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Eshmun The Feds responsibility is to normalise rates to avoid...

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06/09/15

12:10

Post #: 15943212
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Originally posted by eshmun ↑

Yes pretty close now to testing the markets true resolve. Friday's close in the US was another hissy fit which will have sent a signal to the Fed. If they are not listening yet then no doubt there will be more until they start to listen. The longer that this tension is allowed to go on the sharper the moves in markets will be when the Fed actually comes out with its pronouncement.

I've been buying DLS down from my entry price of 90cents but picked up my volume of buying in the 60cent range and got caught out buying more in the claytons oil bounce that never happened (the market still owes me money from that and I'm getting it back) in the high 60cent range. I've continued to buy with resolve down to 54cents but am now going to wait to see what the Fed does and the reaction with markets. I think some of the recent falls in DLS have to do with the BTP/DLS corporate action so I'm thinking I'm also owed some money back from BPT from these low 50cent purchases as well.

We are at a point I think with DLS (and equity markets in general, but ASX oil stocks in particular) where you could be missing out on a very good opportunity or be facing some unknown market circumstances which are very difficult to quantify or to know where they will lead. The next market crash may not have the characteristic fast bounce back and recovery of the last that was caused by enormous waves of money stimulus. The Fed is not stupid they can read the market sentiment. The first raise is more than token, it signals to the market that there will be more to come (whether or not there will be or not). Then there is the question of whether or not the Fed even has a valid mechanism for achieving its tightening plan. What makes them think that a market that has been gorging itself on free money for the last 7 years (and in the 10 years prior to that on Alan Greenspan's interest rate policy easing) is going to start lapping up 4.5Trillion of treasury paper that's well and truly stuck on the Fed's balance sheet. Are the free money drug crazed gamblers in the Wall St casino suddenly going to give up their addiction and take their positions on a rocking chair on a porch somewhere just to go to the letter box every six months to collect their windfall 0.25%/annum coupon payment. And what's the logic behind suddenly paying interest on all the cash that is sitting in US and other commercial banks around the world's balance sheets due to the record excess reserves that have built up in these banks because participants in the real economies in the US (and elsewhere) actually decided to deleverage in a massive way after the GFC and rejected a lot of the "free" leftover money that the Wall St crowd couldn't find to put anywhere despite inventing any number of new and very dangerous derivative products to try and sell too new retail punters like they were selling bottles of cola. Well to me it seems like an absolutely futile and pointless exercise that the commercial banks now have to start giving back these excess cash holding in exchange for the US government debt that originally created the money in the first place. Its like an exercise in futility akin to a couple of tennis players hitting a ball backward and forward in a rally that never ends.

Try and take the object of addiction away from and addict and all you will get is screaming. Not going to happen or will it? We shall see. I think we will test 15500 but a big relief rally will come when the Fed delays the hikes again and the robo-machines are reprogrammed to start buying the dip again. Why tank the markets? It doesn't make sense.

Eshmun

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Eshmun
The Feds responsibility is to normalise rates to avoid further asset inflation. Shares will fall because they have been bought with a risk free rate of near 1.5%. When this rate rises all risk assets have to be repriced.
Asx I think will be insulated as our rates are low and staying low and dividends attractive so I think we will see a decoupling of the two markets over next 1-3 years

DLS Price at posting: 54.5¢ Sentiment: Buy Disclosure: Not Held
2 Upvote

0 Great analysis

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