Trader: “When Futures Are Down A Point Or Two Before The Open, I’m Asked What The Problem Is”

Jon Alternative Media, Blogosphere, Geopolitics, Market Commentary, Politics

From the latest ‘Trader’s Notes’, authored by Richard Breslow, a former FX trader and fund manager who writes for Bloomberg
This was supposed to be the year traders were going to be hamstrung by political risk. When the late 2016 trends faltered in the new year, this was a common explanation for why. That theme has been swept away. Investors insist on living only in the here and now. After all, the bullets aren’t flying where they care.
How many times have you been asked how much of all this geopolitical risk is priced in? The simple answer is, not at all.
For every well publicized lottery ticket being bought on German yields collapsing after the French election, there are other traders buying euro upside believing the National Front can’t possibly get through the second round. And lottery tickets aren’t hedges. They don’t protect the mass of stacked trades being built up. At best they may provide a modest pricing buffer as everyone heads for the same exit

This post was published at Zero Hedge on Feb 15, 2017.