3 THINGS I THINK I THINK
1) The “buy the dip” mentality is alive and well. Money managers are still chasing performance. Every dip is a chance to make up lost ground….
2) Goldman Sachs has a superb event driven trade here with their buy call on the homebuilders. If the conspiracy theorist in you wants to make some money try this: Goldman has close ties to the government which means they know someone is going to push a housing tax credit extension thru. That means the homebuilers run up into the end of the year and perhaps longer. Can’t beat ‘em? Join ‘em.
3) I was having trouble coming up with real catalysts for a potential sell-off before the end of earnings season. Reader Jack rectified that issue:
1. disorderly dollar crash
2. unemployment not budging
3. housing rolls over again because the shadow inventory finally surfaces
4. commercial real estate shoe drops
5. further rise in oil due to dollar weakness
6. over optimistic earnings estimates for future quarters and market finally starts caring about the lack of top-line revenue growth
7. credit losses overwhelm banks
5a. Israel Iran
How bout a rate increase? Or just a jump in interest rates. Wouldn’t that spook the market?
8. End of Year = No more performance chasing….
There’s lots of them, but with the VIX and yearly lows and higher bullishness, these factors are not mentioned. It’s a land-mine field out there.
Fed wouldn’t do anything as far as raising rates I would think. But they could start mopping up excess liquidity if point 1 becomes an increasing possibility, that right there would cause lower markets I think, since fundamentally we are still quite behind.
How about Europe being dupped out of the “global recovery”? They are starting to make some noise over there. A lower dollar and a China peg really snubs Japan and Europe don’t you think? Maybe a surprise protectionist announcement from Europe? They are the largest economy in the world you know, the Eurozone that is.
9.
raising long term interest rates.
not in the short term, but sometimes next year, i think the biggest problem will be raising long term interest rates – currently bondholders are happy with printing, declining dollar and declining yields, but maybe they will realized sometimes in the future that they were fooled.
if goverment debt bubble ever burst, it wont be pretty…
also seeing 78.56 oil price today, while we are in weak season of year, is a bit terryfing.
the oil could easily become 10x leveraged anti-dollar bet like we saw during spring, summer of 2008. if dollar stays on the same range i can easily imagine oil over 100 by april of next year.
At what point does high oil prices begin to scare the market again?
Many many many … H1N1, Obama caught dorking a Swedish escort in Stockholm, China bubble pops, India-Pakistan war, Kuwaiti Air 747 crashes in TPC’s business park ….
But one I can guarantee won’t be it … 7. credit losses overwhelm banks.
Everyone knows who’s picking up the tab for that one.