Sunday, May 25, 2014

Confusing markets

It's getting more and more difficult to read the markets.....

VIX - the gauge of market fear is plunging to a multi-year low.

Over in the USA, retail investors are pouring in a lot of money into penny stocks. The money that they poured in surpassed 2007.

It was very unusual to hear many people keep calling for markets crash...................if those people really getting concerns and sold their positions, it was quite incredible because the markets absorbed the selling very well and in fact too well. S & P making a new high again, closed above 1,900 for the first time yesterday.

Traditionally, most equities or bubbles are punctuate by interest rate increase. Looking at 10 year treasury yields, market does not seems to think we are getting any of interest rate hike.

It has been a long time that I did not watch crude oil price. It's trending up but no sign of breaking out of previous highs. Moving closer to USD 120/barrel will probably the strongest catalyst to bring world economies down to a recession.

The markets are indeed full of contradictions now.....ample liquidity yet no solid economic growth. Complacent market participants yet not reaching extreme end. Market is neither cheap nor expensive based on traditional measurement such as PE ratio. Overall inflation is low but middle class feel purchasing power is getting weaker and weaker. Even Pimco bond king forced to shift his stance from New Normal of below average economic growth to New Neutral - the world economic is slow or not recovering with very slow interest rate rise. If we are trapped in this Goldilocks scenario, we should see much bigger bubbles eventually.

1 comment:

Sofiya Lim said...

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