Black Swan or Lame Duck?
Arriving in to see that “Chinese shares are under pressure. SHCOMP & SZCOMP are both down -1.8% & -2.4%. The indices are down on continued talk that regulators will add 10% CGT to QFII investments (discussed for some time)- but talk it will be retrospective. The markets are trading lower on rumour not fact….” ~ all very indicative of the present state of mind of many…
Below you’ll find the Eurostox chart we posted earlier in the week highlighting our concerns for a decline. Now that fixed income is set to join the ‘risk-off’ party the question is whether this bout of stock market weakness is another head-fake bottom of the range buy opportunity – or something altogether more worrying… I suggest the latter. The market is right to be complacent about the looming US fiscal cliff and the slow steady march towards financial integration (think sovereign loss) with regard to Europe… after all – we’ve seen how the movie ends… fudge, delay… and the thief of time itself – procrastination…
What was the catalyst for the move o/night?
ZH:1. Delayed reaction to global supply chain implications of an AAPL outlook cut (and/or overseas holders hedging) as well as some missed earnings in China;
2. Major Aussie quasi-bank Banksia (yes, its really called that!) hitting the skids (a la Northern Rock) bringing fear that Australia is entering 2008-mode USA;
3. a NYT article which could be inferred as a direct attack on the Chinese political faction (exposing Wen Jiabao’s hidden billions); and/or
4. a realization that at 14-plus x P/E multiples, the US equity markets are not pricing in anything the kind of possible pain a fiscal cliff scenario (or Romney-ite in the Fed) might bring. Of course, the need for a narrative is irrelevant, the most net long position since 2008 is unwinding (for now) but by the time we wake for New York’s morning, things could have reversed once again.”
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Link to this article: : http://www.goldmadesimplenews.com/markets/black-swan-or-lame-duck-8507/