My Diary 420 --- What is the market saying?

What is the market saying?

Simply pick up some interesting points conveying around the market….some make sense, some are simply baseless, but worth for getting a sense of market sentiment.

1. Dollar, Commodity and Equity

*Merrill sales: "A stronger USD = bearish for oil. Weaker oil = bullish for equities. a stronger USD -> weaker oil -> leads to higher equity markets

My Takeaway -- But looking at charts, it seems to me that a stronger USD is bearish Asian equities...it also seems that equities and oil both move in lockstep with each other and if anything, equities lead oil, not the other way around. AND a sharply lower oil price is bad...it means the world is slowing not that it will make the world grow faster.

2. HK God of Stock = 30% loss

Lee Shau Kee (Chairman of Henderson Land) talking about stock market again and said he has been losing his pants lately. 

My Takeaway – There is no god in this market. He wrongly predicted the market up a few times over the past year and has lost 30% of his portfolio. His portfolio went from peak of HK$200bil>HK$140bil. But what's 140 billion for him? It's like 140 dollars for me...Lunch money...Lee year end forecast for HSI is 23000.

3.      What are HFs, LOs and sales people saying?

*Hedge fund: "If oil goes down to below 100 then demand is weak… which one should question about global growth. Or are we going to get a sell off in any asset class which is not a good sign also"- He is a high convicted bear.

*Long only: "hate to admit, but think if oil drops below USD 100, markets could fly, boil that frog man!!"- He has been a bull in past 6month.

*Hedge: "yes, but it brings down inflation expectation…That is why markets are trending back up...how much of the financial mess is already priced in? how many more negative comments do we need to hear from subprime etc..? after all US has a problem, but at the moment US is N O T in recession, and most likely will not fall into one either. which brings to the point: ASIA markets are OVERSOLD and should bounce back 

My Takeaway -- You pick your side, then argue for it. I am a bear and still think things could go worse before getting better. The pain of credit crisis is just being felt by the real economy. It is not just the US problem as we wished in 2007, it is a global pain (No decoupling yet simply!). Asia has recently burned, ranging from Korean to Singapore, from Chinese export to Taiwan Tech OEM, from WON Crisis to Thai Political Tension and Japan PM resignation.


Good Luck and beloved Bear Market!