Monkeypox
Market Participant Behavior & Flows
Out there, in “The Real World”, some are panicking about a new disease that’s going round called…MONKEYPOX!
China, fondly remembering how well it did during Covid, was the first to respond:
“CHINA TIGHTENS BORDER CONTROLS TO KEEP MPOX AT BAY”
Back here, in the Ponzi World of Wall Street, there is no such concern about Monkeypox. After all, the place is already packed with Monkeys, immune to most things, especially a disease bearing their name…
Seeing “Monkeypox” headlines on Bloomberg got me thinking about how the Market Monkeys behaved during the “Yen Carry Trade” Apocalypse…
On that fateful Monday, Cramer tweeted that “we aren’t oversold enough for a real bounce”, Morgan Stanley said that the “equity correction may have more room to go” and Jeremy Siegel called for an Emergency Rate Cut. Meanwhile, our parody publication was calling for calm and patience and that the time to panic was a month ago, when we were preparing for Summer Volatility ahead of the actual event (“Election Volatility”).
What’s really amazing though is how the sentiment around this whole Yen-charade has round-tripped over a period of just two weeks. I wish we had the imagination to come up with such a ridiculous series of events, but reality beat parody once again:
On Monday August 5th, the Monkeys were scrambling to quantify the size of the “Carry Trade” and were throwing around figures between $4 trillion (JPM) and $20 trillion (Deutsche Bank).
By Tuesday, JPM said that the Yen Carry Trade Unwind was half complete.
By Wednesday, JPM said that three quarters of the Yen Carry Trade were now unwound.
By August 16th, Bloomberg had a headline that the “Carry trade that blew up the Markets is attracting Hedge Funds Again”.
I don’t know who these traders are that managed to unwind $4 trillion in 2 weeks (a feat that would qualify for the Hall of Fame of Trading!) but I envy their broker! The commissions on those $4 trillion of trades would buy quite a few shrubberies, assuming those trades ever happened... Anyway. This calls for a meme…
Just imagine the sheer stupidity and greed of unwinding something that was seen as toxic just 2 weeks ago and now getting re-packaged by Wall Street as an “opportunity”. I just keep coming back to Peter Sellers’ timeless classic: “How I Learned to Stop Worrying and Love the Bomb”.
So we went from Un-winding the Carry Trade to Re-winding It? What is this? Blockbuster?*
*Incidentally, the parallels with 1987 are almost appropriate here since Blockbuster opened their first store in 1985…Be Kind, Rewind! Kids reading this should google / Chatgpt something called “VHS”, your jaw will drop!
Flows & Behavior of Various Market Participants
What I really wanted to explore was how different types of market participants behaved during this correction and where they stand now.