The Trading Game by Gary Stevenson, a Loro Piana baseball cap and some Zygo headphones are among the essentials for financiers holidaying in Montenegro this summer (everyone moved on from Mykonos years ago when the Marbella crowd moved in).
But while downtime is important, a smart market player knows that it pays to stay connected. In other words, pack your laptop because you never know what could unfold or sometimes, unravel.
A case in point was the first week of August. A weak US jobs print, some lousy corporate earnings and a bump in yen rates by the Bank of Japan decimated the stock markets and stoked fresh fears of an unwind of the yen carry trade of the sort that have surfaced from time to time over the last 20 years.
The VIX index soared and some market participants dared to whisper about emergency Fed rate cuts.
Cue a push wider in European bank spreads as the summer’s consensus trade — that unsecured bank spreads would grind tighter — was tested and rejected.
Yet in the end, it only took a couple of days for the market to realise that its reaction had been completely overblown. The US economy is not, it turns out, heading for Armageddon.
The overreaction created a once-in-a-holiday buying opportunity in many markets: for European banking spreads it was a 10bp-15bp push wider. Those with computers to hand were able to reload at an alluring level.
Anecdotally, UK asset managers were among the investors that were quick to fade the widening. Some hedge funds were also involved, though several were said to have been burnt on the initial gap wider, so lacked the risk capacity to make a swift re-entry.
Meanwhile, others were likely wary about irritating family and friends as nobody wanted to be the work bore logging on from the side of the pool.
But such opportunities don't surface frequently in financial markets. In the case of the yen carry trade, some have been waiting more than 20 years for the big unwind. Those who can act will be able to afford themselves a lot more leisure time further down the line.