Fundamental Trading Diary

Fundamental analysis of the capital markets

I’m Out – For Now

It’s been a brutal 3 weeks – and we’re not done yet.  However, with the unemployment rate jumping 0.3% while 86k jobs have been lost, I’m guessing that we’re on the brink of market intervention.

What does that mean?  I suspect we’re going to see a soft bounce in the US stock market, and a hard bounce in the Euro.

The Euro really hasn’t been the same since the G7 finance minister & central bank meeting at the end of Q1, so there definitely have been some changes in the policy of central bank reserves.  As a consequence, I’m not comfortable making large or prolonged trades here.  I think a lot of the proverbial fecal matter has yet to hit the fan.

With this all in mind, I’ve taken small positions long Euro (1.4235), Oil (105.90), and selling bonds (119.31250).  The plunge protection team is going to need to raise cash to boost stock prices, but it will boost inflation and kill cheapen bonds to do it.

The Working Group on Financial Markets has a lot of work to do over the weekend…


September 5, 2008 - Posted by | Uncategorized

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