Monday, May 5, 2014


The Madman was back on the phone again.  Max never calls except when he can't trade or when he shouldn't trade and today was one of of those latter days.

"Squeeky bum time out there, Max?"

"Don't *&$^ with me Charlie, you know what this is like."

"I feel for you Max, but I can't quite reach.  In my lifetime if I had half the money you've made in a year I'd be a happy man."

If you've lost have the money I have in the first four months your wife would have left.  And don't give that crap you wrote about how cheap it is to be short?"

"Of course I'm short you (*&^,.  No body in his right mind is long this market."

"You mean there isn't a bid?"

"Of course there's a bid.  That's why the G*& D$*&#$ thing has a 57 handle!"

"But it shouldn't…"

"OF COURSE IT SHOULDN'T!  No way it should.  WHY DOES IT HAVE A 57 HANDLE?!!!" (I should point out the ten year closed with a 60 handle)

"Max, you are in good company.  The Morg lost a bundle as well."

"Morgan is filled with IDIOTS starting with the guy running the place.  They…"

"They are running the same book as you are it seems."

"ARRRGGGGGGRRRR!" (Max has never appreciated unflattering comparisons)  "Do you SEE what is out there?  Can you BELIEVE what we have?"

"And what might that be Max?"

"We have less than an 80 point spread between the 5 and 10 year.  We got the Euro at damn near 1.39 but the Spanish 10 year went through 4.00%--the SPANISH 10 year!  The Italians are 25 b.p. higher.  THAT'S four separate countries with no government!  The…"

"But they are wonderful people Max, wonderful food."

"Who gives a *&^%, Charlie, who cares!  They being nice people doesn't count!  I'M SHORT, THAT'S WHAT COUNTS!!"

"Max if I may say you are adopting a highly selfish and contentious attitude about all this."

"Selfish?  Contentious?  Charlie, I'm getting killed AND  I  DON'T KNOW  WHY!  Do you know why, Charlie."  Do you?"

"I think so Max.  I think people haven't a clue as to the true state of anything because the government and the central banks have mucked about so much that there is no real market any more.  Everybody buys stocks because a 2.00% yield with a bit of upside potential is better than this other crap.  They buy Spain, they buy Italy.  They even buy Greece for some yield because people tell them the crisis is over.  They don't tell them nobody has a job just like they don't tell them that there are more unemployed in this country today as a percentage of the job market than in 1978 and THAT was a bad year.  We have guys saying that the GDP is going to 3%-3.5% but there's no need to raise rates now.  Of course with any inflation, we have a gap of about 5% between nominal growth and the 5 year, but hey not to worry and the fact that we have ALWAYS moved too slowly on the monetary front doesn't mean a thing.  You might throw in the fact that a country with 15,000 Nukes is under one man rule by a nut doesn't seem to mean much either and the result would be that there is something seriously wrong.  But other than that, Max, no, I haven't a clue, but that doesn't do you much good, does it?"

"No.  What would you do?"

"Max, I'm an old guy.  You know what I would do."

"Sell in May and go away."

"Bye, Max."

"Bye Charlie."

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