Pascal
08-11-2015, 01:20 PM
The real issue with the Chinese devaluation is the competitive advantage that Japan might lose to gain access to the US market.
Hence the selling pressure on the Yen today. In a sense, this is not good news for US large exporting companies (AAPL - 4.2% today)
US fixed income assets are gaining from this... or at least should be gaining. US Treasuries are up today, but defensive sectors are not attracting much money.
Next week is options expiration, which should be bullish for equities. So I'll let this week bleed and see when to buy.
As of now, we have a failed bounce from a bottom oversold market. In a failed bounce, the shorts covering activity is not there anymore to support equities. What is only left is liquidity from Japan and China. That is basically devaluation fighting deflation. This is a "race to the bottom:" you print and get nothing for your efforts except triggering more printing by your competitors. It is similar to Saudi Arabia stating that they will drive competition out of the oil market by increasing production and forcing prices down... just to see competitors just do the same because their survival is at stake.
Pascal
31688
Hence the selling pressure on the Yen today. In a sense, this is not good news for US large exporting companies (AAPL - 4.2% today)
US fixed income assets are gaining from this... or at least should be gaining. US Treasuries are up today, but defensive sectors are not attracting much money.
Next week is options expiration, which should be bullish for equities. So I'll let this week bleed and see when to buy.
As of now, we have a failed bounce from a bottom oversold market. In a failed bounce, the shorts covering activity is not there anymore to support equities. What is only left is liquidity from Japan and China. That is basically devaluation fighting deflation. This is a "race to the bottom:" you print and get nothing for your efforts except triggering more printing by your competitors. It is similar to Saudi Arabia stating that they will drive competition out of the oil market by increasing production and forcing prices down... just to see competitors just do the same because their survival is at stake.
Pascal
31688