This week our newsletter looks at some of the looming “what-ifs” on the horizon – the Euro’s troubles, the US fiscal cliff, a Chinese slowdown – and how managed futures might fare if the worst-case scenario became reality.
Despite the markets clawing higher this month, the majority of the short positions in our trend following models have not yet been stopped out. With all the catalysts for a downturn on the horizon, we’re hoping this turns out to be good news for managed futures.
On the 11th anniversary of the terrorist attacks that rocked the nation, the country is in a state of reflection. But in an era of economic fragility, the new enemy, deserved or not, has become uncertainty. The fiscal cliff has been shoved to the peripheral as politics take center stage. No one ever expected the country’s fiscal issues to be addressed before November, but the debt rating agencies don’t seem to be on board with the delay strategy.
In a world of cold metrics and glossy brochures, there’s something reassuring about hearing it from the horse’s mouth. There’s nothing like seeing a manager laying out their approach and sentiment toward the markets to get a sense of what kind of trader they are. That’s why we love to see messages like the one we received from Atlantic Capital Advisors principal and managing director Andrew Taylor.
Traditionally, when you read a story, the moral comes at the end – a sound bite takeaway that justifies the time spent. We’re going to try something a little different, though, and provide the moral of the story up front. See, this story has a lot of moving pieces, and it can be all too easy to focus on one point, missing the forest for the trees. So before you even get started here, remember: Nothing happens in a vacuum.
The term “fiscal cliff” has come to encapsulate the collective fear for the future of the US economy – that we’re careening toward disaster. But recent employment figures suggest that the possibility of careening over the cliff’s edge is not being taken very seriously… yet.
The fiscal cliff has already started dominating the headlines even though the end of the year is still over six weeks away. The looming budget negotiations will have an impact on just about everyone, but for managed futures, the story is a little bit different.
In case all that fear mongering and minute-by-by minute obsessing over the fiscal cliff hasn’t sated your desire for hyperbole and manufactured crisis, you’ll be happy to know that the “cliff” meme is spilling over into other areas, too. The Congressional gridlock we all know and love has prevented our legislators from addressing the expiring farm bill, which could be seriously bad news for any dairy fans out there.
Tonight when revelers are counting down from ten, it might not be a part of their New Year festivities – they may be counting the seconds until Congress finalizes the details of the fiscal cliff deal.
While the economic damage from going over the fiscal cliff would have been spread out over the next year, the 11th hour passage of a deal sent the markets soaring this morning. That’s all well and good, but a closer look at the deal reveals that it may be too soon to start celebrating.