You have probably seen the video clip where Vince Lombardi is stomping on the sideline and asking the above question.Asian markets opened considerably lower; Japan down 2% and a bunch of others down more than 1%.
Gold and crude oil are also down and the yen seems to be up a lot against everything again.
This is starting to look like a bit of a flushing. If most toilets have five gallons the question now is how many more gallons to go before the water fills back up.
Hopefully your emotions will still be in check and I would say that whatever this turns out to be it won't look much different than similar moves in the past and moves like this to come in the future which also makes this a learning opportunity.
As I write this on Sunday night I have to say there is nothing, at this point that would surprise me. I mean nothing.
If this turns out to be serious I think it will be the threat of constricted liquidity that will have turned out to be the tipping point. I don't know if anyone is talking seriously about the Fed making an emergency cut but the declines as of now are miles away from that kind of action.
10 comments:
If I may dare to ask, what is your exit strategy-Roger?
Roger...
Once this unwind starts to really move, it's going to be massive, and it's going to affect just about everything out there. The JPY carry has money in just about every facet of our economy. The bond market could likely see a big amount of exiting. The pushing up of rates is likely to trigger some selling in the equities, which are probably likely to have already been selling off as yen moves out.
There's about $1 trillion involved in the carry. Money in that kind of size is likely to trigger big moves. As big moves start to happen, it will feed itself. It's going to be a race to be the first out once these guys get it in their heads that the trade is over. Carry needs one thing in order to work: No volatility.
Things are going to get very volatile.
"The days of getting credit with poor credit or no credit history are numbered....This month, the Federal Financial Institutions Examination Council, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision developed account management and loss-allowance guidance.....
The so-called "sub-prime" credit card market, which has never been tested in a recession has deteriorated at such a rapid pace over the past year it caught regulators and issuers by surprise....Consumers with no credit or credit problems will have to get (credit) the old fashioned way..."
CardTrak; "LOUSY CREDIT-FORGETABOUTIT!" -- August 2002.
This was a brief excerpt from a professional credit tracking service provided to financial institutions. It dealt in large measure with the credit card bubble that happened less than five years ago. We have short memories. The large financial institutions and hedge funds have selective, greedy memories. They are the final stop for the Ponzi scheme this time. Expect some heavy losses at what are "gold-plate" institutions, almost all US-based.
That said,the present mortgage concerns, as with other financial burps in the system over the years, should not be the catalyst for a market deep-six,IMO.
sort of reminds me of last Summer, when right at the bottom the sky was falling.
see http://doted.info
Sounds like George wants to buy here. Sold to you! (Dow futes down 90+)
We are almost at the SKY IS FALLING stage. Even roger is posting "What the Hell...
I sold about 6% of my portfolio before all this started because I was to heavily invested. Looks like I will be to heavily invested again in days or weeks from now.
for the record the title of this post is an attempt at levity
The thing to remember, as Bill Cara reminds us (http://tinyurl.com/3259lw), is that psychologically you _could_ be a buyer today; not that you likely will be but, with that extra cash on hand (that the bulls mocked you for holding), you are in a position to acquire some excellent assets at a very good price _if you so choose_.
Volatility is back, risk is being re-evaluated, things are going to move faster now but opportunities will arise; be patient.
I currently have no intention of 'buying on dips' when I think a fire sale might be coming but ....
I am amazed at how dismissive so many people are of the G-7 meetings: “Nothing new,” “Reworked wording,” “Sanitized commentary.” After the Spring 2005 meeting the emerging markets took a 20% hit, US markets nearly ten percent after talk then about the Japanese currency and removal of ZIRP.
At the last meeting G-7 comments warned “carry traders” that they were not in a one way bet. They were right. Ignore the comments of the world’s finance ministers and central banks working in concert at your peril.
Furthermore, the new correlation of all asset classes is a logical result of globalization and the hedge fund trading platforms sold by the likes of GS and the other hedge fund “suppliers.”
What we’re left with is: get into global equity indices and balance it out with bonds and forget alternatives.
The betas – inter-asset correlations - are changing. No one ever promised that they’d be fixed. Gold will trade as a function of jewelry demand. Oil has a huge substitution effect coming down the pipeline. CDO’s and their repackaged ilk will be costly niche products. Derivatives simply add cost to the hedgies net under performance. Their sales pitch, providing negative a beta, is seen for what it is, a sales pitch, and a high-cost endeavor. Remember how it used to be timber had outperformed the S&P500 for decades? Remember portfolio insurance?
Get simple, get low-cost.
There’s a famous line from the Vince Lombardi movie after a big loss. At practice the following Tuesday the coach says something to the effect of starting from scratch and says “Gentleman,” holding a ball, “This is a football.”
Paul Horning chimes in, “Coach, can you take it a little slower?”
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