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Has anyone studied his predictions to see how good he is? Lately?
That is all speculation, but I do know one fact: Commercial traders, who have very good track records and are rarely wrong, are:
buying dollars
selling foreign currences such as euro
selling oil
selling gold
selling indexes
the traders buying are the speculators. the problem is the speculators buying now are too late. There are no more speculators left to buy, which is why this is the climax and the speculative bubble is likely to best.
Note that if this doesn't happen, the commercial traders will be required to cover their shorts and they're the only ones left to buy. If they do cover it will be an incredibly explosive rally because the only sellers will be the speculators who bought a long time ago and are ready to take profits (but they won't take profits if they know commercials are covering!!!).
A monumental move is coming up. I never bet against commercials so I'm anticipating a move down.
The companies & countries have reduced costs and inflated the money in order to raise profits and increase GDP. But that can't continue indefinitely. You can only cut costs so much. That's why I think the economy is not as strong as people think. And the commercial traders know that, that's why they're selling.
Anyway, all that doesn't really matter all we have to do is watch price. buy/sell pullbacks and breakouts and enjoy the ride, whichever direction it may go!
It's good to watch the commercials. But who are they in relation to S&P when 4 major houses account for over 60% of daily volume (I have read higher estimates)? I don't know but I suspect many of them are market makers, esp. in options, who have to keep large hedges going both ways. Does anybody know?
In any case, with SP the commercials are at same net level they were just before the Aug 08 meltdown, so large downside move poss soon. At same time, my seasonal cyclics show that last week in December is the bullish peak week of the year. Sales will be poor this Christmas. US markets especially are now extremely rigged, more so than in the past. Thus: there will be no sell-off until the New Year. Crude will keep treading water also. Gold will go up to 1250 soon and then by Jan 1st will retrace 50% from 1027 recent key low to around 1138.
SP will continue to climb to about 1220 at which point, on Monday Jan5th 2010, or perhaps Tuesday Jan 6th (!) it will make the highest high which will be seen for the next 5 years at least with lows going down to around 780 - 750 at least.
That is a relatively simple scenario. If we get hyperinflation starting in 2010, which I do not expect, all bets are off. Either the markets could go into hyperdrive price-wise even though actual valuations are declining in terms of purchasing power parity, or many of them could end up in default/shutting down, i.e. public auction futures markets in US$ could be a thing of the past.
In terms of Goldilocks queries about currency hedges etc.: I think there are two levels to consider. The first is an extreme systemic failure. It is not likely but nevertheless more like than at any point in the past few generations. In that case, fiat currencies - all of them - will be worthless. Gold and silver are the only sure things to insure against that sort of thing. People who are not rich but have some funds might consider buying bags of silver dimes. They could be handy for paying bills, groceries etc whereas large one-ounce gold coins will be hard to deal with for short term practical needs.
Assuming this doesn't happen and assuming you're not someone trading in multiple currencies holding long term positions (in which case occasional futures options are probably the best approach provided you are hedging enough to make the 1-2% fees worthwhile), all that matters is domestic inflation or purchasing power of one's domestic currency relative to prices of goods and services, not whether or not your currency is worth more or less in terms of other currencies.
A cheap dollar will be good for the US in the longer term because it might - assuming a normal world which this no longer is - revive US industrial productivity without which a developed country is not a developed country any more.
No matter what, within a few short years the post WW II political order internationally will be a thing of the past. America is no longer #1 and will never be again for generations, if not centuries. The balance of power is shifting to Central and Eastern Eurasia where it has been most of the time since about 500 BC with very few exceptions.
America will be like the UK and France the past 60 years - a fine country but no longer an empire, albeit with a couple of decades of seriously hard times. Europe will be generally stable, wealthy but increasingly fragmented class-wise as wealthy elites entrench further and the middle class have less wriggle room, albeit the past few decades they have had more upward mobility class-wise than Americans (see NYT excellent study on this two years ago). China will go through boom and bust cycles with more booms than busts. Russia will become military/defense anchor of Central Eurasia unless the Chinese pull a fast one and invade them all of a sudden one day!
Japan will continue to be miserable being the most advanced, wealthy and crowded place on earth.
That’s short for Federal Accounting Standards revision 167, effective Jan. 1, 2010. In essence, it’s a new accounting rule that will force financials to bring bad, off-balance sheet assets onto their books… thus a potential trigger for more Wall Street carnage.
“FAS 167 will be a larger and larger issue for the financial markets in the coming months,” explains Dan Amoss, our resident CFA, “and an emerging story in the financial media.
“In short, the banks with large off-balance sheet variable interest rate entity (VIE) exposures will have to hold more capital against these exposures. So they're actively going to shrink the potential size of these VIEs, which are used to house things like credit card receivables.
“This coming consolidation of VIEs is likely one reason that banks have been hoarding cash and jacking rates on business credit cards -- for creditworthy customers -- up to 30% with no advance warning.
“This ultimately means slower formation of new credit, and in many cases -- i.e., Citigroup -- the outright shrinking of its balance sheet to a degree that starves a credit-addicted U.S. economy.”
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And lest you think we’re making too big a fuss over FAS 167, check out these sound bites. The first is from Freddie Mac’s Q3 earnings report, the second from a Wells Fargo Q3 conference call.
“Under these accounting standards [SFAS 166 & 167], the company will record the underlying mortgage loans in these single-family PC trusts and some of its Structured Transactions on its balance sheet. These mortgage loans have an outstanding unpaid principal balance of approximately $1.8 trillion as of Sept. 30, 2009… While Freddie Mac continues to evaluate the impacts of adoption, the company expects that the adoption could have a significant negative impact on its net worth.”
“I want to update you on our most recent analysis of the impact of the application of FAS 166 and 167, which is expected to result in the consolidation of certain off-balance sheet assets currently not included in our financial statements. We provided a preliminary analysis in our second-quarter 10-Q. Based on our continued refinement of this analysis, we now expect approximately $55 billion in incremental GAAP assets to be brought on balance sheet, representing approximately $28 billion in incremental risk-weighted assets… we continue to explore the sale of certain interests we hold in securitized residential mortgage loans, which would further reduce the amount of incremental GAAP assets and incremental risk-weighted assets.”
Maybe I should sell more of my 401k and build a bomb shelter and start stocking it... cuz if that happens, we'll be near world war 3 I think
I agree there will be a sell off, but even deeper than the first? I think no, even for the entire 2010 year which I also agree will be very bearish, I don't see us dipping below 700.
As for oil, I doubt we'll see it above $100 anytime soon, unless there is in fact a major war.
