OT. What's driving the market lower ?
Hi Jacob and all. I'm a long time admirer of your postings. And perhaps you've missed this bit of possibility for why the market is heading down despite better than estimated reports. First, as a disclaimer, I'm fully invested in the kind of stocks everyone here buys. And like everyone else, I bought too soon and exhausted my cash. So I really hope I'm wrong in what I'll say next.
I think the drop in the market has nothing to do with the earning reports. And might have everything to do with Saudi annoyance with US policies regarding them and Mideast. I have heard that Saudi citizens have approx $600+ billion in US stocks, plus $70 B in US Treasury bonds. If they get even a whiff of suspicion that their assets might be frozen or confiscated (because they help palestinians), then they are sure to move them out of the US in a hurry.
So if this were a hypothesis, and one wanted to test it, what observations would one make ? Well, the dollar should drop, and Euro and gold should increase. US stocks should drop as positions get liquidated without regard to any fundamentals.
It is always possible that the dollar might drop and the Euro and Yen might increase, just due to random chance. But usually there is a pattern there. The currency of the economy that is growing should rise, and the one in stagnation should drop. But we're seeing the opposite. The US is growing, but the $ drops. Europe and Japan shrink, yet Euro and Yen are stronger. And gold, which has done nothing but lose for 20 years, is suddenly perking up.
Some pundits say gold is gaining because Japanese housewives are hoarding it. OK, fine. But then they must be dumping Yen to buy gold. But Yen is higher too. So the only answer is people are dumping US dollars, and buying gold, and moving assets to European markets. And potentially there are $700B+ dollars subject to this switch.
Just to make this somewhat on topic, I'm up to my ears in ALTR, INTC, LSI and WDC. And unfortunately do not own even a sliver of gold.
Good luck to all. I hope I am totally wrong, though I am really afraid a disaster is coming.
Sarmad |
