Let’s Call the Whole Thing Off!

To quote Hannibal from the A-Team: “I love it when a plan comes together.”

Although the outcome from yesterday’s European policy announcements was not particularly surprising- 50 bps from the BOE, nowt from the ECB with a heads-up on 50 next month- the market outcome was gratifying.

Sterling roared against the euro and particularly the CHF; if this keeps up, he’ll only have to re-mortgage his house (as opposed to his soul) to afford the odd piste-side vin chaud next week.

Similarly, the front end of the sterling curve got bushwacked (though in fairness, no part fo the curve did particulary well); there would appear to be further downside in store, given the rather tepid reaction of 3 month LIBOR to the rate cut.

Today, of course, sees the release of US payroll data. What is there to say? It will be crap, though exactly just how crap is frankly ungameable. Porbably more itneresting than the headline print will be the revisions from April ’07 through March ’08; these are typically revised lower during economic downdrafts.

Elsewhere, Macro Man feels caught in a global sentiment cross-current; punters seem desparate to play a reflation/recovery rally in certain markets and sectors. Meanwhile, while the various moving parts in his diversified book seem to oscillate on a daily basis but, in aggregate, end the day somewhere close to zero.

It’s as if markets can’t seem to decide whether the reflation trade is real or not. And it brings to mind the old Gershwin tune, “Let’s Call the Whole Thing Off.”

You say either and I say eyether,
You say neither and I say nyther,
Either, eyether, neither, nyther
Let’s call the whole thing off!

You say China and I say zloty,
I say peso and you say Aussie,
China, zloty, peso, Aussie
Let’s call the whole thing off!

I say Korea and you say Baltic*
You say rally and I say uptick
Korea, Baltic, rally, uptick
Let’s call the whole thing off!

* Baltic Dry Freight Index

No doubt there are plenty more couplets that illustrate the dichotomy of views at the moment; under ordinary circumstances , he would be happy to delve into them.

But he’s been tied up this morning and has quite a few things to do beore payrolls, so he’ll leave it to readers to furnish their own. Good luck to all for the payrolls and the market aftermath; as for Macro Man, he can only hope that in looking at his book a few hours from now, he doesn’t want to call the whole thing off.

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