Central Bank Intervention Creating Distortions in the Markets

Louis Bacon

Central Bank intervention is creating a number of distortions in the financial markets and wreaking havoc for many previously successful funds and speculators. Recently Louis Bacon, founder of the $15 billion hedge-fund firm Moore Capital Management LLC, announced plans to give back $2 billion to investors citing ‘constrained and distorted markets’.

Louis Bacon’s Comments on Government and Central Bank Intervention are Important:

“Markets are increasingly distorted by central banks’ attempts to squeeze drops of growth from an over-indebted private sector across much of the developed world”

“The political involvement is so extreme — we have not seen this since the postwar era. What they are doing is trying to thwart natural market outcomes”

“It is amazing how important the decision-making of one person, Angela Markel, has become to world markets,”

“I have under-performed market opportunities, so yes, I have questioned myself a little bit…  But I do think I can ultimately adapt to a changing market environment.”

This last comment is key and best expressed by Louis Bacon’s close friend Paul Tudor Jones who famously said that traders must “Adapt, Evolve, Compete or Die”.

The recent changes caused by Government and Central Bank Intervention in the financial markets have left many traders confused and vulnerable, without a proven plan for the future.