Please don’t take this prediction too seriously but I think the “Phrase of the Year” will be something like– “… is struggling to hedge its exposure” and hence the “Word of the Year” will be something like “hedging”. Of course it will be #1 only in the case the word “meltdown” does not beat it out.
The World is partying like it is 2007 all over again. The reasons are two: the crazy money printed by Helicopter Ben and the moral hazard produced by the universal bailout of everything, everywhere. I still see the traces of sanity in the US consumers’ minds as they are running a pretty decent savings rate but most of the world has gone crazy. The name of the game is the low rate on sovereign debt of most of the major economies, which allowed governments to run unprecedented and unrestricted stimulus packages.
The spectacular rebound in oil prices in 2009 could be attributed to two major factors: fears of currency debasement that lead to excess hoarding and speculation; and discipline of well-oiled Opec members to cut production.
Last year I was not making making predictions for 2009, mostly because my call for 2008 was ridiculously correct and I had nothing more to say. But this year will be different and I’ll try to make some predictions.
The big financial question that every econo-blogger must be aware of is: how come that the proportion in profits in the economy as the whole that the financial industry was taking was constantly increasing all the past few decades and yet this same financial industry became the epicenter of the systemic crisis we are in now?
As almost all WSE authors posted their view on reverse REPO announcement, I think I have to post my take as well. Yes, in general I think it is a warning to some of the most leveraged carry-trade players. But my view is a small refinement in the same direction.
As the internet is full of comments on the default of Dubai World corporation and the S&P futures are down by 22 points, I assume that you all already know what happened, so I’ll jump directly to the conclusions. Calling this post “The Lessons of Dubai” may sound a bit premature, because usually people say “The Lessons of History”, not of something that just happened. Well, I think now Dubai is already history and it’s quite ready to teach us a lesson
The number of blogs commenting on dollar vs stocks inverse correlation is approaching infinitum. I won’t try to summarize what I found, I just want to place some accents.
We all hear from all possible stock market advisers and economists that the market discounts all news in advance, essentially validating the tradition to call news “newsnoise”. And I totally agree with that. However I also hear as many times that the market discounts fundamentals well in advance. And here’s the problem. It turns out that many (if not most) people cannot properly distinguish between “news” and “fundamentals”. The last straw was Pretcher’s Elliott Wave book that I’m reading now where he uses the word “news” and “fundamentals” interchangeably, essentially treating them as synonyms.
All you need to know about Program Trading but were always afraid to ask.
There is a lot of confusion on the internet about program trading and I have the impression that many people who seriously discuss it in fact are not directly involved in it. So what is program trading?
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