For everyone else, here is the latest rant by Richard Breslow explaining not only why traders are frustrated in a market in which nothing makes sense, but where after holding their hands for years central bankers have finally forsaken the 20 year old hedge fund managers:
From top to bottom we have redesigned a system that is stable only when under the influence. I read this morning that money managers are pining away for a return to the happy and calm days of 2011-2015. The world was in existential crisis, but stocks were being manipulated higher. Happy days, I’m getting my (market) fix.
And this only after a modest 10% selloff. We can't wait for the angry letter that will hit after a real crash.
From BBG's Richard Breslow
When investors used to say they didn’t like uncertainty, it meant they expected consistency in how policy makers would interpret incoming data. Situations evolve and exogenous shocks happen, but at least let’s all be on a similar wave length. Then you do your analysis, I’ll do mine and that’s what makes markets. That ship has sailed.
Current levels of volatility aren’t good or fun and certainly not “normal.” It’s a problem of our own making. From top to bottom we have redesigned a system that is stable only when under the influence. I read this morning that money managers are pining away for a return to the happy and calm days of 2011-2015. The world was in existential crisis, but stocks were being manipulated higher. Happy days, I’m getting my (market) fix.
A casualty of this current volatility is that at any given time there are no rational explanations for what’s going on. Back and forth swings of meaningful proportion are characterized, by necessity, with a random reason generator. If we don’t do so we’d have to admit to a much deeper systemic defect. Better to just put it down to simple things like China’s economy or the European banking system is collapsing. They’ll be forgotten at the next rally.
What would be hard news is G-20 participants giving more than lip service to their host’s pre-summit statement: “We cannot just rely on monetary policy. Fiscal policy must play a role,” and “We understand that, as the second-largest economy, our policies spill over to others. We also understand that U.S. policies spill over, we must stress policy coordination.” Yes, Mr. Lew, there is a crisis. German 10-year bund yields 15 basis points.
Analysts are touting technical hammer patterns formed yesterday in the S&P 500 and Treasury 10-year yields. Everything should rally now. Somehow, I doubt they’ve hit the nail on the head. The only thing that has changed is the price. El Condor Pasa. A condor by any other name is still a vulture.