Last week I talked about China's economic troubles shown by weak data. I went as far as to call them a paper tiger. That may have been a bit harsh, but it was to make a point and that point was the last sentence of my entry. "Look out Chinese QE!"
Well, that did not take long. Fast forward all the way to THIS MORNING when China tried to do its best FED/ECB impression by "proposing a strategy" that would allow Chinese banks to swap local-government bailout bonds for cash as a way to bolster liquidity and boost lending, said people familiar with the People's Bank of China talks.
Wait a moment! Who do they think they are? It's one thing if the ECB is going to steal our ruse, but China! That is just too much. We perfected the art of having our FED buy up all of our garbage and then flood the market with loads and loads of cash. That will stimulate growth, create jobs, and prop up a healthy inflation rate. What could possibly go wrong?
Now add to that when we find out the demographic of the new Chinese equity "investor". This almost feels like one of those "pump and dump" schemes that we saw in the movies like "Boiler Room". Roughly 90% of Chinese stock-trading volume comes from retail investors, according to government data released late last month. If there is one sure way to freak out a market it is to encourage a bunch of inexperienced "investors" trading on their smart phones to enter a marketplace that they know very little about AFTER the market experiences nearly 20% gains. You want to see panic selling? Stay tuned to this market if it even hints at a correction!
Trade well and follow the trend, not the perma-bull OR perma-bear "experts."
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.
The major U.S. equity indexes finished sharply higher today, in the process retracing much of the losses experienced on Friday. The only thing similar to Friday's performance was that the market-moving news came from overseas, but this time it clearly had a positive bent to it......
How can options help an existing position? The typical position that a retail investor has is long stock. You can do a number of things to hedge/augment this position. You can sell a covered call. Given a long stock position, you can pick a price...
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Keep a civil tongue.