It has become very fashionable to be bearish these days. We have investment banks coming out and basically saying that we are screwed and that it is game over. I have never seen investment banks turn so bearish so quickly. The bottom line is that credit is a complete disaster and one must remember that this equity bull market has been driven by a central bank inspired credit bull market and equities have been a derivative of that paradigm. The problem is that the piper is now due his pay. The economies of the world don’t have the cash flow to cover the debt burden on both the corporate and the sovereign side due to horrendous mal-investment world wide. The Event Horizon nears.
Short-term we do we go from here? Do the Central banks go quietly into the night or do they have one more trick up their sleeve? Will they sacrifice the bank or banks that have the energy derivative old maid and bottom this market? If I was the head of the Fed, I would control the speed of the decline and draw more and more shorts into the market and then unleash some type of new policy or hint of new policy and cause a massive short squeeze to give the illusion that I still have power. Perhaps that is the set up going on now. I am very suspicious that the VIX is only 27 and has not shown real fear yet. This decline seems very controlled to me. I am becoming less bearish the lower we go and once I see a spike in the VIX I will be reducing my exposure further. I have have a feeling that the FED may be holding a pair of Aces for their last hand. The bottom line is be cautious getting short down here. Ultimately we are going much much lower but nothing goes down in a straight line.
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When you say you are becoming less bearish the lower stocks go, does that mean you are covering shorts on the way down or waiting for the VIX spike to cover the majority? TIA
Goddammit, my sentiments exactly. These Algos while deadly, are not imaginative. They are programmed by humans, after all.
j adbese,
I have been covering and will cover more on a spike in VIX.
BlueStar – nice analysis and warning. I think people are only looking at interest rates as the only tool that the Fed has – this is too simplistic
TLT has been serving me well but I scaled back significantly today.
good piece again blue,
two mandates I have are kicking it here one up 1,5% MTD the other 11% at today’s close.
I too am looking to cover on spike, and just as surprised as you on the lack of VIX ripping action.
cheers
The Fed is holding 2 7 off-suit, and will perhaps bluff a pair of aces.
But dangerous to bluff all-in when you’re sat with nothing. The market may call.
Interesting juncture.
Interesting metaphor.
Peter Schiff 28 mins
http://usawatchdog.com/gold-will-smell-blood-of-negative-rates-peter-schiff/
Could the Fed announce a rate increase this weekend?
Yes they could.
In the face of a flattening yield curve/recession a futile move, but would abort a crash.
Like clockwork, the NEIKKI plummited non-stop to the .68 fib line before bouncing.
Here comes the countertrend rally. I don’t expect the party to long that long. Greece headlines are already creeping into the papers.
movie review & discussion: The Big Short – 49 mins
https://www.corbettreport.com/the-big-short-flnwo-32/