Trader Warns “Markets Are On The Move, Beware Of Ignoring Why”

Wednesday, September 19, 2018
By Paul Martin

by Tyler Durden
Wed, 09/19/2018

“Markets are never wrong, but they are often misunderstood, or the prevailing flows are given credit they were never intended to convey, and sometimes investors execute trades just because they have to,” warns former fund manager and FX trader Richard Breslow as he looks at the US and Chinese market reactions to the latest round of tariffs and tariff retaliations.

Via Bloomberg,

But I’m not going to dispute what has been going on this week, other than to suggest that it may be advisable not to come to conclusions that lose the forest for the trees. Or base a trading strategy on questionable foundations.

It’s all of Wednesday and already there are a few examples worth considering: The equity rally after new tariffs between the U.S. and China were announced, the sterling rally on Brexit optimism and rising U.K. CPI, and the blithe acceptance of Italian budgetary assurances, alongside the utter indifference to the ongoing struggle within the German governing coalition that led to last night’s “reassignment” of the head of domestic intelligence.

The tariffs came and equities rallied hard. Immediately we were regaled with explanations that they aren’t so bad, were less than feared, aren’t immediate and other facile explanations. Dangerous conclusions to draw when you consider the stakes and the people involved.

Lost in the discussion was the news that accompanied the Shanghai Composite rally that set the whole market tone. China’s National Development and Reform Commission announced plans to accelerate infrastructure spending, clarified that there would be no retroactive collection of social security taxes, is working on ownership reform for underperforming state-owned enterprises, streamlining the process of custom clearance for exporters and improving the forward guidance for the amount of Total Social Financing, in other words how much support will be provided to the private sector of the real economy.

The Rest…HERE

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