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Suddenly, Everyone's In the CRASH Camp, Not Just The Bear Camp
Joshua Brown | May. 18, 2010, 9:12 PM
Newsletter writers, hedge fund managers, journalists, bloggers, technicians, fundamental analysts, economists and strategists are joining the crash camp left and right. Not the bear camp...the crash camp.
I've been running around Manhattan all day taking care of business, meeting clients etc. After scanning today's articles and blog posts, I can honestly say that I've never heard more chatter about an imminent market crash, all at once, in my life. It's like the May 6th Flash Crash got everyone in the mood to talk cataclysm all of a sudden.
* First of all, the macro guys are disturbed by the Euro Zone's crisis and its ripple effect/ contagion risk. This isn't new but it is more pervasive. And the possibility of a China collapse scares the hell out of almost everyone.
* The technicians and Dow Theorists are grossed out and have dusted off all the 1937 charts again. Specifically, they are looking at the highly distinct pattern of a big drop (May 6th) followed by a failed rally (euro bailout day's 4% gap open) followed by another fast sell-off. Richard Russell's latest missive, in which he tells us that we won't recognize America by year's end, will make you want to kill yourself.
* Equity analysts are all pointing to year-over-year comps which will start getting harder now. They may feel OK about the "E" but they're shaky about the "P" - will the tax hikes and regulatory headwinds we now face really allow for a high-teens multiple on whatever the earnings turn out to be?
* Bond guys are freaking out about sovereign stuff, obviously. We've transferred corporate risks onto government balance sheets with bailouts, the Piper still awaits his payment in many cases.
* Eddie Elfenbein posted the results of a CNBC poll yesterday in which 40% of respondents predicted a 50% haircut for the Dow. Seriously, almost half the respondents predicted Dow 5000 by the end of this year.
* The hedgies are vocally bearish again as well. Seth Klarman's got some cautious commentary out today and Jeremy Grantham's "sell everything" stuff is being quoted everywhere. Raoul Pal put out a newsletter this week with a 2 day-to-2 week crash prediction.
Originally posted by itsawild1
I wish the usa would just default on its debt and start over. We do have the power, the will, but the nwo would fight that like the audit the fed to the death for some. Imean there is a point when its mathamaticly imposable to pay off debt. We have been at this point for a long time and with so much lost tax revenue [that doesnt go for interest] there is just not enough left to pay the crooked and the just. The crooked, and wicked greedy will have to look elsware for their greed.
They have blead the goose dry, and they have blead the gooses children as well as they. Its over for easy money, they that played with fiat money, and fraud might find out they have to get a real job based on real things. thanks again
Originally posted by manta78
Just out of curiosity, how do you feel China, who's been keeping us afloat for a long time would react to our default, and what do you think they would do about it, if we did default?
[edit on 20-5-2010 by manta78]