Brexit or how I'll make a killing in forex

You have had central banks announcing more monetary expansion in the aftermath. Brexit was an excuse. This morning, Mark Carney announced loosening in the coming months -- it fueled a buying frenzy. He wasn't even hinting. He outright said the cheap money is coming. The ECB leaked that they are going to expand the pool of assets in their bond buying program, which fueled front-running and a buying frenzy. The BOJ freaked by the move in the yen has been intervening. All of the Fed bullshit -- the endless confusing jawboning the last two years about how tightening is coming (no really guys, we mean it this time!). ... Off the table (even though it was never on the table, despite any idiot who believed the bullshit they managed to string out over a year and a half). The Fed funds futures are pricing in loose monetary policy to infinity now, and people are finally understanding that QE4 is way more likely than rate normalization anytime soon.

You can't use the markets for risk assets as a proxy for anything economic in this kind of environment. Markets trade off central bank announcements. Not earnings. Not economic news as a proxy for where earnings might head. It's all phony. Manipulation.

In a free market, interest rates are the universal prices that discount future cash flows and calibrate risk. But interest rates are being controlled to an extent we have never seen -- they have ratcheted it up to insanity and are controlling those markets with an iron fist. We have negative rates in a third of the developed world and near zero rates in the rest of the developed world, including the U.S.

Normally, rates are the traffic signals for a market-based economy. Right now a stagnant, overly indebted economy (which is permanently stagnant because of the debt they have encouraged, basically creating a self fulfilling prophecy of stagnation) should have a lot of those traffic signals flashing bright red -- for obvious reasons; a lot of toxic debt needs to wash out before we can ever grow again. But they are doing everything they can to keep those traffic signals green -- which means more and more debt, which means more central bank schemes. Which means an eventual ending to their mess the way any road without traffic signals creates an accident.

The irony is that what they do widens the gaps between the haves and have nots. Which you can argue is what created the vote in Britain to leave the EU. Which is just going to stir more resentment among the little people in the future. A small percentage of people benefit from the cheap money. Small savers can't get any return without excessive risk. Not that it matters the way it did two decades ago. Most people can't make ends meet in the depressed economy we are saddled with, let alone save.

The Federal Reserve has been at a crossroads for the last year or so -- they ran up risk assets, including the stock market and when QE3 ended a year and a half ago, the run up in stock prices ended and the market began to roll over. It can't go anywhere, and has in fact, tried to go down. It's a house of cards. We have seen all of that volatility, including the sell offs in August last year and earlier this year. But the market needs more monetary heroin to have a chance at going higher. Brexit was a grand excuse to expand the money supply some more, wasn't it? And they jumped on it. What you are seeing in various equities is that they are trading directly in correlation to those central banks and how they pounced on it to get the printing presses rolling again (figuratively). The Brexit news, the economy, earnings (which are way down) have nothing to do with it.

I know that some people don't understand my posts about this, but if you don't get what I just posted, think about this. Brexit will surely slow down the British economy in the short term. The ratings agencies, for example, all downgraded Britain on the prospects for slower growth. Not shocking. In an unmanipulated environment where interest rates traded freely in a free market (what a concept!) that should have sent British government bond prices tumbling and driven up yields. Again, that isn't just common sense. It would be a fait accompli. Instead we got the exact opposite in the bizarro world we are in. The 10-year gilt yield hit a record-low. ... less than a 1 percent yield this week. That is because there is nothing fundamental going on reflecting reality -- there hasn't been for quite a while now, and Brexit is just an extension of the fucked up world they created. The only reality that matters is how central banks are going to hijack the markets further -- and that depends on more and more credit creation. Brexit was a grand excuse, and every move you saw in equities this week followed a central banker signaling that the party was on.