This is about a day old as of this thread. George Soros, the infamous investor and speculator who takes pride in the manipulation of sovereign
currencies, and delights in his heavily bearish positions upon them in their declines, has reportedly placed a farily formidable bet against the
Standard and Poor's index (S&P) for the immediate future. Aparently this comes in the form of a "Put-option", which would allow him to sell off
certain stocks at an agreed upon time for a pre-set rate. Basically Put options are used as hedges against unforseen sell-offs and market plummeting,
but in some cases they can be seen as a bet in and of themselves, if the investor feels the chance is strong enough.
History has a story to tell about big calls from Soros and people should be paying attention, says the Baron blog:
“Soros reportedly made $1 billion betting against the British pound in 1992. We heard rumors of Soros making a $1 billion bet against the AUD (a
position that has done well if true). We heard when he made $1 billion betting against the yen. Where are the headlines for his $1.25 billion bet
against the stock market?” asks Baron.
It was a big story earlier in the year when an unknown investor placed a fairly large put against the April market to the tune of a few tens of
millions (20-40 if I recall). This obviously places that in the dust. Granted we are talking about Soros here, so anything he does he does with
emphasis and the full weight of his capital, but it isn't chump change to anyone.
This comes on the heels of a whole slew of recent "Hindenberg Omens" appearing over the past couple weeks, perhaps 6-8 of them by some counts;
historically "Hindenbergs" have not predicted necessary crashes, but they suggest the strong possibility of one in the 40 day period following, and
while independently they may have meant nothing, this recent mass cluster of them is very alarming.
We are also seeing rapid growth in treasury note interest rates, which some feel dictate higher interest rates all over the economy, such as in
mortgages, in order to remain competitive in their payouts. In fact Treasury note rates on their own could be a lynchpin.
We are seeing great tensions now in Egypt. Granted, it is traditionally an unstable country, but somehow it is also an anchor by North-African and
Middle-Eastern standards, and the instability of Egypt and/or Iran will mean a general breakdown in the lot is likely. Also keep in mind that Egypt
commands the Suez Canal and Iran the Straights of Hormuz- the only two outlets into and out of the Persian Gulf. If EITHER of those passes becomes
unstable or contested, that alone would have market destroying consequences.
Personally, I see some sort of massive panic likely coming for the September-October months, which has traditionally been a danger period for the
markets, and which already has a lot of doom-saying attached to it by now. You don't have to be a prophet to see what the cards are leaning towards in
this one. We have a fairly formidable confluence of bad trends working against us this time, and the trends which seemed sufficient to crash the
markets on the last low period, such as the Southern European Instability are not only still present, they are even more severe.
The markets have made a liar out of many of us recently, and I have to admit I also predicted a large downturn for last fall; the markets are becoming
increasingly divorced from the actual everyday economy, and have shown a remarkable ability to resist powerful forces nearly dictating their decline,
but I feel like the shell game may actually be up this time.
edit on 16-8-2013 by joeraynor because: repairing link
edit on 16-8-2013 by joeraynor because: link
edit on 16-8-2013 by joeraynor because: link repair