Markets are screaming “gimme a break already,” according to former fund manager and FX trader Richard Breslow, who notes that with Turkey on an extended summer holiday and Chinese equities getting a late-day boost from their friends, there has been little appetite for angst.
Breslow suggests “we should try it on for size and enjoy it while it lasts.”
It has been a very interesting start to a week that should be dead. It feels alive and well. In a world with so much ugliness and boorish behavior it would seem that traders have started the week open to, perhaps needing, things to be calmer and more civilized. I guess no news is good news when the alternative is to be surrounded by loose cannons.
Later this week we will get the minutes from the last FOMC and ECB meetings. And of course, at the end of the week there is Jackson Hole. There is, and will be, no shortage of speculation about what will be said. Or the issues analysts would like to see addressed. The authorities would serve themselves and everyone else best by saying as little as possible. Given the clear messages we got after the recent meetings and the lack of groundbreaking hard data since then, beating a dead horse will serve little purpose. It’s fine to admit everything isn’t on auto-pilot.
Are trade wars a good thing? To some, yes. To others, obviously not. Will it help to hear oblique references that there are risks out there? If you aren’t aware of that, you have larger issues.
And what really keeps them awake at night, you won’t hear about. Markets are telling us they want some peace and quiet and policy makers should oblige. Jackson Hole has morphed into a central banker as a rock star forum. It should go back to a simpler time.
Most of us can live with a hiatus from electioneering and lobbying. Just look at today’s contained ranges and bask in the fact that no one is complaining about being bored. Try to ignore the fact that the euro rally we thought we were getting at the end of last week failed miserably, global sovereign yields remain mired in the sewer and that a government-sponsored dead-cat bounce in Chinese equities doesn’t really mean trade tensions have eased. Equities are up. Much of emerging markets are happy. The weather is nicer. All in all, not a bad start to the week.
But you don’t get the whole morning off.
While enjoying the Monday peace and praying for a respite from the texting class, take a look at the price of gold.
Being bullish gold has been a very popular disaster of a trade. It is doing a very good job, however, of trying to find a bottom right where the technicians told us to watch.
If it holds and bounces, it will be a big deal — whether it lasts or not. (especially given then net short speculative position)
Keep a weathered eye because if it does keep its bid, people will, rightly or wrongly, start to argue it has implications for the dollar as well. And if that carries through there will be a lot of dollar break-out people scratching around for a new story.