Market is Bananas

Monkey not impressed

People not understand recent banana price movement.

Me explain.

There is global banana market.

This important, cause no banana involved.

In New York, banana trade all day, every day. Millions of banana. Billions. You can buy banana, sell banana, short banana, hedge banana, construct sophisticated banana strategies that involve never seeing, touching, or acknowledging existence of banana.

Beautiful.

Degenerate.

For every actual banana somewhere in warehouse, there stack of banana promises. Banana-adjacent exposure.

Some regarded monkeys have 50x leverage on banana futures.

Most do not want banana. They want banana price movement. They want number go up or down. If real banana appear on desk, they panic and call compliance.

Market deep and efficient which mean you can trade infinite banana without inconvenience of fruit.

In Shanghai, banana market work differently.

If you buy banana, you get banana.

Not future possibility of banana depending on market conditions and a force majeure clause. Banana.

Revolutionary.

This make trading slower, more boring and annoying to monkey who like to sell thing he do not have. Can’t YOLO life savings into banana you don’t own.

Can’t sell 10,000 banana unless 10,000 banana exists. Can’t roll banana position indefinitely. At delivery, ape show up with truck and expect fruit.

Monkey communist hellscape.

Monkeys here still have job. They inspect banana. They move banana. They have opinions about banana quality that cannot be expressed in basis points.

These monkeys fuck, apparently.

Price here set by simple process: How much banana exist, how many monkey want banana.

When banana plentiful, prices calm. When banana scarce, prices rise.

Now something strange happen.

New York banana price say banana everywhere. Abundance. Infinite yellow. No reason to beat chest. Model stable. Volatility contained. Everything fine.

Printer go brrrrrrrr.

New York monkeys have been replaced by algorithms that have never seen banana. The algorithms have never seen anything. They live in cloud and dream of volatility.

Shanghai banana price higher. Suggests that if everyone try to get banana at same time, things might go bananas.

Both price exist same time.

Wall Street regards explain this with word like ‘arbitrage,’ ‘logistics,’ and ‘local demand dynamics,’ which actually mean:

‘Do not ask what happens if people actually want banana because we are dangerously overleveraged and someone’s wife is going to find out.’

But now everyone want their banana.

Monkeys hungry.

Monkeys decide they want banana now.

Positions liquidated. Margin calls flying. American monkey only now realise he’s trading synthetic banana.

Monkeys start getting anxious. Monkey retarded but monkey not stupid.

Shanghai price move first. New York price insist this no possible. More banana paper created to calm everyone down.

But no work. Price keep going up.

Monkey want banana, and there not enough banana for promise.

Every 300 banana promise, there be only 1 banana.

300 monkeys fight for it.

That when shit start flying.

Eventually, New York monkey realise something terrible:

They cannot print banana.

They can print banana contracts. Banana derivatives. Banana-backed securities. Banana swaps. Banana ETFs tracking banana ETFs tracking banana futures.

But actual banana? That require tree. And time.

And someone who know what dirt is.

Emergency meeting at 3am. Very serious monkeys in expensive suits suddenly care about agricultural yield forecasts.

New PowerPoints explain ‘strategic banana acquisition.’

They call Shanghai. ‘Please sell us banana.’

Shanghai monkey light cigarette.

Lean back in chair.

Smile.

‘What price you offering?’

New York monkey scream number.

Shanghai monkey laugh. Shake head. ‘No no. That fantasy price. Made-up number from computer that never see banana.’

‘Here real price.’

Number much higher.

New York monkey go quiet. Do maths. Realise monkey who demand banana delivery will bankrupt them.

Monkey financial system actually pyramid scheme.

Some monkey lose everything. Some monkey go jail. Some monkey write books about ‘unforeseen systemic risk’ and get hired to teach at business school.

Shanghai monkey?

Shanghai monkey eat banana.

This article is not about bananas.