The timing of Bloomberg’s Richard Breslow left something to be desired: just hours after he urged traders not to assume that “each event will end badly“, the market quickly did just that, breaking virtually every “reflation support line” and then as a cherry on top, Donald Trump flipped on half a year of market narratives, and may have put a final nail in the reflation trade coffin, sending the S&P below the 50DMA for the first time since the election.
24 hours later, in his latest overnight note, instead of raging at the fates, the Bloomberg FX commentator does the wiser thing, and tries to learn from the lessons the market presented to him, sharing them with readers. Or, as he puts it, “Chalk This Week Up to Lessons I Have Learned”
His full note below.
If ever the markets needed a long weekend it’s right now. And if liquidity conditions and the anecdotal lack of interest in new positions are any guides, traders have been heading for the hills all week. Still, there are some lessons to be learned from the past few days, so it shouldn’t be a total loss.
One takeaway, as the last of the weak positions are forced to stop out, is just how the marginal actors have been leaning – a valuable piece of information to have when we get back to work. A characteristic of this environment is that investors’ market opinions change far less frequently than the price action would suggest. And even the most junior algos left in the holiday-staffed computer farms know how to sense fear.
This post was published at Zero Hedge on Apr 13, 2017.
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