Posts Tagged ‘ stock market correction ’

Complacent Market; Fraught with Risk

October 28, 2016
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Complacent Market; Fraught with Risk

In a shockingly flat stretch, noteworthy for the lack of volatility, and an incredibly tight range, the market has gone absolutely NOWHERE from July to October. 20-30 basis point moves feel outsized, even though they are not, in any sort of historical context. On days when the market goes up, the VIX falls to a 12-handle. Almost each and every session, the tape is “heavy” for some sort of “reason”, at some point in the morning, only to “rip” violently, for no apparent reason, undoing any meaningful move down. It’s been torturous for traders, the market is very expensive, the economy is late-cycle, yet the market can’t go down meaningfully for any reason. CJF believes that in a period of light volumes, algorithmic trading is increasingly dominating market action,...

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China in Recession; Yuan Depreciation Imminent

September 3, 2015
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China in Recession; Yuan Depreciation Imminent

China is at the end-game of its great economic transformation. Multiple iterations of 5-year plans, and flawed central economic planning, created a massive build-up in debt that can no longer be continued. China’s debt fueled growth is understood, but the impact of the deleveraging phase is becoming evident in real time. Various estimates of China debt exist, but given the proliferation of shadow banking, and state involvement in the corporate sector, China’s total debt is a nebulous subject. Using estimates, China debt rose from $1 trillion in 2001 to $30 trillion today. China GDP is approximately 10x larger during a period in which debt rose 30x. McKinsey Global Institute estimates China debt-GDP at 282% in 2014. China’s economic problem is straightforward. Party rulers believed steadfast in the ability to...

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