Tuesday, January 22, 2008

Who's Not A Bear Now

Suddenly everyone is a bear. Now we have George Soros saying that the world was facing the worst financial crisis since World War II and the United States was threatened with recession. "The situation is much more serious than any other financial crisis since the end of World War II," Soros was quoted as saying. He said over the past few years politics had been guided by some basic misunderstandings stemming from something that he called "market fundamentalism" - the belief financial markets tended to act as a balance. "This is the wrong idea," he said. "We really do have a serious financial crisis now."

Asked whether he thought the United States was headed for a recession, he said: "Yes, this is a threat in the United States." He added he was surprised how little understanding there had been on how recession was also a threat to Europe.

Things can look ok at 13,300. At 12,600 you want to buy on weakness. At 12,000 everything looks expensive. At 11,700 you swear you never want to touch stock ever. Its the same, you can replay that in all markets: the Bursa 1,520 looking good for a CNY and election rally. At 1,500 govenment won't let it fall, they need to boost market for election. At 1,460 we will say "don't buy now, sure regret". At 1,420 OMG very oversold already, pity no more funds to buy. At 1,350... all you can hear are swear words.

This is not to piss people off. I'm a bit lucky to call for a sell as the Citigroup results and writedowns looked more than just bad news, it was a huge catalyst. Markets will go on being overbought or oversold till a proper catalyst comes about. I was especially uneasy with the US$4bn provision for consumer debt writedown. A correction can be a temporary thing if it was a minor issue. This is big, its the terrible twins: inflation and credit bubble being pricked. Good thing is we are falling fast which means we can reach bottom faster. But we are not there yet, stay tuned.


yau said...

i also just read this news from scmp. from soros, he said

Billionaire investor George Soros said the world was facing the worst financial crisis since World War Two and the US was threatened with recession.
“We really do have a serious financial crisis now,” Mr Soros told Austrian daily Standard in an interview.

i think very bearish serious

Tony said...

Play Baccarat: Put warrants = player bet; call warrants = banker bet. Now player dragon quite long..

maxwealth88 said...

the bull is dead. better run away. no more CNY rally. looks like tough time ahead.

The Great Game said...

It's going to be a very interesting time. Look at the commodity - petrol, palm oil, tin, soya bean, etc -- all are trading at all times high. Inflation is going to rise in the near future on top of the economic slowdown. Stagflation, as coined by the economists in the 70s, is coming.

Also, equally interesting, is how the two greatest bubble -- the credit bubble, and the petrol bubble -- in recent history blend together, as witnessed by the capital injection by the ptrol dollar from Middle East into the ailing financial giants in the West.

clk said...

with all sorts of call warrants floating out there, all the bankers today are laughing in their vault!

Shouldn't we have a PM who call all those issuing call warrants similar to those who have short our Ringgit 10 yrs back, traitors!

swifz said...

business is business. If one loose on the call warrants, the just admit your mistakes. Dun go out name callings.

bantersy said...


Fed lowers fed funds rate by three-quarters of percentage point. Though next week is the FOMC, may be they think why not do it today since the rout is happening now. The cut does come a tad higher than most would have expected - 50bp. It should offer some relieve to the market for a while, I think.

maxwealth88 said...

Good news, US Fed cuts interest rate to 3.5%. at least will slow down the carnage.

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