"Ordinarily, the financial risk in a market, and hence the risk to the economy at large, is limited because the assets traded are finite. There are only so many houses, mortgages, shares of stock, bushels of corn, [bars of silver], or barrels of oil in which to invest.
But a synthetic instrument has no real assets. It is simply a bet on the performance of the assets it references. That means the number of synthetic instruments is limitless, and so is the risk they present to the economy...
Increasingly, synthetics became bets made by people who had no interest in the referenced assets. Synthetics became the chips in a giant casino, one that created no economic growth even when it thrived, and then helped throttle the economy when the casino collapsed."
US Congressman Carl Levin, Financial crisis: The role of investment banks, April 27, 2010
"To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate."
Jesse Livermore
We will be getting the Non-Farm Payrolls report tomorrow.
The markets are obviously edgy ahead of that information.
The whole thing hinges on the Fed, what impact on their thinking that the number may have.
It is just another sign of how artificial and distorted the financial system has become. Their actions are enormously amplified by the speculation and leverage in the system, which is their own doing.
So rather than guess let's see how things come out tomorrow, and go from there.
Have a pleasant evening.
