Sep

25

 40 years ago when one first fooled around with the idea that there was a web of interconnections between markets like the web between producers and consumers in biomes of nature, one concluded that there was always a web between markets, what I called the ecology of markets, i.e. when stocks went up it caused bonds to go down, et al–but the problem was that the web was always changing. In looking back at that hypothesis and observation, doing many recent rests, one concluded that problematically that the observation was correct, and the main problem as far as opportunity is that that the web is always changing. Perhaps this is because of ever changing cycles, but perhaps due to homeostatic activities by the central banks and flexions.

anonymous writes:

1. Most of the money today is managed by AI methods.
2. AI data input is biased toward current decade, to substantial degree.
3. Within current decade, most intraday moves had Bonds suppressed by Equities strength.
4. Bonds are still not far off their ultimate record high valuation; and Equities are on their records.

It would make a hard sell to modern asset allocators to point that 40 years ago Stock fortunes were in lockstep with Bond fortunes. Will ancient history make abrupt comeback? This would make for utter disruption.

anonymous writes: 

How many markets or asset categories make up the web? Just trying to keep it simple here is what I came up with:

1. Equities
2. Fixed Income (Bonds)
3. Commodities
4. Currencies
5. Real Estate
6. Arts & Collectibles

Did I leave anything out? 

Stef Estebiza writes: 

American markets steadily, slowly, go upwards…the markets are opportunistic pathogens…until a bad note of any nature happens, they continue to do what they were doing, in this case they are going up, using the most illicit systems to do so exp-multiple. Panic has been abolished by law…what is it that still has to happen to cause a change? A random nuclear explosion? When you have liquidity and infinite ability to handle any "indicator" as you like (even the debt) what can you expect? The only one would be a collapse of consumption…one of those non-controllable costers from central banks. For now the sun shines, navigates upwards…waiting for Trump…and in the meantime, all the MINCHIATE on artificial intelligence, bitcoin etc…can also stay. 

Russ Sears writes: 

"panic has been abolished by law". Please define "panic" and put some numbers to this. It would seem to me that "panic" implies some over-reaction During the election when it was clear that HC would not win..There was panic…S&P futures down 100… then a reversal by end of day. It would be hard for me to put a market impact number on a nuclear attack, because it would be huge, and probably would be some "panic" at some point. But lack of big down days implies that the market believes it essentially has got it (the future) right. Not conclude that it is being manipulated. It's much easier to get people to believe a malicious falsehood about someone/thing than it is to get people to believe in benevolent falsehoods. 


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2 Comments so far

  1. Jeff The Deaf on September 29, 2017 7:50 pm

    “Seems like” (yet another unqualifiable statement preface) these time varying intermarket covarianve dynamics are driven “primarily” (begins purposefully maximizing statement enteopy before statement is even finished) by the inflation/deflation verse and refrain:

    Significant inflation archetypal performance - commodities up, stocks up, RE up, bonds dn, denomination currency dn, Soros bemoaning up
    Significant deflation archetypal performance - commodities dn, stocks dn, RE dn, bonds up, denomination currency up, Soros bemoaning up
    Weak _flation archetypal performance: FANG stocks up, Ron Insana air time up, Amish fireplace production up, +ve gamma strategies dn, HF fee acceleration dn, retail day trader oxytocin levels up, retail day trader cortisol levels dn, Soros bemoaning up, etc., etc.

    But seriously, the web “seems” (did it again) most whimsical when annual pct inflation changes are negligible.

  2. Joe Butkiewicz on October 9, 2017 3:50 pm

    Mr NIEDERHOFFER,

    Speaking of 40 years ago - likely longer - what were the circumstances that brought you to Kingston Pennsylvania? I was speaking to a fellow Kingstonian and he mentioned you lived on Westmoreland Ave. I was curious how that came to be.

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