Joachim Nagel flew to Portugal to tell CNBC that inflation will stay high. This required a conference. This required a plane ticket. This required a camera crew standing on a sidewalk asking questions that could have been answered via email.
The Bundesbank president warned inflation will remain "significantly above target." He did not specify which target. He did not specify for how long. He did not specify what anyone should do about it. He simply said words into a microphone and flew home.
Retail traders heard this quote and immediately checked their EUR/USD charts. They zoomed out to the 4-hour timeframe. They drew a trendline connecting two random candles from last Thursday. They convinced themselves they had discovered something Nagel himself did not know. They opened a position with 50:1 leverage because a German man said inflation might stay elevated in a currency bloc of 340 million people.
The euro moved 0.0003% after his comments. Technical resistance held at the exact level it has held for six weeks. Support held at the exact level it has held for six weeks. The 50-day moving average continued doing whatever the f*ck a 50-day moving average does, which is absolutely nothing predictive.
Nagel could have said inflation will drop to zero by October. He could have said it will hit 47% by Christmas. He could have said the Bundesbank is now headquartered in a Wendy's bathroom. The chart would look identical.
Somewhere in Frankfurt, a central banker practices his serious face in the mirror before his next conference appearance, where he will say different words that mean the same nothing.
Photo by Paul-Christian M on Unsplash
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