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Market-Neutrals Rapidly Deleverage, Imminent Market Crash Coming?
From DerailedCapitalism:
Market-neutrals are deleveraging at a rapid pace breaching the 50-ma
on Friday. Is this indicative of a market drop in the coming days as
market liquidity is disappearing and no one is trading? Watch out for 2010 lows to be taken out as the technical setup for further weakness is quite favourable.
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There is a lot of truth in the list and though many comments are interesting and entertaining. One must keep in mind that these observations are all a distraction from the fact that our monetary system is fiduciary to the beneficiaries of the FED. If you could forecast the best interest of those individuals then you will know why and where we are going. If you look at the winners and losers of the past two years it becomes obvious that some have harvested the labors of others.
Sorry for the wet blanket
this has been the best index for predicting market crashes......including this famous may 6th crash.....:
http://www.zerohedge.com/article/market-neutral-wipe-out-likely-next-bail-out-bandwagon-liquidity-disappears-again
Can someone explain to me what this is.....HSKAX? Please.
Here's a fairly indepth explanation from a 2009 ZH post, http://zerohedge.blogspot.com/2009/04/incredibly-shrinking-market-liquid...
The Fed has overcome the problem of reality.
Are the people who keep predicting market crashes the same poeple who keep writing software viruses?
...the chart looks like it has a bad case of a swine flu-bird flu-HFT flu mix developed by lab rats on fiat-digi-crack...in this "rock'em sock 'em" market where the machines are just waiting for a glitch to excuse them from deep frying their circuits...question: does A.I. dream of suicide?
HAHAHA, great comment!
A market crash hasn't occurred the last four times market neutrals delevered.
What makes this time any different?
I still believe China will eventually put the smackdown on Wall Street, the Fed, and by (criminal) association, the federal government.
I don't know how it might happen. I don't know when it might happen. But I believe it will happen.
ALL AMERICANS SHOULD SHORT BAC. IT IS YOUR PATRIOTIC DUTY. A JOURNEY OF ONE THOUSAND MILES STARTS WITH THE FIRST STEP.
Nonsense, next stop for SPX is 1250, easily by month end.
Week's end?
Sure all looks pretty damn weak to me! Hell the big QE2 has added a whopping 100 DOW points? Thats all? Bunch of BS, now theyre going to have to monetize everything daily and 100% market handholding intervention just to keep things even.
The prop for what you describe may be why QE2 POMO - next schedule released 2PM Nov 10 - is slated for $27.5 billion per week as compared to the previous of $10 b p/w.
Sure all looks pretty damn weak to me! Hell the big QE2 has added a whopping 100 DOW points? Thats all? Bunch of BS, now theyre going to have to monetize everything daily and 100% market handholding intervention just to keep things even.
wrong market as usual. could be a sign of a seize up in debt markets, tho. we've "never been here" and with Irish yields blowing out an the imminent bankruptcy of that country we have "Spanish bonds." Who would have predicted that at the beginning of the year? With the Euro collapsing then soaring "the day of decision" has arrived. needless to say "europa avers and declares America a catastrophe." what's next? "our obliteration of Spain is a matter of internal affairs"? I say dollarize Greece and dollarize Ireland.
November 4th, 2010
By David Goldman
10. No-one to whom banks want to lend wants to borrow.
9. The kind of businesses that create jobs, namely start-ups, need equity rather than debt in any case.
8. The Fed will flatten the yield curve out to five years, competing against the banks, reducing their profitability and their capacity to lend.
7. The deflationary tendency in the US, such as it is, is mainly demographic: as the Boomers retire, they sell real assets (the US may have a 40% oversupply of large-lot family homes by 2020), and buy financial assets, just like the Japanese during their great retirement wave of 1990-2000 (which coincided with the lost decade). It has nothing to do with monetary policy which has been extremely lax throughout.
6. If you keep interest rate slow in the advent of an enormous retirement wave, then people will save more and spend less, because they expect to earn less income on their savings.
