While running on the beach I was stopped out of half my positions for a modest loss. Obviously I was not expecting this to happen. Basically there is an outside chance we go bat shit crazy parabolic. Why do I say that? The DAX, SHANGHAI, CAC and now the HSI have all gone parabolic this week and all are up huge YTD. The SPX and DOW are basically flat YTD. The Fed this week may have inadvertently set off the parabola phase of the bull market. I will not use their names since they are fools who may have unwittingly unleashed the bear killing Kraken.
No Name number one said that if the economy weakens we will do QE4. A mere 2% from the highs and we get talk of QE4. Mind you these dopes were just thinking of lifting off on rate hikes a month ago. The other No Name said that if the market goes up we will raise rates and if it goes down we will wait on raising rates. So there you go folks…the stock market owns the Fed. The implications are staggering. There is no more pretense as to what this fake economy is all about. So this can go down two ways. 1) The Market tests the Fed’s resolve and we get our correction that we have been trying to set up for the last year and they unleash QE4 or 2) The market participants lose their minds and lever up even more in the belief that the Fed will never let the market go down and we have a parabolic rise to top this off. Trust me, for the health of the investment business you want to see a correction. Parabolic rises are multi year ending moves that devastate economies. Think Japan in 1989 and the US in 1929. I certainly hope the Fed understands what they might have done and if not I hope someone on the inside tells them. They should come out and talk the market down before lift off.
I am still 60% thinking correction and 40% the Kraken Parabola. We are at important levels with the technicals, VIX and BBs suggesting an imminent correction. I will revisit my risk positions as this evolves. I will either re-short or get long. Make no mistake this market has become a traders market. Fundamentals have long ago left the building because if they did matter we would be rolling over as S&P numbers are being cut at peak margins and peak valuations. I still suggest telling non-investment folks to start raising cash and taking some profits for a rainy day.
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How far did you run?
In other words you allow others to influence your investing decisions. Interesting.
OA.
4 miles.
MsGt Hartman,
Not sure I understand your statement. If you mean am I insane and will remain short in front of a parabola the answer is yes the herd influences me.
yeah, ridiculously tough to fight this global melt-up … as the BlueStar well knows, with all melt-ups, it can go on for some time and who knows how high .. and often the best & quickest bucks can be made near the end of the whole thing .. naturally the risk is also considerably higher, hence the Blue taking a big swing on the dark side
I’ll keep my favored longs but have
begun trading shorter time frames
so that I don’t get to messed up if it
moves against me.
I will take the liberty to make inferences regarding your beach photo and headline: you have done well enough in your pro career to live in Hawaii so getting stopped out for a modest loss on a short is no big deal. congrats for being able to afford and enjoy a much-desired lifestyle. I am staying tuned into your posts as some sort of resolution to this historic bull draws near.
Flyaway18,
Thanks. I did ok but not hedge fund ok. I was a long only mutual fund manager.
How rigged is it? At this point the pretense that markets exist at all is over. The global game of thrones demands the repricing of ALL paper assets. Wtf happened in the 80’s into 90’s? Are we really to believe the surge in ALL paper assets then was accident? Looking for guidance here. What caused the 80’s-90’s rip? Serious question, Blue. This shit quacks like a duck that has quacked before.
Blue. Sorry for the noise in the previous comment. Paper assets are surging worldwide in a lunatic way. They did in the 80-90’s also. The great “financial crisis” never came close to touching the old levels. This current worldwide move looks very similar to the move of the 80-90’s. Paper assets are being revalued just like back then?
What if the supposedly second world(China India Mexico Russia etc etc) formed a second world bank? Like Phoenix AZ only with young people to balance out the ancients sucking off the big gov tit. Pension plans and all the usual stuff would be created. How much would those “markets” be worth?
I remain long equities with weight in positions like, AAPL, BX, MO, VOO, UTG and others. I have been retired as an entrepreneur 25 years and have no pension etc. other than a modest amount from Social Security
I am concerned that it’s been so long since a 10% correction and MORE CONCERNED with the loss of American preeminence economically and the erosion of our credibility with our allies in developed and developing countries. I travel extensively in Asia and elsewhere. Well connected friends in BKK are tactful and must be prompted to speak candidly about their opinion of the US which is not what it was. We were in Madrid in 1966 when a room at the Palace Hotel cost $14/night and as Americans we were revered. That feeling no longer exists.
Travel is an excellent way to learn 1st hand what others really feel, rather than rely solely on CNN, FOX, WSJ, etc.
For these reasons I maintain (and adjust opportunistically) a SPY Sep 196 x 186 Put Spread. And, have been short C$ Futures for about 8 months. I would delighted to have the put spread fail.
