Trader: "It's Amazing What Just Happened On Tuesday"

Authored by Bloomberg macro commentator Richard Breslow

Hedge Away Your Fears by Taking on More Risk

Sadly, it has become all too common for traders to get fixated on one specific thing, which may or may not happen. They then find themselves unable to make trading decisions based on the inputs that one would normally expect to drive things. Economic numbers cause momentary blips signifying little or nothing. The situation is magnified on Fridays when we take for granted that anything could happen over the weekend. Who wants to go home short bonds when a tweet can ruin your best laid plans?

But I have to say, it was amazing what just happened on a Tuesday. When the Tesla CEO started his messaging barrage, trading seemed to seize up everywhere.

People could have been forgiven for asking why this particular news caused trading to be suspended for the entire membership of the S&P 500. Bond and foreign exchange traders were similarly transfixed

Without question, it’s a great story. The buzz was palpable. But I wonder how much of it was an intense interest in this particular company and man. Or whether we have just become trained to stop doing what we are supposed to as soon as something new and confusing shows up. Everyone just pushes back from their keyboards, engages the go-slow button on their algorithms and waits.

It’s a phenomenon that has become so common that, even if noticed, goes largely unremarked upon. But it’s very unhealthy. We used to be paid to try to diligently stay focused and, mostly, engaged during the lulls in order to be prepared to spring into action when something happened. Now it’s quite the reverse. When the best opportunities present themselves, no one wants to play. And worse, when they’re most needed, the transactors go MIA.

True this is indicative of the fact that much of the news can’t be factored into models. But also that traders remain much more afraid of losses than motivated by gains. It seems to be true regardless of whether they are institutionalized or not. And we have raised a generation of market participants who are largely fatalistic. I never hear anymore that you must learn to make your own luck.

If, or more likely when, regulators ease restrictions on proprietary risk and position sizes, things will be slow to start, because traders are out of practice and market structure isn’t really set up for it. No matter the protests to the contrary. Of course, as long as central banks remain activist investors, it may not matter all that much.

Many of us assume that in fairly short order, U.S. equity markets will print new all-time highs. The templates to announce it are already written. Champagne corks will pop. The temptation to take a peak at your 401(k) will be overwhelming. The GDP and employment reports were strong. Actually, better than they were given credit for. Earnings have mostly done their part, notable exceptions notwithstanding.

But, make no mistake, the U.S. stock market is a favorite flight-to-safety vehicle. Big, liquid and simple. It is, counter-intuitively and simultaneously, benefiting from good fundamentals and the fact that everyone is scared.

Try this one on for size. If the world were to calm down and more level heads to prevail, you might find it the perfect time to be lightening up. Who would have thought that the analysts calling for a major correction might just be the optimists out there.

Comments

lock-stick pods Wed, 08/08/2018 - 13:44 Permalink

It's all ONE SICK, PATHETIC SPAMMER!!!

•• roea.rita ("I SUCK DICK ON THE INTERNET FOR LAND ROVERS!")

•• Adolfsteinbergovitch ("I TORMENT THE WOMAN WHO SUCKS DICK!")

•• lisa.roy39  ("I SUCK DICK ON THE INTERNET FOR LAND ROVERS!")

•• Leakanthrophy (PORN for Jesus!)

•• Cryptopithicus Homme (bitcoin spammer - imaginary "friend")

•• Free This (ABOVE, in all his 7th grade glory - JACKASS  as new icon!)

•• 07564111 ("I PRETEND I DON'T KNOW ANY OF THEM!")

•• MoreSun (whacked, OH SO WHACKED!!)

•• Africoman

•• Sanctificado

•• beemasters

•• PrivetHedge

•• Cheolli

•• bobcatz

dozens and dozens and dozens of banned log-on's -- more than seven years!

 

....and all the while, the pathetic little SPAMMER sits in his leaky, moldy, smelly single wide in Western New York, surrounded by garbage and dirty clothes, trying to find his dick amidst rolls of fat, talking to his ACTION FIGURES and wondering where his life went.

 

It's all ONE SICK, PATHETIC LIDDLE SPAMMER!!!

