"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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Fucking Fundamentals....are you kidding me....they didin't matter on the way up, so now they're whining they don't matter on the way down. I say they DO matter...but this plunge will be short lived.
Completely agree... except for the last bit. Its not clear whether this will be short lived.
I have been looking for a job for 1-1/2 years.
How much worse can it get?
Do you really want to know my friend? If you're now a part of the Free Shit Army, I'd say things are looking uip for you, and down for the rest of us still with gainful employment. I'm a farmer, and with grain prices nearing 20 year lows, I am no longer gainfully employed, on fact, going to the field this year will mean I"m going negative, paying for the priveledge to work. It's a Wonderful Life.
Don't let them ruin you!
If you have to ask........................
Never work again?
Same here, I found one that starts in June doing ROW work. Provided of course, the company that hired me will still be liquid by then and I have doubts.
CNBS and all the rest of MSM will have a steady flow of mouth breathing moron financial "experts" splaining why the "markets" are solid and these jitters will pass.
The fun-da-mentals are so strong!
Fucking sick joke.
They are not investors, they are gamblers.
Since when the fundamentals matter? 1960's?
No matter how you say it, it's all bullshit. fundamentals haven't mattered in 7 years and they still don't matter now. the market has been trading at valuations that are entirely unsubstantiated even though most people outside of ZH believed they were. We've been talking about the divergence between the stock market and the real economy on this website for years and the fact that Fed has turned off the liquidity booster pump and asset prices are falling shouldn't surprise anyone here one bit as we've all been expecting it. it's the outsider, ignorant analysts and the Cramers who are getting creamed.
I have written about this particular asset bubble in the past and my premise has always been that in the US the 4 primary financial asset markets effected by the fed's liquidity were 1. gold. 2. oil. 3. bonds. 4. stocks as they are the most liquid. Each of these markets exploded higher with the first government bailout programs in 2009 and continued to be boueyed through the QE programs. As with any market that has been interfered with through financial engineering or manipulation, my prediction has always been that each of these markets will unwind every bit of their artificial/non-fundamental gains. the first to pop was gold. Although gold hasn't retraced its entire move back to its 2008 lows, I predict it will eventually do so. Oil has clearly retraced 100% of it's fed inspired bubble, and more. The next bubble to pop will be stocks and we're seeing the beginning of this now. I'd agree with Albert Edwards 75% selloff call as that would essentially drop the S&P back to its 2009 lows, but chances are greater the Fed or other concerned entity would step in well before that to stop the slide. (the 401k's of millions of registered voters are hanging in the balance) And finally, after all the asset reallocation takes place, the last bubble to pop will be bonds, and when that one goes, I suspect even the fed will be unable to contain it.
You said - I suspect even the fed will be unable to contain it.
Don't be so sure.
so you find debt based bubbles can go on foreverrrrrr.... Meh.
Weeeeee. Just like a roller coaster, let's see who is puking at the bottom.
This guy... for one.
Yeah sure, its was perfectly logical on the way up but irrational panic on the way down. LOL!
Investing in the market now is like investing in a stick of dynamite with the fuse lit.
Wall St. bailed out with Trillions from taxpayers, 5 trillion free money from the criminal Jewish crime syndicate , the Fed. and that is fundamental!
When the recession hits, how much of that $5 trillion do you think is actually in an account owned by those whose name is on it but for whom the Jews acted as caretakers? The money is long gone, as in 2008 when we found out the Jews had done us a favor and replaced a proper mortgage in pur pension accounts with an MBS.
Asshole: Why must you bring religion into something that has nothing to do with religion?
Asshole: Why must you bring religion into something that has nothing to do with religion?
I see, says the blind croney broker to the muppet deaf mute on the disconnected telephone, fundamentals really do matter.
Ha Ha Ha.
Use a women's image for panic mode.
So algo`s have feelings too?
So we'll see realistic P/Es again? <sarcasm>
Its the end of the world as we know it, and I feel fine...
https://www.youtube.com/watch?v=Z0GFRcFm-aY