With a reminder to vote for your favourite P&L socks (yes really!) let’s move onto the second of this year’s abbreviated Irrationals – the Headline/Analysis of the Year.
I have been known in the past to give strategists and analysts a bit of stick, it is good-natured with a tint of seriousness – there are some outstanding, engaging and informative strategists in the industry, but all too often we end up with a bunch of reports that could, frankly, have been written by me, because they are a report on what happened – and not what is likely to happen. I understand technical analysis is about the repeating of history, but I am not sure that news headlines or events repeat, especially within a matter of hours.
So a “thanks, but no thanks” to those analysts (mostly, I have to say, from the retail space) who fill my inbox daily with nothing more than a “here’s what happened in case you missed it”, but I am really not interested.
There was an interesting incident this year which could have qualified for the “when pre-trade TCA goes wrong” award, had I wished to include one, when a British Airways flight in March went due north from London to Edinburgh, rather than what it was meant to do and that was fly due east to Dusseldorf. A tip of the hat here to a friend who observed “Dusseldorf got last looked”, but I’ll stick with the pre-trade TCA analogy – after all, what does pre-trade TCA do? It tells us what is meant to happen in all likelihood, but comes with disclaimers – and, given BA merely sent the flight on to Dusseldorf from Edinburgh, it feeds into scurrilous accusations in some quarters that some executing parties may have “adjusted” their post-trade TCA to reflect better upon their trading.
When it comes to headlines we cannot leave out the politicians and central bankers of the world, for while they may not always be quoted exactly correctly, the spirit of the remarks is generally reflected in the headline. Hence our thanks to Germany’s Finance Minister who was quoted as saying that “An escalation of the trade war would be bad for the economy” – thanks for that insight.
Thanks also to that eternal source of meaningless and obvious quotes, the Japanese hierarchy; most evidently Bank of Japan board member Yutake Harada for the insightful “high economic growth is needed for Capex to recover”, and we cannot let one of these pass without mentioning Japan’s Ministry of Finance spokespeople who never tire of telling us they are “watching exchange rate movements carefully”, whenever volatility (remember that kids?) spikes. At the start of the year we were treated to a “watching carefully” quote, only for the Japanese authorities to sit quietly by while there was a flash rally in the yen!
On the macro-economic and technical analysis side there were a couple of standouts – one was a report from academics that went into pages and pages of detail (that no doubt took months and months, maybe longer) only to conclude, “Unexpected central bank announcements are more likely to cause FX market volatility than scheduled ones”.
As far as technical analysis is concerned I enjoyed the commentary that noted “with Cable at 1.3150, if we are to test 1.33 first we must break 1.32” – this analyst was paying attention during maths lessons at school – but decided to go with the in-depth piece that concluded, with USDJPY at 110.00, “If it breaks 110.45 it’s going up, likewise if it breaks 109.45 it’s going down”.
I hate to be the one that has to point out that over the next three or four weeks (I got bored checking after that) it went above 110.45 twice and below 109.45 three times and the range was 109.20-110.75.
So there is plenty of the inane, useless and downright irritating analysis to be had out there, as there are banal, obvious headlines, but there is only one winner this year and I am afraid readers it has nothing to do with markets (and indeed most of you will need to revert to the internet to understand it).
The headline of the year has to be from ABC News in Australia with the magnificent “NT Fishos Lose Barra to Monster Croc”. For those in need of enlightenment, two fishermen in Australia’s Northern Territory had the Barramundi fish they had caught snatched of their line by a rather large crocodile, but the kicker was in the body of the story when said fish was referred to as, “a donkey of a Barra”.
Any thoughts and ideas on how I can get the word “donkey” into a headline on the Profit & Loss website are most welcome!