"Fundamentals Don't Matter Right Now, It's Panic On The Way Down," Trader Warns
In the wake of yet another dramatic selloff on Wednesday which brought the Dow to the brink of correction territory and kept the market on pace for its worst start to a year in history, investors are getting worried.
A confluence of factors including the continued devaluation of the yuan, plunging oil, and soaring HY risk have brought markets to the precipice and the bears are out in force, with the likes of Albert Edwards calling for a horrific 75% plunge in the S&P.
In short: the writing is on the wall and you should probably read it.
Here with more on the carnage and on how it’s “bubbles on the way up [but] panic on the way down,” is former FX trader Mark Cudmore.
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From Bloomberg
Yesterday’s selloff across almost all assets provides the confirmation that’s needed for investors to heed the many medium-term bearish technical signals triggered last week. It’s time for capital preservation.
- Even if an oversupply of oil provided the trigger for yesterday’s capitulation, in a broader sense fundamentals don’t matter right now. That’s frequently the case in the short term (bubbles on the way up; panic on the way down), even if they always matter in the long-term.
- Equities in most major markets have broken multi-year uptrends; North American credit-default swaps are the priciest in three years; investors are dumping emerging- market assets at the fastest pace ever; the commodities fall remains unchecked.
- Brent is heading for its longest losing streak since May 2010, and is the cheapest in almost 12 years. Cheaper energy is a net boon for the global economy, even if not for financial assets.
- Global economic data hasn’t been bad in the first two weeks of the year. There have been some surprises, but nothing shocking.
- We’re experiencing wealth-destruction due to asset-price dynamics alone. The negative moves will stop only when excess leverage is trimmed and not just when prices return to “fair value.”
- Equities may experience the most pain in coming weeks because they’ve had the least severe corrections in the past few years. Commodities, emerging markets and high- yield credit are still vulnerable, but they’re already on their knees so don’t have as far to fall.
- Wheel out the doom-mongers for their time in the sun. In a few weeks, we can assess whether the setback is critical or provides new opportunities.
(7 votes)
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What??!! So it was fundamentals that have mattered up until now?
HAHAHAHAHAHAHAHAHAHAHAHA
Agreed. And if anything, it is fundamentals that actually IS behind the coming crash.
Fundamentals tell us what things are worth in a worst case scenario, and salesmen establish value on a best case scenario.
Liars lie and buyers buy.
About a trillion dollars worth a month in QE......nuttin to worry about.
Dont forget, the Fed has the weapon of negative interest rates in its bag.
Fed is so kind. PPT setting up the short sellers nicely this morning. Is this a no brainer market? It's all triple black diamond from here.
Hey Tylers - Here's a fundamental - Baltic Dry Index has dropped almost 100 points in the last week to 394
383 today.
http://www.dryships.com/pages/report.php
My last month paycheck was for 11000 dollars... All i did was simple online work from comfort at home for 3-4 hours/day that I got from this agency I discovered over the internet and they paid me for it 95 bucks every hour...Try it yourself... www.wallstreet34.com
I did just what you said. Made no money. Then I talked my neighbor into it, thinking I did it wrong. He did no better. Then I started advertising bogus ways to make lots of money, and the money poured in. Is that how it works?
This guy has a very interesting notion of fundamentals.
Agreed. Another mouth organ spewing nonsense.
Look at this funny shit.
http://www.investing.com/indices/major-indices
Spot the morons who are rigging the game today. Hint: Look for the green and the VIX is not it
I like this one it flashes even more red with just one green.
http://www.investing.com/indices/major-indices
It is the same link. They are pumping the futures on US equities right now. Watching it on my trading platform. And Crude seems to be wanting to push through 31. Vwap on NQ at 4180 and price is just above it since they ramped it to protect the bulls. See if the bears can smack this bitch back.
Yes, but I clicked the "technical" tab not realizing the link brings to the default.
Do you think this is another August set-up to get Treasury sales and now that the Treasury sale was "successful", now they squeeze the shorts after killing the longs?
In many ways the play looks the same since in November and December the Chinese and other overseas dumped a boat-load more Treasuries.
Your thoughts? I have no doubt that long-term this is bearish, but I do not think it dies until TPTB decide to kill it by self implosion.
Right, fundamentals are always in play on the way up and horrible speculators rule the downside. Small ideas from small minds.
