Home » Posts tagged 'bear'
Tag Archives: bear
Hobson’s Choice
Hobson’s Choice
More than two months have passed since the August “flash crash.” Fragilities illuminated during that bout of market turmoil still reverberate. Sure, global markets have rallied back strongly. Bullish news, analysis and sentiment have followed suit, as they do. The poor bears have again been bullied into submission, as the punchy bulls have somehow become further emboldened. The optimists are even more deeply convinced of U.S., Chinese and global resilience (the 2008 crisis “100-year flood” view). Fears of China, EM and global tumult were way overblown, they now contend. As anticipated, global officials remain in full control. All is rosy again, except for the fact that global central bankers behave as if they’re utterly terrified of something.
The way I see it, underlying system fragility has become so acute that central bankers are convinced that they must now forcefully (“shock and awe,” “beat expectations,” etc.) react to any fledgling market “risk off” dynamic. Risk aversion and de-leveraging must not gather momentum. If fragilities are not thwarted early, they could easily unfold into something difficult to control. Such an outcome would risk a break in market confidence that central banks have everything well under control – faith that is now fully embedded in the pricing and structure for tens of Trillions of securities and hundreds of Trillions of associated derivatives – everywhere. With options at this point limited, the so-called “risk management” approach dictates that central banks err on the side of using their limited armaments forcibly and preemptively.
With today’s extraordinary global backdrop in mind, I’m this week noting a few definitions of “Hobson’s Choice”:
“An apparently free choice that actually offers no alternative.” (The American Heritage Dictionary of Idioms)
“A situation in which it seems that you can choose between different things or actions, but there is really only one thing that you can take or do.” (Cambridge Idioms Dictionary)
…click on the above link to read the rest of the article…
Neither Bull nor Bear
Neither Bull nor Bear
“Good Economic Management” vs. Larceny
“Will you shut up?!”
That is what we wanted to say this morning, here in Zurich, Switzerland. At the table next to us, a hedge fund promoter is working hard…
“The value proposition… outside of the box… we’re only talking two points… we can dialogue about it… Goldman… our business model… prioritize our priorities… get the balance right…”
New Canadian prime minister Justin Trudeau – who actually has more than just one bad idea.
Photo credit: Andrew Vaughan / Canadian Press
Meanwhile, on the front page of the Financial Times is a good-looking guy with a bad idea. Pierre Trudeau’s son, Justin, is Canada’s new prime minister. (Another political dynasty!) He will “take advantage of low interest rates” to embark on a C$60 billion infrastructure program.
Just for the record, the Canuck feds are not taking advantage of low interest rates. They’re cheating savers… retirees… and responsible citizens whose expenses are lower than their incomes.
In much of the developed world, central banks have pushed interest rates to their lowest level in 5,000 years. This is not “good economic management.” It’s larceny. They’re taking money from savers and giving it to borrowers – especially in the financial sector and in government. But on to other things….
This is not just larceny, it is insanity (not unique to Canada to be sure, as it has gone global) – click to enlarge.
12% a Year in Stocks
“We don’t pay any attention to the stock market. We buy good companies at good prices,” an old friend explained about how his private fund operates. (In the interest of full disclosure, we are one of his investors.)
“We aim for 12% a year,” he continued. “And that’s what we get, more or less.”
…click on the above link to read the rest of the article…
Bubbles Don’t Correct, They BURST!
Bubbles Don’t Correct, They BURST!
I’m practically drowning in interviews. I had half a dozen yesterday and even more today. But it’s time to put the word out that the second greatest bull march in history is finally coming to an end. It’s done.
Wall Street thinks this is a correction – a 10% drop, maybe 20% at worst, followed by more gains. They think we’re just six years into a 10 if not 20 year bull market. This is just a healthy breather.
Of course they think that! It’s the same “bubble-head” logic you find at the top of any extreme market in history!
Every single time – without exception – we delude ourselves into believing there is no bubble. We think: “Life’s good, why should we argue with it?”
And every time, we’re shocked when it’s over. Only in retrospect do we realize, yes, that was clearly a bubble, and oh, how stupid we were for not seeing it.
Bubbles don’t correct. They burst. They always do. And if anyone is still doubting whether this is a bubble, they need to get with the program – now!
Like I said on Fox yesterday, I wasn’t always a bear. I was one of the most bullish forecasters since the late ‘80s because I discovered how you can predict the spending of consumers through demographics.
With one simple indicator I predicted the Japan crash in the ‘90s when everyone was saying they’d overcome the U.S.
I predicted the greatest boom in U.S. history thanks to the spending of the Baby Boomer generation. All from demographic research, driven by my top cycle, the Spending Wave.
