The Crisis Is Building Based On U.S., Not Asian, Structural Weakness - Great Analysis

[commanderco]

Quote from fearless9:

The shorts grabbed control of the ES Feb 15 and did not let go until yesterday.

Each day from the 15th of feb they build an accumulating position on the bid, long before the China dive and long before that talking head Greenspan managed to get his pre-prepared speech in place.

I tried to point this out to the knitting club
over at the ES journal thread, but no takers there.

It is all contained in the T&S gate if you go looking for it.

I noticed that as well f9, I think that the unraveling of the yen carry might be the driver.
I do believe the problem has it's roots in the US, not growing pains in asia as is widely touted.

My guess is lower interest rates and a slipping dollar. However I do not think that lower interest rates will save the RE market nor do I think it will fuel more takeovers and corporate expansion.

All in all I am not holding my breath for a white knight on this occasion.

 

[drsteph]

Quote from commanderco:

I noticed that as well f9, I think that the unraveling of the yen carry might be the driver.
I do believe the problem has it's roots in the US, not growing pains in asia as is widely touted.

My guess is lower interest rates and a slipping dollar. However I do not think that lower interest rates will save the RE market nor do I think it will fuel more takeovers and corporate expansion.

All in all I am not holding my breath for a white knight on this occasion.

Short term interest rates stay more stable than any of us would care them to be for longer unless there is a massive equity selloff requiring a 50 bp drop to infuse liquidity to keep the system from imploding. Rates can only fall once people are gun-shy for borrowing for stupid reasons. A bit of darwinnowing by our Fed, if you ask me.

No chance of rate hike, though. That WILL implode the equity market.

Have been trying to play that long end of the curve unsuccessfully for a while - it should have hit a 5.5 yield on the 30 last year. On the sidelines for now until things shake out as that area is just too dangerous. With cash rates where they are, that's satsifactory too.

 

[jficquette]

Quote from wareco:

I was never great in economics classes, but if money is flowing out of the U.S., wouldn't the FED have to RAISE rates in order to make the Dollar more attractive? The article seems to infer that a rate cut would be the FED's action.

Sooner or later the Fed will have to let the system fix itself. They can't keep going around creating bubbles. There is too much liquidity out there. Fed needs to raise rates or at least hold them steady and just let the chips fall where they may.

John