It’s Friday, and under normal circumstances, former FX trader Richard Breslow would have broken a keyboard or three by now after four straight days of putting up with your senseless bullshit.
But this week is different. Why? Simple: because this week has been tradable. Richard likes markets that are tradable. After all, he’s a trader. So today, he’s fine.
In fact, he’s more than fine. He’s had “a fun few days.”
But that doesn’t mean he thinks you’re any less stupid than you were last week. In fact, he thinks maybe you’re really pushing it with the “tantrum” talk and the dire predictions about risk. As for the dollar doldrums and the euro euphoria, he doesn’t really see how that’s any different from what we were already seeing this year, and when it comes to commodities, it’s pretty clear to Richard that you don’t know what the fuck you’re doing.
His conclusion on Friday is this: “it’s wishful thinking to claim we’ve seen trading Paree, just because a pigeon flew by this week.”
It’s been a week filled with hyperbole. Trial balloons dressed up as pre-commitments. A little volatility described in cataclysmic terms and compared to jarring historical market upsets. Feverish extrapolation masquerading as revised forecasts. Central bankers daring to go where no one has gone before. It’s been an interesting, and in many ways fun, few days, but based on what we can possibly know at this point, unlikely to be enshrined in trading lore.
- I hope I’m wrong, but the moves we’ve seen this week don’t strike me as dispositive of anything. Is the dollar offered? Yes, but that’s been the case all year– the flip side of the euro. But the important test will be how it closes today. More important to me than the range extensions we’ve had the last few days
- If this time things are really different it shouldn’t be pausing into quarter, month and week end, giving those who “don’t have it” a chance to get in. It should force me to look into the abyss and have to decide whether I’m prepared to reach for it. That’s how powerful trends behave and they’re not benign: despite what they look like on charts after the fact
- Equities, too, have spent the first part of the day looking comfortably benign. If traders thought there was any chance that the “put” had been replaced by a “call”, we wouldn’t be talking about sighs of relief, reassessments and that the S&P 500 future is trading in London only one percent from all-time highs. It’s as true as it’s been all month: until we close below 2400, spare the discussions of how much wealth has been destroyed on every pull-back
- There’s even been a lot of talk of taper tantrums in bonds. Really? Ten-year Treasuries have made one tepid attempt at 2.30%. People describe bund yields as having exploded higher. But having managed to rise to 44 basis points, it would be indecent to describe anyone one as bleeding from the face. Yields are indeed higher. They should be. But so far Treasuries are closer to YTD lows than where they were in March
- And what’s to be said about commodities? Unless the price action is analyzed and described in financial asset terms rather than contrived fundamentals, they will continue to be misunderstood and poorly traded. And leave off the “entered a bear market” line
- Maybe everything will boot of next week, but it’s wishful thinking to claim we’ve seen trading Paree, just because a pigeon flew by this week