Posts in UK
Is reality catching up with investors' favourite narratives?

I am still willing to give Mr. Trump the benefit of the doubt. We have no actual policymaking to judge yet, and at least some of the people he is surrounding himself with look capable. I admit, however, that the burden of evidence is getting heavy. The president-elect's tweets, on their own, are evidence that he has tendency to act long before thinking. Last week's presser also provided a timely reminder that we are dealing with a volatile character. I understand that infuriating "soft" liberals, such as yours truly, is exactly what Mr. Trump and his strategists want. I have no doubt that the incoming administration's communication "style" is carefully planned. The base loves it! But problems are brewing, chiefly among which is the growing chasm between Mr. Trump and the intelligence apparatus upon which he will so desperately depend for policymaking when he takes office. 

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Widening the opportunity set

One the more enjoyable things about reading Macro Man in recently is that the author's mood, as well as the spirit of the more battle hardened of his commenters, have been lifted significantly. This is not because they necessarily wanted Mr. Trump to move into the White House, but rather because the political shock in the U.S. appears to have brought back good old fashioned, active, macro trading. 

I am not sure it ever left, but I sympathise with the idea that the change in political winds in the U.S., and Europe, will unlock hitherto barren markets for swashbuckling macro investors. The added joy of such a story would be that the index huggers and risk-parity brigade would see their clout diminished somewhat. After all, bond yields are now rising again, and next year's political constellation in Europe could well create a number of new currencies to dabble in. I doubt Macro Man will be that lucky, though, but one can always dream I suppose

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Equities Finally Get the Memo

After a week's break, and a detour, I am back in the saddle for a busy run-in to Christmas. The main market mover of note, while trawling the museums and bars of Paris, was that global equities finally showed a bit of weakness. The MSCI World slid 1.8% last week, down 4.8% from its peak in August, which means that the index is flat as a pancake year-to-date. A belated reaction to the recent mini tantrum in bond markets, or a knee-jerk reaction to tighter polls across the pond, are probably the lazy strategist's reason for the sell off. But it has been coming regardless. 

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