This page has been archived and commenting is disabled.
One Trader Warns "Market Realities Were Starkly Exposed This Week"
Certain market realities were starkly exposed this week as a result of the China currency moves, Bloomberg’s Richard Breslow writes.
Carry positioners have/had enormous positions leaning on central banks despite obviously changing circumstances, equity investors remain long for the same reason and bond investors remain short their duration targets. What it implies is that the need to be fully invested continues to trump prudence, that the market thinks it will deal with rate hikes when they actually happen, and every curve ball will be seen and described as a black swan event.
As Keynes is supposed to have said, “When the facts change, I change my opinion. What do you do, Sir?” Yet markets have been lulled into relying on the belief that this is no longer the case, and even if it is, any change will be stage managed for the comfort of institutional money managers. Gone are the days when you had to guess at the Fed’s policy by interpreting weekly money-market operations. But that can’t be done in any practical sense.
- Keynes also argued that the world was an inherently unstable place and no central banker has perfect insight into the future. Saying the Fed is “data dependent” really means we have little faith in our forecasts and will move if and when it is a no brainer. It also says, as we have been so reminded of this week, that it is wrong to define “data” narrowly as only meaning economic reports. To the Fed, wrongly or rightly, data means all inputs from all comers.
- Yet again, just yesterday, the NY Fed’s Bill Dudley wouldn’t give a specific date for liftoff and said he doesn’t know when himself, even if the time is “certainly getting nearer.” He then spent quite a bit of time talking about China. But he does acknowledge that being able to raise rates is a good thing and a goal. So change with the circumstances.
EUR/CNH moved as much as 7.5% higher on the week as carry traders were being carried out on their shields. Panic buying led to destabilized price movements and cries of global disaster. I was rather reminded of what Otter told Flounder in one of the great quotes from Animal House, “You f&%*ed up, you trusted us.” Although Otter had far more reason to feel aggrieved. The EUR threatening breakout higher against the USD and GBP strikes me as laughable.
U.S. 10-year bond futures rocketing higher, despite the well repeated conclusion that last Friday’s NFP number was “good enough” for a Sept. liftoff, was also a sad reminder that these supposedly game-changing events have a very short shelf life as long as normalization remains a dream set somewhere in the future.
As for equity traders, the lesson once again has been shown to be: the 200-DMA is a line in the sand not a line drawn on a screen. The same was assumed of EUR/CHF at 1.2000 and USD/CNY at 6.2100.
Today, as I write and equity markets are all in the green, I am curious to see if traders will take advantage of this get out of jail free card or declare that once again we have been shown that the status quo defeats the normal.
Source: Bloomberg
»
- 15456 reads
- Printer-friendly version
- Send to friend
- advertisements -
This time is different. Kramer told me so.
pods
The deck chairs have re-arranged, so it's time to get up and dance. They have fucked up their models so badly that they have no clue what happens next, but they can't change anything because they would have to admit they made an error and hell will freeze over before that happens....
https://youtu.be/x0wJ9V1kP4E?t=8s Cut a rug.
"... Saying the Fed is “data dependent” really means we have little faith in our forecasts and will move if and when it is a no brainer. ..."
Or rather, the Fed has no clear, coherent strategy and it is just doing stuff.
I've made a good living for a long time with this approach.
Ohhhh! Now I need a new keyboard!!!
I was thinking the same thing, is this a pause where everyone gathers up their stuff and jumps off the train?
Should find out soon, can't prop this shit up much longer, especially after seeing China's hand.
Maybe, the question is how much of the "market participants" are actually in a position to do this? None of the 401k sheep can do this. Are the large banks with their skimming algos or pension funds going to slit their own throats?
It's a club, period.
I don't think anyone can outright go to D.C. again for another fucking bailout.
Everything from here on out will be complete covert until a major nasty "unforeseen" event occurs...
I was thinking the same thing, retards with 401ks can't do anything, except stop contributing but sheep like the bigger numbers and not thinking about their own financial future.
With every centrl bank/government doing the exact same thing we will, eventually, experience global weimar...
get busy living or get busy dying...
same as it ever was...
Not only that, but people with 401ks basically never reallocate unless there is a major drop. You won't see major movement until there is at least a 5%-10% drop, enough to get the 401k holders to log in and allocate out of equities.
When the shit hits the fan, most of them won't know until their statements come at the end of the month or quarter. Most of them are clueless what they are even investing in. I worked with people like this in a gov't agency.
Next round won't be QE, they'll call it something like "emergency monetary stabilization" and the bail-in's will come right after that.....
And the story they will feed the sheeple is that this action will restore the values of their 401ks.
Should find out soon, can't prop this shit up much longer, especially after seeing China's hand.
When you've got a printing press, what's to stop you from buying up the market on down days?
yeah, like when the market sells off down thru a key technical level theres a central-bank conference call that takes place & they tell kevin henry to not stop hitting that keyboard til he sees triple-digit-green
Most people with money in the "markets" trust that the fed will not let them drop. It's the same as it was in china before their markets took a nosedive. The only way actual equity holders start to sell is if they start to believe the fed doesn't have their backs. Until then, there are algos and the fed to keep it up on low volume.
Yellen has perfect insight into the future. Just like benny and greenspan before her.
Didn't you mean hindsight ?
Gone are the days when you had to guess at the Fed’s policy by interpreting weekly money-market operations. But that can’t be done in any practical sense...
BULLSHIT. The only reason it's gone is because we don't have to guess anymore. it's zirp 4evah and qe infinity. that is all bitchez.
That is exactly the case. How do people miss that?
"and even if it is, any change will be stage managed for the comfort of institutional money managers."
Where is there any evidence that this will not in fact be the case forever? Why are we still "supposing" this as something to watch out for?
Seriously. People. Please.
I remember when everyone was expecting Greece to default one time and then, out of absolutely nowhere they came up with the money. Another time when they actually defaulted and everyone pretended they hadn't.
It seems to take this sort of rythm. A kind of disrespect of any sort of reality when looking at the markets. This incredibly important thing is happening. Oh wait, yep, it's the next day. China declared economic war on the US who bombed their shipyards to stop exports but hey! Stock markets OK today, USD is trading normal.
Did yesterday even happen?
Or is this just some sort of facsimile of Oceania is always at war with Eurasia. Or perhaps it should be Eurasia is always at war with Oceania.