Buy and Sell Signals, and Other Market Perspectives Message Board

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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives

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Nov 3 4:00 PM EST

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Hawkmoon

To: Hawkmoon who wrote (91308)	4/1/2017 8:43:35 PM
From: GROUND ZERO™	1 Recommendation of 218316

BLIND SPOT: FED STILL FILLING UP THE PUNCH BOWL “…modern academics and economists have a crucial blind spot; they tend to ignore how the financial system really works.” HS Shin, Bank of International Settlements, March 2017 This week, our friend Gillian Tett of the Financial Times dug into something close to our heart. Economists and academics are far too focused on their craft, while financial (risk management) awareness is a dangerous deficiency. What good is a central bank’s “duel mandate” if they ignore credit risk which has been proven to be the global economy’s Achilles heel? Navigating their “blind spot” will be the holy grail of asset management over the next few years. Crowded Trades We advised clients to get long U.S. Treasuries and Gold Miners heading into this week’s all important Fed meeting. In recent years, so much comes down to meticulously measuring just where exactly is the most crowded trade heading into Janet Yellen’s gathering. There are too many market participants trying to generate alpha around the FOMC, often there’s a very large collection of patrons on one side of the boat. As we advised clients, “toooooo many players have been short U.S. Treasuries in recent weeks”, when there’s nobody left to sell something, prices usually rise. Everyone was waiting for Janet (Yellen, the Fed Chair) to turn into a hawk, when she didn’t deliver they all ran to cover their bond shorts at once. * * Hawks at the Fed want to hike rates, pop asset bubbles, but they’re NOT driving the bus. thebeartrapsreport.com GZ

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