Yesterday, it was Thomas Stolper who capitulated on his latest incursion into the field of 0.000 batting, when he closed his long EURUSD reco (only for the EUR to jump today of course). We can hardly wait for him to announce he is again long the EURUSD for the clearest EUR short signal possible. That said, it still left outstanding the Goldman Russell 2000 recommendation noted here previously [15]. Sure enough, in the aftermath of yesterday's return of risk with a vengeance, Goldman is taking steps to make sure it locks in at least some profits on its RUT 2000 target of 860 by hiking the stop to 810 from 765. The reason? "What has clearly changed in the past week -- and the catalyst for this "leash tightening" -- is that European sovereign risks have reemerged, with continued near-term support for Greece now much more uncertain than we or the markets had previously assumed. With the amplification of these hard-to-assess risks emanating from Europe, and data continuing to support our main thesis, we think that protecting the gains at this point with relatively tight stop is prudent" But why if Europe is suddenly fixed, on the completely meaningless news that the ECB is funding Eurozone central banks with magic money on their Greek bond losses, even as the actual debt notional is not changing at all. At this point, we doubt we are the only one who no longer care.
From Goldman:
Trade Update : Raising our stop on our long position in Russell 2000 index to 810
We are raising our stop on our recommendation to be long the Russell 2000 index to 810. The recommendation, opened on 26-Jan-2012 with an entry of 799.26 and a target of 860, was premised on three considerations. First, we were of the view that the US equity market would continue to be supported by solid cyclical data. Second, US monetary policy had turned incrementally more accommodative. And third, the Russell 2000, in particular, appeared (at the time) to be lagging behind both the data and other pro-cyclical implementations. After some supportive data in early February (in particular, a good January payrolls number), with Russell 2000 responding well, we tightened our stop. Since then, we have been passing through the less macro-intensive part of the month, but the macro data remained mostly supportive, with stronger claims/Empire survey and housing market sentiment balanced by modest misses on retail sales and consumer confidence. And today's Philly Fed survey surprised on the positive too, with forward-looking components, in particular the spread between new orders and inventories, improving. With better initial claims and Philly Fed feeding into our Advanced Global Leading Indicator, we get a picture of a relatively broad-based improvement in the global cycle.
What has clearly changed in the past week -- and the catalyst for this "leash tightening" -- is that European sovereign risks have reemerged, with continued near-term support for Greece now much more uncertain than we or the markets had previously assumed. With the amplification of these hard-to-assess risks emanating from Europe, and data continuing to support our main thesis, we think that protecting the gains at this point with relatively tight stop is prudent