The Credit Crisis Financial Stocks Short Journal

The fed balance sheet is forecast to expand to $2.5-$2.7T, this will take months. And a lag between of actions of this magnitude and future hike is likely to be significant, CBs dont usually ease like mad then raise a little later
 
Both the job market and the inflation figures are the worst in decades, without a turn around on that any suggestion of imminent rate hikes seem silly. When the Fed removes for 'an extended period' there will still be a 5-8 month lag till they actually raise(like it happened with 'considerable period'). So one can argue there is virtually no chance of hikes for the next 9 months
 
Quote from ralph00:

More Hendry clips. He's still pretty cocky, but definitely has his tail between his legs a bit.

https://self-evident.org/?p=691
More...
Thanks for posting. I enjoy watching his appearances. I think his fund is still down ~5% YTD after having a blowout year in 2008. Quite a humbling experience but he makes a good point his job is protecting his capital rather than blindly participating in speculation that he can't rationalize.
 
To point out the obvious, money has piled into lots of "anti-US Dollar" trades since March:

equities, gold, currencies other than the USD (maybe except GBP).

So even though there isn't much CPI inflation, there has been asset price inflation.

Suppose (stick with me here) then that the current craziness continues for another 12 months. So let's say that everything goes up another 50% in 12 months.

S&P 500 at a new record high above 1600, oil at 117 a barrel?

Eventually at some point higher oil prices will:

(1) hurt consumers and therefore hurt corporate profits
(2) hurt corporations' expenses, and therefore profits
(3) hurt corporations' expenses, who might try to raise profits, hurting corporate profits

So even though I can foresee the current anti-US Dollar mania continuing for some time, eventually (assuming strong positive correlation between equities and oil), higher oil prices will drag the stockmarket down.

Quote from Daal:

I couldn't find any strong arguments in that article except the part where they suggest inflation expectations are rising. I agree its the biggest risk to the dove trade, it has been going up lately
More...
 
http://online.wsj.com/article/BT-CO-20091019-709523.html

Einhorn (wasn't he a value investor? talk about style drift) now betting on higher interest rates and "currency collapses" in developed countries 4-5 years out. He highlights Japan:

Einhorn said his hedge-fund firm is betting on the possibility of a major currency collapse and a surge in interest rates, citing ballooning government deficits in some of the world's most developed countries. Einhorn said Greenlight has been buying long-dated options on much higher interest rates in Japan and other developed regions, giving the firm the chance to make big profits from a jump in rates. The options, bought from major banks, are tied to interest rates four to five years out, Einhorn noted. In the case of Japan, rates have been very stable in that country for many years, so the options were relatively cheap. Einhorn said the "asymmetry" of that trade was interesting. If rates jump suddenly in Japan, Greenlight stands to make "multiples" on its positions, he said.
 
You must log in or register to reply here.
Back
Top