Wednesday Outlook: Commodities, Emerging Markets 7 comments
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There’s no question authorities have not ruled any action out to help markets. Bernanke is putting all his academic research into real-time action. That’s the deal with research - it’s only that. Paulson, on the other hand, is an experienced market veteran, but there has never been someone in such a position so conflicted.
Earnings are coming fast and furious. Most have been disappointing. AAPL, maker of the only products American consumers seem interested in, reported and was able to beat much lower forecasts. It, and most other stocks, were trading much higher in after hours trading. Just remember, most companies and analysts have been sharply reducing estimates and then beating. That’s the dirty little game they play.
click to enlarge
We’re still awaiting word on Lehman swap settlements that should have taken place Tuesday. The first news bulletin reported no assigned losses while a second suggested the process wasn’t settled yet.
I’ve been hoping that we would get some extended sideways action to relieve oversold conditions. The violence in the markets makes current conditions nearly un-investable on a day-to-day basis. There will be opportunities in the future to either re-short or enter long positions. But for now we’re just laying in the weeds watching and waiting for our opportunities. Until then we remain primarily in cash.
Have a pleasant day.
Disclaimer: The ETF Digest is long FXY.
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This article has 7 comments:
For most people, until proven otherwise better to assume this is a bear market.
There is a stunning Russian Checkmate event that got totally interpreted the wrong way and you will have to be shocked if you know what's going on. This is a great opportunity given to us by the Russians:
tinyurl.com/54ppc6
With respect to the Lehman settlement there is a lot of discussion of the true cost. Below is a press release from the ISDA suggesting it's a $6 bn hit.
Another perspective was offered in an October 15 article by Elisa Parisi-Capone, an economist who writes for www.rgemonitor.com (one of best if not the best finanical / economic sites on the net)
ISDA press release:
"The cash settlement deadline for Lehman is today, October 21. Based on industry estimates, a total of $6bn to $8bn is expected to have changed hands by close of business. This is approximately 1% to 2% of the $400 billion in CDS trades referencing Lehman and does not account for the effects of collateral, which will further reduce the payment amounts.
“Today’s settlement demonstrates that the industry infrastructure for CDS clearly works,” said Mr. Pickel. "ISDA and its members have developed a robust legal and operational framework "
www.isda.org/press/pre...
______________________...
RGEmonitor.com article by Elisa Parisi-Capone
Lehman CDS Payout On October 21: $360bn or $6bn?
"So far, among dealer banks and AIG the CDS fallout from Lehman’s default amounts to around $200bn already."
www.rgemonitor.com/eco...
To borrow a line from Lawrence of Arabia:
"I do it because it pleases me".
No, inflation does not "no doubt" follow.
Everyone piled into the same bubble bet on inflation and got killed, and will continue to get killed.
All the inflationary bubbles go smash. Real estate, oil, BRICs, submerging markets, gold, all of them.
At these spreads, investment grade debt in the first world and especially in dollars is the best asset on the planet. Nominal claims, in the dollars you-lot have pretended are mere monopoly money, will trounce all your bubble blowing headline chasing scaremonger slander-games.
Watch.
I have been following your comments with a great deal of interest, and I feel compelled to delurk to ask you the following: if we are indeed in a period of deflation, why are you long stocks as you have stated in other posts? Wouldn't it be preferable to go 100% into investment grade credits, since they represent claims on nominal dollars? (Note that I'm not disagreeing with your thesis per se, but I'm just puzzled by the apparent contradiction.)