AUD money market conditions credit spreads wider than pre '08

by AUD
on Wed, 10/13/2010 - 19:02
#647873

Except you, that's why you & your like are not buying stocks.

I've said it before, I'll say it again, money market conditions are nothing like pre the crash in '08.

There is no bubble in stocks when measured against other papers being so eagerly sought at present. People will wake up soon enough.

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by Minion
on Wed, 10/13/2010 - 20:01
#647977

No bubble - correct, in the sense that the public is no longer borrowing money to chase price. Bear market rally with sentiment pegged to bullish extremes like 2008? Heck yes....... volume is getting a little light, except on the down days. "it's different this time because POMO Ben has lit the dollar on fire and no other central bank has a water hose big enough to put it out"...... markets don't function when everyone is on one side of the trade. 2009 rally happened after a huge haircut. We've already grown back what we lost after our correction in the Spring. :)

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by AUD
on Wed, 10/13/2010 - 20:22
#648028

Yeah, & based on credit market spreads, which incidentally the stockmarket follows cause it always has, we still have a lot of hair length to grow.

The '08 crash was a number 0 buzz cut & central banks haven't done anything to improve the quality of their credit since then.

I'm not claiming the stockmarket will be up a gadjillion % in 2 weeks, it may still have down days, but Leo is right, soon enough those nervous nellies still hiding in government credit will succumb to greed.

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by Minion
on Wed, 10/13/2010 - 20:30
#648050

Interesting, I've never seen the use of credit spreads to time reversals. Sentiment indicators seem to be the most reliable but I'm always ready to learn something new. :)

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by AUD
on Wed, 10/13/2010 - 22:36
#648307

My data comes straight from the RBA, it's only monthly data so I wouldn't try to time a reversal with it but the evidence is clear - the stockmarket rises & falls with the underlying spreads between the various levels of credit risk in the money market (bp spreads of 1-5 yr corporate bonds (aa, a, bbb) over governments is what the RBA publishes).

And why shouldn't it? Stocks are just a 'junk' form of credit, they are part of the money market.

I'm telling you credit spreads are still waaaay wider than pre '08, there is no chance of another panic, fear still stalks the money markets, though spreads have certainly narrowed since then, hence the rise in the stockmarket.

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by Minion
on Thu, 10/14/2010 - 01:04
#648523

Sounds a little like the COT reports (which are a week late). The large traders of $INDU futures have really taken some longs over the past month. Heh, I wonder why............

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