Take your pick last night. Right after the market closed, the dollar started strengthening again. A lot. Then, suddenly, the floor dropped out of Gold, and the S&P 500 Futures spiked HARD, with over 2,000 contracts bought at the market. A few hours later, it happened again. And at 4:30, once more! What in the Sam Hell is going on? Simple, really. See, there are what - 8,000 hedge funds? Well, for 7,999 of them (up until the last few days anyway) they have all been in one trade, more or less - short dollar, long energy, short financials. Nice, if and when it works.
But now that trade has been unraveling at a frightening rate. As the dollar has gotten stronger it has squeezed people. Hard. See, these guys are not just investing the money they get from rich folks all over the world - they are taking that money and borrowing, then investing that. So when these bets go bad - oil falls, the dollar goes higher, or any of the “parameters” they’ve been working get the rug pulled out from under them, they have a huge problem, all at once, and they have a very bad hair day. That’s happening. In spades. More
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