1. The Americans were broadly convinced by the general sell-US-buy-Europe macro call. Almost all of them were *very* worried about the US stock market -- pen tapping, twitching, high-pitched laughter, we saw all kinds of displacement activity. The conventional wisdom is true on this point -- very few of them have ever seen a bear market in their lives, and I for one would not count on them not to panic.
2. Greenspan is beginning to lose his lustre among the cognoscenti -- a fair few people are bitterly regretting his failure to raise rates promptly enough this year. Nobody I spoke to thought that he would serve a third term, and most agreed that the Fed was now in full "don't spoil the retirement party" mode, trying to push the eventual reckoning into the next guy's watch.
3. There are some fund managers who are very sharp cookies. But they are by no means the majority. I was surprised (yet again) to see how many out-and-out stone cold *morons* are in charge of nine-figure portfolios out there. By which I mean people who are happy to quote "The Economist", or the "Wall Street Journal" as a major information source, are unable to grasp the concept of a business cycle, etc, etc. I heard the same "MBA-speak" scripts several times, and usually in a context that made it clear that these people hadn't understood them while taking their MBA. And always delivered with the monolithic certainty of the truly insecure; the overwhelming feeling was that talk about "core competence" and "flexibility" was being used as a comforting liturgy. Somebody really should do a study on feelings of inadequacy and impostor syndrome among financial professionals -- I'm sure it has immense practical importance.
4. Whatever their views on our stock analysis, the FMs all wanted to hear one thing above all -- that the Europeans had given up their Europeanness and bought into American values. One guy asked "But have they taken on board the shareholder value culture?" or a variant upwards of a dozen times in an hour. Another guy even accepted all of our reasoning, but then said "at the end of the day, I don't think that the Europeans have got the right management culture" -- he wanted his values to be universally accepted more than he wanted to make money!
I'm not sure what to make of this. The "conventional wisdom among fund managers is always disastrously wrong" indicator would say sell Europe, buy US. But I detect a worrying understanding among US financial professionals that they have been made to look like geniuses by a low Fed Funds rate, and are in immediate danger of being uncovered. All in all, I'd be buying both puts and calls, because I think it will be a good few months to be long volatility.
dd
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