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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.

 

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Thu, 08/14/2014 - 13:47 | 5093106 Cthonic
Thu, 08/14/2014 - 14:04 | 5093228 Bloppy
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:

http://tinyurl.com/lb4jkxv

Thu, 08/14/2014 - 13:38 | 5093114 agstacks
agstacks's picture

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

 

Go ahead and junk me...

Thu, 08/14/2014 - 13:58 | 5093208 SafelyGraze
SafelyGraze's picture

CTFK

BTFD

which is which

 

Thu, 08/14/2014 - 13:38 | 5093116 q99x2
q99x2's picture

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

Thu, 08/14/2014 - 13:54 | 5093184 cougar_w
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.

Thu, 08/14/2014 - 13:58 | 5093203 viator
viator's picture

Mushroom clouds are Keynesian positive.

Thu, 08/14/2014 - 14:22 | 5093315 New_Meat
New_Meat's picture

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

Thu, 08/14/2014 - 13:43 | 5093140 mvsjcl
mvsjcl's picture

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

Thu, 08/14/2014 - 13:43 | 5093143 Winston Churchill
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.

Thu, 08/14/2014 - 14:46 | 5093467 khakuda
khakuda's picture

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

Thu, 08/14/2014 - 13:48 | 5093163 SheepDog-One
SheepDog-One's picture

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

Thu, 08/14/2014 - 13:53 | 5093177 cougar_w
cougar_w's picture

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

Hope the pay is good.

Thu, 08/14/2014 - 13:56 | 5093194 viator
viator's picture

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

Thu, 08/14/2014 - 14:03 | 5093222 besnook
besnook's picture

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

Thu, 08/14/2014 - 14:14 | 5093283 TabakLover
TabakLover's picture

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

Thu, 08/14/2014 - 14:07 | 5093247 Bemused Observer
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...

Thu, 08/14/2014 - 14:42 | 5093397 AdvancingTime
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.

http://brucewilds.blogspot.com/2013/08/after-big-crash.html

Thu, 08/14/2014 - 14:37 | 5093412 jubber
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.

Thu, 08/14/2014 - 17:06 | 5094227 assistedliving
assistedliving's picture

he's talking about the shorts catching knives right?

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