a hands-on market

Eric Peters just absolutely crushes it with his weekend notes newsletter today:

Stepping Away: “Policy makers can dampen volatility but they have far less influence over achieving economic outcomes,” said the CIO. “Said differently, they have more influence on raising asset prices than lifting growth.” Even the ability to raise asset prices diminishes as their prices become elevated. “But for markets to unravel, it requires there to be some sort of policy error.” The VIX hitting 80 doesn’t just happen. “For big breaks to happen, like Lehman, policy makers must step away because they can’t maintain the coalition to protect the status quo.”

Stepping Away II: “The S&P didn’t need to hit 666 in 2009, and EU bonds didn’t need to crash – policy makers stepped away,” continued the CIO. “So you must ask yourself is there some set of policies at this moment, or some type of economic or market dynamic that is unsustainable?” Even if you think QE is ineffective, are there indications it cannot persist for some time? “We kind of had a Bear Stearns moment in China this summer, but it’s hard to conclude that any of these policy makers are stepping away now, all you can conclude is that everything’s expensive.”


Peters Capital Group

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