In the run up to Bernanke's and the Fed's QE tapering frenzy, the press and market got a tad overexcited in the run up to an FOMC meeting in June 2013. In this post I emphasised the need to keep a calm head and to look at the bigger picture
You got to love it.
I don’t remember such an event build up since the Cyprus debacle in March. The frenzy gripping the press and markets leading up to tonight has been ridiculous.
So I decided to go through the headlines to see what the market and press has had to say.
Here’s a selection of headlines
- Will the Fed calm or ignite more fear for the gold investor
- FORGET THE TAPER: Here Are The Only 29 Questions Journalists Should Ask
- Traders Are Passing Around This Ben Bernanke ‘Lord’s Prayer’ Ahead Of The…
- Ben Bernanke Is Scared
- Ben Bernanke Owns This Bubble, Baby
- President Obama ‘basically fired Ben Bernanke
- Markets flat-footed ahead of Bernanke’s highly-anticipated remarks
- Markets On Edge Before Bernanke Speaks
- Obama has fired Bernanke
- Bernanke & Fed Don’t Know How to Quit QE
- Farewell Bernanke – Thanks For Inflating The Biggest Bond Bubble The World…
- Bernanke must ensure minimal damage
You get the picture.
Now while journalists obviously have to emphasise a headline and give their own take (as we do here) it’s hard for your average Schmo, like you and me, to wade through the sea of stories and opinion to fathom out what exactly is going on.
Usually though the truth is often staring us right in the face or can be gleaned by using a little bit of common sense.
One of my mantras in trading is, at times, to take a step back and look at the big picture.
Fortunately I work with some very astute people who can also view things from the simple (and oft best) perspective.
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The market has spent the last couple of weeks trading tapering and Uncle Ben while forgetting all else. Like a storm, today we’re now in the eye and the peace and tranquility it brings. In a few more hours all hell breaks loose again.
So here’s my take, and unsurprisingly it’s no different to that of my colleagues.
The data drives Ben full stop. At the moment the data isn’t great. It’s not terrible but it’s not great.
Tapering will come. We know it, the market knows, the dog down the road knows it, BUT it will only come when the data suggests it should.
Irrespective of what Ben says today the market will be trading tapering from now until it happens. The market will trade it after it happens. The market will trade it for the next 6-12 months until the market gets bored of that bone and sees another one in the butchers window.
So we as traders have to go with the market and be pulled along even though we are trying to trade in a market that may not make sense.
How often do you ask yourself why a currency is at a level that screams to you that it shouldn’t be trading there? That’s what trading will be like from now on.
While following the market or trend it’s important to not end up like a Lemming and disappear over the cliff with the rest of them. Keeping a basic grip on reality and taking that step back once in a while may be the difference between a healthy account balance or your blood on the rocks.
