MAJOR RISK OFF IMMINENT TO APRIL
Illustration 1: Bitcoin price (from inception 2010 to present)
Asianmacro had been busy trading and had not posted and shared any views for 2 weeks till today (*where I made 3 posts within 6 hours). As I was commenting to Tradehaven who was asking why I had not written anything and my reply was I had been busy recently making my dough from trading and just did not have much time left for any writing!
Anyway, if it is not clear to you in my recent posts, I had been cautious entering March and I am looking at an imminent major risk off across all markets after today. Especially for the U.S. stock market where S&P500 just made a new all time highs intraday . While I do not have the pedigree of George Soros who has a backache when something does not feel right in the markets or his portfolio. He then proceeds to de-risk or go short risks where he sees fit. A sense of deja-vu similar to the onset of the Asian financial crisis in 1997 is coming over me.
Back then when Thailand was one of the biggest importer of French Bordeaux wines and when over a week in May 1997 when THB overnight rates spiked to 1,000% and the currency fell 15% within a short period and weakening further from 22 to 56 against the USD in six months thereafter when the Central Bank, Bank of Thailand did not have the FX reserves to defend its currency anymore; it might have felt like an isolated affair that affected Thailand only. Little did the markets expected that a combination of capital controls imposed, a loss of confidence in deposits placed in banks, and easy liquidity that had flooded all asset markets from stocks, bonds, properties and commodities would just as easily disappear and every Asian country fell quickly with Korea, Indonesia and Malaysia hit even more badly than the initial domino to fall, that was Thailand.
From Illustration 1, one of the biggest silent bubble that has been building is in Bitcoin http://lifehacker.com/5991523/what-is-bitcoin-and-what-can-i-do-with-it … http://www.cnbc.com/id/100597242. In fact from Illustration 2, you can see that Bitcoin has went up by ninefolds since December 2012 to this very day! The volume spikes on those days that the Cyprus negative news came out is pretty evident as well.
Illustration 2: Bitcoin price (Dec12 to present) … explosive 9 folds rise from $10 to > $90!
Money needs a home and it had been stocks, corporate bonds, treasuries, properties, arts, and bitcoins in the recent months when QE continued unabated from the U.S. Federal Reserve to the Bank of England and most recently since Q4 2012, the Bank of Japan too. ”In the long run, we are all dead …!” as famously said by John M. Keynes … but in the immediate period, we just need a loss of confidence that like a spark in 1997 with the start of the Asian financial crisis to just shake everybody out of their holdings.
P.S. I doubt the value of Bitcoin as a safe haven as you need to be plugged into the electronic network afterall … just imagine when the electricity is out or if there is no internet connection, whatcha gonna do?!
*Asianmacro is a beach bum managing his own wealth. Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself. While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith. Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication. This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.