Trying to make sense of the financial markets

[Inor]

Something I have noticed the last 6 or 9 months with the financial markets that was not making much sense to me...

Yesterday the Fed raised interest rates again by 0.25%. Normally, that should have caused the stock markets to go down at least 200-300 points. Also yesterday, another regional bank failed (Pacific West Bank). On top of the rate hike, that should have really clobbered the markets. But it didn't; the markets were mostly flat.

I got thinking about all of the financial chaos the last year or so: None of the fundamental metrics have been particularly strong recently. They have not been horrible, but certainly not good enough to prevent what should be a long, slow decline in the markets. I got to wondering why that is not happening.

The only thing I can think of that has changed recently (within the last couple years) is the release of ChatGPT and OpenAI. About 80-90% of all stock and bond trades are now done by trading algorithms not human analysts. Historically, the algorithms have always been driven by the numbers (10K statements, earnings numbers, Fed numbers, etc.). In other words, they were always driven strictly by results with "sentiment" playing only a minor influencer role.

Since ChatGPT and OpenAI became a mainstream thing about a year ago, I am thinking a lot of the trading algorithms may have been updated to take advantage of the language models provided by OpenAI to be able to parse the actual English statements made by Powell and the other Fed Governors. Powell's statements have always had a "dovish" tone, even when he is raising rates and taking other actions generally considered "hawkish". I am starting to think that may be responsible for the algorithms not reacting the way common sense would dictate they should.

Certainly the algorithms can remain irrational longer than we can remain solvent. But... If we keep a closer eye on the statements made by the Fed and other "big fish" than we normally would, we might be able to judge when results are going to turn back to real fundamentals. When that happens, we should see a very steep decline very quickly and have the possibility to make a lot of money quickly by playing it right.

Thoughts?

[MountainGirl]

Something I have noticed the last 6 or 9 months with the financial markets that was not making much sense to me...

Yesterday the Fed raise interest rates again by 0.25%. Normally, that should have caused the stock markets to go down at least 200-300 points. Also yesterday, another regional bank failed (Pacific West Bank). On top of the rate hike, that should have really clobbered the markets. But it didn't; the markets were mostly flat.

I got thinking about all of the financial chaos the last year or so: None of the fundament metrics have been particularly strong recently. They have not been horrible, but certainly not good enough to prevent what should be a long, slow decline in the markets. I got to wondering why that is not happening.

The only thing I can think of that has changed recently (within the last couple years) is the release of ChatGPT and OpenAI. About 80-90% of all stock and bond trades are now done by trading algorithms not human analysts. Historically, the algorithms have always been driven by the numbers (10K statements, earnings numbers, Fed numbers, etc.). In other words, they were always driven strictly by results with "sentiment" playing only a minor influencer role.

Since ChatGPT and OpenAI became a mainstream thing about a year ago, I am thinking a lot of the trading algorithms may have been updated to take advantage of the language models provided by OpenAI to be able to parse the actual English statements made by Powell and the other Fed Governors. Powell's statements have always had a "dovish" tone, even when he is raising rates and taking other actions generally considered "hawkish". I am starting to think that may be responsible for the algorithms not reacting the way common sense would dictate they should.

Certainly the algorithms can remain irrational longer than we can remain solvent. But... If we keep a closer eye on the statements made by the Fed and other "big fish" than we normally would, we might be able to judge when results are going to turn back to real fundamentals. When that happens, we should see a very steep decline very quickly and have the possibility to make a lot of money quickly by playing it right.

Thoughts?

If OpenAI is part of this now, not sure you can 'guess' which way something might be interpreted; regardless of how close your eye is.

I wish I had something more to offer - I do not. Deep Blue vs Garry Kasparov keeps coming to mind.

[Jester-ND]

for all we know AI super quantum computers have been manipulating this shit for a few years now... which is why none of it (commercial real estate or metals) have made any sense. Lots of shit should make the markets fluctuate more than they have, the only thing making sense is none of it makes sense!!

[Inor]

for all we know AI super quantum computers have been manipulating this shit for a few years now... which is why none of it (commercial real estate or metals) have made any sense. Lots of shit should make the markets fluctuate more than they have, the only thing making sense is none of it makes sense!!

If you pay attention to it on a daily basis, there is a certain rhythm to it. But something has changed, slowly, over the last year and shifted more away from the fundamental numbers and more towards spoken/written words by the Fed/banksters and notable traders. That is why I am thinking they are starting to use OpenAI more and more.

That is good news for us because OpenAI is totally predictable once you have played with it for a while. It is just a matter of figuring out what sources the whales are feeding into the OpenAI algorithm to make its predictions.

If I am on the right track, it also means that when it does finally reconnect back to reality, it is going to crash hard and it is going to crash FAST. This one could be damn fun to play!

[Prepared One]

Interesting. So, in other words the boat is sinking in shark infested waters but the computer is telling us to rearrange the deck chairs, everything is just fine. The market hasn't made sense to my since dementia Joe took office and I am no market genius, but I am betting this does not end well for most Americans. Those that have enough scratch laying around may be able to to leverage the situation, certainly the rich will, but most Americans will take it right in the ass.

[Jester-ND]

The US gets it's credit rating lowered..... so obviously the dollar gets stronger in Bizaro-world!

[Slippy]

A ton of complicated and manipulated stuff happening both domestically and globally. Too much for me to understand.

On a "maybe related note", looks like McDonalds is taking some big punches on the chin...

https://discern.tv/mcdonalds-bankrup...-to-disappear/

[Prepared One]

A ton of complicated and manipulated stuff happening both domestically and globally. Too much for me to understand.

On a "maybe related note", looks like McDonalds is taking some big punches on the chin...

https://discern.tv/mcdonalds-bankrup...-to-disappear/

They are being forced to pay their workers 15 bucks an hour to flip burgers has to be taking it's toll. That cost gets passed on to the consumer and the consumer won't pay 30 bucks for a hamburger, coke, and fries, for long. Working at McDonald's isn't supposed to be a career choice. What good is that 15 an hour going to do you if you have been laid off or the store went out of business because consumers weren't going to pay those high prices for a lousy burger.