New liquidity? - Mother of all bulls? - We don?t buy it [Archive]

goldfinger

11-03-2009, 11:38

The DOW went up 5.8% yesterday, Nasdaq 7% the S&P 6.4%. Gold fell to below USD 900 yesterday, USD 890 even. Or, as we like to put it; the dollar strengthened to 900. Currencies of smaller countries that have seen their money hammered strengthened. A surge of new confidence. The most direct explanation for this bull run was [...]

More... (http://www.farmann.no/new-liquidity-mother-of-all-bulls-we-dont-buy-it/)

I'm very impressed with your detached and analytic way of looking at the market's, even in a day where stocks like berkshire hathaway is up like 17 %, without collapsing in the after trade. You are in the same boat as guru, Spetalen, that claim it could take 20-30 years before our sovereign wealth fund is back to where it was, that means he see this as 1929, if anyone was in doubt about that, but he was wrong in 2003 , where he saw the norwegian exchange at 50-60 over the next few years (instead a bubble in everything from stamps to chinese art formed), I guess Spetalen is back to the view he had in 2003, in the sense that he don't see a new bubble forming this time. It will be interesting to see what happens today. If it will fall back down again , or just drop down again ,as a small correction in a ongoing rally. I am not playing the short side of the market.

I think this is similar to 1998. If you look at the swiss franc, you will see there was similar moves in 1998, then the government threw money at it, and the franc calmed down, liquidity returned and things went into a huge bubble, mainly the nasdaq. I do have fears something similar is about to happen now, a 10-15 year chart of the NOKCHF reveal a certain pattern. This time the "fear and deleveraging forces are so great, that IF we get a new bubble, it will be extreme. The thing that technically have looked to become that mania asset have been gold, but so far it's just bounced off that break off level, that earlier this year was showing similarity to when the nasdaq broke out. Just let say that it does not happen, the river of liquidity stays frozen, and things just deteriorate further, that might happen. However, I think it's very possible that the dollar could fall off a cliff, and that the market could go back to the old positions, really stoking inflation and make this to "1988" for emerging market's and commodities.

I like to mention http://www.tradersnarrative.com/jeremy-grantham-worlds-a-bubble-except-for-trees-907.html

"it's everywhere, in everything".

Jeremy Grantham, with his 2007 article, when everything was still beneath the surface was right on it. In it he argue that the world is a bubble, he is advice stocks now, he thinks they are cheap. In the 2007 article he suggest that while everything is in a bubble, it seems the last leg of the madness , or the final blow off phase, is yet to come. Since he are now telling people to buy stocks, it seems he stands by that. Let's say the franc weaken, the dollar really get's hammered, etc, then we will get that final blow off phase.