Statistics are a very important part of financial markets – sometimes they serve a very important purpose, sometimes they don’t. As we continue with the Irrationals, it seemed sensible to run through a few data sets that help, or rather don’t help, because after all, this column seldom likes the sensible, helpful route.
So this is truly an Irrational rather than an Accolade and into the bargain it offers me the opportunity to take a dig at one of my favourite targets!
It’s time for the third award of this year’s Irrationals but first I need to highlight there are too many contenders for Headline of the Year to mention here so I will merely highlight one or two. I have deliberately chosen to ignore headlines around the two major events of the year, the UK referendum (I still don't like the ‘B’ word) and the US presidential election.
There were some absolute crackers this year, some in financial markets, some not.
With thanks to those of you who appreciated the irony of Boaty McBoatface being a financial markets signal, we move onto the second of this year’s awards – this time an Accolade.
Had it not been for the need to highlight the Subversives of the Year, we would have kicked off – as we did last year – with the Central Banker of the Year.
At the irrational end of the scale (as opposed to the accolade end) I feel an honourable mention has to go to Haruhiko Kuroda, governor of the Bank of Japan and Thomas Jordan of the Swiss National Bank.
As December strikes, for the second year your correspondent has decided that rather than shut down until January he will award another set of "Accolades" or "Irrationals". This year, to make things more interesting, themes from my Twitter account are included, which if nothing else opens the door to much more sarcasm.
We will get into the main body of the awards from Monday but I want to start the year by awarding an Irrational to the "Subversives of the Year" (or the "how did we miss that? award).
If I were a cynic I would raise a quizzical eyebrow at the timing of the CFTC’s announcement on Friday that it has proposed “supplements” to some of the detail around RegAT. This rule has raised significant controversy over what seemed to be a proposal to have source code stored with the CFTC, but, according to CFTC, apparently it was all a misunderstanding! A cynic would also ask why something that is "misunderstood" needs rewriting of course, but I'm sure we're above that...
You can tell things are expected to be quiet – Happy Thanksgiving by the way to my American friends – when this column turns to those great philosophers Ozzy Osborne and Clint Eastwood for inspiration, let alone – and this is not for the first time – going all “Oliver Stone” on you. Either way, I suspect December is going to be a very interesting month, to finish off a quite extraordinary year in terms of peoples’ ability to get things wrong.
Last week’s Icap results saw a sell of in the share price due to the under-performance of the Nex Group. Normally I wouldn't bother myself with share price movements (and I won't now to any degree) but any move that reflects market expectations for the Nex Group is interesting, not least because it could inform the price of any potential takeover bid. Nex is, in many ways, a proxy for the OTC industry so is it right that stock markets seem bearish (for this five minutes at least) over FX and OTC markets?
I suppose it’s inevitable when senior people leave that speculation over the future of a business grows exponentially, but even without some of the senior departures, there does seem to be a tremendous amount of buzz around about the platforms.
The public protestations from several CEOs about how they are building a business, not selling one has to be taken with a pinch of salt, after all, why would they publicly show their hand? Some are obviously genuine, but most would at least listen to an expression of interest, no matter how vague it was.
Once upon a time, a very, very, very long time ago, a generation of traders (of which I was one) was introduced to the concepts of crosses. This introduction was not without some mishaps of course, but it was an invaluable outcome of our elders and betters teaching us how to read markets, more specifically how to identify drivers of moves in the main currency pairs. It is hard to escape the conclusion that in the modern FX market, such skills are thin on the ground.
Putting aside all jokes about the UK’s disappointment at losing their “dumbest electorate crown”, I’ll keep this brief because the world is still coming to terms with how the “experts” once again got it hopelessly wrong. So just to say yes, the FX market was very orderly yesterday as the results came in but (there’s always a ‘but’ remember), we are in no way out of the woods. For just as this was a eerie echo of Brexit, so too could market behaviour be in the coming months.