Thursday, September 15, 2011
Dollar Swaps
This is not a liquidity problem. The ECB and the Fed think providing dollar funding will solve the banking crisis. It is a solvency problem that needs to be solved through wholesale sovereign bond purchases and a TARP like program. Liquidity is not the problem. I think you have to short government intervention that doesn't solve the problem. We probably will squeeze shorts for a few more days up to the FOMC meeting, but after that, there are no barriers to shorting this market.
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15 comments:
Liquidity provides relief, but I not so sure we get further than this, these little moves by politicians and centrals banks are buy less and less time, the market will keep pressing until Merkel and Co cave on Eurobonds or a super sized stability fund. One by one also the last hero stocks and commods like gold are also coming unstuck. Copper also breaking. Plus the action is Asia suggests the slow down there might also be where some shocks might hit this market that probably isn't being priced in.
Yes, Asia is very weak, and it is being ignored because of Europe. The Chinese real estate bubble machine is coming to close. The Chinese banks are screwed.
It will take another big down draft before we get the initiative to issue Eurobonds and a TARP like program.
Agree with you on this. Bears exhaust quicker in short term even in a longer term bear trend hence large squeezes but the rug pulling is swifter in terms of time. This is reminding me more and more of 08.
This is a bit boring, are we really going to squeeze to 1280? Pain trade is up...
Pain trade has been up since middle of August and we've been going up and down like a yo yo.
Where do you come up with that number 1280? Maybe we get to 1280 if the Fed comes up with QE3 promising to buy another 600 B in Treasuries and ECB promises to buy all the outstanding PIIGS debt.
I always find it fascinating that people always extrapolate the past week's action into the next week's action. If we went up 70 points in a week, extrapolate another 70 points up for the future.
1280 is the old level that we broke down from and pushes it right up into the trend break. Everyone look to the ground at 1100 a few look for 1250. Also Europe might have more of a bounce in it. I would also judge of the RSI"s anything above 60 probably safe to short. Also not many people talking that the 1100 bounce was the 38% retracement from the 2009 lows to recent highs. Still what bothers me more than Europe is Asia the world's new growth engine that isn't trading well at all. FAI in China by all accounts slowing fast, things like CAT pretty subdued in this bounce.
Shorts got raped this week
What's your call for tomorrow MarketOwl? Do we gap low or high?
Everywhere you turn pundits are all very bullish now.
It's like they flipped overnight.
It was doom and gloom just this Monday.
So what happened? Geitner said there would be no collapse?
Thats all it took?
Listen, Greece will default. It's that simple. Unless someone else wnats to pay their debt from now til eternity, they are going bankrupt.
The economy over here is going to take years.
housing won't come back for 6-10 years.
Remember the days when the dow would go up 50 or maybe even 60pts in 1 day!!
And we were all happy.
Now it's 100, 200 or 300.
U might have seen a 200pt day once a year!
it is global credit, not Greece.
Greece is just an excuse of the money masters.
3 or 4 years ago we were getting 800 point dow moves. prechter could be right that we will get unprecedented vix very soon.. cos volatility following volatility so soon usually creates more chaos.
The risk to VIX going much higher is investment banks being nationalised. As government entities they will have no interest in selling volality, less supply but still the same demand will see structurally a higher floor price, that said it will still mean revert and vol in the 18-25 range will be the norm, rather than in the 13-18
Euro giving back the gains from yesterday without much of a fight. The dollar looks sticky to the upside in the near term. Bad news for US stocks. Once you have the risk off theme in place, you need capitulation to go back to risk on. I don't think we've had that capitulation in the US market.
Well, if we close above 1219, next level is 1265.
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