Conditioned To Catch The Falling Knife

Tyler Durden's picture

The numbers out last night were once again largely on the weak side of disappointing, with very little reaction and even less of an intuitive reaction. As Bloomberg’s Richard Breslow writes, this is the downside of everyone having the same positions. Simply put, we've been trained to catch the falling knife by the CBs, one of those trading strategies that will work until it doesn’t and when the knife slips you will really have a taper tantrum.

Via Bloomberg's Trader's Notes...

Some strategists are even finding good news in the euro area growth data, noting that it is impressive there is any growth at all when none was expected, unlike U.S. where 1H numbers disappointed -- some people just don’t like black and white analysis.


As we have mentioned before, it seems there is this enormous consensus in all ideas and positions, everyone knows that central banks are there and driving everyone’s positioning, my friend Bob Savage said yesterday:


"we’ve been trained to catch the falling knife by the CBs, one of those trading strategies that will work until it doesn’t and when the knife slips you will really have a taper tantrum."


It’s becoming harder and harder to look at the news and then guess what market did in response - although it’s a fun game to play at 3am in the morning when you can’t sleep.


May perhaps be better to consider not so much trading the reaction to events, instead trade movements in anticipation thereof, trade the expectation, then go into the number flat, the expectation tends to be much more logical than the reaction.


If you look at how markets are trading, they move ahead of a central bank meeting, or a strong or weak number, then everyone is caught with same position and you end up being right but proven wrong.

  *  *

Welcome to the new normal.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Bloppy's picture

Buy more CYNK and all will be well. Oh, and load up on that TSLA thingy too.

Left tries to shift blame away from Obama's warmongering by attacking McCain:

agstacks's picture

At first I thought this was an article on PMs.  <sarc>


Go ahead and junk me...

SafelyGraze's picture



which is which


q99x2's picture

I hold the opinion that you will see mushroom clouds before you have to stop buying the f'n dip.

cougar_w's picture

A year ago I would have disagreed.

I am less inclined today.

The cougar is moving slowly and carefully, these days.

viator's picture

Mushroom clouds are Keynesian positive.

New_Meat's picture

massive numbers of broken windows to be replaced, well out of the blast radius

mvsjcl's picture

Euro-area growth? They're joking, right?

Winston Churchill's picture

Last time I tried to catch a falling knife was when I was 13.

The emergency nurse was so cute I had a woodie ,despire bleeding out from my leg.

khakuda's picture

I could kind of see Winston Churchill saying and doing this.

SheepDog-One's picture

We're gonna drop some knives on some folks.'

cougar_w's picture

"Investors" are now just the stooges and patsies of the CB.

Hope the pay is good.

viator's picture

The markets used to driven by the invisible hand, now thay are drive by the dead hand of the state.

besnook's picture

the bottom line is the fed cannot let the market correct or all sorts of hell will break loose. btfd.

TabakLover's picture

Putin knows this (down market the US's worst fear).  No need for shots fired.

Bemused Observer's picture

Listening to all the talk is like those scenes in movies where the character is listening to someone talk, and in their mind the voice becomes this squeaky shrill yattering and their mind wanders away to something important...

That's where I am...mind wandering...

AdvancingTime's picture

 After a major crash if one does occur the majority of people will look back and say, it happened so fast and with so little warning that they could only go along on the ride. We do indeed live in interesting times.

In my book Advancing Time I focus on how change is occurring at an increasingly faster rate. One of the biggest changes over the last few decades is in the speed and way we communicate, this will have a massive bearing on the effect and speed of a great unraveling. To many of us, as with the occurrence of other unseemly events that take place in history it is merely a question of when and not if.

While we have learned much during the last two hundred years about economics and how to manage our economy we should not be so arrogant as to think we can control greed or change the nature of bankers and politicians. More about how people will look back on this in the article below.

jubber's picture
Shaun Walker        ? @shaunwalker7

So @RolandOliphant and I just saw a column of APCs and vehicles with official Russian military plates cross border into Ukraine.

assistedliving's picture

he's talking about the shorts catching knives right?