The Market is very undecided here driven by two themes
- Equity are cheap here
- Quantitative easing (US Central Bank being buy of last resort of US Treasuries)
in combination with the benfit on the election being over, but a number of important and most likely very negative data coming up.
For those with Financial Times access below are two link to FT Alpaville adressing the issues.
http://ftalphaville.ft.com/blog/2008/11/04/17783/why-draaisma-is-saying-buy-buy-buy-buy/
http://ftalphaville.ft.com/blog/2008/10/27/17448/the-unthinkable/
The main issue I have with the equity argument 1) is that it assume we can measure todays market in a reference of the last 20-30 years which I would doubt. On the other hand we have a rally going on as we also had three times in the 1929/30 period as shown below:
Looking at the market in the last 24-48 hours the odd move have been US Treasuries that have performed very well in an other bullish risky asset environment ... maybe linked to quantitative issues. Some support is probably also coming from expectations for very weak economic numbers in the next few days.
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1 comment:
Question for Mr Draaisma: Are all crisises created equal? The question is that no one has any clue how things will develop, so you you choose your measuring stick calibrated at whatever thing in the past and decide: Now is enough, we go up. Too bad that he did not track back to 29 with his indicator. I doubt that 02 or 87 have any relevance for our current environment.
Many thanks for you blog - great stuff and good thinking
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