Posts Tagged ‘Spoos’

Notes From Underground: It’s Good News Week (By Hedgehoppers Anonymous)

October 19, 2014

Last week was an appropriate tribute to a song from the 1960s in which the news is looked upon as just so much blather about drivel and evil events. The fears of EBOLA, SECULAR STAGNATION, ISIL, COLLAPSING ENERGY PRICES and EUROPEAN ECONOMIC COLLAPSE converged to create volatility and fear in all asset classes. The nervousness about global equity markets collapsing caused the bond yields to dramatically decline, which led to a capitulation by BOND MARKET SHORTS. In my opinion the volatility in the bond markets was also the results of decreased market making abilities of money center banks due to increased capital regulations. (This is not a commentary on the increased regulations but just an observation about market impacts). Also, many market actors have been selling volatility in an effort to increase returns and got burned for their efforts.


Notes From Underground: People Get Ready There’s a Train a Comin’

April 2, 2014

This is a tribute to Curtis Mayfield and the Chambers Brothers who recorded the song and made it popular. The TRAIN THAT IS COMING IS THE ENGINE OF VOLATILITY. Tomorrow is the ECB meeting and the regularly scheduled press conference 45 minutes later at 7:30 CST in which ECB President Draghi will use nuance to explain the central bank’s decision. Currently, the market is expecting some type of action by the bank because it seems that the Germans have acquiesced to some type of ECB quantitative easing scenario. When the ECB announces its decision at 6:45 a.m., a statement that leaves policy unchanged will result in the EURO rallying against all major currencies for, based on the Bundesbank’s statement last week, the market is anticipating ¬†at least a modest cut in the refi rate of maybe 10 basis points.