Boy, we’re searching far and wide for explanations for yesterday’s price action and one person who is out on Thursday with an interesting take is former trader and current Bloomberg columnist Richard Breslow who thinks maybe you should be focused on Harry.
Wait, Harry? Who the fuck is Harry?
Well presumably “Harry” is a lot of people (last we checked it’s a common name although admittedly, I have never personally known anyone named Harry – “Fogell, have you actually ever met anyone named Muhammed?“). But in this case, we’re talking about Admiral Harry Harris who showed up on Capitol Hill Wednesday for a hearing with the House Armed Services Committee and it came across as, well, war-ish.
If you’re super interested in this, we’ve actually gone ahead and embedded Harry’s full comments below (all 58 pages of them), but the gist of it was this:
U.S. interests in the Indo-Pacific are real and enduring, while the growing challenges to our interests are daunting and cannot be overstated. In order to deter potential adversaries in the Indo-Pacific, America must continue to invest in critical capabilities, build a force posture that decreases our vulnerabilities and increases our resiliency, and reassure our allies and partners. Simultaneously, we must also encourage our allies and partners to be full and cooperative partners in their own defense and the defense of the free and open international order. America’s resolve is strong, and it is imperative we continue to show our resolve and commitment to the region in the years to come. I ask this committee to continue support for future capabilities that maintain our edge and prevent would-be challengers from gaining the upper hand.
As the above mentioned Richard Breslow notes, “the average person on the street in America would look at you blankly if you asked them who is Harry Harris [but] believe me, travel to Asia and you will not have a hard time finding people who are very much aware of who is the commanding officer of the U.S. Pacific Command, his hard-line views and the amount of fire power at his disposal.”
Ok, so who cares what Harry says other than Pyongyang and Xi and maybe some people Richard has talked to while playing backdoor Russian roulette for money in Southeast Asia like Christopher Walken in Deer Hunter?
Well, Asian algos care, apparently.
“As his headlines began to hit right on the hour [at 10:00], gold shot higher,” Breslow recalls, before asking you the following rhetorical question: “How many people asked you what is going on with gold?” And then there was the dollar. Here’s a fun chart:
“I’ll bet every algorithm in Asia was reading his text and rapidly forgot about the dot plot,” Breslow posits. Yields drifted higher about an hour later and I suppose there’s an argument to be made that the more aggressive the U.S. stance in the region, the less likely it is that the Treasury will find willing buyers for all that new supply – or at least not with yields where they are now.
As for stocks, Breslow says that “bless their hearts” they “decided to take advantage of a falling currency” and continued to move higher on the assumption (?) that weak retail sales maybe gave the Fed an excuse to be dovish? Richard doesn’t say that last bit, but it’s part of some folks’ narrative for Wednesday.
Anyway, if you were looking for an alternative take to explain some of Wednesday’s moves, there’s one for you and happily, it involves geopolitics which, as regular readers know, is a subject that’s near and dear to our (cold) hearts.
Full Harry Harris comments