Beware Greeks bearing gifts - or is it central bankers?

Central banks to the rescue!

In the absence of any real political will or effort to change/improve the current state of play, all responsibility has once again fallen squarely on the shoulders of our favourite central bankers. Headlines across the major news wires late last night gave the market the undeniable impression that central banks are standing at the ready come next week to perform a globally coordinated liquidity injection not dissimilar to the one witnessed at the tail end of last year via the expansion of swap lines.

Needless to say this was more than enough to get the “risk” market in a tizzy of sorts and sure enough it was off to the races, with USD sales across the board and higher equity futures on both sides of the pond. What can anyone really say in the face of the above news? A market that for the bulk of this year has been at the mercy of central bank intervention, let off the hook ever so briefly to be apparently freely operating for the month of May and some small part of June, is now firmly back in the clutches of said central banks.

From this I infer that no matter the outcome of Sunday’s Greek election, no matter whether you believe Greece stays or goes, no matter where Spanish and Italian 10yr yields end up, Europe and indeed the world will be saved by the injection of greater liquidity. Ok, so perhaps not saved, but certainly yet another delay of the inevitable that everyone has been waiting for over the course of the last 6 months.

I’ve had a gutful of this market and its meddling bureaucrats, one thing that is painstakingly obvious is that the efficient market hypothesis, is now (and in truth probably always was) nothing more than a hypothesis. So how do you trade this nonsense? Well your scribe is closing all positions today for better or worse and walking away for a week or so. With the elections, G20 summit and FOMC next week and no doubt more headlines like the ones featured last night, it is only the brave or stupid or perhaps stupidly brave that will want to get involved in this market for now.

Time for a new helmet...