Thursday, June 4, 2015


It started off poorly and finished on a down note.  To begin--and for what reason God only knows--Mme. Lagarde offered up her view that give the IMF's new numbers on the growth of the U.S. GDP (2.7%) the Fed should not consider tightening until next year.  Big time No, No.  IMF MD's do not offer advice such as that.

She followed up with the view that Greece needs debt relief.  No kidding.  But you are in the end game with Greece in conjunction with the entire EZ and the ECB.  You do NOT express individual opinions.  Dumb.

Finally, this afternoon upon learning that Greece had informed the Troika that they would be delaying all repayments due her organization until the end of June (as discussed here last week), her response was, "I did not expect that."

Chrissy, honey, the Greeks are not your friends:  they are your opponents for the time being.  They are going to take this down to the wire to see how much they can get and when they feel they have reached that point they will either agree or walk away.  In the mean time they build up what is known as a "war chest"  The last thing they are going to do is pay away anything they needn't.  So let's get real.  Everyone knows that you want a deal but this is not the way to get it.  I would have loved to be around the Euros and Sr. Draghi.

And speaking of Sr. Draghi, his comments of yesterday provoked another beaut of a day in the bond trenches.  This morning everybody picked up on his suggestion that everyone should expect more volatility and he got it in spades.  The Bund hit 1.00% for a brief moment and the 10 year blasted up to about 2.45% before everyone took a deep breath and the buyers came back creating yields that were actually below yesterday's close.  With gyrations like this one could bet that the drums would start beating that regulation has nothing to do with this and it's just all market movements.  Crap.  It's market movements alright but in a market that has less and less liquidity and THAT is primarily the result of regulation.  Draghi's comments regarding the continuation of his QE sustained the vol but there was also murmurs that if the IMF's economy numbers were right on or even a touch too optimistic in their revision, the Fed might be tempted to get back in the bond buying game, adding to that lovely $4.5 Trillion balance sheet with little market discipline in the form of market makers.

I'm paranoid, obviously.  Yesterday I was feeling pretty good; today I'm wondering whether these market swings are like a boat in a blow...back and forth, back and forth, back and.......blub, blub, blub.

Jobs data tomorrow.  Should be a fun opening.

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