Traders Swimming Against the Tide

If there is one lesson we have learned over our two decades of trading, it is this,

if something seems obvious, well nearly every single time, the opposite thing tends to happen.

There are times however where the markets will exhibit extremes and more often than not the algo driven market we have today, ends up pushing markets to their highs or lows into the close on any given day. We know why this occurs and we tend to think those that really control the flows, have enough data to know where the majority are positioned and will continue to push the tide against them till they bail. Then once they bail, well the market will let off again only to resume when the big players decide its time to roll tack once again.

The situation we find ourselves in now globally is one where the US central bank took far too long to raise rates in an orderly fashion and instead has jacked things up by 200 basis point right quick. We know this is not a mistake but rather a necessary clearing mechanism to supply those with the most to lose, with the proper ammo to sell early, wait and reload their poker chips at appropriate points in time.

We aren’t sure why its not obvious to market participants that the central banks never make mistakes, rather their motives and their directives are clearly aligned with their real mandate. Education or shall we say Narrative Regurgitation will tell us the central banks role is to maintain general price stability and employment. However in the real world, their mandate is very obvious, to buy the Ponzi scheme time, (decades in fact) to kick the can down the debt pile road so that a bloated government can continue its plundering ways. How else do you explain a balance sheet that goes from $3.7 Trillion to $9 Trillion in 2.5 years??? You don’t explain, you don’t even try to contemplate it, because Occams Razor will tell us, that the only correct answer is that the system is nothing more than a “mirage of wealth” but the mirage of wealth has very real consequences in real time for those that unfortunately have to live in the REAL WORLD.