Nearly every market vox pop, newspaper comment or blog this weekend appeared to end with a comment about fastening seat belts for Monday. Despite much thought, we are not going to introduce the SBI to our Macro-Maniacs toolbox but the point is that if every one is strapping up for the ride and not really looking forward to it, then who is driving this thing? Inquiring passengers want to know, but there are rumours in the cheap seats.
“Well its definitely the equity markets driving this”, say the FX boys, “If Spoos drop we sell Yen crosses, so they must be driving it”…
“Can’t be us”, reply the equity boys, “We just sell when we see the Yen rally or spreads widen”… Oooops, don’t like the sound of this…
Must be those bond boys then…? “Nah not us, we buy bunds when we see Yen strengthen and equities drop and when Libor tightens”.
Must be the short term cash boys then…? “Not us, we just demand more when we see Yen rally, stocks drop, bonds rally and if one of those central banks say the banks need to increase capital requirements when they can’t…”
Ahhhh!! The Central bankers! THEY must be driving this!. Errrr, No. They never passed their driving tests and are still mostly under the guidance of their policymaker instructors, so its the policy makers isnt it? Meanwhile, it was suggested that it must be the Gold dealers until somebody reminded us that the gold dealers just buy whatever happens.
Back to the policymakers. Well we have problem there too. If the passengers on the left would like to look out of their windows they will notice that we’ve just cruised passed the G20, who were stuck in a lay-by peering under the bonnet. “Er right, the starter motor of stimulus hasn’t worked so far and we’ve drained the battery flat. If those nice people in the East don’t give us a lift we will have to push ourselves up this hill. And that will be painful. What’s more, little Timmy and JC are beginning to fight in the back.
Enough rumours, someone better go up front and check who is in the driving seat. Oh dear, it would appear that its empty, the door open and the wheel lashed in place. Is there anyone on board who knows how to drive this thing?
So here we sit, buckled up in coach class awaiting the next move after Friday’s turbulence. Even though we were concerned about the effect a poor NFP would have, as it was fast becoming the last straw to cling to, the press appears to have kitchen-sinked every market dump to the poor old payrolls. A little unfair, because from here it looks as though the real theme is to pick a Euro-periphery (or, even core) to subject to Mr Market’s own Special Stress test (involving straps, knotted ropes and electrodes). Whilst market participants scramble for their copies of “Hungarian Debt for Dummies”, Mr Market has already moved on and is peering in the windows and rattling the doors of Belgium, with France also high on his calling list. Bringing the fight to the heart of Europe. Much more of this and we are going to see another swipe back from the Eurocrats to prevent anyone from hurting their baby, but the Geithner Gags are still holding firm. God, they are going to have a thing or two to say when they finally get them off and THAT is the point you want to pray the webbing on your 5 point harness isn’t frayed… but until then we may well be needing them to hold us down during a classic Bounce Monday.
As someone once remarked: “I hope I die quietly in my sleep, like my Grandfather… Unlike his passengers, who died screaming in the wreckage…”