Macro Man is struggling to come up with much desire to have an active investment stance, let alone layer fresh risk, ahead of a few days fraught with event risk. Given the run-up in equities, EM, etc., it would be entirely plausible for those markets to sustain a setback as longs take some profits….which, if he isn’t careful, could lure a bear like Macro Man from his peaceful hibernation.

Regardless of the outcome of the next few days, a bit more two-way risk does seem likely. The stress-test pendulum seems to be swinging back the other way, with this morning’s headlines focusing on BAC’s need for an extra $34 billion, which probably constitutes a little more than they can dig up from under the cushions of John Thain’s old sofa.

Tomorrow’s ECB meeting could possibly be shaping for a disappointment; while 25 bps of easing is baked in the cake, it seems unlikely that the Bank’s “unconventional” measures will be anything terribly sexy. And given the “green shoots” that are emerging even in Europe, no doubt the Weimar Republic’s representatives on the council will be fighting tooth and nail for rate hikes before too long.

As for payrolls on Friday….well, it’s all a crap shoot. The unemployment rate should tick up, but as for the headline number, who knows? On second thought, given that the out-turn has exactly matched the consensus for most of this year, thanks to government maniupulation of the data economists’ new-found forecasting prowess, perhaps the consensus forecast of -610k is the best guess.

But hey, we always have China! PBOC has hit the wires this morning, promising to increase the yuan’s exchange-rate flexibility while keeping it stable. Ohhhhhhhhh…kkkaaaaayyyyyy. If we’re back to playing these sorts of games, you’ll have to pardon Macro Man if he has little desire to play along.

Originally published at the Macro Man blog and reproduced here with the author’s permission.

One Response to "Desireless"

  1. Guest   May 13, 2009 at 11:43 am

    First, The notion is that we are at an economic fork in the road. We have several direction the economy can head improve, decline (each to variable degree) or stay steady for a little until the wheels start turning.I think Macro Man hit it dead on target, instead of taking a “guess” and making hallucinated projections. Shows they are considering all variables, a good sign.Its smart to mention an international entity at the end of this article, it depends on how well these political figures navigate.And last, watch your mouth when you criticize the U.S government manipulation of figures. The U.S spends a lot of money getting the most reliable data around the globe.The issue with the banks and the fed is not a missing and fudging numbers. It is a policy issue, we just transitioned governments and we are still not used to a entirely new economic philosophy. Are we die hard extreme capitalists that would liquid all major banks at the flip of a switch, no. But we are not really socialists either.It is not a solution issue, those are being hampered out by the thousands, from every single university around the world. Penny for your thoughts probably adds into at least a a couple thousand, of responses from the best in the business that the fed receives.So, far its been realistic, and weighing of options. It depends how these CEO’s play ball.