Monday, August 24, 2015


I actually got up early to watch this unfold because by the time I went to sleep last night Asia was a catastrophe and the writing was on the wall.   It was something.  It reminded me of 1987.  Shares were being "paused" right and left (we didn't have that in '87) and no one had a handle on where this was going.  At one point the DOW was down almost 1100 points but I'm not telling you anything you don't already know.

Nor can I tell you anything about what's going to happen except that I don't think it's over.  One of the "optimists" on TV this morning predicted another bad day on Tuesday and then the "snap back" which always occurs.  That makes sense in a single over-bought market but I don't think that's what we have here.  I'm looking at a crisis of confidence that has become quite global in nature,  The release of the Fed minutes started it as it was clear that mob had no agreement on anything and gave the distinct impression that they really didn't understand what was going on anyway.  That was bad enough but the Chinese, who everyone thought ruled the nation with an iron fist proved that there was more iron in their brains in the matter in which they have handled their finances over the past few month and in the ineptness over the past week.  The Euros haven't exactly covered themselves in glory for a while now and the administration in this country has been playing golf.  When people world-wide start asking, "Is anyone in charge," that is never a good sign.

We have always said that in the financial world if one loses credibility one is lost.  Today there is no credibility anywhere.  There is also a growing sense of fear.  In the midst of the morning's carnage I saw a print for GE that scared the hell out of me.  20.  GE is a hell of a good company.  Somebody (s) was selling the hell out of GE.  You don't sell GE into a market like this to that extent unless you have to get liquid in a hurry.  Oh no, thought I, we're going to lose somebody right now.  Fortunately, we did not but if you think this liquidity issue on which I have been harping for months now is not real, think GE.  And think debt markets.  A couple of more days like this and there could be some real shocks among the hedgies and if there are shocks there how far behind will be the banks?

Look, I don't know what is going to happen so there is no point in continuing.  However, it must once again be said that trying to deal with a global economy this complex with monetary policy alone while witnessing the absolute abdication of the fiscal and political forces is insane.  I'm afraid we might find out just how insane this is.

More tomorrow.

No comments:

Post a Comment