Wall Street is on sale: Radio Show

Wednesday, September 02, 2015 // Written by Enzio von Pfeil

Wall Street is on sale, so "don't do something - stand there"! Here are my abbreviated speaking notes, along with the interview's clip.

  1. "Don't do something - stand there"

     This means that you do NOT sell into weakness, you wait and then BUY into it!
  2. Phony reasons for the correction

      We've known all along of
    1. slower growth in China. Haven't all US traders become instant experts on China's PMI?
    2. a Fed Funds hike in 4Q15
    3. slower global growth. Indeed, the IMF just looked at someone else's watch to tell us the time.
    4. --> these phony reasons are a flashlight with a dead battery and thus are misleading reasons why punters are selling.
  3. Real reasons for the correction

    1. the market's subconscious senses a change in the Economic Time:
      1. America's moving from an excess SUPPLY of money to an excess DEMAND for money.  Indeed, the Fed is tightening precisely because aggregate demand is improving in America - so buy in to stronger earnings ahead in line with America's looming excess demand for goods, and
      2. Meanwhile, China's is moving from an excess DEMAND for money (one-year lending  rates are a real 11%) to an excess SUPPLY of money. Everyone knows this. What they may not know is that this excess supply of money has to find a home in asset markets, and cheap stocks are just such an attractive home.
    2. Lots more shorting possibilities these days - in the physical as well as derivatives markets.
    3. Shorting collusion ?
      1. Hedgies are desperate for performance in order to justify their fees
      2. China already is cracking-down on hedgies colluding to short the markets, and
      3. Expect American and other firms to be caught in the collusion net, just as they got caught fixing the LIBOR as well as FX rates
  4. STRANGE buying habits of stock market punters!

    1. Normally, people buy when things are cheap and sell when they are expensive. Witness yesterday's good U.S. car sales, which lend credence to this common-sense.
    2. But this KISS principle cracks when it comes to buying shares: punters want to buy expensively and sell cheaply!  Isn't that odd, this blind, un-reflected  following of the herd?
  5. Investment implication

    Cheap Wall Street is on sale: fill your boots, perhaps just after the Fed Funds hike on 17th September. But for us less clever ones, how about just dollar cost averaging in to  market over the next weeks?  I am thinking in particular of the US and China/Hong Kong, but also of those welfare mausoleums, Europe and Japan: both have been festooned with excess supplies of money, money that will find a home ONLY  in the assets markets; stocks are a ready home to go to ...

 You can listen to to the show here

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