Stress Remains in the Markets

"When a man is tired of London, he is tired of life."

-Samuel Johnson

Macro Man is tired of London. Frankly, he was tired of Madrid. And he's also tired of his little enclave in Surrey to which he retires each evening and weekend.

Have no fears, gentle readers. Your scribe is not perched on the ledge of a tall building, prepared to commit a gruesome kind of hari-kiri (for one thing, he is acrophobic). He is far from tired of life. He is, however, tired of these markets, which seem to require 24-hour attention, seven days a week.

Perhaps it is the dark mornings; without sunshine and birdsong streaming through his window, Macro Man is naturally a bit groggier when the alarm goes off. However, his fatigue is more of an existential ennui; how many crises, miracle cures, and Sunday nights on the Bloomberg can one man take before the brain starts Operation Shutdown?

Not that he's begging for mercy, of course; attention to detail in stressful times is part of the job description. And stress remains highly evident in this market. The LIBOR/ICAP rates both surged higher Wednesday; below is Wednesday's chart updated with the latest fixes. Observe how ICAP 3 month rates are nearly 4% now!

The same sort of stress is evident further out the curve as well; 2 year swap spreads reached another record high yesterday, and are on another planet compared to any levels in Bloomberg's 20 year dataset. That Banesto is now giving away free motor vehicles with every large time deposit would appear to confirm Macro Man's suspicions that all is not quite right with European banks; one wonders what Miguel Indurain thought of the idea?

With markets moving as quickly as they are, traders (or at least Macro Man) feel like they must keep a closer eye than usual on both price action and their P/Ls. Of course, the downside to doing so is an all-to-frequent negative message resulting from downswings in the P/L. This month, for example, Macro Man has had twelve losing days and seven winning days. While he has managed to scrounge together a profitable month (knock on wood), thanks to the optionality in his book, it is still psychologically tiring to go home starting at a red number nearly twice as often as a black one.

By his count, he's only had two sleepless nights this month; he can only imagine how exhausted, mentally and physically, less fortunate market punters must feel. Readership figures also suggests that you, too, are feeling the strain. After surging last week, weekday visitor figures have retreated this week to more "normal" levels.

Sod's law suggests that the SCREW-U package will be voted on Saturday or Sunday, thereby depriving punters of yet another relaxing weekend. However, with quarter end rapidly approaching and the market evidently as fatigued as Macro Man, perhaps the surprising outcome of the next week would be that everything goes gentle into that good night.

Comments

[Smarty_Pants:]

Imagin how stressful it is for people like David Bonderman and his private equity firm TPG Inc. He's the lead investor in the $7 billion capital raising by Washington Mutual in April. Most of that money has now evaporated, never to be recovered.

Not to worry though, JP Morgan made out great on the deal so everything's AOK.

2008 Sep 26 09:58 AM

[daytrader:]

oh,poor baby!we will take up a collection for the lead investor in a & billion deal.while your at it,how about all the people scrapping buy who worked for peanuts at wamu;$10 an hour bank tellers,or investors making mega bucks on thier cd's paying about 2%.

smarty pants what freakin' world do you live in?

2008 Sep 26 11:48 AM

[carey_jim:]

My intuition (read: paranoia because I have no hard evidence) is that the same old boys as usual are manipulating the stock markets to keep them fluctuating but steady so they can make profits the same way they always have.

We have had "the greatest financial crisis of our lifetime" but real estate and related stocks, which supposedly caused this mother of all crises, are holding steady .......

Common sense says that funny money is "in control" (sic) and not free market trading.

Gee, I wonder why the FBI is sending people into our oligopoly financial establishment to try to figure it all out?

Maybe it's because investigational reporting has been killed off in America by the right wing press or has been bought off by the plutocracy?

"There is something rotten in the state of Denmark."

2008 Sep 26 03:57 PM