I’m going to go into hiding for a few days on market moving news. this is because: 1. I will be going to HK for my graduation ceremony! Yay! It’ll be nice relaxing at the Macau poker tables! 2. I really intend to get the musings on Japan out, which at the moment looks like a 3-part series (fundamental factors affecting the nation, implications of possible sequences of events, and some solutions ranging from probable, plausible, and all the way to pie-in-the-sky). 3. CFA progress is painfully slow, and I am not prioritizing it because I think I’m learning more from the markets anyway (not to mention that the registration fee is my average daily move!). If you read this anf for any reason need to contact me, drop a comment (it will show up in my mailbox, and thereby my phone while in Hong Kong) or just call my HK number. I will be back to the markets by two weeks from now most likely. With this in mind, some house cleaning is due.
- Italy is at the mercy of its own bond market until ECB starts printing massive amounts of money to support Rome, thus it’s at the mercy of the London Clearing House margin requirements (determined by spread vs. euro-AAA issuers) until the ECB promises to buy every single cent of debt. Political solution? Come on, Italian politics/politicians have been the laughing stock of the rest of Europe for as long as I’ve lived! The rest of Europe!
- The congressional supercommittee isn’t getting anywhere, and we have two weeks. keep in mind, if the bare minimum is agreed to, or if procedural- or party line differences prop up, remember that this is the D-Day – 1 solution, so it needs to beat expectations if we aren’t supposed to be back here during the presidential race. So, 6 months.
- Stock markets are falling off ridiculously high levels… I’ve had very little idea what has gone on during the 16 000 to 20 000 rally in the HSI (that’s right, it entered a bull market!) given that firm resolutions were few and far between. Ok, the Oct. 27 marathon crunch seemed to be good news, but honestly, the only thing that’s really worse now – after Greece kinda solved its problems in its own way – is that Italian bond yields popped. Are we fundamentally better off than we were at HSI 16 000, or off the euro meeting marathon? No! is this really a shock to anyone? Well, if you bet your house on sunny day weather options and you get woken up by the gentle rain on your window, I guess there’s cause for panic, and this is what seems to happen to equity markets at the moment. Anyhow, watch the volatility indices, I think we can get some pretty spectacular runs there in the coming weeks unless Italy politics clear out ASAP. Odds of that happening with more parties than can be counted and a deliberate attempt by all political parties to maintain this soup by never actually forming proper allegiances and seemingly swapping policy priorities to make it relatively easier to reshuffle and retain power after inevitable betrayals will show now! Run for the hills…
- MF Global, Jeffries debacle: Well, thanks guys, now everyone is offloading exposure to anything which isn’t Germany or directly north of it in Europe. look for this to be creating the sovereign debt version of musical chairs around banks, with chairs being government money and the music played increasingly fast by peripheral bond markets. Jeffries handled the debacle as well as it could, but on the end of Jon Corzine: who on earth expected that guy to trade responsibly? He’s taking risks I couldn’t dream of and I enjoy the learning experience of losing my money! Well, thankfully, if I do “well enough” then maybe I can one day aspire to have the track record of a Goldman Sachs head!
Update: I will unleash a little technical report on EURUSD ichimoku analysis later tonight, and one more quick post for the yen and gold before I leave the table. This is too juicy to pass up on! Japan, please wait and don’t let your yields skyrocket before my little analysis is out, ok? I really want to see if I can be ahead of the game.