28 January 2011

The Return of the Bear (or the entire family of Bears)

Its Friday afternoon, 6:15 GMT,  CNBC is on, having a look at their heatmap and it is almost all red.  Nasdaq down 66 points (2.41%),  Dow 154 (1.32%), Gold up 23.5 points.  Not a standard Friday afternoon for sure.

Add to this Egypt, Tunisia, and mind you, Athens, London, Paris, Dublin, and as abstract as it seems this does not have to be an EM isolated event.  People will not be happy once problems start.

Add to this a ratings downgrade in Japan from AA to AA-, very much implying that anybody anywhere can be downgraded.

Add to this DJ reaching 12,000, a very much technical time for a correction.

And of course account for the real problems; staglation, u/e, gdp decrease in UK, huge sovereign deficits that are totally unsustainable, "friendly" national and banking accounts, significant differences in cost of labour and productivity amongst The Old World and The New World (somehow the phase of Developed vs Developing nations is losing its meaning)

... and one could think, that one day someone will be saying, Russia 1998, Tunisia 2011.

... and maybe it is time to stop being "cautiously optimistic" and start being "hopefully sceptical".

... and even though I read today that Paul Paulson has made USD4bn last year on his hedge (congratulations to him), I bet you that an event like Tunisia, unlike CDO, credit, debt, inflation, gold price, cannot be forecasted in.  However just for you Mr Paulson, lets agree that the bears can be the cute animals too (vide the picture above).