Former trader Richard Breslow is back off the weekend break and he figures this might as well have been a three-day weekend.
Because while there are plenty of reasons to be concerned and thus a plethora of valid arguments for why one might be inclined to suspect that the recent jitters we’ve seen in risk assets are not in fact dip-buying opportunities, today just doesn’t seem like the day to express that palpable sense of angst with aggressive directional bets.
In short, Breslow notes that investors, much like Melania Trump in the bedroom, are expecting “a placid” experience.
We’ve all gotten used to that sentiment when the markets are flying, your favorite show is on tonight and your team had a good weekend, yet you’ve just got a down and uneasy feeling. The world’s an ugly place and you’re determined to take it out on some hapless asset price. This week is starting off just the opposite. There’s every reason to hold on to last week’s queasiness. But it just feels like investors are in the mood for a placid day. It’s August and we’re going to have to keep paying attention right up to Friday evening, leaving little appetite today for angst and mayhem.
- Events may get the better of things, but now doesn’t feel like the time to vent your anger. The economic news overnight, such as it was, came in benign. Japanese, Thai and South Korean numbers were solid. Not necessarily the indicators that blip on global radar screens, but also nothing to, in any way, suggest trouble. Europe has contributed by giving their economists the day off
- There’s also a growing sense, and comfort, that, for now, the clear message that central banks want to send is things are good, but not perfect and we want to shoot for ideal.
- Growth is good. But inexplicably moribund measured inflation will let them remain market friendly. Good news can be banked. Bad news is temporary. Too much good news is to be placed into perspective lest traders get the notion that the currency of the respective country is cheap. Watch the Riksbank’s deputy governor Jochnick on Thursday play the flip-side of the “current inflation trends are transitory” song
- The Korean peninsula is a scary place. But it’s hard to expect imminent war as a result of this week’s war exercises when the KOSPI is nicely off the lows from a week ago and the won is in the middle of the recent range. Those are pretty effective, if not always accurate, visual clues for the mood on the ground. And while developed market stocks are wobbling, the Shanghai composite is zooming. It’s hard to feel really bad when the MSCI emerging market currency index is threatening new highs for the year
- What nastiness is in the offing, we’ll have to see, but after recent upsets, enjoy the respite, set your stops and plan your high conviction trades for September, realizing that, like the ones made last December, they’ll likely be passée by week one of the NFL season