I heard two quotes in the financial news this morning that caught my attention. First: that about 30% of Americans will end up getting infected with the coronavirus. Second: the S&P 500 is on pace for the 5th best month in the last 30 years.
These statements are incongruous, at best. Yet, IMO, it’s more a comment on the ability of central bankers to determine stock prices through both direct and indirect means.
Everyone knows about the indirect: flooding markets with trillions of dollars that have to go somewhere. Most observant traders know about the direct: hammering volatility and manipulating currency pairs and other drivers of algorithmic trading – the tail that wags the equity dog.
For an example, look no further than VIX. It has tagged a deep retracememt of its last rally three times in a row.
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