Already have an account? log in
This article is FREE for you
Create a free account and join institutional investors, analysts and strategists from the world's largest banks
By submitting your email address you agree to receive communication by email
‘Smart’ Power: We Have ‘Never Been Further’ From Free Market Dynamics
Over the past year, we've variously argued that when it comes to providing unique frameworks for thi
OR, subscribe now for unlimited access
By submitting your email address you agree to receive communication by email
By submitting your email address you agree to receive communication by email
I’m slow, but I see a pattern. In 1998, our ivory tower central bankers declared LTCM’s crap-out bet on Russian bonds to be a TBTF bet and arranged for all involved to dodge the well-deserved bullets. Fast forward ten years, to September 2008, and we had former Goldman Sachs investment banking CEO Hank Paulson, as Secretary of the Treasury, answering, “Then God help us all” to a congressional query as to what might happen if congress rejected Paulson’s run on the taxpayer’s piggybank for$780 Billion (initially).
Now, ten years after that debacle…
We do indeed richly deserve the government we get.
There are so many first time buyers in the markets using stop loss – limits. Whenever the ring bells in 2018 and the markets start to quit the top levels, we will see an avalanche. This could be the third time that the central bankers have to intervene and we will see a lot of volatility.
I’m smiling because today the volatility (vix) is traded at the lowest price. The more we approach the big figure 30.000 Dow, the more puts will be bought by me for safety and profit reasons.
Draghi calls it some kind of guidance, and brags about it. Several more GEs will stop the market cooperative price controls. The pendulum will swing to a disorderly environment maybe presaged by currency behavior that we are seeing now.
In other words, we’ve all become front runners.