Trader: 'Investors Know Central Banks Are Just As Deeply Into These Trades As They Are'

Here are three bullet points from Breslow’s longer note – long story short, the legacy of the central bank “put” lives:

  • This recurring pattern inevitably leads to the tedious discussion of what haven assets are or aren’t doing in response. The answer is nothing. It is a noble but futile exercise to try to explain events by finding something that has moved a bit and imparting some greater meaning to it other than randomness
  • Safe havens are hedges. And we all know, no one hedges anymore. It just hasn’t proven to be worth the cost. Being lectured by yet another central bank, as the chorus was joined by the Reserve Bank of Australia in their latest Financial Stability Review, doesn’t help. Or change anyone’s behavior
  • Investors realize that monetary authorities are just as deeply into these trades as they are. And the current zeitgeist built up over the entirety of the post-financial crisis world expects policy-makers to be the ones responsible for keeping the balls in the air. No pain, no gain became gain with no pain. It has been just too great a strategy to call the bluff of those advising caution


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Disclosure: None of what I write here is to be construed as advice to buy or sell any kind of asset. It is merely my personal and not my professional opinion. Any asset can go to zero.

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