Read what Larry Summers recently wrote:
Time US leadership woke up to new economic era
April 5, 2015
This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system. True, there have been any number of periods of frustration for the US before, and times when American behaviour was hardly multilateralist, such as the 1971 Nixon shock, ending the convertibility of the dollar into gold. But I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the US to persuade dozens of its traditional allies, starting with Britain, to stay out of it.
This failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the US approach to global economics. With China’s economic size rivalling America’s and emerging markets accounting for at least half of world output, the global economic architecture needs substantial adjustment. Political pressures from all sides in the US have rendered it increasingly dysfunctional.
Largely because of resistance from the right, the US stands alone in the world in failing to approve the International Monetary Fund governance reforms that Washington itself pushed for in 2009. By supplementing IMF resources, this change would have bolstered confidence in the global economy. More important, it would come closer to giving countries such as China and India a share of IMF votes commensurate with their new economic heft.
Meanwhile, pressures from the left have led to pervasive restrictions on infrastructure projects financed through existing development banks, which consequently have receded as funders, even as many developing countries now see infrastructure finance as their principle external funding need.
With US commitments unhonoured and US-backed policies blocking the kinds of finance other countries want to provide or receive through the existing institutions, the way was clear for China to establish the Asian Infrastructure Investment Bank. There is room for argument about the tactical approach that should have been taken once the initiative was put forward. But the larger question now is one of strategy. Here are three precepts that US leaders should keep in mind.
First, American leadership must have a bipartisan foundation at home, be free from gross hypocrisy and be restrained in the pursuit of self-interest. As long as one of our major parties is opposed to essentially all trade agreements, and the other is resistant to funding international organisations, the US will not be in a position to shape the global economic system.
Other countries are legitimately frustrated when US officials ask them to adjust their policies — then insist that American state regulators, independent agencies and far-reaching judicial actions are beyond their control. This is especially true when many foreign businesses assert that US actions raise real rule of law problems.
The legitimacy of US leadership depends on our resisting the temptation to abuse it in pursuit of parochial interest, even when that interest appears compelling. We cannot expect to maintain the dollar’s primary role in the international system if we are too aggressive about limiting its use in pursuit of particular security objectives.
Second, in global as well as domestic politics, the middle class counts the most. It sometimes seems that the prevailing global agenda combines elite concerns about matters such as intellectual property, investment protection and regulatory harmonisation with moral concerns about global poverty and posterity, while offering little to those in the middle. Approaches that do not serve the working class in industrial countries (and rising urban populations in developing ones) are unlikely to work out well in the long run.
Third, we may be headed into a world where capital is abundant and deflationary pressures are substantial. Demand could be in short supply for some time. In no big industrialised country do markets expect real interest rates to be much above zero in 2020 or inflation targets to be achieved. In the future, the priority must be promoting investment, not imposing austerity. The present system places the onus of adjustment on “borrowing” countries. The world now requires a symmetric system, with pressure also placed on “surplus” countries.
These precepts are just a beginning, and many questions remain. There are questions about global public goods, about acting with the speed and clarity that the current era requires, about co-operation between governmental and non-governmental actors, and much more. What is crucial is that the events of the past month will be seen by future historians not as the end of an era, but as a salutary wake up call.
The writer is Charles W Eliot university professor at Harvard and a former US Treasury secretary
Lawrence H. Summers is the Charles W. Eliot University Professor and President Emeritus at Harvard University. He served as the 71st Secretary of the Treasury for President Clinton and the Director of the National Economic Council for President Obama.
Follow @LHSummers on Twitter
WTF IS THIS SHIT!?
get your own blog
IW40,
This might have been easier…
http://larrysummers.com/2015/04/05/time-us-leadership-woke-up-to-new-economic-era/
Haha, “other countries don’t like the US, ergo I expect the SPY to trade under 186 by Sep of this year.”
My Dear Fly,
Having my own blog would be too much work, not to mention being abused…
…but if you wish, I’ll refrain from posting here.
Despite your insults, I find your site entertaining and respect how committed to IBC’s success you are.
OA: You’re right and in my view, so is Larry Summers.
IW40,
Keep coming.
ironbird,
trade the technicals. we are close.
There’s nothing fake about the economy. You sound like a crazy dooms day prepper with shit like that. The money and the economy are very real, always.
FXTradeX6,
Go talk to the 90 million folks who left the work force. The 48% of the folks on government aid. The corporate profits of America are being subsidized by Uncle Sam’ debt load which has doubled since 2009. So yes the economy is real but not sustainable hence my term fake.