Traders have become so complacent at the lack of volatility in markets that it is no surprise that a few percentage points shifts here or there in the last few days as the world inches toward total thermonuclear disaster have shaken a few. However, as former fund manager Richard Breslow gently reminds us – this is nothing… and that could be a problem, chiding traders to "stop pretending that you care about the end of the world."
Since the first missiles were fired across Japan last weekend in what was the most provocative North Korean move yet, only one thing has really moved…
Via Bloomberg,
We really need to stop feigning that the markets reacted in any meaningful way to this past weekend’s news from the Korean peninsula. There was some barely measurable knee jerk response as traders were only too happy to accommodate stop/loss orders and then, not so much. Unless you want to count the endless explanations about why this would be bad for the global supply chain and who, what, why and when something counts as a “safe haven.” Just to be clear, nothing moved enough to indicate any panic or identify where safety can really be found. And that isn’t all good.
Asset prices pretend to be consumed with issues politic, but in fact trivialize everything.
We’ve lost an important regulator on the behavior of those with the ability to seriously mess with our lives.
Mixed in with my emails about the end of the world were discussions about where we should try putting additional money to work. AKA buying the dip. The UN Security Council was meeting in emergency session. Reports have been circulating of another missile being moved into position. And right on cue, I’ve just been reading that all that other stuff aside, this will be a week driven by central banks. Now that, at least, sounds familiar.
Don’t get me wrong. The last thing I want is trouble anywhere in the world. Certainly not this kind. Nor am I an advocate for playing the drama queen on a serial basis. But bad things are more likely to happen if we assume away that which isn’t easy to understand as to its potential ramifications.
Just for the record, buying yen or yuan under the circumstances is a dubious strategy. China didn’t string radiation detectors all along its border with North Korea because this is just a threat that will be localized to Guam.
Lest you think, I’m just venting outrage (there I go using that banned word again), at how algorithms are programmed for these sorts of events, I did get a laugh a few hours ago. I was reading why the now cohesively run euro zone was the new go-to place whenever trouble rears its ugly head. When, suddenly, I was interrupted by electronic shouts that the shared currency had just been knocked down to the day’s low because Italian and French PMIs came in light. And this is supposed to be a market that has its priorities straight?
Just for the record, with the exception of gold, you’d be hard pressed to find any asset price levels that don’t look entirely familiar. Going back to prices we saw late last week doesn’t denote a circumstance where we’re in uncharted (pun) territory.
Finally, Breslow explains what the market is really afraid of…
"It’s a strange world when UN Ambassador Nikki Haley warning that Kim Jong Un is “begging for war” will get knocked off the top of the playlist by Lael Brainard telling you she’s data-dependent about a rate hike that could happen three months from now."
Indeed it is.
via http://ift.tt/2gKUhQF Tyler Durden