I am old enough to recall a time when fundamentals mattered. I also recall looking at the ValueLine subscription at the local library, B.t.I. (Before the Internet)... That would be, umm, 20 years ago.
"...at the local library, B.t.I. (Before the Internet)... That would be, umm, 20 years ago."
An eternity in the electronic age. I too remember visiting that strange building in the town center called a 'library'. Personally I think it is just as important how you look for information as it is the information itself.
Those were the days my friend.
We have a huge new library in our little town, grossly over-designed and over-built.
They just don't have any books .... there is an immense movie section, where people rent movies for free,
there are talking books, and babysitters for children, and computers for homeless people to use ....
Supposedly, not 1 library was damaged or looted during the Katrina shitstorm. Just sayin'......
"I am old enough to recall a time when fundamentals mattered" and I remember when one million bucks was one (metric, of course) ton of...
mmmm don't know ... gives us another tip pls, weight f.e.
me too.. 22 - 20 years ago exactly.
I thought it was turtles all the way down.
Turtles?
It's Subatomic Particles all the way down.
Same thing, different paradigm.
If your in equities or the markets now and not hedged to the hilt your an idiot. Guns and ammo, bitches. Pick your ammo investments not options. Some ammo is netting up to 80% returns in 1 year.
wealth destruction due to asset prices going down? how insightful
I'm trying to figure out how you can have "fair value" without removinb leverage?
“From now on, depressions will be scientifically created.” — Congressman Charles A. Lindbergh Sr. , 1913
fuck fundermentals dont matter?!?!? better go buy a mcmansion
the only way the s&p could go down 75% is if we had real markets, which we don't.
Wealth... Destruction... No. Somebody doesn't understand the meaning of the word wealth.
.
Then if it is asset destruction, won't the impact reach everyone and not just the intended target (Middle Class)?
I like this idea of "wealth destruction" when in reality it is asset destruction.
They hold vast amounts of "wealth" in the form of these assets, all valued upon the animal spirits of gamblers.
We tend to establish the value of our holdings on what others think they are worth, rather than what they are worth to us, and many of us seem to actually value nothing but what others want.
+1 indeed, whenever people start to talk about "their wealth", I mentally exchange that word for loot. it's fun
there is a thing called valuation. and indeed it propels markets. that's the insight of the greatest and perhaps last true economist on earth, Carl Menger
the problem with valuation, though, is that it's personal. and circumstantial. I value this glass of water in the desert two diamond encrusted watches of yours
my third cow makes more milk my family can consume. I am willing to exchange it for your second horse. but not my second cow for your remaining horse
so that price, one cow for one horse... is really only that. the price for that asset against that other one, in that circumstance. which might never come again
but we have elevated Price to The All Knowing Prince Of The Earth, blindly. of course markets can be very efficient... if you understand what is going on
and where there is an exchange, there is a market, however manipulated or else. but you have to understand the specific human circumstances around it
or what the human programmer was thinking of when he programmed that bot
so in short, your holdings have the value you assign to them, and if somebody else has a different valuation of them, exchange might happen
behold, the market. it works on everchanging circumstances and valuations. it... needs them
Good point. Silver might be $14/oz, but as a poor student on an isolated island I value my meagre 20oz stash at far higher than $280USD.
For me, it's a small insurance policy against inevitable hyperinflation. When it costs 30 pathetic New Zealand dollars for a feed of fush n chups, a 1/10oz round will probably be equal in purchasing power.
So in reality, I'm just stocking up on fush n chups in advance.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." -- John Stuart Mill
Wake me when RE prices in the DC/NOVA area crash by 40%. Until then meh.
Be kind of late by then, dont'cha think?
Pfffff.
Making money will be easy in a few weeks. Just front run the Old Yeller's announcement of massive ES, NQ, and YM buying program.
We thought they'd never end
Peas.
"We’re experiencing wealth-destruction due to asset-price dynamics alone. "
I don't agree with that. If the asset was real then the value is probably still intact. Only the price of the asset measured in fiat is changing. Good luck if your assets are stored as fiat (they should be stored in shiny, food, defence and portable energy and water). In any case, the destruction is not happening at the current time. The destruction took place when they decided to print $30T out of thin air. What we're seeing now are only the delayed symptoms.
The bi-polar world of finance .....
Wild optimism or utter despair
Rational markets?
You have got to be kidding.
Break out the Lithium.
If you loved Apple at 120....you will really love it at 20 right.....
American Pickers, Bankster version