One Trader Trusts Numbers Even Less Than He Trusts You – And That’s Saying Something

Richard Breslow is a man who doesn’t trust you.

We’ve established that on any number of occasions this year. The former FX trader’s crowning achievement in berating investors came two days ago when Breslow accused you of trading on “wild projections fueled by an irrelevant and dangerous tincture of moral outrage.”

Well, it’s Friday and generally speaking this is the time when five days of dealing with your senseless bullshit finally pushes Breslow over the edge, but today his tone is surprisingly measured.

But that doesn’t mean he’s didn’t approach his daily missive with a healthy degree of Breslow-vian skepticism.

Today, Richard endeavors to explain why he doesn’t trust numbers. The thing about numbers is that while they’re “proudly used to denote dispassionate rationality,” they are in fact “meaningless.”

It follows then, that since Breslow doesn’t trust you and he doesn’t trust numbers, you trading on your interpretation of numbers is the worst possible scenario.

Because that’s people Breslow doesn’t trust trading on data he also doesn’t trust – a recipe for disaster, to be sure.

More below…

Via Bloomberg

We’re all data-dependent. It’s not just the central banks that hide behind that aphorism. Traders and investors operate that way too. It’s just that data is a very poorly defined word and concept. The dictionary speaks of facts and specifics. But in reality it includes, biases, positions and a whole lot of other subjective factors. You and I can, quite properly, look at the same data and react differently.

  • So while it’s a universally held concept that is proudly used to denote dispassionate rationality, it’s in fact a meaningless one
  • The European composite PMIs that were released this morning were all misses. Good numbers, but misses nevertheless. But the euro has been up versus the dollar all day. Why? Because while it’s also trading near the bottom of its recent range, people are, for the moment, emotionally invested in desperately hoping the euro will go up and the dollar down
  • European politics is now good and U.S. politics bad. Emmanuel is even better looking than Jared. There must be fire behind the smoke of the Treasury flatteners and the ECB’s PSPP is what a healthy, growing economy just does. Whatever it is doesn’t matter, just look at the data. Well, your data
  • I’ll be the first one to admit that numbers have both probative and confirmation bias effects. It’s also why a picture really is worth a thousand words. Technicals help us own up to reality. Or at least force us to explain ourselves
  • The 10-year Treasury yield hasn’t moved in over a week and has had a two basis-point range so far today. Yet, when it was at 2.165% I read that if it breaks 2.23% it could really motor. And at 2.145%, it was setting up for a retest of year-to-date lows. Same data, not meaningful, but sang to different people in widely different and visceral ways. Of course the response to both should be, “sit down and be quiet”
  • So what’s my “data driven” bias on a, so far, quiet Friday? I’m looking at the bounce in gold as my sentiment indicator of what risk wants to do today. And I would trade accordingly. But, psst, I still like the dollar and hate bonds, regardless of the data
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