Tuesday, January 19, 2016

Terrific Tuesday!

So after another nail biting week in the markets it appears as though the global bounce is in full force this am as most markets around the world are up 2% or so.

Here's the standard reasoning behind this big rally:

* We're due for a technical bounce.  I won't go into the details here but the markets are believed to operate like a falling ball.  If they fall hard and fast enough they will eventually bounce a little, much like a rubber ball falling off a table.  Doesn't that make you feel better about the safety of your 401k?

* The data out of China appears to be so bad that there is a growing consensus that they will have to artificially reflate their markets.  Again, this is nothing sustainable just further hopes and dreams for more monetary stimulus.


What remains of grave concern for me in no particular order:

* The pending bankruptcies across the energy and commodity sectors.

* The impact these bankruptcies have on the global financial institutions (many of our largest banks are reporting $20+ Billion in exposure).

* Have we entered a new paradigm where "Sell every rip" replaces "Buy every dip"?

* The global debt feast may be ending - total global debt is up from $77 trillion at the peak of the '08 financial crisis to over $102 trillion today.

* The way the world and markets have changed in the past 15 years.  85% of Wall Street traders were not in the business during the dotcom crisis.  Almost half weren't around for the 2008 crisis.  The speed of swings in today's market is unlike anything that existed 10 or even 5 years ago and the ramification of these changes is not widely understood.

I hope to take some time in the coming weeks to dig a little deeper into many of these topics.

Cheers.

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