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A "Pivotal" Week (But No Time For Cowboys)

Tyler Durden's picture




 

It is fair to say, Bloomberg’s Richard Breslow dares to say - without being trite, that this really is a very interesting pivotal week we are heading into.

The FOMC trying to thread the needle of moving on, keeping everyone calm and keeping a wary eye on a geopolitical landscape that isn’t getting better. Greek negotiations that layer existential questions of problem resolution paralysis on top of default and Grexit. And let’s not forget MERS, Turkey coalition issues, Hong Kong bomb makers, Ukraine and meaningful MPCs given Kuroda’s comments, CHF wariness and NOK economic projections. Feels to me like Act 4 of Macbeth, “Double, double toil and trouble.” Lots of predictions, forecasts and pronouncements, but what will it all really mean and should we beware what we ask for?

Really no good news from Europe on the Greek front. Yet everyone still thinks the base case is some cobbled together patch. EUR/USD hasn’t made a serious attempt to get back below 1.1100 in the last week and the way it has traded around that level it is certainly a support area to be watched and respected. So 1.11/1.14 remains a very profitable range to trade. Greece is saved on the bid. Coeure and Merkel on the offer. EUR vols are higher but more reflective of intra-day opportunities than belief in a breakout

The one question that markets haven’t addressed is the third alternative beyond Greece is saved and Grexit. That is, default and no exit. That will be the biggest threat to the EU, EUR and the lift-off scenario. Unlikely SNB makes a move before this plays out

Take a look at YTD USD/JPY, and despite the end of May leap, it has done very little. It trades like 120.00 is pretty much fair value and forays too far away from there are the aberrations. And I’m a USD bull.

 

Bonus view: AUD/NZD looks unstable at these lofty levels

Equities are certainly sagging today, but still from lofty levels. Shanghai at 5100, SPX near its 2100 pivot. Worth a watch, but not in panic mode. Bonds have had a well publicized tough run, but they still are the go-to haven when some other markets have a rough day

*  *  *

So what is this telling me? FOMC will do backflips to introduce the rate rise concept with every caveat, bell and whistle attached. They will hope to keep the yield curve relatively flat and refuse to commit. Make no mistake, they would love to raise rates but, with apologies to Willie Nelson, they don’t wish to be cowboys

Another trading opportunity to keep in mind is that USD long positioning (per the CFTC) continues to rise, but the FOMC will highlight that all decisions are data dependent. That means reaction (over-reaction?) to numbers will be tradeable events

 

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Mon, 06/15/2015 - 10:27 | 6197715 Headbanger
Headbanger's picture

Yep, The Feral Reserve will raise rates no matter what!

Mon, 06/15/2015 - 10:37 | 6197740 philipat
philipat's picture

The "Rate rise concept" doesn't mean that they will actually DO anything! They have totally painted themselves into a corner by years of procrastination. They will NEVER raise rates and QE4 is next. Mind you, if they DO raise rates and the Equity markets crash, QE4 will come even sooner.

Mon, 06/15/2015 - 12:05 | 6198038 KnuckleDragger-X
KnuckleDragger-X's picture

With headline reading HFT's, we will continue to see Yellen say nothing that might disturb the special snowfakes......

Mon, 06/15/2015 - 12:50 | 6198213 TheRedScourge
TheRedScourge's picture

Am I the only one who noticed that it's supposed to be "Bubble, bubble, toil and trouble"? Or is the implication that "the b-word" shall remain unsaid now?

Mon, 06/15/2015 - 10:39 | 6197741 two hoots
two hoots's picture

It is clear to me that FED/CBs, Banks in general know how to loan out money but as recent events have proven they have no idea how to get it back if debtors don't follow the rules.  (But why bother when you can just print more when you need it?)

But some uneducated loan shark has no problem getting paid back?

Mon, 06/15/2015 - 10:45 | 6197764 aqualech
aqualech's picture

Initially, they are intentionally fomenting defaults in order to collect bailout bonanzas. Easy money!

