Wednesday, October 28, 2009

Frankenstein Lives - Global Synchronized Boom

I randomly picked a handful of equity markets around the world to include in this post. All of these markets collapsed simultaneously last year then had the same reactionary lows last year. And then on March 10th, had the same rally low. All have the exact same rally patterns since. And all are driven by very tight volatility rallies.

If this doesn't concern you, well .........

Just as we said before the 2008 collapse, all financial markets and assets would sell off simultaneously. The concept of asset diversification was and remains a ruse. And those remarks were justly accurate. The same dynamic exists today.

Before the collapse in 2008 we wrote about Wall Street and hedge fund comparatives to 1929 stock pools and the associated effects of manipulation, momentum trading and piling on to create equity and commodity bubbles, we wrote of the fact that program trading accounted for massive volume on the exchanges and the still unreported fact that on foreign exchanges much of the trading is from outside of the country, ie American and European hedge funds and banks. Now much of these remarks are finally being reported in the press. And rightly so. The only problem is that they are being written as a post mortem. And they will most certainly be reported again after the next post mortem. These dynamics and more are contributing to perfectly correlated global markets.

Anyone trying to reason this market with comments about the "market" anticipating an economic recovery, or the market is fairly valued at a certain price or the market is anticipating a future earnings projection is missing the entire forest through the trees. Entire.

The only thing world financial markets are telling us is that the horror of Frankenstein lives. Absolutely nothing has changed. Risks are higher than at any time in my life. The new global synchronized boom will again be followed by another global synchronized bust.

South Korea
posted by TimingLogic at 10:38 AM