econonoise

[solarbird]

Okay, so, up front, some linkless material: I'm not a technicals person, but we should've seen a bounce Wednesday in the equity markets, as a continuation of previous ticks up. Seriously, we should've, and we didn't. The market is crazy oversold and there wasn't much shocking news and we're overdue for a little corrective jump, and so far, we aren't really seeing it. What we have been seeing is a clusterfuck of Hindenberg Omens¹, and these are the conditions where historically you see crashes.

Oh, and Saudi Arabia yesterday told buyers to get used to high oil prices. Um, yeah, we know.

Mish is coming all out and saying we're fucked; it's deflation. He's talking Austrian terminology, which means money and money-equivalent supply, and not necessarily price. I still think oil issues will defeat price deflation overall, but that's not better, and wage pressures are pretty much zero, so don't look for inflationary input on that side - or pay hikes to help deal with rising costs of things you need, either. Karl at Market Ticker is even more bearish.

I'm really hoping that various theories that China will stop being such a huge buyer of US dollars as soon as the Olympics are over are wrong. Really hoping. (Link is to Brad Setser's article over at the CFR website.) One thing they want the US to do is shore up the dollar, but that'll be some work. Again, I'm not a technicals trader, but if I were, I'd bring up the six month chart on the dollar index and note you can draw a very nice "bear flag" with a channel that the dollar has just broken out of, down. The target would be a new low of, eh, 66ish, if I understand that sort of thing correctly. Which I'm not sure I do, so don't go placing shorts on my word for it - if you're one of those people, you should do your own drawing. I think it's nuts enough in equities where people believe in it; I think forex traders are less likely to buy in.

Bank of America went through with its plans to buy Countrywide. This is crazy. Seriously, what the hell are they doing buying a zombie housing lender that's being sued from coast to coast? S&P downgraded BoA stock from "sell" to "strong sell" (a.k.a. short the hell out of this) on the news. Presumably the intent is to loot and destroy, but you can't duck the legal liabilities that way.

Shaking out what's left in the sack:

The Fed appears to be having some trouble defending its target rate. That's neat. Credit card losses are worse than expected, which is a no-brainer, but still. The government-chartered housing corporations Fannie Mae and Freddie Mac are seeing delinquencies continue to rise. California lender IndyMac is having to spend a lot of time swearing it's not about to die. I'm hearing otherwise. And Dr. Roubini at RGE Monitor has given a lot of interviews lately, some of which are linked on that page.

And that's that.

¹: Yes, I am proposing this as a new plural; a school of fish, a murder of ravens, a clusterfuck of Hindenberg Omens.

Comments

[firni.livejournal.com]

Sounds like shorting stock is going to become big business.

[llachglin.livejournal.com]

Ah, you reminded me where I saw the link to the "shopping center economic model is dead" article that I linked to earlier this week despite it being two months old. It's a link in the Mish article that you mention.

[denelian.livejournal.com]

not that i UNDERSTAND economics. but i was told in my international econ (which is somehow a poli-sci class...) that much of this will be/can be alleviated by actually re-pinning the dollar to the Gold Standard. and that this was a thing being discussed...
and i haven't seen anything like this. have you?