Eventually, taxes must be increased to support all this bailing, maybe even privitizations will take place with collateral delivered to the banks, via round-about mechanism that obscures the actual event.

The taxpayers of the developed world are to become debt slaves to the tbtf.

Mon, 06/15/2015 - 13:41 | 6198501 TwoHoot
TwoHoot's picture

Thank you, two hoots. Imitation is the sincerest form of flattery.

Mon, 06/15/2015 - 10:27 | 6197717 dimwitted economist
dimwitted economist's picture

AND WW III starts SOON!!!!

Mon, 06/15/2015 - 10:32 | 6197722 Squid Viscous
Squid Viscous's picture

Pivotal week, lol

 

BTFD!

Mon, 06/15/2015 - 10:32 | 6197723 WTFUD
WTFUD's picture

Trading Opportunity? Is he NUTS?

Mon, 06/15/2015 - 10:32 | 6197726 Kilgore Trout
Kilgore Trout's picture

World Health Organization: To avoid MERS, refrain from drinking camel urine.

http://www.who.int/csr/disease/coronavirus_infections/faq/en/

Mon, 06/15/2015 - 10:38 | 6197744 JustObserving
JustObserving's picture

So why were so many South Koreans drinking camel urine? 

MERS death toll reaches 16 among 150 confirmed S. Korea outbreak victims

http://rt.com/news/267157-skorea-mers-death-cases/

Mon, 06/15/2015 - 10:43 | 6197758 Monetas
Monetas's picture

Dog meat .... no statistics from Norkia .... but, they are too poor .... to afford dog meat !

Mon, 06/15/2015 - 10:38 | 6197745 philipat
philipat's picture

Thanks for that tip, very useful. When I order a cocktail later tonight I will be sure to avoid my usual Camel Urine Highball(s)..

Mon, 06/15/2015 - 10:41 | 6197750 Monetas
Monetas's picture

Camel urine is also a cheese and yoghurt starter .... don't eat yellow cheese .... when vacationing in Yemen !

Mon, 06/15/2015 - 10:34 | 6197730 JustObserving
JustObserving's picture

FOMC will do backflips to introduce the rate rise concept with every caveat, bell and whistle attached

FOMC will lie as usual.  Was that so hard?

Mon, 06/15/2015 - 10:34 | 6197733 Monetas
Monetas's picture

WW I .... Balkan, WW II .... Baltic, WW III .... Balkan !   (tendered without comment)

Mon, 06/15/2015 - 10:39 | 6197747 Amish Hacker
Amish Hacker's picture

Every week is pivotal, every decision is crucial, every outcome is imminent, every final phase has begun, every point is the tipping point, every outbreak is contained, and even cowgirls get the blues.

The new normal.

Mon, 06/15/2015 - 10:55 | 6197811 gaoptimize
gaoptimize's picture

I seriously wonder if Greece is a distractor story to keep the sheeple focused away from the systematic existential problems across the West.

Greece has a population similar to the state of Ohio.

Greece has a GDP similar to the state of Louisiana.

Greek per capita debt is ~$40K vs. ~$60K for the United States

Is Greece a ligitimate canary in the coal mine, the straw that broke the camel's back, a bellweather, the first sailor in the barrel, or a huge distraction?

Mon, 06/15/2015 - 11:42 | 6197967 roadhazard
roadhazard's picture

There is a prepper show coming to a city within range of me this weekend. Perfect timing.

Mon, 06/15/2015 - 12:18 | 6198083 PeeramidIdeologies
PeeramidIdeologies's picture

You dare say there's no time for cowboys? Well who's ever heard of that before?

Mon, 06/15/2015 - 12:37 | 6198158 mendigo
mendigo's picture

I remember in the last cycle.

They were saying that gm was insolvent  They just needed a good excuse to trigger bailout.

Windup the paulson warning doll.

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