HBanker flatters me interminably by asking my opinion of the market! Truly I don't, nor does anybody else, know. I'm working fearsomely on trying to think less and observe more. As I've said before, I think the market is much like a teenage boy. Accordingly thinking has very little to do with its machinations.
While many of us see the obvious the reasons why the market SHOULDN'T go up, we are told (and I believe it) that what everyone knows is already discounted. The credit issues WERE NOT discounted last MAR - AUG ('07)--everyone was denying both the existence and the magnitude. We were not here--we were pioneers in talking consistently about systemic risk which peaked in Aug of 07. BSC was a consequence of that peaking. Are you surprised that it took 6 month for that consequence to be realized? I would have been. I learned at an expensive tuition rate that these unfoldings take time.
Personally, I think that the market has psyched itself into thinking that it has discounted everything. We've opened the kimono for Q1 earnings, and I guess they just don't seem so bad. My suspicion is that this market has a lot of money feeling restless like a teenager on hormones. I also think that some on the incongruence between perceived poor fundies v. fairly stable market reaction to include advance may be due to USD bottoming. Our market has been the relative underperformer over these last handful of years. If our currency strengthens (and I believe that we have the most transparent markets/regulation though there is much argument that could be made that if money is like water, it will run downhill. The US markets have been downhill.
I would wonder out loud too that if the USD were to be strengthening, those European companies itchy for some acquisitions might coming shopping with a vengeance. First with creating a toe hold with stock purchases, and second with open offers. Frankly, that is just a wild-assed guess, but there may never be another more opportune time for (1) leveraging the difference in the currency and (2) having invested assets that will appreciate with the dollar.
I'm hearing much about how low volume this rally is. Remember the summer of 2006? I'm reminded that a low volume rally can carry a market far. If the market can clear and hold the current technical overhang we may very well see a strong rally--particularly if there is a break in commodities. And....if we bump against the old highs and penetrate--my goodness what we might see is frightening. My guess is that we'll test the old highs barring no jarring economic data or banking disasters.
Having said that, I'm not forgetting the difference between liquidity and solvency. I think that we have solvency, but there's not much liquidity spilling out. We cannot forget, either, that there is still lots of money sloshing around in markets around the world. Perhaps OUR market will be the next asset bubble. It sounds so bizarre to even write that it just might be true!
So to Banker's question, I do think that we'll test the old highs. Said with the qualification that my crystal ball is in shards on the floor.
While many of us see the obvious the reasons why the market SHOULDN'T go up, we are told (and I believe it) that what everyone knows is already discounted. The credit issues WERE NOT discounted last MAR - AUG ('07)--everyone was denying both the existence and the magnitude. We were not here--we were pioneers in talking consistently about systemic risk which peaked in Aug of 07. BSC was a consequence of that peaking. Are you surprised that it took 6 month for that consequence to be realized? I would have been. I learned at an expensive tuition rate that these unfoldings take time.
Personally, I think that the market has psyched itself into thinking that it has discounted everything. We've opened the kimono for Q1 earnings, and I guess they just don't seem so bad. My suspicion is that this market has a lot of money feeling restless like a teenager on hormones. I also think that some on the incongruence between perceived poor fundies v. fairly stable market reaction to include advance may be due to USD bottoming. Our market has been the relative underperformer over these last handful of years. If our currency strengthens (and I believe that we have the most transparent markets/regulation though there is much argument that could be made that if money is like water, it will run downhill. The US markets have been downhill.
I would wonder out loud too that if the USD were to be strengthening, those European companies itchy for some acquisitions might coming shopping with a vengeance. First with creating a toe hold with stock purchases, and second with open offers. Frankly, that is just a wild-assed guess, but there may never be another more opportune time for (1) leveraging the difference in the currency and (2) having invested assets that will appreciate with the dollar.
I'm hearing much about how low volume this rally is. Remember the summer of 2006? I'm reminded that a low volume rally can carry a market far. If the market can clear and hold the current technical overhang we may very well see a strong rally--particularly if there is a break in commodities. And....if we bump against the old highs and penetrate--my goodness what we might see is frightening. My guess is that we'll test the old highs barring no jarring economic data or banking disasters.
Having said that, I'm not forgetting the difference between liquidity and solvency. I think that we have solvency, but there's not much liquidity spilling out. We cannot forget, either, that there is still lots of money sloshing around in markets around the world. Perhaps OUR market will be the next asset bubble. It sounds so bizarre to even write that it just might be true!
So to Banker's question, I do think that we'll test the old highs. Said with the qualification that my crystal ball is in shards on the floor.
1 comment:
Leisa said
"Personally, I think that the market has psyched itself into thinking that it has discounted everything"
Had to laugh at this:
The other day some analyst was doing the rounds pounding the table to buy financials because "the market has already discounted everything bad that can happen regarding the banks - THE NEXT 18 MONTHS OUT"
So the market is so clever - now it can predict 18 months in advance everything that will and can possibly happen?
Talk about pure 'fantasy'
A lot of "hope" in this market...
LOL But maybe 'dreams do come true'? You never know....
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