The Market Ticker
Commentary on The Capital Markets- Category [Market Musings]

Be very ****ing careful.

That's the short version.

Timelines have become compressed to an unbelievable degree, and liquidity sucks.  HFT is responsible for most of this, I suspect, but it portends very bad things in the near future for the markets -- and ultimately for the overlevered economy and business as well.

Don't let anyone tell you business has "de-levered."  That's a lie.  Non-financial corporations have record debt outstanding.

And why not, when you're basically getting paid to borrow?

It gets worse when you start looking at off-balance-sheet obligations such as firms like Netflix have -- far worse.

How far does this go and how bad does it get?

Nobody knows how far it goes -- but it can get very, very bad indeed.

How about worse than 2008 -- because the systemic leverage is in fact higher among non-financial businesses and governments, while the available means of response have been basically exhausted.

Buckle up.

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2015-08-25 14:40 by Karl Denninger
in Market Musings , 185 references
 

Oops..... if you bought the open you're deeply underwater.

Gonna keep buying, dippy?

smiley

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"Markets in turmoil!" screamed the headlines yesterday.

But that's only true when the market goes down strongly, right?

Here's the amusing part of this -- the cut in China's reserve requirement that produced a 600 point DOW futures rally overnight (most of which happened before the cut) and the futures market over the last 48 hours has done nothing but******people on both sides of the trade -- those who shorted yesterday -- really any time yesterday -- are now (deeply) underwater, and those who sold yesterday are shaking their heads at a crystallized and unnecessary loss.

But before you start singing Kumbaya please keep one thing in mind -- these sorts of "excursions", just as they did in early 2007 when the Asian market melted down and again in early 2008 when Bear Stearns went under, have a serious negative effect on liquidity in the market as those who find themselves with the raw deal this morning take their ball and bat and go home.

It happened last time and it will this time.  And no, what started last week is not over.

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I mean, c'mon -- can't even manage to hold a ramp for a couple of hours?

smiley

PS: Momos are getting destroyed.... if you bought into the Netflix or Apple ramps mid-day, in particular, well....

PPS: Was that alleged "email" to Cramer from Tim Cook legal?  You know, market-related data is supposed to be released to everyone at once (reg FD).  I suppose it's ok when you lose money though.... right? smiley

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Is to go against the market.

The open today was so extreme and liquidity so poor that it was basically impossible to enter an order and have any reasonable expectation that you'd get a decent fill.  For that reason the only wise choice today is to sit it out.  A lot of people sold into the spike low and got flat-out murdered -- less than an hour later that act looks damn stupid.

However, you will soon have an opportunity to sell the bounce that comes when you get spike-down moves like this.  It is unwise to try to get too far in front of that petering out, and if you've been long and just watched 10% or more of your account vaporize in names like Netflix and Amazon it will be intoxicating to see your balance creep back toward where it was a few days ago.

It will be very hard to sell into that rip because you won't be "made whole."  But that still may or may not be the right choice, whole or not, on a cold, stone-faced analysis of the stocks you hold.

Prepare yourself to be coldly analytic now.

This is not a day to trade, it's a day to go the bar and drink.

In the coming days you will need that cold, analytic view to make a wise decision.

Go find it today, whether it's a day at the range, a day at the bar, a 10 mile run or a wild night of sex.

This isn't over folks.  In fact you're just seeing the beginning, even as you watch the DOW come back by 2/3rds of its opening-print loss.

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