Where did the pajama traders go? Where did those traders who used to control the opening based on extraneous data and news events from overseas disappear to?
Ever since the election of Trump, we have lost a great deal of the ridiculous volatility that plagued our markets for years -- the kind of volatility that led to giant distortions each morning as we tried to calculate the impact of an Italian bank's failed restructuring or a raid on the Cyprus financial system. How much was a collapse of the Brazilian real worth? How do you factor in weak Chinese numbers?
Brexit? Has to be terrible, right?
The impact on our market was always suspect, but that didn't keep them from trying to control things. When you add in that some Fed speakers would talk after the market about raising rates, sparking the possibility of a tape tantrum and then a selloff in the stocks that need rates to stay low to be competitive, you had a lot of action every morning that was, alas, full of sound and fury but signifying absolutely nothing.
I would call these traders out regularly, giving you that pajama image just as a gratuitous slap, because I think I have earned the right for gratuitous slaps, given my role as a Dr. Denton trader in a previous life.
In the '80s I would trade Japan aggressively and be set up for America out of Tokyo. It worked before the 1987 crash because the Japanese controlled our openings, since they were so powerful back then. They strode the Earth like colossus -- something that's hard to believe now but was the case for certain.
I have some theories about what happened. First, someone got wise to these clowns -- hey, if President Elect Trump can call Senator Schumer a clown, that's a real opening for further less-than-ambassadorial descriptions -- and took their money away. How long can investors stick with managers who are wrong by 9:34 a.m.?
Second, the rest of the world, despite the stories in the press, just got better. Britain's been up for a dozen days because Brexit has created a better business environment because of the weaker pound. The numbers out of most of Europe are quite strong. Hate 'em or like 'em, the data out of China's pretty darned good. Latin America's no longer a disaster. The real and the ruble rock.
Third, the news flow out of the U.S. is better. Last night, Merck (MRK) got some good news about Keytruda and its importance in fighting lung cancer. Forget that this was in the cards; this market likes to go up on the same positive data all of the time. United Continental (UAL) issued numbers that were better than expected for December. That wasn't supposed to happen. In front ran Delta's (DAL) numbers.
Notice none of this has to do with Trump. We are possessed by Trump in the news business. How can you not be? But the simple fact is, the reason why we don't care about the morning futures fluctuation is that there is none, exaggerated or not. The terror that the futures struck, rightly or wrongly, has disappeared.
We are all for the better of this artificial, silly infantile, immature trading by people who have either learned the errors of their ways or have moved on to honest employs.