Market Dentistry

Macro Man has a dentist’s appointment this morning. No, not the guy responsible for this (it still tickles Macro Man how many Brits didn’t understand that the teeth were a joke.) When Macro Man first moved to Britain a dozen-plus years ago, his American dentist took him aside and told him to “find a dentist that the rich people go to” to ensure a basic standard of care. While Macro Man can’t comment on his dentist’s other clientele, he can at least confirm that the bills are startlingly high.

In any event, a spot of dentistry will make for a welcome break from trading these markets. We’re more than a third of the way through September, and Macro Man can’t seem to get any sort of trading rhythm…his P/L hasn’t strayed more than a few bps from zero all month. It’s been particularly frustrating, in that he’s had a few pretty solid winners….but every day, the remainder of his portfolio has been dragged down by a bevy of small losses.

Intellectually, it’s been pretty grating. AUD/NZD is as good a sign as any of what kind of market we’re in. As noted in yesterday’s post, the RBNZ had a bit of a moan about the level of the NZD, with Sleepin’ Al Bollard highlighting the misalignment of AUD/NZD in particular. As you can see, since then it’s been a one-way trip lower (i.e., for a stronger NZD), with a couple of particularly brutal trips down an elevator shaft along the way. You’ve gotta laugh….(if only so that you don’t cry.) Randolph and Mortimer, where are you?!!?!?!

While Macro Man’s had a small position in AUD/NZD, he’s at least had the sense to leave other FX trades alone. The yen has been pretty interesting; for the past ten years or so the market has developed an almost Pavlovian response mechanism to sell yen (i.e., buy USD/JPY) when it’s a “risk on”, equity positive environment. As you can see, that strategy has performed execrably over the last five weeks or so, perhaps as a function of Japan’s HIA and the new laissez-faire attitude of the DPJ.

And there’s been other minefields as well. Macro Man bought silver a few days ago when it broke 16. Given his general scepticism of the “dollar going down forever” crowd and his uber-scepticism of precious metals cabal, this was purely a technical, “sell to some greater fool” play. Unfortunately, his metals scepticism is so great that he has tried to trade the position around, and somehow contried to not really make any money despite a current reading of 16.85 on the Dec futures contract.

Grrrrrrr. In many ways, Macro Man’s looking forward to his trip to the dentist this morning. It’s likely to be more intellectually satisfying and considerably less painful than his attempts to trade these markets this month, and despite the size of the bill it might well prove to be less costly to boot.

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