June 13, 2006
Why I am avoiding the US Market for a trade
This morning Lehman's Degraaf had this to say which is what I suspect as weel and mentioned yesterday:
"When the catalyst for a decline remains vague, the decline usually has greater
durability because the discounting mechanism works with less urgency. There is
no doubt that blow-up risk is rising with tighter credit, and maybe there is
something beneath the surface, not yet seen, but all present. LTCM prompted
market weakness weeks before the world was privy to the Greenwich hedge fund’s
existence. Historically, a tightening cycle is rarely complete without the
curtain being pulled open to reveal the simplicity of an institution whose
profits appeared to magically defy gravity (the illusion of leverage), and that
has yet to happen in headline fashion here. "
I have to agree with this and rallies will likely fail until we get this scenario. At least history suggests this.