What do abstract art and our financial markets have in common? – The Daily Reckoning

More than you think…

In a second I’ll show you a super easy trading strategy I got from one of my hedge fund contacts.

Seriously, you’ll be stunned at how simple this is. But it’s made them a boat load of money over the past few years.

Can’t argue with that.

Before that, though, tell me what you think of this picture:

What does it make you think of? For me I see a line on a street at night.

You might see… I don’t know… a swimming pool lane divider. That’s me being imaginative.

It also reminds me of the Robin Thicke song ‘Blurred Lines’…

Would you believe me if I told you that this sold for $43m?

Well you probably would. But that says more about the state of the art industry, where abstract art goes for millions.

Clever dealers create a lot of hype to pump prices up to where they want them to be.

You can draw parallels between art dealer guff and central banker rhetoric. In recent years the likes of Draghi (ECB), Carney (BoE) and Yellen (US Federal Reserve) have succeeded handsomely in pumping up stock prices.

You might be sick of me talking about central banks now…

But hammering home their importance in our markets is vital.

Over the next few days, we’ll probably see more of this ‘dressing up’ rhetoric via the Jackson Hole meeting, which starts today.

The title of this year’s meeting is “Fostering a Dynamic Global Economy”.

Ha…

This is a meeting in the US state of Kansas at a luxury retreat. Prominent central bankers from around the world meet to talk about how to conduct policy going forward.

They also discuss ways in which to improve financial stability… more on this later.

It’s like a party island holiday for central bankers. Just replace the alcohol and sex-fuelled debauchery with economic and policy-based debauchery…

I will be paying close attention to Fed chairwoman Janet Yellen, who addresses the group today..

I’ll also have particular interest in what Mario Draghi, the head of the European Central Bank has to say.

Europe has had improving economic conditions over the last few months…

But there are still huge unsolved issues.

Greek debt…

The perilous state of Italian banks…

Germany’s trade surplus sucking the life out of the bloc…

We’ll see what happens.

But you probably wonder why I think this meeting is so important, right?

Take a peek at the next two charts…

The above shows the SP500…

Read the full article from the Source…

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