In reply to by pods

michigan independant Wed, 08/08/2018 - 13:23 Permalink

EF Hutton retards, next.

In 1980, several Hutton branches began writing checks greater than what they had on hand at one bank, then making a deposit in another bank equal to the amount it wrote at the first bank. This strategy, known as "chaining", is a form of check kiting

The scheme worked for almost three years.

666D Chess Wed, 08/08/2018 - 13:27 Permalink

"But, make no mistake, the U.S. stock market is a favorite flight-to-safety vehicle. Big, liquid and simple. It is, counter-intuitively and simultaneously, benefiting from good fundamentals and the fact that everyone is scared." That's exactly what they want everyone to believe and when absolutely everybody is holding then bag then is when they are going to pull the plug. 

Ben A Drill Wed, 08/08/2018 - 13:42 Permalink

Every 10 cent drop in GDXJ prevents me spending thousands of dollars in the real economy.  

 

New truck?  Nope

Vacation?  Nope

Hotels?  Nope

Stay at home?  Yeah!

Getting broker by the minute?  Yes!

Yen Cross Wed, 08/08/2018 - 13:49 Permalink

 LMAO- The GDP and employment reports were strong. Actually, better than they were given credit for. Earnings have mostly done their part, notable exceptions notwithstanding.

  I'd like to have some of what he's smoking.

  • One time tax cut profits.
  • Pull forward demand on future sanctions costs.
  • Look at long term unemployed & Labor Participation Rate.
  • Buybacks.
  • Real estate market is already starting to roll over.
  • ATH consumer,student,auto loan debt.
  • Where's the Capex?
  • Don't get me started on Geo macro.
Edward Morbius Wed, 08/08/2018 - 13:52 Permalink

Musk has sealed TSLA's fate with his lie. If he cannot show he indeed has the funding commitments, he gets to go to jail and TSLA stock implodes. If he does have the $ (he doesn't) then he goes private, then BK in a year or two.

MrBoompi Wed, 08/08/2018 - 14:01 Permalink

Once you go public you let the "market" manage your business for you.  It takes guts to say fuck you and take your company private again.  

Clowns on Acid MrBoompi Wed, 08/08/2018 - 17:48 Permalink

Boopi - Don't be fooled...this conman pyscho is trying to cash out his 20% of TSLA at a Yuuggge premium. Musk knows he's fucked in the Public markets. He has been a complete fraud in reporting his so called Reservations. These were never audited. Accounting tricka and opaque reporting has combioned with th4ee virtue signalling soyboys and bitches to pump this piece of shit. Add in some pencil necked CA fucksticks that became anal_lsts fro Baird, Morgan Stan, and some weird Indian dude who thinks Sunrah is god.

 

Demand for M 3 and other models is falling. No way this already exponentially overpriced stock is worth 200 nevermind 420. Musk would be going to jail with the stock at 30, but James Murdoch is on the Board....so sleazy Muskie pulled in some virtue siganlling rich boys to prevent him being the only one holding the anchor when this Ponzi and lying scheme went down.

 

In reply to by MrBoompi

To Hell In A H… Wed, 08/08/2018 - 14:07 Permalink

It is, counter-intuitively and simultaneously, benefiting from good fundamentals and the fact that everyone is scared.

I stopped reading from that moment, despite having only one sentence left.

itstippy Wed, 08/08/2018 - 14:55 Permalink

The stock market continues going up, up, UP because every single financial advisor, financial planner, and talking head media financial analyst has been telling people to put their money into it for the past umpteen years. 

"To get the type of returns you need to meet your financial goals you must be in the stock market."

It's worked for many, for a long time.  By investing in stock-based mutual funds that follow the S&P, using a tax-deferred vehicle like a 401K or IRA account, millions of Americans plan to ride the stock market wave to a comfortable retirement.

Nice plan you got there; be a pity if something were to 'appen to it.

Catullus Wed, 08/08/2018 - 15:29 Permalink

Maybe it’s because you’re not in the open call market. You’re all sitting at some terminal somewhere. Had you open called, you’d have rushed over to the desk and started yelling out $400, $405, $390. Instead everyone stops, tries to figure out what that lunatic is doing and the shares halt.