You Can Bring A Horse To The Water ….
But You Cannot Make It Drink, so the saying goes.
A series of poor calls made in the Fx in the past week, holding on defiantly and seeing the gains from my S&P 500 shorts erode.
My mind on horses again, as usual, and the wild horse chase it has been. Yet I am not alone. A few friends have reported that their trading year has got off to stubborn starts.
We are at a precipice and reports cannot decide between if this is a dead cat bounce or if its the panic bottom which makes it heaven for volatility traders and nightmare for longer or medium term investors.
Why was Mario Draghi so vehement about the non existence of deflation yesterday ? Because he still needs people to buy ’em bonds. The maxim of deflation is that cash is king, because a dollar tomorrow is worth more than today.
Why do I think we are at a precipice ? Because it is schizophrenic.
29 Jan 2014
Mobius Sees Money Flowing Back Into Emerging Markets on Growth : Bloomberg
7 Feb 2014
Mobius Says Emerging Selloff to Deepen, Countering O’Neill : Bloomberg
5 Feb 2014
TOM DEMARK: The Next Two To Three Days Are ‘Extremely Critical’ For The Stock Market — It May Crash 40%
Roubini, Faber, Summers and gang are out in force but the bounce in equities over the past 2 days has led to equity strategists finding their voice again as I find some reports in my in-box telling me what to buy in this sell off.
But if you ask me, Bill Gross makes the most sense this week even if people are pulling funds out of Pimco.
“The amount of credit and its growth rate are critical to asset prices, and of course asset prices in our modern economy are critical to growth and job creation and future prospects for investment. We have a fiat/credit/debt-based economy that depends on the continuous creation of more and more credit in order to thrive and some would say – even survive. We need those pigs and more of them. And they need to circulate and be traded – what some would call “velocity” – in order to keep the economy growing.
With credit growth slowing due in part to lower government deficits, and QE now tapering which will slow velocity, the U.S. and other similarly credit-based economies may find that future growth is not as robust as the IMF and other model-driven forecasters might assume. Perhaps the whisper word of “deflation” at Davos these past few weeks was a reflection of that. If so, high quality bonds will continue to be well bid and risk assets may lose some luster”
And maybe that’s why one by one, the big bulls are changing their minds, like Mobius is. Because you can bring a horse to the water, but you cannot make it drink and we are going no where from here.