Why is Dow at all-time high?

[hitek79]

But I don't. Just like Larry didn't call you an idiot. You make up some fantastical internet stories though.

[Hugh Conway]

Whatever reality you want to believe hitek79, you clearly take this place very seriously.

[DasBlunt]

These few participants are the pension funds and mutual funds that manage the average joe's money. They ride everything/pound everything to a level where "value" players step in and buy.

When they talk about the huge pct of American households holding stocks, it's through these funds. These funds are primarily long only and do not do nearly enough hedging through derivatives. They are also not supposed to hold much cash, therefore must buy stocks. Many sources of liquidity (would be sellers on the way up) are no longer around.

Prop trading groups have been regulated out of banks. Hft guys have been run out of town because of lack of volatility and regulatory pressures. Retail (average joe) no longer trades stock because Wall Street has been demonized in the press and the game is "rigged" by scary robots.

No sellers on way up= stocks artificially inflated. No buyers on way down= crash.

It is interesting you point out the retail stock segment.

Just musing as I don't know the field well enough, but it seems with the potential of online trading, this sort of opportunity for companies to raise capitol would be a awesome. Instead, it seems fees and confusion plague getting in on the retail level?

Your comment, "(certain) funds NOT doing enough with derivatives and hedging", the public perspective is the same? it is just this lack or failure of volitive ebbs and flows that seems to change sentiment?

[hitek79]

Another poor attempt at a save. You're almost too easy.

[Sparky]

Hugh have you let Jer loose with your moniker?

[Hugh Conway]

No, my meds.

[OldLarry]

No, my meds.

Phew! Hope you are feeling better dude. There's a great little pink sheet stick you should check out called underwater aviation- unreal technology...

[4matic]

I'm not big on news hyperbole but emerging markets have been getting taken out and shot since the New Year with SSE in real trouble:

http://www.bloomberg.com/news/2014-0...-of-track.html

financial drama is unfolding in China as the new year begins. Last week, for the second time in six months, interest rates in the critical interbank lending market spiked above 10 percent, prompting fears of a liquidity crisis that would trigger mass defaults and cripple the world’s second-largest economy.

The implications of this brewing storm are bigger than many global investors realize. China’s credit-fueled investment boom has been a driver of metals prices and machinery exports. China has become the world’s largest automobile market, its largest oil importer, and its largest buyer of gold. Although foreign banks have relatively little direct exposure to Chinese financial markets, capital flows into and out of the mainland are potentially large enough to have a significant impact on asset classes not normally associated with China. A financial train wreck would send tremors through global markets.

[skiballs]

^$70 a barrel oil?

[Tippster]

I'm not big on news hyperbole but emerging markets have been getting taken out and shot since the New Year with SSE in real trouble:

http://www.bloomberg.com/news/2014-0...-of-track.html

financial drama is unfolding in China as the new year begins. Last week, for the second time in six months, interest rates in the critical interbank lending market spiked above 10 percent, prompting fears of a liquidity crisis that would trigger mass defaults and cripple the world’s second-largest economy.

The implications of this brewing storm are bigger than many global investors realize. China’s credit-fueled investment boom has been a driver of metals prices and machinery exports. China has become the world’s largest automobile market, its largest oil importer, and its largest buyer of gold. Although foreign banks have relatively little direct exposure to Chinese financial markets, capital flows into and out of the mainland are potentially large enough to have a significant impact on asset classes not normally associated with China. A financial train wreck would send tremors through global markets.

Wouldn't that affect the Bond market more?

[4matic]

Wouldn't that affect the Bond market more?

China is the largest sovereign holder of US Treasury other than the USA. What type of bonds are you talking about? A credit market freeze forces asset holders to liquidate other perhaps more liquid holdings like equity. That's what happened in 2008.

I'm not sure what the effect would be on US Treasury. Could be rates go back down.

[Hugh Conway]

Where are we going to get our crap made ski gear?

the problem isn't 'central china' it's the municipalities and down the line. But hey, they've learned from us how to get people to work harder:
http://www.scmp.com/news/china/artic...s-crystal-meth

[4matic]

Where are we going to get our crap made ski gear?

Detroit.

[Tippster]

China is the largest sovereign holder of US Treasury other than the USA. What type of bonds are you talking about? A credit market freeze forces asset holders to liquidate other perhaps more liquid holdings like equity. That's what happened in 2008.

I guess my Finance JONG point was that Chinese corps (not necessarily the Chinese Govt.) who are currently (and have been) sitting on US Govt. Bonds would be looking to sell to offset losses in stock or to shore up cash, which as you said would drive down yield, meaning less people would buy... thus possibly speeding up bailing on QE? I know just enough to know that I don't know shit.

[Hugh Conway]

That works.

On a semi-serious note, I just bought violin strings on fleaBay from China for $1.49... delivered. Between eBay fees, postal fees, and everything else, how the fuck do you make money doing that if it's not stolen?


what do they do with the dollars they sold them for tipp? More likely they just flee to their pad in Oz, Vancouver, London or the Bay Area.

[Tippster]

Or precipitate Revolution 2.0. the 1B non-middle class Chinese are getting pretty fucking pissed... again.

[Hugh Conway]

if douchebag backpackers are important enough to cyber monitor and search... you think the masses have a chance?

[Tippster]

Big difference between a Gweilo and the Proletariat. Not much difference between what's going on now and the "Great Leap Forward" other than who reaps the benefits, which pissed off enough people back then to foster the Cultural Revolution. Sure China has 300-400 Million people enjoying the benefits of rampant Capitalism (and graft) but the vast majority of Chinese sees their role moving toward serfdom to the Middle Class elites, and they no likey.

[4matic]

I forget whether I mentioned this. Girlfriend had cousins wife visiting from China. She was here a little over two weeks and spent $50k on strip mall designer junk (her husband is loaded-manufactures industrial transformers). She works for a power company and her friend and her boss were caught embezzling from the Peoples Party; she embezzles too. She'll "expense" a lot of the junk she bought and bill the commies. "Everyone does it." Two things: 1. The Communist Party is cracking down on this in a big way. 2. If they continue to crackdown it will affect consumption and could predicate debt defaults.

The way you are arrested in China for this sort of thing is they take you to an unknown prison with no contact to anyone and then months later they bring charges and assign you a lawyer.

The good thing I suppose is the broad doesn't want to live in USA. She likes her privileged lifestyle in a polluted shithole.

[Hugh Conway]

Sure there's a crackdown. How much of the power base are the embezzler's? My sense, from my ass, is a fair bit.

[Benny Profane]

I forget whether I mentioned this. Girlfriend had cousins wife visiting from China. She was here a little over two weeks and spent $50k on strip mall designer junk (her husband is loaded-manufactures industrial transformers). She works for a power company and her friend and her boss were caught embezzling from the Peoples Party; she embezzles too. She'll "expense" a lot of the junk she bought and bill the commies. "Everyone does it." Two things: 1. The Communist Party is cracking down on this in a big way. 2. If they continue to crackdown it will affect consumption and could predicate debt defaults.

The way you are arrested in China for this sort of thing is they take you to an unknown prison with no contact to anyone and then months later they bring charges and assign you a lawyer.

The good thing I suppose is the broad doesn't want to live in USA. She likes her privileged lifestyle in a polluted shithole.

I was changing channels the other day, and fell on an interview with some CEO of a high end luxury good maker ( I think it was Hermes) who said sales are down 20%, and blamed poor sales in China for that.