I began my career as a reporter on the floor of the Chicago Mercantile Exchange, covering the currency futures and short-term interest rate futures for a news wire. Among other things, I learned that often, the locals, people trading with their own money and wits, would take the opposite side of trades of the institutional players. The institutional operators had deeper pockets but were looking to lay-off risk. It was a David vs. Goliath story often. It is, therefore, a special pleasure to talk with Ben Lichtenstein as he and his team help prepare the futures traders for the new session.
Second, there is a fiscal cliff approaching as the moratorium on evictions and foreclosures is set to end in a few weeks, and then the $600 extra unemployment insurance is terminated, as the way it stands now, at the end of the month.
Third, and turning to international events, I noted that the UK-EU trade talks that were to be accelerated this month ended early last week as the two sides continue to have fundamental disagreements. I remain skeptical that a new trade agreement will be struck, and this will increase the uncertainty and likely disruption late this year and the first part of next year.
Fourth, Chinese and Hong Kong stocks have rallied, and it is also related to the Cold War that I think continues to unfold between the two largest economies. Many Chinese companies cannot be secure with their US listing, and HK has seen a flurry of IPOs, which mainland investors are buying. This supports the Hong Kong dollar and Hong Kong shares even though arrests have begun under the new security law. Many in the US complain that the Fed’s actions encroach on the private sector and distort the price discovery process. It is much worse in China, where the stock market has traditionally been dominated by retail investors, who have been encouraged to buy papers that are understood to be official.