Rumor Mongerers in control of this market - what NEWS caused the selloff???

C

chewbacca

Subprime was a well noted issue in February.


And the BSC fund blowups was an issue a few weeks ago.


So no 'new' news really caused this decline. Its all based on rumors at this point.....just as all previous pullbacks aka buying opportunities. This sell off sure feels like the Real Deal but so did all previous selloffs. Only time will tell. Until then, trade what you see not what you think.
 
Quote from chewbacca:

Subprime was a well noted issue in February.


And the BSC fund blowups was an issue a few weeks ago.


So no 'new' news really caused this decline. Its all based on rumors at this point.....just as all previous pullbacks aka buying opportunities. This sell off sure feels like the Real Deal but so did all previous selloffs. Only time will tell. Until then, trade what you see not what you think.
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no rumors ..credit spreads have widened and risk is being repriced ... corporate bond market priced in a 150bp move higher .. this is not rumor ..its fact ... 150bp move in corporate debt means money just got that much more expensive ... LBO deals may not get done now at these levels and future LBO deals will probably be put on hold .. of course this all stems from the CDO and mortgage markets where for subrime debt, there is absolutely no bid .. this is as real as it comes ...
 
Quote from nutmeg:

My only thought presently is if the market prices in future events (theoretically) what is the future event?
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While, as Spectre noted, the future event may be recession, it is also possible that the mkt is now reassessing, revaluing based on current info. Previously, all negative info was ignored. Now, something happened that got it's attention...

I like to remember that the mkt has a mob mentality. For a long time there has been a big party with no worries. Recently someone glimpsed some smoke in the corner and hollered fire. The exits are pretty crowded as StockTrader3 (or whatever his name is) and the other non-trading perma-bulls rushed to save their paper profits...

Either way, next week should provide some good trading opportunities (as did this week). Closing on the lows Friday afternoon with the volume on Thursday & Friday should make for good internet / newspaper fodder this w/e....

R
 
this selloff is sanctioned so that the FED can ease as the elections get underway. Then the markets rise into the election breaking through the old highs.

profits are decent and valuations arent through the roof, and inflation is reputed to be low. All the ingredients for a market resurgence. The next up leg, the market wont be fighting the FED.
 
Visualize the market price being a bunch of bulls outpacing or sometimes falling behind a wagon (the wagon being the value which itself is moving back and forth).

There need to be no news event for a shift. The market was overdone on the up side and now it will be probably overdone on the downside. This creates opportunities for those with patience.
 
Quote from sobemark:

no rumors ..credit spreads have widened and risk is being repriced ... corporate bond market priced in a 150bp move higher .. this is not rumor ..its fact ... 150bp move in corporate debt means money just got that much more expensive ... LBO deals may not get done now at these levels and future LBO deals will probably be put on hold .. of course this all stems from the CDO and mortgage markets where for subrime debt, there is absolutely no bid .. this is as real as it comes ...
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its all bullshit.

1) markets don't move one way. so who's to say CDX spreads on high yield debt won't move back 50bp down.

2) during this same time, long treasuries moved down 50bp. This absorbed 50bp of the 150bp cdx move.

3) that move was in the high yield side. the AAA side of the corporate curve moved significantly less ... haven't checked, but probably 25bp-50bp at most. Thats equivalent to one fed move, equivalent to -nothing- when you consider treasuries moved opposite to offset this. A lot of deals get done with lower yield debt. the 'earnings yield arbitrage' is still there. don't kid yourself just because the press is trumpeting game over. its not over. just as the yen carry trade won't be over with .75 vs 8.5nzd interest rates (versus .5 vs 8.5).

4) watch bbb subprime debt get bid to at least 70c on the dollar (at 38-40c right now) in the next 2 months. this risk is going to get appropriately priced. thats why you have the likes of GS coming out buying it. its worth hell of a lot more than 40c... wish I could buy some.


buy this dip.
(i'm that guy)
 
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