Pre-Employment Thoughts

The Summer of Europe has now officially rolled into the Sep. of Draghi. The vast majority of drive by macro analysts continue to reverse engineer a battle plan based on the net change on the day of the SP future. Others have opted to point to low 10 year yields as "proof" that an historic stock drop must be looming. We have held to our Jan. "things will kinda sorta work out call."

The key characteristic in a monetary regime (let alone a global monetary regime) is and has been the elasticity of asset classes to economic data/reality. Portfolio Channel decisions are wonky discussions for high altitude vacationing central bankers. For traders with a P/L on the front lines of a monetizing mania, the objective is to not draw straight lines between markets and economics. The fundamentals will balance out over time. In the short run, that's the margin clerk on line 1.

We think the market is a tad stretched now. The action between Friday and Tuesday is our favorite window, not the first 30 minutes after the print. Bottom line, the world didn't change today. More clumsy central bank activity in the market doesn't make us feel better about the state of the capital markets. US Bonds trading as yen proxies isn't good for us or Japan in the medium term. Ma and Pa getting jazzed up about the SP after a Memorial day to Labor Day run of 180 points doesn't give me the "warm and fuzzies." There's not more going on here than meets the eye, there's way less. That's what a monetary regime does, get used to it.

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