Perhaps it's because a wave of pessimism constantly assails me as I get older, but navigating the financial markets is becoming increasingly complicated. We all know the rules of the game, and the first is that "whoever fails to respect the Holy Grail of prudence is eliminated from the game." Exactly. About the stock markets, the more I look around, the more I wonder what the state of mind must have been of those who looked around 20, 30, 40, 50, 60 years ago. What did Jesse Livermore[1] see in the first fifty years of the last century? What did George Soros[2] see in the final phase of the previous century? What did Paul Tudor Jones[3] and Louis Bacon[4] see between the last century and this one we are living in? What do Chris Rokos[5], Michael Platt[6], and Kenneth Griffin[7] see today?
I remember when I was just a child, every time I had a thousand lire (old Italian currency) in my pocket, I would immediately run to the main pizzeria in my small town. Yes, I bought a pizza, but in reality, I entered that pizzeria because I was fascinated by a painting that was prominently displayed. Western-style, a man on horseback and a sign commanding "Climb to the highest point of a mountain and, weeping, seek a vision." I was terribly fascinated and realised that, in reality, writing attracted me much more than the "portion of pizza" I was stuffing into my stomach. I still didn't know what a macro environment meant, yet I was always imbued with it, from a very early age. I lived on the plains, and the highest point I could climb was my dad's shoulders, on the balcony of my maternal grandparents' house, or up a tree. Those kinds of heights were "my entire Everest." It was in those childhood days, so teetering on the edge of a piercing sensitivity, that I began to realise that what I was seeking closely resembled something I could only find if I committed myself to turning my gaze to "things of heaven" rather than "things of earth."
Let me be clear: by "things of heaven", I'm not referring to "a certain religious inclination." I'm simply giving a name to that attempt to see beyond the shadows of the earth, with the friendly support of an inner effort unafraid to look where people prefer not to see. It was then that I came to understand that to grasp this deeper vision, it wasn't necessary to take the text on that painting literally, but rather to engage in an inner effort that truly drew on the most sincere depths of my soul. I tried then, and I still try today. I sincerely believe that Jesse Livermore tried it too, and that George Soros, Paul Tudor Jones, Louis Bacon, Chris Rokos, Michael Platt, and Kenneth Griffin are trying it today.
In all humility, assuming a higher position is a necessary step in connecting us with what lies beyond our humanity. Being face-to-face with the source of our inner beauty is the only way to enter into symbiosis with that truth that only a "special moment" can perceive. That silent, perfect moment in which everything returns and the movement of the tides bows to eternity—this is the correspondence between what binds us to the things of the world and what invites us to step outside of the things of the world, to see where the truth is going.
That highest point in the world that has always fascinated humanity (I think of Mount Olympus for the Greeks, Mount Ararat for the Jews, Skull Hill for Christians). Well, for a small and modest ordinary mortal like myself, Mount Olympus, Mount Ararat, and Skull Hill can only be the mountain within me, the one I seek audience with when confusion reigns supreme, clouds cover the sky, and tomorrow grows ever darker. Like today, when I stand here wondering, "Has the macro fan lost its bearings?" Considering what's happening in the world, I can't help but embark on that journey inspired by the words in that painting I loved so much, "Climb to the highest point of a mountain and, weeping, seek a vision."
The Fed has confessed to predicting accelerating growth but has cut interest rates anyway. I think the Federal Reserve has lowered rates because it predicts that unemployment is destined to rise. Still, even this hypothesis is destined to die on the vine because the Fed has taken care to state that it predicts unemployment will decline. "Something doesn't add up," I keep repeating to myself, so I return to that reviled inflation that central banks around the world are thinking of binding with steel chains in the most bottomless hole in the earth. Yes, inflation, the evil dragon. I focus on it and see that the Fed has also lowered its inflation estimates at will, to protect itself with the principle that says "if inflation is destined to decrease, then rates can also be lowered." And yet, something still doesn't add up. Come back. I'm not meant to take everything I'm told at face value; I don't like the "feudalism of reason." I need to understand. I might still lose money on the markets with a bad bet, but I need to know "why I lost that money." I remind myself, first and foremost, that we as macro traders don't play this game to be right, but to make money.
As I said, something doesn't add up. Why? But if the Fed just told me that the economy is growing and unemployment is falling, how is it possible that inflation is also falling? If, as the Fed says, the economy is growing and unemployment is falling, then inflation should rise.
Yes, I really need to climb to the highest point of a mountain and, crying, I'll have to search for a vision. So far, I've only discussed the macro environment in terms of the economy, but what about its impact on geopolitics? Here too, confusion reigns supreme.
Suppose the centre of the stage is the two wars (Israel/Hamas and Ukraine/Russia), behind it. In that case, we have "an overt manipulator" who actually moves tiny (Trump), "an undeclared manipulator" who moves much more than he wants us to believe (Xi Jinping). Behind these two manipulators moves the "illegible tightrope walker" (Putin), who, knowing full well that he must necessarily deal with the two manipulators, is committed to not breaking the thread that binds him to both, even at the risk (as is happening now) that one of the two manipulators (in this case Trump) will feel (rightly) taken for a ride. The rest of the world is following suit, just as Ulysses did when he was forced to follow Agamemnon's reckless military campaigns: he didn't want to, but he was forced. Ithaca was too small. Well, the various Indias, North Koreas, Belarus, Pakistan, etc., are all too small to be able to say "From now on, I walk alone".
Well, I just climbed to the highest peak of the mountain, and I'm crying. This time it's hard, really hard, and I won't get out of it any time soon. Prices go where they want, increasingly nervous and gruff, yield curves don't descend to meek counsel, options seem to want to tell the one who built their fence to go to hell, commodity prices make me think someone is drugging them behind their backs.
I ask myself, "Are these the last fires of Sodom and Gomorrah?" I don't think so. I'm sure that Jesse Livermore, when he stood at the highest point of the mountain, weeping and searching for a vision, was much better at it than I was. I'd like to know if George Soros, Paul Tudor Jones, Louis Bacon, Chris Rokos, Michael Platt, and Kenneth Griffin are now at their personal peak, and if they're experiencing similar emotions. Who knows if they have already discovered their vision? If they haven't done so already, I'm sure they will.
[1] One of the best traders in history.
[2] "The Man Who Broke the Bank of England", but also much more.
[3] Hedge fund manager, co-chairman and chief investment officer of Tudor Investment Corporation, but also much more.
[4] Hedge fund manager, founder and chief executive of Moore Capital, but also much more.
[5] Founder of macro hedge fund Rokos Capital Management and a former founding partner of Brevan Howard Asset Management, but also much more.
[6] Founder of BlueCrest Capital Management, but also much more.
[7] Founder and CEO of Citadel,but also much more.