And from that, we knew the Boomers would peak in 2007 followed by a slowing economy.
…click on the above link to read the rest of the article…
Why the Bear of 2015 Is Different from the Bear of 2008
Why the Bear of 2015 Is Different from the Bear of 2008
Are there any conditions now that are actually better than those of 2008?
It’s tempting to see similarities in last week’s global stock market mini-crash and the monumental meltdown that almost took down the Global Financial System in 2008-2009. The dizzying drop invites comparison to the last Bear Market that took the S&P 500 from 1,565 in October 2007 to 667 on March 9, 2009.
1. Then: Markets and central banks feared inflation, as WTIC oil had hit $133 per barrel in the summer of 2008.But this Bear is beginning in circumstances quite different from 2007-08. Let’s list a few of the differences:
Now: As oil tests the $40/barrel level, markets and central banks fear deflation.
2. Then: China had a relatively modest $7 trillion in total debt, considerably less than 100% of GDP.
now: China’s debt has quadrupled from $7 trillion in 2007 to $28 trillion as of mid-2014, an astonishing 282% of gross domestic product (GDP)
3. Then: Central banks had a full toolbox of unprecedented monetary surprises to unleash on the market: TARP, TARF, BARF (OK, that one is made up) rescue packages and credit guarantees, quantitative easing (QE), zero interest rate policy (ZIRP) and direct purchases of mortgages, to name just the top few.
Now: The central bank toolbox is empty: every tool has already been deployed on an unprecedented scale. Every potential new program is simply a retread of QE, yield curve bending, asset purchases, etc.–the same old bag of tricks.
4. Then: Central banks had a relatively clean slate to work with. Interventions in the market and economy were limited to suppressing interest rates in the post-dot-com meltdown era.
Now: Central banks have never stopped intervening since 2008. The market is in effect a reflection of 6+ years of unprecedented central bank interventions. Rather than a clean slate, central banks face a global marketplace that is dominated by incentives to speculate with leveraged/borrowed money established by 6 years of central bank policies.
…click on the above link to read the rest of the article…
The Big Bad Bear Case
The Big Bad Bear Case
My aim with this article is to outline, with facts, large global structural issues that I believe everyone, bulls and bears alike, should be fully aware of. While some of this discussion may rattle the cage a bit you will hopefully find this article well researched and informative.
Recently I’ve outlined why we switched our trading stance from buy mode (Door Shut) to sell mode (Inversion) on stocks. This week I’ve also outlined the aggregate technical factors that have us very cautious on stocks in general (Totality) while not precluding the possibility of new highs.
This article, however, will focus on much larger structural issues that have been building for years, decades indeed. And no this article is not so much about central banks, debt issues, Greece, China, deficits, etc. While all these are important as part of the overall picture, they are mere current symptoms of a much larger issue that is at the core of all that is already in play and will only deepen in our societies in the decades to come: Institutionalized poverty with an ever widening divide between the haves and the have nots which will result in an eventual drastic revaluation of asset classes across the board.
And before you think I’m off on a hyperbolic rant let me assure you my reasoning will be very much fact based and I have reason to believe the US Fed and Janet Yellen are very much aware of it all, but have no solution to prevent it from happening. In fact it is mathematically unavoidable.
A few weeks ago in The Greek Butterfly I discussed the concept of a global math construct that needs to maintain its integrity to make global debt serviceable. To that end I concluded that they would not let Greece default.
…click on the above link to read the rest of the article…
Oil prices: A bear and a bull on the rally
The price of oil has been rising for more than a week. What gives?
The price of oil has been heading up for eight trading sessions, raising the hopes of energy companies, investors and the whole province of Alberta. But is this rally the real thing, or is the market misreading the signs? Here are two takes on the oil price rally.
The Bear
Stephen Schork is the editor of the Schork Report (Schork Report)
Stephen Schork is the editor of the Schork Report, an investment newsletter that is dedicated to the energy market. Schork describes the current rally as a classic short squeeze rally. Which can be a bit tricky to explain.
‘All of the fundamental drivers in this market point to even lower oil prices.’
– Stephen Schork, The Schork Report
As the price of oil dropped through the fall and winter, many traders started to short futures contracts, essentially betting that the price will continue to go down. In the past two months, the price of oil has started to rise and some of the traders who were shorting futures contracts had to cover their short positions, by buying futures contracts, which pushes the price up higher. Clear?
- Canadian dollar gains almost 2 cents as oil rises and interest rates stay
- Canadian dollar at 82 cents US as oil surges for a 2nd day
“All of the fundamental drivers in this market point to even lower oil prices,” said Schork in an interview.
…click on the above link to read the rest of the article…