5. If you increase the inflation rate, prospective retirees will save more and spend less, because they expect to have less future purchasing power. That is the opposite of what the Keynesian short-term model predicts, namely that inflation prompts people to spend money (why keep it in the bank if its value is falling)? That’s the trouble with the Keynesian approach: it’s a blindered, short-term view of things. But some times the long-term, for example demographics and the retirement cycle, affects the short term.
4. QE has raised inflation expectations without causing much inflation: the price of insurance against inflation, e.g. TIPS and gold, has risen, while housing prices, wages, and so forth continue to fall. That’s the worst of both worlds. Rather than shift portfolios from “safe” assets like Treasury bonds into real assets, which the Fed hopes, investors may simply shift their portfolios into stores of value like gold and foreign currencies (which is precisely what I have been doing).
3. Inflation, as even the Fed will admit, helps some people and hurts others. The idea is that it will help more people than it hurts by forcing investors to buy real assets. The kind of inflation that QE is likely to cause will have an almost entirely damaging impacta on the US. In fact, the devaluation of the dollar and the rise in raw materials prices will hurt every American household and most American businesses; it will benefit Middle East oil producers, Vladimir Putin, Aussie mining companies, and all sorts of people who don’t live in the United States.
2. With 22% of the adult non-institutional population unable to find full-time work (according to the estimable Shadow Government Statistics website, no reduction in interest rates will persuade Americans to go back to the borrowing binge of the 2000s.
and Dave’s Top Reason why QE won’t work is:
1. It undermines the dollar’s world reserve currency role. That’s why gold keeps going up. If the US were Greece or Ireland, we’d be in front of the International Monetary Fund in sackcloth and ashes right now. But we’re the world’s only superpower, and the central banks of the rest of the world have to hold their reserves in dollars. Why? Because there isn’t enough of anything else (unless the price of gold were to go to $10,000 an ounce, which I doubt) and because they hate each other more than they hate us — at least for the moment. With Obama shrinking America’s strategic footprint and the Fed behaving like the neighbor whose septic tank overflows onto everyone else’s lawn, Washington is testing the world’s patience. It will have consequences.
http://blog.atimes.net/?p=1607
good list
Duplicate ... but as long as I have taken the space ... it occurs to me that to help the people of the US and especially the upcoming bubble of retirees, we need an environment of higher interest rates and lower food/staple costs.
The fact that the Fed is doing the exact opposite, which appears to be designed to crush the vast number of baby boomers as they retire, it makes one wonder what they think they will achieve by killing the dollar. What jobs do we need that will come back?
The ONLY thing that Benji's free (to the banks) money spree seems designed to do is to save the bankers and their bonuses from writing off their bad investments and recapitalizing afresh. Of course all of the bankers, share holders and the bank bond holders would lose their "investments" in the banks ... but so f'n what! Isn't it worth hurting a couple hundred thousand fat cats to save a country? (I guess not or it already would have been done, eh?)
... and either way the jobs that we need won't be back whether retirees are saved or the banks are saved. Ben and his board of bankers are choosing short-term self-interest instead of the good of the country and its people.
The goal of the Fed is to get people to spend _more_, not less, and to foolishly invest their savings accounts and money markets earning nothing in interest into risky investments. Most of the gross domestic "product" in this nation is due to consumption and the fedgov is not going to be able to borrow the 12% of GDP for much longer to replace the consumer spending that was lost when the bubble burst. Plus, the Fed's route is intended to devalue the dollar to inflate home prices and balance the insolvent banks' cooked books. I don't believe they will succeed in any way in that area.
Yes ... and excellent!!
Even with the Fed dumping billions into the market, it can not go up indefinitely without more than a hand full of HFTs and hedge funds pumping the market.
That is why the HFT churn computers are so necessary to the entire scam. The HFT CONputeres can hold price on all selling, high volume or low volume in all of the critical stocks and ETFs.
You don't think that deleveraging and HFT computer takeover are separate unrelated events do you?
I'm convinced that all that is happening even with low volume is a nice economy of scale. Even with no humans trading intot he open market it stands to reason that the HFT's and HF's are the only ones creating a semi-demand. Even if that demand is measured in nano-seconds in today's market.
Other than that not much going on in the market unless trading the physical aspects of commodities.