I’ve often said that “Free Money Trumps All”, and so far during this extended Credit Crisis, it has.
Even Jim Cramer has taken my infamous “Pavlovian Response” commentary and applied it. Where have I heard that before? PAVLOV1 PAVLOV2 PAVLOV3 That’s always nice to see.
Interestingly that now, as the domestic and world economy are on the brink of finally shrinking and banks insolvency is inescapable, there are plans and hopes for a new and massive intervention. This hope has been responsible for the markets miraculous recovery from the weak employment report of two weeks ago and has somewhat changed the tone and tenor of the “just buy the dip” market participant (HFT).
But now EVERYONE JUST KNOWS that regardless of the fundamental situation, the markets MUST RALLY during Policy Response. Everyone, including the most bearish are resigned to that expectation. A full 100% of market participant believe it. So guess what? Expect a massive, sell the news response shortly after the suckers have committed.
Maybe I’m wrong but I think we’re hitting the wall with a giant splat. And on that note, enjoy your weekend!
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Very True, If I , the most uber of Bears see this and think its bullish (even with the Iran Sanctions fading) ..there is no one out there left to play this Clam Game anymore? We will see.
except for you…
Well this attempt to save the world by throwing money at it will fail in the end. Fundies are beyond horrible.. Last Stimulus coming out of BoE lasted 17 days before it was all given back……. Wish I was more normal and can react to that ringing bell.
http://www.managementtoday.co.uk/news/1136670/boe-provide-cheap-credit-banks/ I believe the ECB, BoJ, RBA, FOMC, etc won’t pony up money, just talk…but BoE appears to be spending again.
Have a nice weekend Scott. I wish you would post a bit more. I miss your commentary.
Scott,
whats your net exposure to market here?
Trying to figure out what the majority of people are doing and doing the opposite is a suckers bet.
We’re in the new normal where people try to figure out what everyone is doing and then figure everyone will actually fade those people, therefore you have to fade the faders…or something like that.
QE2 definitely wasn’t fade the news even though it was advertised as the greatest sell the news event ever. LTRO was a close second and it wasn’t sell the news either.
I’m not holding my breath for it to be different this time.
Lefty (if I may call you that),
One would think that to be true. However, if you look at the Fed, the hands look rather tied, so the ball is really in the EZ court.
Ben would likely have difficulty printing now, but if EU steps up and recaps the banks and if the election in Greece is at least neutral then you could have a serious risk on rally.
Gaming this very difficult. Probably best to stay neutral here.
I agree that it is more difficult now.
Unless we enter a 2008 style vortex and Ben wants to take the 10 year to 0.5%, I think the Fed has priced themselves out of the market.
But the main reason I’d want to stay neutral is that it’s hard to discern when progress is made in Europe. Few people understood what LTRO was when it came out and even fewer new that it was THE bailout in a seeming endless sea of bailout ideas that Europe was pumping out. But if something does materialize, even if it’s difficult to understand how it will effect markets and people don’t jump on board right away, I still see us going higher medium term as a result.
Right now I’m cautiously optimistic of higher prices.