Not a clue, has he?

The FT has just published a comment on recent market moves saying:

An investor consensus that took months to build, namely that robust economic growth and elevated inflation would bring about substantially higher interest rates, has been coming apart, and the pain for those caught in that trade has heightened with moves in the past couple of days.

Three questions.

First, who built that consensus?

Second, why did they do that?

Third, what did they hope to gain?

Could it be that there was organised action to bring pressure to bear for lower government spending that would harm the wellbeing of ordinary people but much enhance the wellbeing of the wealthy?

Surely not?

He believes that someone purposely builds views in markets. Rather than their being the aggregation of individual views….

18 thoughts on “Not a clue, has he?”

  1. It’s actually not as idiotic a comment as you might think Tim, but it’s reminiscent of a caveman with a computer. He’s got some vague recognition that it’s an object of some complexity but that is the limit of his understanding. A number of commentators have pointed out his similarity to some Zerohedge contributors or someone on Infowars – very much conspiracy theoristesque at times!

  2. It’s true my share investments took a bit of a shelacking in March 2020 when the bottom fell out the market during Covid-panic but they’re up 175% since the low point. I can live with a bit of a retrenching.

    Just think, I could be 2% up if I’d invested in a Spud-Go-Green Bond.

  3. Ducky McDuckface

    First, who destroyed that consensus?

    Second, why did they do that?

    Third, what did they hope to gain?”

  4. Wealthy investors thought rates would go up, positioned themselves accordingly. They got it wrong. Yet somehow this “enhances the wellbeing of the wealthy”.

    Conspiracy theories are one thing; but he could at least make them consistent.

  5. Like all left wingers who want to control, to dictate, he assumes that there are genuine, actual, physical “levers of power” to be pulled by a specific individual. They are all so vainglorious that they want to be that individual, if only they can find where they are hidden.

    It’s just not fair that they can’t!

  6. He’s not entirely wrong. There’s people who talk their book. From then on it’s herd behaviour. Financial journalists have to write articles people want to read, more & more people have stake in the paradigm. You end up with a consensus because so many people have a stake in it. Been going on since I first took notice of financial markets. Including the next bit. Something happens. Can be trivial. And the paradigm collapses. And another one forms & a consensus builds around that. But very often, there’s little fundamentally changed between before & after the shift. Most of the important facts are still the same. Just people are looking at them a different way.
    You could say the market purposely builds views in markets with all the players doing their little bit. Markets aren’t always particularly rational.

  7. Dennis, Who Probably Just Offended Someone, Somewhere

    Ladies, Gentlemen and those In Between –

    When you find yourselves agreeing with Richard Murphy on anything related to economics, accounting, finance or politics, it is time to retreat to your study, take a deep breath and a snifter of brandy, and ponder on where you went wrong. Richard Murphy finds conspiracy when ever and where ever the limits of his knowledge bumps up against reality. It’s conspiracy not because it’s conspiracy, but because it never occurs to him to attempt to expand his knowledge after said bump.

    Don’t be like Richard Murphy.

  8. For herd mentality, it’s hard to beat the “progressive” Lefties. They seem to wake up in the morning and look around to see which one of them has expressed an opinion on something so that they can all share it and cover themselves in the glory reflected by twats like Polly, Wrong-Lewis, Jonathan Portes, Dan Davies, Chris Dillow, Rusbridger etc. No one ever goes off the reservation. When it comes to the markets, it is a blend of people talking their book in an effort to influence investment flows and onlookers endlessly debating about how they think other players ought to respond to events. Eventually a consensus emerges but it is quite often wrong. Very few people seemed to think that bond prices would rise recently

  9. Dennis, He Who Has A Degree In Economics

    You could say the market purposely builds views in markets with all the players doing their little bit.

    You could say that, but you’d be wrong. Individual actors within a market can build views, markets themselves cannot. The market is not a actor. It has no individual agency. It is an amalgamation of the actions of those participating in the market.

    Markets aren’t always particularly rational.

    No one with an understanding of basic economics would claim such a thing.

  10. Dennis

    You’re one of the all time greats on this blog, responsible for too many spilled coffees due to laughter – please don’t misunderstand. Murphy’s ‘accuracy’ is an accident, incidental/ partial and based on the Geordie phrase:

    ‘Even a blind squirrel stumbles across the odd acorn’

    He is without question the least competent and most stupid blogger in Cyberspace. I have a six year old daughter who even now probably knows more than him on economics.

  11. “Markets aren’t always particularly rational.”

    Nonsense, look at the way tulip bulb prices have been rising recently! You can’t go wrong! And better than Bitcoin. Why, if the price collapses (which it can’t do) at least you have a tulip.

    Can I interest you in this Tulip bulb? The variety is Tulipus Onionus.

  12. @V_P

    “Murphy’s ‘accuracy’ is an accident”

    I liken Murphy to a fat lad who once sat on the bench for the school’s 1st XV following an outbreak of the plague which drastically reduced available numbers. And years later he will boast that he played 1st team rugby at school and so is a rugby expert.

    He will then confidently predict before each All Blacks game that they will lose. Eventually they will lose a game and Murphy will smugly say that he predicted it.

  13. The Meissen Bison

    V_P: …probably knows more than him on economics

    Either your daughter is called Carlsberg or that “probably” is redundant!

  14. – Slightly O/T, but Prof Potato, responding to a suggestion that he uses his prize book token to buy a book about trains, talks about potatoes:

    “I am a railway enthusiast

    That one may not be my bag

    ‘The potato railways of Lincolnshire’ may be my most obscure book: about the railways that one took potatoes from the fields to the early crisp factories

    I recommend it”

    – in the hands or on the blog of anyone else this might be slightly endearing, but I accept that it is Richard Murphy that we are talking about here…

  15. @Dennis
    Markets aren’t always particularly rational.

    No one with an understanding of basic economics would claim such a thing.

    OK. Dennis. If you want to be pedantic, the players in the market. Or a substantial number of them. It all amounts to the same thing.

    Look, in any market you actually two markets going on. One’s in the commodity being traded. The other one’s in the value of opinions on the trading. The both tend to trade in the same direction. If you’re bullish about a market you’re not a buyer of bear opinions. So one reinforces the other. People get wedded to the status quo. In long running bull markets you get fewer people either trading or passing opinions who have even seen a bear market.
    So yes, a market’s a process not a thing. But traders on it can act like a entity.
    This weekend, over this side of the pond, we have a football match (Sunday isn’t it?) So you have two potential Mondays. One where England wins. One where it loses. I’ll bet that there’ll be a whole lot of decisions taken on one Monday that would go the other way on the other Monday. None of them about football. Wouldn’t even be surprised if it moves the share index. People are very strange.

  16. It’s a common thinking-flaw, assigning intent to processes, the way people write things like “evolution designed a bird’s wing to…” is exactly the same as “the market consensus is….”

  17. TMB

    I’m probably being harsh..

    On my daughter! I stand corrected. Am worried at how ‘woke’ her teaching is though I have to say..

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