By: Pej Hamidi
My email has been swamped with emails from those whom I’ve spoken to before or subscribers that know my LinkedIn. All of them basically have been asking:
“Pej, I know you suggested strongly that a top was in the making last week, and you were talking about how the Greek problem in Europe is affecting us. The market has thus far been resilient when we’ve sold off 10%. What do you think of this current situation? I heard you talking but I wasn’t listening because I was ‘managing my positions’ (i.e. controlling my losses).”
The radio and Virtual Trading Floor are for all time frames, even those rare, BIG MACRO related events. If you’re not already tuned in, you should tune in. If I’m broadcasting, I’m talking about everything in as much depth and detail as possible in a stream-of consciousness format. I’m banking on my years and years of study and experience. But, as we all know, past results are no indications of future performance.
I also know that markets are resilient, until they’re not (duh). I also have a hunch the current market hasn’t discounted the worst, and it will. That’s how markets function. For reasons I’ll talk about on the radio, I don’t think we’re ready at all for what’s coming. We don’t even know what’s coming. Today may have just been a taste. Even if we bounce and consolidate for a few days, the downward spiral has started. Arb spreads are going to widen, swaps will blow out, correlations are going to spike to 1.0 (on highly volatile days like today where the TRIN stays above where it’s been ranging, a multi-sigma event could be in progress). A downward spiral is a downward spiral. Corporations are “sovereign” too. But they blew up. What an experiment in Keynesian and Schumpeterian economics we’re all witnessing. I’m sure many economists are speculating on the end play, in theory. The traders are trading the move. So trade the move. Don’t be a key pusher if we’re in consolidation, mean-reversion chop because you’re trying to make your month.
The money made in ’08 and ’09 for some, will be used in the next 3 years to amass a real fortune. Not as scalpers and daytraders, well at least in my case because I’ll be the first to admit that I suck at daytrading. Downgrades will lead to the manifestation of no liquidity because they can’t find a counter-party, even if they’re a sovereign nation like Portugal, Greece, Ireland, Italy, or Spain. And then there is the emerging market debt! Oh My. Then comes the MENA bonds. If you missed it Tuesday, I might have some additional comments tomorrow on the radio, and will throughout the week. It’s very fluid. But it’s a BIG MACRO event and these are like US Carriers making a 180 degree turn. Not much can or will change over 24 hours, usually. Sometimes, you wake up and the world has crashed while you snored through it. The poor American in the United States wakes up as the S&P’s are gapping down 18-19 handles.
I also want to emphasize that ALL members of T3 Live, trial or paying, are entitled to a free 30-minute consultation ($100 value). I have a long list that I’m getting to as quickly as possible, but email PHamidi@t3live.com if you want to have a chat about anything market related. And I promise, I’m not going to use a stop watch on you.
