -->.083X w ext to -->1.097X
4. An aggressive hawkish FED with a .25 bp increase will trigger direct play : 1.061x--> .046X (intermediate stop) w ext. 1.020X

We trade EXPECTATIONS and NOT FACTS so the FED doesn't need to give us .50bp for us to move downward in Mid Term leg

bond vigilantes....haha, I thought those guys were retired...

http://www.businessinsider.com/the-b...e-back-2016-12

...the possible scenarios I see for a FOMC to really stir the pot: 1) they hike 50 bps not 25 (meh); 2) they put out an aggressive dot plot, much hawkier than the flaccid dot plots they have whipped out recently (ok, I am awake): 3) they whiff. (Boom.) But whythehell would they? Who knows, but it's What They Do.

25 bps hike is the expectation and forecast most forecasters expect from what I can see.
I think it all will be about the outlook for 2017 if we get the 25 bps hike that is expected. ( 2 or more hike expectations for 2017 bullish, less then that bearish)

So if we get the expectation 25 bps hike eurusd will spike up. During conference with hawkish fed it will turn bearish again. ( bull trap )

If we get a hike 50 bps directly it will be very bullish USD ( bearish EURUSD)
With an 50 bps hike FED is aggressively hawkish and I expect outlook 2017 then will be the same.

...and that was it for the european session. US in full control across all markets and asset classes until the FED. Very very important day today. Whatever the outcome we will have a before and after in the FA front.

--> Before going deeper into FED talk. Honestly 2 thumbs up for all the posters in the last few pages. Superb analysis and reading, fantastic posts. Some of you guys have really raised the discussion bar in FF. I am sure some that were not use to read markets like that will reap the benefits in one way or the other in terms of consistency and standing out of the crowd.

--> Instead of trying just give my view, let's try a different approach for today as I think it will benefit all.

--> Let's try to find some common ground and key points so we can have a clear framework. I will only try to set some boundaries to make the conversation easy to follow and give some ideas in the more complex FA and news part. Lots of people have asked questions about that and what better opportunity to trade and learn than a live RMT session with major mid and long term TA in play.

--> So lets get started with this until the FED...For those shy or simply wanting to share or learn something in between feel free to ask or jump in the discussion. Just reading the analysis in the last pages should be alone an inspiration of how much one can learn from the FA side just with patience and putting the miles and hard work....

sisse

What source/site do you guys use for real time results on big news when mobile? I've tried using the FF calendar page but it usually freezes for a while with bigger news events when I'm checking it mobile.

I have the myfxbook app installed on the mobile phone. It mostly outperform the speed for FF calendar during news. So even when I am on the computer I mostly get the numbers earlier on myfxbook moblie app then on the FF calendar.

Thanks checking it out now--

--looks good. Much appreciated.

I think you should try to follow live properly today. This is a major market event and won't recommend to just follow it via mobile. Have your platform, your workspace ready, Bloomberg or what have you side by side. Track it properly.

Doesn't matter how much we move today but the implication of it will have a huge impact for 2017 and beyond and could make the difference between getting in synch with the markets for next year or getting lose in translation later....

If you can't, try to focus after on the outlooks and main benchmarks rather than the hike headline alone as the 'money' is not necessarily there ...

sisse

Thanks. Good advice. And I certainly will try to clear my desk for the event and after. My business doesn't always let me call the shots on my schedule. But sometimes I get lucky.
"The restaurant business is like dancing with a bear. No matter how tired of it you are you can't stop." -Ludwig Bemelmans