Quick Note On Yesterday's Sell Off
It seems there are a multitude of reasons I'm hearing for the market sell off yesterday and the pathetic response from the bulls today. I expect they'll try to give it another go tomorrow but this rally appears to be finishing up without some renewed buying. The two most prominent reasons I'm hearing for yesterday's weakness are overseas sellers and the dollar. The fact is both are ridiculous. Especially the weak dollar notion highlighted by the brilliant insight of tout TV.
A weak dollar is what has fueled this rally over the last four years. So, to state that a weak dollar is causing the sell off is absurd. Should we see a drop outside of the historical trading bands for the dollar, that might cause fear of the unknown in the global growth scenario but we aren't seeing that. If dollar weakness was a problem, we'd see the bond market reacting accordingly as a weakened dollar of significance would mean import prices might cause inflation. Bond yields made a new low. Bond traders are smarter than equity traders and way above the fray of tout TV. All you need to be a equity trader is a heart beat. Additionally, the dollar is weak against what? The Euro? Who cares?
The Yuan is pegged against the dollar so imports from China, accounting for a vast amount of the trade gap, wouldn't change one iota. And, what about the Canadian dollar where we do more trade than with the Euro? Or the Yen? Or the Won? What really upsets me is I turn on the TV and the first thing I see is some special commentary on how they appear to be "cracking" some type of big story as it pertains to the dollar and the markets. Is this as good as it gets in the financial press?
Now for the selling in "Europe" as we hear because of dollar weakness. Well, this rally started failing in late October when I posted as such on the 26th. If I am an individual and I can see this rally was failing, wouldn't many sophisticated multi-billion dollar hedge funds, traders and professional money managers see the same thing and start locking in profits? So, where are we now? Right back to where the S&P 500 was when I reported the market was weakening on October 26th.
A weak dollar is what has fueled this rally over the last four years. So, to state that a weak dollar is causing the sell off is absurd. Should we see a drop outside of the historical trading bands for the dollar, that might cause fear of the unknown in the global growth scenario but we aren't seeing that. If dollar weakness was a problem, we'd see the bond market reacting accordingly as a weakened dollar of significance would mean import prices might cause inflation. Bond yields made a new low. Bond traders are smarter than equity traders and way above the fray of tout TV. All you need to be a equity trader is a heart beat. Additionally, the dollar is weak against what? The Euro? Who cares?
The Yuan is pegged against the dollar so imports from China, accounting for a vast amount of the trade gap, wouldn't change one iota. And, what about the Canadian dollar where we do more trade than with the Euro? Or the Yen? Or the Won? What really upsets me is I turn on the TV and the first thing I see is some special commentary on how they appear to be "cracking" some type of big story as it pertains to the dollar and the markets. Is this as good as it gets in the financial press?
Now for the selling in "Europe" as we hear because of dollar weakness. Well, this rally started failing in late October when I posted as such on the 26th. If I am an individual and I can see this rally was failing, wouldn't many sophisticated multi-billion dollar hedge funds, traders and professional money managers see the same thing and start locking in profits? So, where are we now? Right back to where the S&P 500 was when I reported the market was weakening on October 26th.
<< Home