Excitable gloom-mongers and Apocalypse | stockbee


Excitable gloom-mongers and Apocalypse

Was that it? Can it really be that the violent storm that broke over financial markets this month has turned out to have been no more than a bit of noisy huffing and puffing, an empty squall that blew over at the first sign of a response from central banks? Have the excitable gloom-mongers in the media and parts of the financial markets once again been denied their Apocalypse?

There have certainly been encouraging signs in the past few trading days that, over here in the United States, markets are reverting to a sort of normality. Equities have shaken off the doldrums.

After a strong week, the Dow Jones is 6 per cent above where it started the year and only 5 per cent off its July peak.

Having spent much of the past two weeks bouncing around like a bungee jumper on a thin rubber band, US Treasury markets look comparatively becalmed – the yield on three-month Treasury bills has bounced back up from its low of below 3 per cent last week to a more normal looking 4.5 per cent.

In the interbank credit market, anecdotal evidence suggests that the August panic is giving way to a late-summer calm. Those nasty rumours about imminent bank failures – featuring, in the UK, names such as Northern Rock and, in the US, Countrywide – have dried up. The weird things that were going on in the interbank market two weeks ago – with overnight lending rates shooting up and down in an unprecedented way – have disappeared.

It is tempting for those of us who never signed on to the “sky is falling” hysteria to crow at the sheer dullness of it all.

But in truth even I did not think that it could really blow over this quickly. What kind of a crisis was that?

Central banks step up their overnight repos, the Fed cuts a largely symbolic, as opposed to a real, interest rate and a few big-swinging, money-centre banks make a very public appearance at the discount window, and that is it?


KN said...


Are you back from your hols?

Kishore Surana said...


Do you think its a good time to wait right now, or is it a good time to buy stocks..?

FYI: I am a first time investor and have been waiting for the markets to settle down before investing in stocks....

Also, what are you stock suggestions, once the market settles..

Pradeep Bonde said...

I prefer buying during low risk period when all factors are aligned. The Market Monitor is in confirmed correction mode, so long term positions are risky.

James said...

I personally find it strange that the markets haven't dropped more. There are certainly some problem out there and nothing has really changed from one month ago. I guess that the subprimes stuff will not create a brutal crash. It might be a process and not a one time event. I'm waiting for the next rebound but I'm wondering at what level it will happen. I'm also wondering about the meaning of the low volume in the markets. Does it mean that with higher volume the market would be up or on the contrary, it would be further down?

Pradeep Bonde said...

The low volume is due to holidays. Most people are trying to squeeze in last week before school starts.

David said...

Hey, what is happening with the various spreadsheets? Have folks stopped updating them?

Vishal said...

earnings season is over. earnings reports are down to a trickle.

IIO said...

Based on my estimation, 2014 will be a good time to invest in stocks.

David said...

Hi vishal,

I can understand the Earnings sheet but the Episodic Pivots sheet stopped on 8/20 from what I can see.

Gnib said...

It would be great if we still can access the Earnings spreadsheet, since there are a lot of candidates to watch and do research on. Plus, many of them will lead in the new bull market, isn't this one of the ideas of Earnings play? Thanks a lot if you can put it back!

Vishal said...

David, the episodic pivots list is updated by Pradeep & Skytrader. Me & JT (dunno his full name) kept the Earnings Data updated.

Pradeep has been on vacation & I havent seen an update from Skytrader for the last couple of weeks. Im sure Pradeep will resume updating once he gets back from his vaction.

Besides, this market is not exactly prime for investing. I think a wait and watch attitude is warranted. Unless you feel bearish ......