Wednesday, November 07, 2012

Now what?

So that's that then. The US X-Factor is over, we hope the winner,  as chosen by YOU the voting public, goes on to have many hits and the $6bio spent on producing the show are recovered through record sales. We know that Mitt really, really wanted it and his dream has been shattered but hey, you gotta give it 110% and he is really grateful to the voters for getting him this far, its been onehelluva experience he wouldn't have missed for the world, we are all really best buddies and he would just like to thank ... yaaawwwwn. 

So what next ?   

If you are a Republican market participant do you now -

a) Sell out all your fossil fuel investments

b) Buy gold as its obvious the US economy is now going to be a disaster and QE will run out of control (plan A).  

c) Sell everything as doing so may push markets lower and the resultant price action can be held up as a vote of no confidence for Mr. O.  whilst screaming "Money printing and Toldja so"

d) Nothing - you knew that Romney wouldn't get it anyway 

e) Wonder what all the fuss is about, plan Thanksgiving  and get back to trying to haul your yacht out of the trees in your neighbour's garden.

If you are a Democrat market participant do you now - 

a) Stay in bed with a hangover after partying hard celebrating a win that you think makes you special. 

TMM always tend to see election victory parties as a bit strange.  Errrr are sort of by definition representative of the largest chunk of the voting population so what's so special? In extremis if we had an arbitrary election to vote for either mass public puppy executions followed by global nuclear holocaust OR no change to current status quo, would a resultant massive global party as 99.9999% of the population celebrated their stunning victory over certain death REALLY be justified?  If so, then in true "Olympic Economics" style, we ought to be running one every month. 

b) Buy Gold as you need presents for christmas, and well, you can never wear enough gold. 

c) Buy everything as doing so may push markets higher and the resultant price action can be held up as a vote of confidence for Mr. O.  whilst screaming "Money printing and Toldja so"

d) Nothing - you knew Obama would get it anyway. 

e) Wonder what all the fuss was about, plan Thanksgiving and get back to finding a job. 

 If you are Team Macro Man do you now -

a) Just buy the dip (JBFTD) as it straight-lines up til Xmas.

b) Sell Gold because we really dont think that Obamafication of the Bendral Reserve is going to directly lead to an inflation gift in our Christmas Stockings. 

c) Scream "Nahnahnahnah" with your fingers in your ears when anyone mentions cliffs. 

d) Get ready for JPY to dump and instead of buying risk in FX via Usd crosses do it all verses yen.  

e) Run a sweepstake on which subject will now replace "US Election" as top of the "you gotta trade on this, aren't we clever" league of analysis filling their inboxes. We guess Greece's X Factor.

f) Wonder what all the fuss is about and get back to a 2001 L'Esprit de Pennautier


Anonymous said...

C Says,
Was more interested in UBS replacing people with algos. Thought this was very funny,but now I know why UBS really are crap.
In essence it appears they are assuming that they can have an algo that brings some sort of superior hedge with it. What makes them think that is possible ,or if so can continue to be possible?
If the proliferation of hedge funds as served to neuter any hedge most of those funds used to have then why won't a prolifiration of algo trading do exactly the same?
Actually,I suspect they know this. Appears to me what the adoption of algo's is reallya bout is removing the kind human input that landed them with huge losses. In essence it might simply be a policy move that says' we'll accept average performance in exchange for limiting our risk.

Of course after a string of high profile huge losses in recent years coupled together with regulations applying to ring fencing we appear to have entered into a new world of investment basics where risk looks like becoming a dirty word.

Frances Coppola said...

f) definitely. On all three.

Anonymous said...

Most important "elections" in the world are who will be the next Fed Chairman.

Summers looked good in that Facebook movie so I say him.

Anonymous said...

whenever in doubt, I ask myself this biblical question : "What would the machines do ?"
Unfortunately, my house is still in the dark thanks to Mother Nature and therefore "Computer says neooo"..

Dee Dee Humberside said...

Don't want to be accused of feeding one of LB's obsessions, but Anna Lee getting trampled BAD.

Screams "housing stimulus" to me.

Leftback said...

Now what?

The answer appears to be "throw all the toys out of the pram" this morning, or as the Australians say "spit the dummy". Of course there is a limit to the profit available on that trade once your favorite plastic rattle and squeaky ducky is on the floor.

Everyone in the US is now banging on about lame duck session. In fact this is not the case, b/c essentially NOTHING HAS CHANGED. If anything, we have had a lame duck Congress for two years that has achieved almost nothing, and now at least the election is out of the way.

Leftback said...

Dee Dee,

NLY and most of the mREITs can't make much money when the spread is very tight. There is also some nervousness about the debt ceiling again. Any potential downgrade of US Treasuries obviously takes agency paper with it. This is not the place to be today, although note the preferreds are doing fine. If dividend yields start to get ridiculous again, you can bet there will be some interest. Not yet, perhaps.

abee crombie said...

NLY keeps lowering the dividend, hence the share pressure. Look at TWO or AGNC, not nearly the same drop.

Negative schatz again...that trade is done

Anonymous said...

Big Ears victorious? Shocked, I mean, who could have known it? No wonder the mkt's barfing. Jeez...

Adults should be in attendance later.

Leftback said...

It is a bit strange to think that yesterday might actually have been a "Romney rally". I mean, people would have had to be somewhat deluded to think The Glove was going to win, surely?

US TV badly needs The Swing-O-Meter. Election night's not the same without it, and last night it would have revealed an insufficient swing in the first few dribbles of precinct polling data.

LB would like to say a heartfelt farewell to a few people who have (dis)graced our TV screens of late. Goodbye to wrestling millionaire Linda McMahon, who lost an ugly race in CT. Goodbye to the always odious Ann Coulter, who will cheerfully spew neocon philosophy and divisive hatred for 5 minutes on any cable outlet. Goodbye to dismal trickle down economist Glenn Hubbard who will now not have to choose between Treasury and the Fed after all.

Goodbye, Bill O'Reilly and Sean Hannity... what's that? We are stuck with them? Oh well. Can't win em all...

Dee Dee Humberside said...

I was thinking along the lines of, spreads are tight, and housing policies are the one thing that might be achieved despite a divided Washington, so speeds are up and may continue rising.

That said, the big money centers are getting beat up worse than the market, so what do I know? Maybe it's just a case of the first c) option, as "the 53pc" have a Great Proletarian Cultural Revolution panic attack this morning.

abee crombie said...

spooz here at critical level .. looks like the stop hunting is about to begin... aapl at the woodshed as well. Seems like the relief rally everyone was expecting from teh election is going to take a few weak longs out b4 it continues. That 11:30 ramp up yesterday killed me

Leftback said...

Energy stocks being beaten with a (contaminated piece of wood) behind the (accessory building) today. XLE closing in on a double bottom.

Not a good day for Old King Coal. He probably isn't a Merry Old Soul today. (Wonder if I'll read that one on a posh blog somewhere later today).

LB is sitting and waiting for possible Salvation, (or Annihilation) after the 10y auction later. It doesn't make any sense to buy 'em at 1,64% but then again when did that stop anyone? [Insert the usual Widowmaker comments here].

Anonymous said...

Critical levels, relatively high volumes, but mostly volatility sellers at current levels. Looks like lunch time Friday buy the dip moment. Nick