ZH type bears may have priced that “new norm” bottom too low bel

来源: marketreflections 于 2010-09-16 11:24:11 [] [博客] [旧帖] [给我悄悄话] 阅读数 : (3680 bytes)

http://www.zerohedge.com/article/guest-post-if-what-deflation-looks-like%E2%80%A6#comments
Mike Krieger, andbody read about it?



I think he (a formal macro analyst @Bernstein ) did very well in differentiating between main street (real physical us economy) and wall street (financial economy), under deflation/inflation and their combination scenarios. Kind of in the same line of thoughts I posted here yesterday. And I post a little more to get some feed back.


The major difference between me and him:

I agree with him on everything he said about the fiat money system, the financial and political elite beneficiaries of all the major countries, and their harm to the main street, and their distorting of financial market as a discounting system of “real” economy, etc, like the s&p;s current “resilient: rally.


One thing I do not agree with him:

The fiat money system, and the power and benefits of financial and political elite behind the system (yes including china), are not going to change at all, and with “main street” living in a Japanese style deflation real economy in a slow pain mode, but not a collapsing or insurgencies or revolution mode, at least for the next 6 months which is as long as stock market cares;

So, main street can basically still live, despite of all kind slow pains such as slow foreclosures and slow or no jobs etc;

This way, “system” still lives too, basically free of “shocks” , and Fed and its allies will maker sure no more “financial shocks whatsoever” anymore,;


This way, all money managers, equipped with cheap funds borrowed at almost zero interest rate, can still pricing a world capitalist economy, which is consisted of the above described main street and wall street;

Main street get to live by, with a little/slow pain, still, living with pain is better than dying; and wall street get to play by, with a little joy, although much less than before, still, better than nothing;

So what wall street is going to play in such a “new norm”, old game: all the asset classes as we know, and the equilibrium of returns or relative returns among those asset classes, with “Fed put/HFT” making sure bottom is not going to fell out for s&p in particular;


Some “front running” folks like gross and russel type may have already figured all these out, and after may be another s&p testing of 1040 or 1020 or even a little below 1000 and still holds, and this “new norm” financial game would become “reality”, and most ZH type bears would have to capitulate, all they would have cash flow problems;

But there are just too many Zhs , so s&p have to re-test 1000 at least one more time, with some kind of trigger, to give shorts an opportunity to cover, and me to sell those stupidly bought VXX positions.

What would that trigger be? Not Fed meeting, not mid term elections, not even Greece, china fed and IMF will support Greece Fed, and Mike Krieger’s revolution dream will never come true, but his gold does have further upside potential as a newer asset class, particularly with s&p recent disgrace.


Until US economy further worsens, and it probably will, I just can’t figure out how 75% or more of US “main street” can manage their cash flows with a service job and underwater or close home asset?

So another bigger than “slow/small” pain of US real economy has to come somehow, to let s&p retest 1000 once more, and figure out a bottom for the “new norm” of the global capitalist economy.

ZH type bears may have priced that “new norm” bottom too low below 1000.

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