Hand on the Trigger, With No Bullets

Every time Fed chairman Bernanke opens his mouth, the markets act like a 5 year old at their birthday party. They will laugh, they will cry. Except unlike a 5 year-old’s birthday party, the market doesn’t always get what it wants.

Last month, investors practically lost their minds when Bernanke announced the Federal Reserve is looking to bring quantitative easing to a halt by the end of the year. The result? Major indices and managed futures experienced multiple risk off days.

But the roller coaster wasn’t over…

Chart Courtesy: Finviz

This week, Bernanke and the bankers had a change of hearts, stating the end is in sight, but it won’t happen until mid-2014…. Maybe.

Whether or not the Federal Reserve chose to delay the end of QE3 because of the reaction from the markets will remain a mystery.

But we do know that this makes our lives difficult. Typically, major moves in the markets are just what we like to see, because that’s where managed futures thrives like in 2008 and 2009 {past performance is not necessarily indicative of future results.} However, the increased transparency of the Federal Reserve is starting to give managed futures investors whiplash.

Prime Example: 30 Year Bonds are up 1.1%, Gold is up 2.9%, all but erasing losses after Bernanke’s first comment, and the U.S. Dollar Future has plunged by -1.6%.

Right about now, you’re probably thinking if the Fed broadcasts the end by the middle of 2014, then normalcy will resume, and and investors as well as CTA’s will have a knowledge of the future, so to speak. Not quite.

Towards the end of Bernanke’s press conference yesterday, he quipped, “I think that’s something that might happen,” referring the end of the QE3.

We feel fairly confident that come the end of this month, we will be seeing a more Risk On/Risk off days than in June. Today is just one.










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Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.

The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex, and is not intended as investment advice, or an offer or solicitation for the purchase or sale of any financial instrument. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts. Opinions expressed are that of the author.

*The mention of specific asset class performance (i.e. +3.2%, -4.6%) is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.), and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship and self reporting biases, and instant history.

The mention of general asset class performance (i.e. managed futures did well, stocks were down, bonds were up) is based on Attain’s direct experience in those asset classes, estimates of performance of dozens of CTAs followed by Attain, and averaging of various indices designed to track said asset classes.

It should be noted that past market performance is not indicative of future market movement.No market data or other information is warranted by Attain Capital Management as to completeness or accuracy, express or implied, and is subject to change without notice.

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Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.