Hey i dont need advice i make my own decisions. I was just trying to help the prior poster out by mentioning to you maverick that making a "trade the tape" statement is not beneficial to someone looking for advice.
Still not quite sure how the POMO $ translates to higher stock prices. Folks a lot dumber than me throw this shit around and yet couldn't explain it if a gun was placed to their heads. Most of these miscreants think GS just buys 5 billion of unhedged random stock and puts it in a sock drawer. Hopefully one of you can do better than that.
Excess liquidity leads to asset inflation whatever the class of asset....look around its everywhere. The fed is crystal clear about their desired "wealth effect" more so than ever before and so are their means. But Risk and Rates are correlated and rising, the later will chap the fed, eventually. Definitely the most overt pump job I've ever seen, So who's big enough to end up holding the bag? Someone's gotta do it, that's one fuggin big bag. Or Maybe they'll get the Alogs and Freqs to keep churning it over and over in an endless loop. Eventually they'll outlaw selling.
Still doesnt explain why printing money shows up in stock ownership. Obviously it does, not questioning that. But the notion that GS and the rest just pile in on Pomo days buying index futures seems overly simplistic at best.
The Fed is buying corporate debt. Somebody is selling them the debt and getting cash in return. What they do with the cash is up to them. It would appear that they are using it to buy equities and commodities. Look at this chart. It shows the Baltic Exchange Dry Index against a Commodity research Bureau index. The Baltic Exchange Dry Index provides "an assessment of the price of moving the major raw materials by sea". It's currently back to the levels seen in the immediate aftermath of the GFC when international trade collapsed. Meanwhile commodity prices continue to soar and have surpassed the pre GFC levels. It's pretty clear that the current run up in prices is almost entirely speculative and not demand driven.
Yeah, this is what I think, too. And, there are size sellers of out of the money puts in the SPX and SPY. I'm pretty sure their thinking is that the market cannot go down, in nominal terms, with Bernanke injecting this much liquidity. So, in nominal terms, what are the bearish scenarios for equities? Some days I have to admit, it seems like he can do anything he wants to the equities market. He'll pump the DJIA to 30,000 even if it's in worthless currency. Someone explain why they would buy a 2 year out of the money SPX put.
Huh...Think of it in more simple terms...more money chasing the same amount of goods....dollar devaluation leads to spontaneous asset inflation: ... whether it is a barrel of oil, a bushel of corn or a basket of stocks. If I can borrow at a low rate, and you can borrow at a low rate, and he and she can as well, lets together risk getting a better rate of return. So what should we buy? Obviously dollar denominated risky assets, because its a no-brainer double whammy carry trade. And if we all do it as the fed sez and the tape reveals..everyone's balance sheets look fat. And "those toxic " assets , that used to be nonperforming, look palatable... even risk appetizing. C'mon Buy it...You can afford it. Buy some more, You'll make more The more you buy the more its worth, we're all buying more. No??....What? Wait? you're short,...oh then I'll buy more and we'll all buy more, until you buy it back.
Riddle me this batman. Why is it that our markets are actually under performing other markets around the world? In some cases demonstrably so. If the name of the game is to borrow and buy risk. Why are we doing so poorly relative to other markets? Want numbers? Fine... Here are the return numbers for the last 12 months: Argentina 55% Singapore 54% Germany 37% Australia 37% Taiwan 36% South Africa 36% Peru 35% Canada 35% Chile 32% Sweden 31% Netherlands 29% USA 28% And year to date: Spain 16% Germany 12.5% Italy 11.5% Greece 11.0% France 10.0% Sweden 7.5% USA 5% Looks to me like if you want to be long risk assets via the carry trade, the US is not the place you want to be.
First, the Fed is buying US debt to influence short term interest rates. The Fed now owns more US debt than China. http://www.ft.com/cms/s/0/120372fc-2e48-11e0-8733-00144feabdc0.html#axzz1DWpirjvf The main reason the Baltic Dry Index is down is that massive new shipping capacity has been added.