Insights into Risk Management & Financial Markets: Do you think I am an idiot

Insights into Risk Management & Financial Markets: Do you think I am an idiot: 2013 is the year where markets is ‘played’ to the tune of QE and its noises. Not depression, inflation, growth, etc. My earlier post ...

Do you think I am a financial idiot?

2013 is the year where markets is ‘played’ to the tune of QE and its noises. Not depression, inflation, growth, etc.

My earlier post on GFC, QE1 QE2 (QE3, QE infinity, QE finite) what’s next is the series of events on a blueprint of how financial markets is designed to trend.

Why QE? Global (and US) QE were designed to lower long term interest rates with the objective of improving growth! As growth did not materialize, there’s QE1 QE2 QE3 and QE infinite. As long as growth does not meet the desired level, whether inflation, etc Central Banks would employ QE and this will carry on and on and on.

The mere suggestion of QE finite by the world’s most powerful man was an exercise to determine how global markets would react. And when markets start to plunge and exceed their ‘speculation’, respective Fed speakers would come to the rescue to ‘improve’ the communication of ‘misinterpretation’. That would explain what happened after May 22^nd.

However, there was a side effect to the above which saw global yields rally!

The FOMC decision was a NO surprise at all. As I mentioned earlier posts, we need to know who BB is. There wasn’t a single evidence of a string of good and consistent economic data. Without evidence, how would BB be able to justify tapering at all?

Global investors got it all wrong because they were manipulated AND leading you to think there would be tapering. ALL Bullshit. While ‘tapering’ was the topic prior FOMC, markets rallied and rallies had been priced in before the FOMC meeting.

After FOMC, did the markets follow through? Most Asian markets were closed for Mid Autumn  holidays. As rallies had been built in, most ‘silly’ investors would buy, buy and buy following the ‘surprise’ no tapering, thinking QE infinite is here to stay. I am not sure but let’s watch next week how global markets would react. Rise or FALL?

To ‘take profit’ someone has to do the dirty work. Hence, you got ‘NO’ surprises like the India Governor raising interest rates, DC (debt ceiling) fears rising from the Grave, Congress, Republicans, Democrats, bla, bla, bla, and series of Fed speakers talking next week. I am so bored of the whole story with the DC, Republicans vs. Democrats, Congress, House, Senate, all noises to instil uncertainty and hence volatility.

Talking about volatility, the victim to QE is Gold traders. Diving from the high of US$ 1,9xx down to US$ 1,2xx, Gold investors got slapped right and left let alone the World’s biggest Gold investor who had to liquidate most of his positions. And while things were bearish, Syria came into play to put it back to US$ 1,4xx till ease of tension brought it back done to US1,2xx. As things got bearish, there was the Fed ‘no taper’ and Gold rallied more than 4%. It was short lived, just one day later, till Fed Bullard, a non voter of FOMC this year ‘screwed’  Gold traders making remarks that the Fed meeting was a close call and there’s a possibility the Fed would possibly taper in the next FOMC meeting.

DO you think I am an idiot to believe the Fed would taper without a string of constructive evidence on US economy? While I am not, markets reacted!

If you understand the above, than I am confident you will know where the market is heading next.

If you don’t and are losing money, I suggest you stay out. Do not be slapped by the market just like how Gold is trending!