My concern is regarding the NFP numbers tomorrow. Things could change almost regardless of the results. There are only three possible outcomes. The number could be hot, cold or “just right” (consensus).
If there is no surprise I think I have a decent chance of getting back into things over a few days without much opportunity cost.
If this number is hotter than expected watch out. It will turn the QE debate in a different direction. How can Big Ben and his mates push a dangerous monetary policy when there is evidence it is not needed.
If the data is cold and unemployment pushes up a notch or two and the employment numbers are much worse than anticipated and it is clear we headed into a 4Q break even GDP then I will be wrong. But not poorer. And even in this scenario I could still be right.
If the number is cold tomorrow QE-2 becomes a certainty. But really that has been the case for weeks now. Bernanke has made up his mind some time ago on this. A soft payroll number would give him the cover he wants/needs to get acceptance for the "pedal to the metal" monetary approach. The stupidest most dangerous monetary policy decision in the past 70 years is good for stocks? When does the reality set in that we just set the ship of our own demise?
All the markets are correlated around strong equities and the "risk on" trade. We have had that for the past six weeks. I am afraid that no matter the result of the NFP we are going to into a risk off mode.
If that is the case I will be able to get back into my favorite trades at better levels.
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Looks like someone agrees with your reasoning :>)
ReplyDeleteShould have read your blog today before buying back into gold....although my theory is that the people attempting to reassure everyone are going to seem less and less credible as time passes (because there is no way they can sustain this spastic juggling act), and each decline in credibility must surely encourage more people to bid up the price of precious metals. It all seems so obvious, it worries me. If it's that obvious, it should have been priced in by now, right? But maybe it only seems obvious to people such as myself who are paranoid nuts and don't watch TV or read established media.
ReplyDeleteBeing right 25% of the time does not seem too bad to me.
ReplyDeleteAnd it's always prudent to take profits and/or to hedge. Especially in an edgy, volatile, and now overbought (IMO) market like this one.
One can hardly be an "investor" anymore given the way these over-hyped reports move the markets.