Demand looks lousy. The S&P 500 is below its 200 DMA. The Vonage IPO has turned out to be a cluster. This business with the bird flu in Indonesia (I first heard about this on Barry's site) is, well, I don't know what.
I heard that it has gone from human to human in that poor family in Indonesia but they are saying it has not mutated. Yeah, I don't know either.
Something like bird flu presents an interesting dilemma. The market knows about the bird flu, so it has to be priced in, so some would say. But can the market gage what the economic fallout from a worldwide pandemic would be? If you say no, that means the markets would fall a lot, I might think that the US dollar and US government bonds would rally, at least initially. If you answer yes to the market knowing what the economic impact would be, then you must believe that stocks won't really be damaged by a pandemic.
God help me, I'm not sure I have enough faith in the everything is always priced in theory.
This all begs another question. With everything seeming so negative, could the market rally here for no reason at all? The rational answer is no but obviously the market does not need to be rational.
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9 comments:
Bird Flu is another Y2K thing. Mostly media driven. IMO
once again you blog nothing informative or even interesting. I honestly cannot believe you are even a decent money manager. did you even go to college? stick to fire fighting.
not sure why you feel the need to to comment in this manner. Have fun taking shots in anonymity and with apparently so little regard for your own time to leave comments on such an utterly worthless web site.
Roger, since you seem like a harmless, yet dimwitted character, I'll try to help you out: go to Bill Cara's blog site to see what a real financial professional posts. Your blogs read like last month's Money magazine.
George is correct about the Bird Flu thing thing. The way the virus is put together precludes any human to human transmission. There will be dishonest reporters giving dishonest reports to the media that will that will scare the public. (for instance, Mr. Anon.) But the grown ups who run the CDC are the best source of information. Tom in Indy
As usual, the truth lies somewhere in between. Y2K was dramatically overblown in the news but I knew folks who worked in that arena and many of the problems were very real; e.g., critical error checking subroutines in older software applications that would not roll over correctly did need to be identified and updated. Given that many financial and business apps had 100,000's of lines of code but lacked appropriate documentation of changes, identifying those routines was frequently a non-trivial job. It is not historically accurate to state afterwards that there was no crisis at all because those problems were in fact appropriately resolved.
Similarly, the H5N1 virus ('avian flu') problem is being sensationalized but it is, once again, a potential threat regardless. If you examine the CDC update site WRT the current Indonesian outbreak at http://tinyurl.com/efb68 you will read "Instances of probable human-to-human transmission associated with H5N1 viruses have occurred in the past. In addition, previous family clusters of H5N1 infections have been reported in Indonesia and other countries." I have no idea how serious the threat is but seriously doubt the possibility of a pandemic is priced into the market in any kind of realistic way; but let's face it, when fear starts to take over, any reason is a good enough reason for panic -- longer term it's just noise but short-term it's best to stand aside to avoid getting trampled.
Back to topic, it looks like some of the major indices managed to struggle back from their lows and even reach slightly positive territory for the day but they still look technically weak to me; e.g., relative strength and slow stochastic are at very low levels. A rally in some sectors tomorrow seems possible but I would be very surprised if it was broad based. For all that it hardly looks like Armageddon, more like a reasonably orderly retreat by a tired market, and I'm frankly more concerned about whether the unwinding of the Japanese carry trade will initiate something nastier globally.
PS: Roger, can you delete comments from your board? Personal attacks are annoying but when they also fail to include any substantive content WRT the markets or investing it really wastes peoples time.
Thanks for the non-attacking comments.
RW, I don't like to delete comments unless they are profane. While the one calling me a fat ass (left on another post) comes close I have decided to leave it.
People are entitled to their opinion even if it is in the form of personal attack.
Today is his day. If he comes back tomorrow to steal more time I will probably start deleting new comments from this guy.
Okay Roger, I can understand that.
But speaking of commodities (we were weren't we?), did you see that DBC has resolved their contango problem by changing strategy to a higher roll yield rule as opposed to a fixed roll period rule (see http://tinyurl.com/hjnl6)? That was a concern of mine but I think the ETF will be better for the change and plan to invest in it once all the banging around in the commodities markets quiets down a bit.
RW,
I knew that they had a plan to address the issue but truthfully I did not know the details, thank you for the link.
The idea of demand and supply being favorable for a while to come makes sense to me but now that there has been such a big move up I think it could be a while before it does quiet down.
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