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A relatively volatile month of August is coming to an end.  The news flow has been all over the place, and we are seeing risk marked up on a holiday low-volume week.  Last night was a great chance to opportunistically be long of risk, short the long end of the curve.  We got some incrementally positive news on the China front on the Europe open and, risk pushed higher, and steepeners were put out.  Bears were sent scrambling to wait for the grownups to come back from vacation.  The macro landscape remains toxic as we head into the fall.  Any number of items could be the driver, at any moment:
– Central bank narrative eroding by the day
– Fed governors questioning their own effectiveness
– Large pensions on life support (GPIF) in a negative rate environment
– Carney questioned the status of the USD as the reserve currency
– Trump blasting Powell daily
– Hard Brexit?
– Global yields pressing further into negative territory, and homeland rates inverting
– Yuan devaluation v the USD
– Hong Kong protests
– Trade war / Tariffs
The list goes on from there..  This fall could be some of the most volatile times we’ve seen, and present some of the best opportunity since the financial crisis.  We have the ECB and Fed coming in September and the positioning of markets ahead of that will be key.   I think the action taken will likely be dependent on what handle the ES is trading at the time.
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