Soon after I put up this post, we have the news of coordinated central bank intervention. Stocks have staged a rip-roaring rally. It is curious, however, that 10-year yields in Spain, Portugal, Ireland and Italy are all rising despite the news, indicating that the bond market believes that risk premiums are rising, not falling.
Is Bernanke Smarter Than We Thought? [View article]
According to my inner investor, QE2 is a disaster and the wrong decision from a policy viewpoint.
According to my inner trader, the end of ZIRP will be a disaster for the markets (but necessary, according to my inner investor, for the system to adjust).
Thinking Bearishly, While Trading Bullishly [View article]
Chuck Prince was an "investor" and took forever to move the business lines of a financial behemoth around. I am a trader and move out on a moment's notice.
If I were a slow moving investor (and I have managed funds like that) I would be fairly defensive right now.
Thinking Bearishly, While Trading Bullishly [View article]
We are recovering from a balance sheet recession. In a balance sheet recession recovery, the system comes out of it highly stressed and any further shocks could create another financial crisis and send it all back down again. That's why we could have a repeat of 2008.
The difference is in time horizon. The previous post referred to a longer term time horizon of 6-12 months. I said that downside was limited, meaning that we are unlikely to go down much more from the levels then.
This post is a tactical call of no more than a week or two, calling for a rally to the 900-920 level on the S&P 500.
I continue to believe that this range-bound consolidation pattern is part of a basing and bottoming process. This is not THE BOTTOM, just a bear market rally.
That may be one of the reasons that Grantham at GMO favors US high quality stocks. Nevertheless, should the market fall because of a recession or financial panic, these stocks will go down, though they may be partially insulated from the decline because of their dividend yields.
Someone Called the Cops to the Fed's Party [View article]
In reply to your question, I use the charts mostly as a graphical illustration to make my point and they are not a formal part of my set of indicators. Having said that, I tend to prefer log charts as they tend to reflect percentage moves better than linear charts.
Incidentally, I don't have a Ph.D. so you shouldn't really address me as "Dr. Hui".
1) "Good" austerity in the form of tax cuts and government cutbacks 2) Structural reform, defined as union busting and the elimination of the Europe social model
Part 2 creates sufficient labor flexibility to address the structural imbalances between northern and southern Europe.
I am a long-term bull on commodities (and precious metals).
You also have to understand that precious metals and miners are part of the risk-on trade. Should a banking crisis hit the eurozone, these asset classes have not performed well. Consider, for example, how gold behaved after the Japanese earthquake. Gold and PMs went down, USD and Treasuries rallied.
I have no trouble with being long commodities longer term if you can live with drawdowns of 20-50% but I am of the opinion that you need to try to time your entry and exit points.
The Emerging Markets-Commodity Disconnect [View article]
Flash9 - They could indeed be distribution tops. But for now, I would give the trading range thesis the benefit of the doubt, but maintain tight stops should the charts break relative support.
Risks of Populist Social Backlashes Continue to Rise [View article]
I had a reader comment complaining about how I compared George Washington to Osama bin Laden and asking whether Cam stands for camedian. I believe that I published that comment but unfortunately the comment got lost and I apologize.
In reply to that comment, consider the following scenario:
A guerrilla sympathizer finds out that government troops are about to raid the town where he is living. The sympathizer then runs around the town to rally the other fighters to assemble and confront the government troops. Remember that these guerrillas don’t wear uniforms and melt into the population. In a conventional war, captured non-uniformed combatants are regarded as spies and not accorded the niceties of the Geneva Convention.
Would that sympathizer be labelled a terrorist? If he is a terrorist, would you consider the head of his movement to be a terrorist?
Now consider the famous ride of Paul Revere and draw your own conclusions.
My base case is a recessionary style bear, not an end-of-the-world Lehman/Creditanstalt type bear market. This would take the S&P 500 down to the 900-1000 level in 2012, which would create a superb buying opportunity.
An Unconvincing Rally [View article]
Is Bernanke Smarter Than We Thought? [View article]
According to my inner trader, the end of ZIRP will be a disaster for the markets (but necessary, according to my inner investor, for the system to adjust).
Thinking Bearishly, While Trading Bullishly [View article]
If I were a slow moving investor (and I have managed funds like that) I would be fairly defensive right now.
Thinking Bearishly, While Trading Bullishly [View article]
Breakout or Fake-Out? [View article]
The difference is in time horizon. The previous post referred to a longer term time horizon of 6-12 months. I said that downside was limited, meaning that we are unlikely to go down much more from the levels then.
This post is a tactical call of no more than a week or two, calling for a rally to the 900-920 level on the S&P 500.
I continue to believe that this range-bound consolidation pattern is part of a basing and bottoming process. This is not THE BOTTOM, just a bear market rally.
Green Shoots In China? [View article]
The jury is still out on the longer term trajectory.
How Cheap Are Stocks? [View article]
Someone Called the Cops to the Fed's Party [View article]
Incidentally, I don't have a Ph.D. so you shouldn't really address me as "Dr. Hui".
All Of Europe's A Stage [View article]
1) "Good" austerity in the form of tax cuts and government cutbacks
2) Structural reform, defined as union busting and the elimination of the Europe social model
Part 2 creates sufficient labor flexibility to address the structural imbalances between northern and southern Europe.
We Are All QEers Now [View article]
Investing In Secular Bear Markets [View article]
You also have to understand that precious metals and miners are part of the risk-on trade. Should a banking crisis hit the eurozone, these asset classes have not performed well. Consider, for example, how gold behaved after the Japanese earthquake. Gold and PMs went down, USD and Treasuries rallied.
I have no trouble with being long commodities longer term if you can live with drawdowns of 20-50% but I am of the opinion that you need to try to time your entry and exit points.
The Emerging Markets-Commodity Disconnect [View article]
Risks of Populist Social Backlashes Continue to Rise [View article]
In reply to that comment, consider the following scenario:
A guerrilla sympathizer finds out that government troops are about to raid the town where he is living. The sympathizer then runs around the town to rally the other fighters to assemble and confront the government troops. Remember that these guerrillas don’t wear uniforms and melt into the population. In a conventional war, captured non-uniformed combatants are regarded as spies and not accorded the niceties of the Geneva Convention.
Would that sympathizer be labelled a terrorist? If he is a terrorist, would you consider the head of his movement to be a terrorist?
Now consider the famous ride of Paul Revere and draw your own conclusions.
One man’s patriot is another’s terrorist.
Is This 2011 All Over Again? [View article]
See http://bit.ly/13CVqv9
The Bull Case For Stocks [View article]