Global Macro – timely topics

[Timmy]

Thought I would start a thread to toss around ideas about what sort of Global Macro & other focus, or foci (had to Google that one) might be important in coming days, and hence might help figure out what the funds are thinking, what is motivating/concerning them, and where they are moving their money to and from (given that is the movement of money by these people that moves markets).

I know such ideas are found on other threads, but thought a central point, perhaps with links to ideas on other threads, could be a helpful resource.

So a thread for ideas and thoughts.
With a practical, timely, & potentially tradeable focus.

For example, on the weekend I heard Hungary and the IMF had broken off talks. I thought this might be important from a ‘sovereign risk’ perspective and not good for the Euro. Well, wrong on all counts (so far anyway). So, at the very least maybe my thoughts can help someone figure out what isn’t important

Some random jottings from my diary today:

• Building permits figures in the US were higher than expected last night (more a snippet of background info), so a positive surprise in a sea of negative economic releases out of the US recently.
• European banking stress test results are being released on Friday (6pm Frankfurt time) … rumours already that Spanish banks have passed. So, I am thinking that this would be very good news from a ‘sovereign risk’ perspective (remembering my appalling, albeit small-sample size, track record on European sovereign risk perspective) but I wonder if it is already, or will be, priced in by Friday and good news on this report could be a catalyst for Euro sell-off in the NY time zone?
• Rumours in the US last night that the Fed is considering not paying interest on reserves (currently they pay 0.25%). I had seen reference to this and other ideas doing the rounds yesterday morning (Aust. time – at least when I saw it), and saw references to a massive round of new QE last week. Given how the US equity markets (my focus) responded to QE in 2009 this talk of even bigger QE a second-time around will be very important to funds... if anything comes of it of course.
• Bernanke fronts the US Senate for a Q&A, starts 2pm NY time Wednesday. Potential volatility around this. Potential insights into Fed thinking (maybe).

Any ideas/thoughts with a practical, timely, & potentially tradeable focus?

 

[Timmy]

saw references to a massive round of new QE last week. Given how the US equity markets (my focus) responded to QE in 2009 this talk of even bigger QE a second-time around will be very important to funds... if anything comes of it of course.

Just on this. Again I have seen a few comments on the blogs about QE2, it is certainly persistent murmuring.

I think the point made here is the best, that QE was a response to a crisis, and that a slowdown in the US economy, or even a double-dip recession, while not a good outcome, is not a crisis, so the likelihood of another round of QE is not high. The article is long and detailed, so there is A LOT more in it than my inadequate words will convey here, if it is of interest, read the whole thing rather than relying on me.

Leaves me scratching my head about the strength of the US equity market (my focus is the S&P500):

• Since the bounce from the early-July lows support (buying) has been persistent.
• Having said this, resistance is now holding.
• Economic figures have been poor.
• Corporate reporting has been not too bad.

I am wondering how important this idea of another round of QE has been to the strength of the S&P. I am guessing it has been a significant factor. But it is unlikely to happen and as this message is spread I am thinking a sell-off again in the S&P to the July lows at least.

ps. Reminder of European ‘stress test’ reports due after the European close.