Markets Have Little Sympathy for Investors

Includes: DIA, SPY
by: Macro Man

Sometimes, markets just scream out "you suck!" Unfortunately, this is one of those times for your humble(d) scribe.

Yesterday, he pointed out that Korean equities had started trading very poorly, no doubt as a reaction to/anticipation of a tightening of monetary conditions and the concomitant impact on the export sector in particular.

Macro Man has kept a special eye on the Kospi in recent weeks, as he has actually had a (long) position in that market, courtesy of a little Asian liquidity model that he's been running. Throughout most of last month it provided a handy offset to his indifferent bearish bets on more developed markets...bets which proved to be rather costly yesterday.

Still, he went to bed last night in a decent mood, confident that the Asian session would rally his long Kospi and offer a tasty bit of payback. Imagine his horror (well, OK, maybe not "horror", but certainly "intense irritation") when he woke up this morning and saw the screen below.

"You suck," indeed.

The resilience of risk assets (other than, y'know, the thing that Macro Man was long) to the first "major" economy tightening, from the RBA last night, has been reasonably impressive. We do seem to be witnessing a little bit of a disconnect, however; the AUD's gone bid on the tightening - no shocker there - but interestingly enough, the back end of the bill strip actually rallied.

Then there's been a faintly ludicrous story from the Independent today, suggesting that oil producers want to move to pricing oil in a currency basket, rather than dollar. After George Washington received a few swift kicks to the groin, the story was roundly denied by the Saudis. Russkies, and UAE. Fun for the whole family!

Still, the buck is looking offered-only and the tide of liquidity seems to be lifting (nearly) all risky boats. Funny, Macro Man could have sworn there was a really crappy US employment figure out on Friday. Hmmph. Must have been a dream.

Markets might be screaming "you suck!" to Macro Man, but trust him: the feeling is mutual.