WHAT DO I THINK HERE? We will fear the worst many times before key Greece dates like Feb 5, 12 and 28 now. It will be back to “2010-2012″ European Crisis headline trading of Macro. This morning for example, we trade worse because NYT claims Varoufakis doesn’t want the Bailout Tranche. Before the key dates above, I would play for the squeeze because I personally believe Merkel won’t allow European ship to “break.”
Written on January 30, 2015 by ozan
WHAT DO I THINK HERE? We will fear the worst many times before key Greece dates like Feb 5, 12 and 28 now. It will be back to “2010-2012″ European Crisis headline trading of Macro. This morning for example, we trade worse because NYT claims Varoufakis doesn’t want the Bailout Tranche. Before the key dates above, I would play for the squeeze because I personally believe Merkel won’t allow European ship to “break.” The key here is if the rest of the Periphery can isolate themselves from the Greek drama. Yesterday they did, but it’s too early to say that as Greek bank problems can concern the rest of the Med! In US, we turn to the ECI. This number is a big hope for the camp which either wants or predicts a “June hike” from Yellen. If the number creates no buzz. yields can fall back fast. In EM, consensus HF short is Turkey.
Many foreign banks had client trips into my Motherland this week & most fast money accounts shorted TRY when they heard Mr. Basci talk about an “emergency meeting” on February 4. A strong ECI/USD can further help the trade. But I predict it may end in tears if people get carried away. Real Money would continue to buy the long end local bonds if inflation is benign. Turning to South Africa, her Central Bank meeting created big Real Money inflows to their local bonds. Brazil also has a lot of headaches related to Petrobras problems now (lower oil, management issues etc). There are 2 key things you need to decide for Macro for February. Do you buy Greece related dips (buy Periphery or Bunds) when majority fears the worst? And in US/fixed income, do you continue to ride the deflation train or prepare for a June Yellen hike. I side with the former. Later this year, we may trade better world growth prospects, health of consumer due to oil etc.. But that’s later this year! Later this year even Euro may feel better if the Continent shows some surprising signs of growth.
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