Thursday, April 9, 2015

Shanghai Bubble

The Chinese are serial bubble blowers.  We got another one on our hands.  From the stock bubble to the property bubble back to the stock bubble.  Usually you don't get these bubbles so close in time to one another, since the last bubble in Shanghai was in 2007, just 8 years ago.  I am surprised at this bubble, considering the weakness in the real estate market in China.  It is mostly retail driven, and from the articles that I am reading, it seems like there are a ton of IPOs that have been issued and are being issued.  Eventually all this supply will wreck the bubble there, when I am not sure.  The bubble shouldn't last long, considering how fragile the Chinese economy is at the moment.

This all points to the theme of investors moving out on the risk curve as the bull market ages.  Now international stocks are the most popular, even though the fundamentals are not very positive.

The action in crude oil recently is wild and unpredictable, they love them one day, they hate them the next.  I don't have a good read on it.  I do believe this S&P 500 should pullback some before the earnings start to stream in next week, but it is hanging up high here longer than I expected.  Tough market these days.


MM111 said...

Looks like market consolidating here for up move. Does not want to go down at all!

Market Owl said...

Yes, the market is very resilient. Hard to bet on a big flush here, we are not bullish enough sentiment wise to make it comfortable holding a short. Also, don't like to chase this bubbly market by going long, so very tough trade here.