Trader: "Investors Are Struggling More With The Known Knowns Than The Unknown Ones"

Tyler Durden's picture

For any carbon-based traders who are up at this hour, here are some early overnight thoughts from Richard Breslow, Bloomberg's former FX trader and fund manager, about the challenges facing investors when in addition to contending with central banks and macro when crafting a narrative, they now have to deal with constantly changing politics and geopolitics. As he puts it: "In today’s environment, investors seem to have more confidence in their longer-term outlook than on what is going on now."

From his Tuesday Trader's Note

Investors Probably Wish They Could Know Less

The markets would like to break out. But they keep being told they’re getting ahead of themselves and promptly back-off. Typically, traders have a pretty strong opinion of how they think things currently stand and then try to craft a narrative of where they believe asset prices may be going. In today’s environment, investors seem to have more confidence in their longer-term outlook than on what is going on now.

It’s hard to position beyond the short-term when you allow the very foundation of your thesis to keep being pulled out from under you. And it doesn’t appear to matter whether you’re a peppy Pollyanna or a gloomy Gus.

We’d like to believe that current prices reflect all of the known facts. But we differ on the facts. Primarily because we can’t agree on what so many important things mean.

Will financial deregulation augur the next banking crisis crisis or free up banks to lend? Can we live with or will we die by looser environmental laws? We can’t even settle on what the term “fair trade” implies for the global supply chain. The economy is strong but growth weak. Then throw in the latest geopolitical events and red-lines and everyone channels their biases. Analysis to follow later.

One thing I’m sure of is that 30 pips in USD/JPY or three basis points in the 10-year are no way to draw conclusions about these topics. Hence we stay violently in quiet ranges,,,,,,,,,,.

Last Friday’s non-farm payrolls was a disappointing number that was interpreted positively. After all, won’t the mix of the labor participation and unemployment rate mean wage pressure? Sounds very plausible. There are just as many people looking at it and saying so how come no one’s showing me the money. How can I be more productive with that robot staring at me?

You can’t plan on what you’ll be doing at your destination with no clue as to how you’re going to get there. Investors are struggling more with the known knowns than the unknown ones, and won’t make headway until we sort this out.

Comment viewing options

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

The current prices reflect all known facts. No, the current prices reflect all known LIES and BULLSHITS of Trump.

Cognitive Dissonance's picture

The traders have their long term meme set in stone. Everything is going to be alright.

The short term meme is in direct conflict with it, so there needs to be a period of thoughtful reflection until they can internally spin the hard data crash into lollipops and sugar plums.

Give them a week tops before this is done.

<Simply stated, we believe what we want to believe and arrange all cognitive functions accordingly. Eventually there is a hard systems crash and we internally reset after a period of time in the corner drooling on the floor.>

Mr Blue's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

Cognitive Dissonance's picture

One has to wonder how effective your 'marketing' plan actually is. Can't you at least come up with something original in your 'messaging"?

Arnold's picture

I know there is human sentience behind the algo trading that makes up most of the volume in trading.

The algos, despite my kidding, are still dumb tools.
A poor craftsman blames his tools.

Lanka's picture

You haven't had a raise in many years.  You should speak to your boss.

buzzsaw99's picture

i'm up bitchez. don't know why exactly because i'm not a trader. i used to watch the nikkei open, wait up for the return from sushi lunch, check the close in the wee hours... now it's like why bother, seeing as it isn't even a real market? that's how i feel about the usa these days too. for some reason i still get up early though. odd, really.

Cognitive Dissonance's picture

"i'm up bitchez. don't know why exactly because i'm not a trader."

Full moon dude.

At least that's my excuse.

FreeShitter's picture

Couldnt sleep too well either must be it.

Arnold's picture

And you are using capitalization and punctuation, mostly in the correct places, Buzz.

Not feeling well?

buzzsaw99's picture

+1 cleaned up my diet and it's messing with all my mutant systems.

Arnold's picture

I was thinking after the Whole Foods thread that Soylent Green was all Natural and Organic, and should be an end cap pop.
May have to market it in the frozen food section, to preserve freshness.

Arrest Hillary's picture

Fear the "Unknown Unknowns" .... the "Unknown Ones" will take care of themselves ?

ronaldwilsonreagan's picture

As long as the Orange Hitler vaporizes planet Earth while these traders are rich that is all that matters.

Grandad Grumps's picture

What is there to know. There are no real investors anymore. The market is rigged and people who have money typically want to be on the side of the cheating fraudster riggers.

Those who don't want to be on the side of the riggers should just stay out.

To prevent that there are actual markets with price discovery is infantile. Rig the price and create the reason later for the media.

DistortedPictures's picture

The funny part is, if you look at the photo with the headline, the two fat pigs are not talking on the phone.  They are snorting tons of coke so they can keep working and make positive decisions.  Imagine if you will, if the police decided to search all those NYSE traders on the floor.  What percentage would have some form of drug on them? Over 50%, 75%...more than likely.  Same with our politicians.  We need to have mandatory and random drug tests and searches...just like they do to us.  I bet we would weed out many of them.  No pun intended. 

buzzsaw99's picture

you take away their hookers and blow and the s&p would crater like a mexican sinkhole.

Last of the Middle Class's picture

Rest assured, somewhere, in front of his little terminal sits an insider keying in words to the algo machine. These guys never play without knowing the outcome.

OCnStiggs's picture

This article made me laugh...

Investors and traders are whistling through the graveyard because they know the market is sitting on a MASSIVE bubble created by Q.E.

Trying to look ahead without looking back to see how you got here is like sitting on top of an unfinished skyscraper looking to the sky to imagine where it "could" be while ignoring the foundation is set in quicksand. What is coming has been delayed since 2007 and is absolutely and incontrovertibly INEVITABLE. The only disagreement is when. And, which side of that argument you are on is largely determined by greed.

The truth is the current market is a phony-baloney Frankenstein created by the Fed and their Elite controllers. The only thing that is known with certainty is that over-riding fact. Everything else is absolutely a creation by the Fed including the timing of when this house of cards glued together by bullsh*t will collapse.