“If your blood is not boiling,” begins former fund manager and FX trader Richard Breslow, “it’s fine to cut out” he threatens as it seems market participant ‘centrally-planned conditioning-biased’ ignorance or perhaps just blind faith in BTFD because of PPT and Midterms has left the US equity market the lone pretender in a world of de-risking.
Via Bloomberg,
I understand it’s a Friday in August. I get that people are claiming they’ve had a hard week and want to call it a day. It’s no surprise that weekend-position-aversion remains a problem for risk takers. But with so much going on, if traders can’t be inspired to trade and challenge the status quo, it is safe to conclude that markets remain well and truly broken…Maybe forever.
Or perhaps we just sleep-walk until a proper blow-up forces some sort of response.
Of course, if we are confronted with the accusation that we should have acted differently, we can always claim Ambien made us do it.
As I’ve been sitting here:
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the Turkish lira dropped as much as 7%,
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the Shanghai Composite closed at its lowest level since January 2016
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and German bunds are trading back below 30 basis points.
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The Governor of the RBA just said what every central banker wishes they could — that he encourages a weaker currency.
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The Malaysian ringgit is the latest Asian currency to experience the effects of slowing growth, sliding to the lowest in nine months.
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BTPs remain at levels the Italian government can’t afford as their equity markets continue to noticeably underperform their brethren.
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And U.S. equities are impervious to it all.
There’s a lot going on and traders need to ditch their base case that monetary policy will, at the end of the day, save all.
And the really dumb one, that calmer heads will ultimately prevail causing geopolitical and trade tensions to ease.
Did you ever think there would be such a systemic need for a new generation of aggressive hedge funds?
Another fatality of quantitative easing. Why stay up at night selling currency when you can just roll into the office at a decent hour and buy whatever the sovereign wealth funds are currently feasting on?
Incidentally, “base case” is now joining my list of banned expressions and words. It’s just commentator speak for I could be totally wrong but hope to be right somewhere down the line. And I’ll get back to you when it happens. While I’m at it, Purchasing Power Parity and the ground meat version of it are also out. It’s just a useless way into a misguided mean-reversion argument.
How appropriate as next week brings the 20th anniversary of when LTCM went hat-in-hand to banks. Make money, make money, lose it all. Sadly, another word in exile, “existential”, is due to return with great fanfare when the Italian government negotiates its budget with the EU.
Strictly off the record, bullies get their way until someone proves they can be stood up to. It may turn out that Erdogan is the unlikely bearer of that message.
via RSS https://ift.tt/2PbcTpT Tyler Durden