Former trader and man who didn’t manage to drink away the cynicism over the long weekend, Richard Breslow, is back with his first missive of the trading week and it’s a keeper.
It’s not entirely clear what it is Richard is wanting you to do in terms of proving that you care about the end of the world, but what is clear is that he’s not enamored with the notion that the euro and the yuan are now being treated as haven currencies.
After all, “China didn’t string radiation detectors all along its border with North Korea because this is just a threat that will be localized to Guam.”
It seems like what Richard wants to tell you is that if this were a world in which two-way markets still existed, asset prices would serve as a kind of regulator (“mount up“) for irrational actors that, by virtue of the offices they hold and the power they wield, have the capacity to leave us all FUBAR’d.
But the irony here is that the market’s role as a regulator (as it were) has been relegated to the dustbin of history by another set of equally powerful but equally irrational actors: central banks.
Enjoy Breslow’s latest, entitled “Stop Pretending That You Care the World’s Ending”, below…
We really need to stop feigning that the markets reacted in any meaningful way to this past weekend’s news from the Korean peninsula. There was some barely measurable knee jerk response as traders were only too happy to accommodate stop/loss orders and then, not so much. Unless you want to count the endless explanations about why this would be bad for the global supply chain and who, what, why and when something counts as a “safe haven.” Just to be clear, nothing moved enough to indicate any panic or identify where safety can really be found. And that isn’t all good. Asset prices pretend to be consumed with issues politic, but in fact trivialize everything. We’ve lost an important regulator on the behavior of those with the ability to seriously mess with our lives.
- Mixed in with my emails about the end of the world were discussions about where we should try putting additional money to work. AKA buying the dip. The UN Security Council was meeting in emergency session. Reports have been circulating of another missile being moved into position. And right on cue, I’ve just been reading that all that other stuff aside, this will be a week driven by central banks. Now that, at least, sounds familiar
- Don’t get me wrong. The last thing I want is trouble anywhere in the world. Certainly not this kind. Nor am I an advocate for playing the drama queen on a serial basis. But bad things are more likely to happen if we assume away that which isn’t easy to understand as to its potential ramifications
- Just for the record, buying yen or yuan under the circumstances is a dubious strategy. China didn’t string radiation detectors all along its border with North Korea because this is just a threat that will be localized to Guam
- Lest you think, I’m just venting outrage (there I go using that banned word again), at how algorithms are programmed for these sorts of events, I did get a laugh a few hours ago. I was reading why the now cohesively run euro zone was the new go-to place whenever trouble rears its ugly head. When, suddenly, I was interrupted by electronic shouts that the shared currency had just been knocked down to the day’s low because Italian and French PMIs came in light. And this is supposed to be a market that has its priorities straight?
- Just for the record, with the exception of gold, you’d be hard pressed to find any asset price levels that don’t look entirely familiar. Going back to prices we saw late last week doesn’t denote a circumstance where we’re in uncharted (pun) territory
- It’s a strange world when UN Ambassador Nikki Haley warning that Kim Jong Un is “begging for war” will get knocked off the top of the playlist by Lael Brainard telling you she’s data-dependent about a rate hike that could happen three months from now
U.S. Amassador to UN Nikki Haley says Kim Jong-un is "begging for war" during UN Security Council emergency meeting on North Korea pic.twitter.com/VQ44BJFE3j
— NBC News (@NBCNews) September 4, 2017