Something just feels a little off, although I know bubbles as these tend to last much longer than a few days, something just doesn't feel right in Asia considering the housing bubble that they can't seem to keep inflated, it seems the Shanghai and now Hang Seng have become Casino Macau, except everyone is invited, even the illiterates (that's not a joke). If it doesn't feel right in Asia, I guess I'd be hypocritical to say the same wouldn't apply to the US, just on a much longer timescale (failed property bubble, everyone rushes in to the stock market as the F_E_D inflates the next bubble).
Speaking of the F_E_D, both Kocherlakota and Lacker are due to speak today.
Option Expiration Friday's are generally pretty dull (next week is monthly op-ex), which generally gives me time to concentrate on more stock specific assets which is what I'll be spending a lot of time on, however once again, some little voice in the back of my head keeps whispering "Asian Financial Crisis". I do remember the crisis although being only about 25 at the time and a neophyte in the market, I really didn't understand the crisis as I would today and I know if had roots in different regions and different assets, but its spread was pretty dramatic, contributing to low oil prices and one of the best stock plays I had ever bought, in an oil Trust with a massive dividend while prices were still in the low teens per barrel of oil. I consider the $40 billion the IMF contributed to try to stabilize the currencies of 3 Asian countries during the crisis and think about that amount relative to European bailouts or of the Greek debt of $320 billion Euros alone.
I think it would be a mistake not to recognize the the lack of couter-party trust in which developed countries wouldn't lend to developing countries, much like the US Financial Crisis in which the credit mechanism froze as there was a complete stoppage of counter-oparty lending between banks as no one knew who had what exposure to subprime after the Lehman collapse and how that spider-webbed out, just like the lack of counter-party trust in the Asian Financial crisis set up events , particularly low oil prices that played a role in the next year's Russian Financial Crisis which spider-webbed across thee Atlantic and nearly took down the ?US financial system with the failure of Long Term Capital Management, THE SMARTEST GUYS IN THE ROOM.
I know these are very different events, but some of the best advice I've received and often give out is, "If you want to know how someone will behave in the future, look at how they've behaved in the past" and what is the stock market or financial markets if not a cornucopia of hundreds of millions of "somebodies"?
In any case, it's just something that's been nagging away at me that I thought I'd mention as the volume and price gains in Hang Seng are starting to see a drop off while the quota's allowing mainland investors to buy in to Hong Kong and vice versa through stock connect are set to rise. Hang Seng has gained +9.5% on the week, however the premium in the exact same stocks trading on the Shanghai vs the Hang Seng which had a premium of about 35% last month, part of the reason we saw such a rush to buy cheaper stocks in the Hang Seng, has fallen off to a still very substantial approx. 24% premium.
Looking at FXI- FTSE/Xinhua China 25, there are some charts that a re more than a bit concerning...
As to the Index Futures Update, it's the NASDAQ 100 futures charts that are seeing the 7-15 min migration occur the fastest which started with 5 min charts 3 days ago while higher timeframes remained in kine, moving with price then the next day the 30/60 min charts went clearly negative and since, NQ has been deteriorating the fastest, 1 of 3 events I've been looking for, the other-distribution in the averages is well on its way and the last, Leading Indicators has begun too.
Index futures will be out in just a minute.
No comments:
Post a Comment