News & Analysis

A Cold Beer, Big Corp volatility, sarcasm and "The New Economy"

Andrew Saks, Monday, 12 April 2021

As recently as two years ago, who would have thought that every aspect of public and national life would be subject to daily change to the extent that it is today?

From waiting for the incoherent ramblings of a man whose personal grooming is not too easily distinguished from that of the Jack Russell cross with whom he is often sighted to waking up to 25 degrees celsius and sunshine, only to perform the same action the following day and be greeted by snow, life in the world's largest capital markets center bears a scant resemblance to its own stature two years ago.

Whilst the pessimists spew their bilious contention across the comments sections of main stream media, one positive has definitely made its presence felt, that being the opportunities for retail traders to finally embrace volatility which has been sorely lacking for a very long time.

Indeed, as long ago as 2011, one particular senior FX industry executive in New York told me "We have been in a period of low volatility for two decades."

Here we are, ten years later, and we can now consider that three decades.. almost!

Since March 2020, when a group of politicians decided to seize the opportunity to instigate a series of coercive measures which have changed the entire geopolitical structure of Western Europe, called into question the motives of those who used to work for the public, who are now viewed as those whom the public work for, and rearranged the entire economic structure of almost every aspect of industry, markets have been very receptive to news, propaganda and focus on the few close to government decision makers who have made hay and caused the publicly listed stock of companies they represent to rally.

Hysteria and risk management

From the hysteria surrounding 'breakthrough' medication leading to rapid-fire stock trading in major pharmaceutical companies earlier this year to the furloughed middle classes whose analytical minds had been channeled away from their every day careers and into delving deep into special interest forums to the extent at which Reddit subgroups for the first time dictated the accessibility of retail trading platforms which have been the subject of extensive development by established companies with over 40 years of corporate history behind them.

Risk management, therefore, is now not only a matter of minute-by-minute precision for traders and dealing desks within OTC derivatives brokers and FX interbank dealers, but is now in the spotlight following the Meme stock debacle in January and the reaction of certain OTC FX and CFD brokers who were simply ill-equipped to handle the flow hence outages occurred.

ETX Capital's traders were afforded completely uninterrupted access to all markets in all asset classes during that period, which should go a long way toward a self-explanatory practical example that ETX Capital does not interfere with its trading platform during times at which its clients have a unique and unprecedented opportunity to capitalize on a legitimate market related event. After all, the nature of trading is such that it appeals to those with their finger on the pulse - that is why there are so many news and analytics platforms, and why so many proprietary trading companies exist.

Trading the news is a standard and long tried and tested method of mastering the world's capital markets. To prevent traders from doing so during times of volatility caused by unusual news, corporate or political activity is to defeat the object of trading.

To then complain about low margins and market saturation due to low volatility whilst making an entire business model which does not welcome the real ebbs and flows of a vibrant market is to make eggs on toast without eggs, bread or a heat source.

Bye bye Big Mac Index, hello Pub Survival Index

Today, as Britain heads to work in the April snow (!), questions the longevity of the freedom which humans were born with as the government allows a respite from endless closures, the questions that lie ahead revolve around how long it will be before the state closes free enterprise down again, whether the rush to the limited outdoor activity will be curtailed by the unappetizing prospect of imbibing a chilled beverage on 3 degrees Celsius outdoor terraces, or whether the public will take their opportunity to end the coercion once and for all and begin to fuel the economy, buy from physical venues and drive share prices in British companies up, meanwhile creating a gulf between the value of the British pound and the Euro in endlessly locked down mainland Europe.

Whilst provincial Britain has used the availability of the traditional pub as a measure of economic and personal freedom, today will demonstrate how many still exist after a year of no revenue and continued operating expenses such as rent and licensing.

Should the shutters be raised on those who did not go out of business, perhaps we will see an end to the world-famous cost of living benchmark "The Big Mac Index" as a measure of how each nation's economy relates to that of other nations, but perhaps the "Pub survival index" which shows the effectiveness of lockdowns in destroying private enterprise and handing power to the state and its closely allied publicly listed corporations with tradable stock on London's exchanges which have lucrative contracts with the public sector's magic money tree.

Perhaps said stock, available on the trading platform, is worth watching. Those who blow public money with the government's carefree abandon on pet projects whilst depriving 5 million small business owners of the living that they created of their own free will and took the risks along with it are perhaps the new creators of market volatility.

Mainstream news makes a sensationalist report about a new breakthrough - prices rally. A few weeks later when it is exposed for the folly it really is and the browbeaten public have to face another national deficit with no consequence, down go the prices.

There's a metric we will never see in the mainstream news...

In the 2010s, middle aged Conservatives called the generation of post-graduate Millennial hipsters with their bamboozling marketing speak and Australian backpacker slang "the new economy".

Perhaps, just ten years later, the government's advertorials and gray suits which sign off massive orders from private finance initiatives for state projects are the real new economy.

What would George Orwell make of it?

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