Tuesday, May 23, 2006

Markets don't like the bird flu....

The markets feel very 2002-ish right now. Whatever the news the markets want to go down. Today the market was up for most of the day until a story broke that there may have been a human-to-human transmission of bird flu in Indonesia, then we went south fast. These are preliminary reports, but human-to-human bird flu, if not contained, is a major, major risk to the global economy. I don't see it happening today or tomorrow - the mutations needed are just too complex - but it is possible and if it does happen, I'd like to be short the market and long lots of water and canned goods :)

Some people keep pointing to hurricane forecasts which are pushing up oil prices. I can't believe people are trading on this news. Forecasters are off by an average of 2+ hurricanes/yr. When you're talking about 3-8 storms/yr, + or - 2 storms is a big margin for error.

Also, there seems to be a presumption in the market that all of these storms will end up in the Gulf of Mexico. Again, flawed thinking as anyone in Coastal Carolina will tell you.

There are a lot of Jim Cramer-ites out there looking to push the market back up but they lack conviction. I can see both the Nasdaq and Dow bouncing 3% up from here, but by 6/1 I think we're going to start testing new lows.

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