When I was a kid there was this little bit of matinee subterfuge that we would perpetrate at the movies.Seeing that there was a 1 o’clock screening followed by a 3 o’clock screening, my associates and I would would wait until the crowd from the first show would exit en masse, whereupon, ticket-less but determined, we would nonchalantly walk in backwards amongst them. Once upstream and within the safety of the lobby, we would then make our way to the emptying seats and patiently wait for the curtain to come up again. As childhood mischief goes, not exactly hotwiring cars for a joyride but OK by suburban standards.

Later, when I was a fledgling clerk in the silver pit, I soon noticed a variation on this theme.

Banks and dealers will all have phones directly to the pit, constantly manned by a clerk whose job it is to parrot the bid/offer, by who, and what size. The larger of these players will have two or more phones to different brokers on the floor, all in competition with one another for that bank’s business. And all the clerks know what other clerk is on with what bank, and what’s transpiring at any given time. The guys in the pit are largely in the dark about these clerk dynamics because a lot of this activity is happening behind them. Literally.

Having been doing this for all of a couple weeks, the trader from the bank asks me a couple of times to size up the bid in the ring after I inform him of a large offer out there. Now he knows that I’m going to ask the broker I worked for what the aggregate bid size is, and later realized that he also knows that other people are going to hear me. (It’s difficult to be deft at something you’ve been doing for two weeks.) Considering the confluence of circumstances and sensing an edge, the eavesdroppers would presumably get short, whereupon, he tells his other more seasoned clerk (around, say, 8 weeks — survival skills develop quickly in the wild…or else) to very discretely advise his broker to not hit any bids but rather to take the large offer. Then he bids for more through multiple channels, though in such a way that he probably is not going to get hit. Opportunistic shorts are now left in the lurch. As they cover, the fresh long in turn typically sells out the physical off the floor on terms friendly to his interests, I would learn later. His plan all along.

The first time this happened my naiveté was taken aback by how quickly and decisively a supposedly sophisticated bank could change it’s mind. The second time it happened, I smiled one of those small, private, epiphany smiles, thinking, oh, the old walk-in-backwards approach. How quaint. In the ensuing years, I cannot believe how many times I’ve seen this little stratagem deployed and the large scale on which it is sometimes done.

Just like the movie situation, timing is key. It was easier to salmon one’s way into a matinee than a night show because the ushers trying to prevent it had been in a darkened theatre for a while. But now they had to stare out into the sunlight looking for what was making its way against the exiting tide. Takes a little while for their eyes to adjust. Such was the salmon’s edge.

It is the same for the markets, and just like there will always be an unwitting rookie clerk out there to further the deception of a cagey participant, there will always be a media prone to being duped again into helping some concern get out of their large, long-term position. A colossal oil company suddenly discovers that it has not a localized leak but rather systemic corrosion problems over a vast network of pipes. Crude quickly jumps. But when everybody’s eyes adjust days later to the blinding sun of pervasive press coverage, it’s actually down for the week. While unleaded gas has plunged as if it were an anvil tossed from a cliff. Hmmm.

If you can artfully walk in backwards when everybody’s slowly coming out, it would logically follow that one can discretely exit when everybody’s rushing in. Especially when the hype is at high tide and the sun is in their eyes.





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