05/24/10 Jacobus, Pennsylvania – We’ve seen an almost complete reversal of market momentum, with the ‘deflation trade’ of late 2008 once again growing popular:
Thing is, moves to the downside often unfold five or 10 times faster than rallies – a sign that there’s little desire to buy into weakness.
The decline in risky assets has been violent. Treasury securities – of which there will never be a shortage – have been bid up aggressively. Yields on 10-year Treasuries have declined from 3.9% to 3.2% in a little over a month. This adds to the anecdotal evidence that carry trades – shorting Treasuries and buying corporate bonds and stocks – funded much of the rally in the S&P 500.
This summer should be the best environment for short selling we’ve seen since early 2009.
Dan Amoss
for The Daily Reckoning
Dan Amoss
Dan Amoss, CFA, is a student of the Austrian school of economics, a discipline that he uses to identify imbalances in specific sectors of the market. He tracks aggressive accounting and other red flags that the market typically misses. Amoss is a Maryland native, a graduate of Loyola University Maryland, and earned his CFA charter in 2005. In spring 2008, he recommended Lehman Brothers puts, advising readers to hold the position as the stock fell from $45 to $12. Amoss is managing editor of the Strategic Short Report.
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So what? Such an insane practice is part of the rigged, casino nature of the market. Speculators toy with peoples’ livelihoods, getting their jollies from events that decimate real people by the truckload. By all means, make the proverbial killing. The term is more accurate than most can grasp. Sure, the Money Masters who rule the roost are cold-hearted bastards, but many who frequent their gambling tables are only different in degree, not in kind. Godspeed
Why not be truly radical and try putting on a conscience?