MARKET COMMENT
May 23, 2007
Greenspan, Stock Jockey
Gee, and I thought he was a bond guy.
Today things were going along pretty smoothly
until Greenspan started talking up his short position [who’s he kidding!] in
Chinese stocks by saying that a “dramatic contraction” could occur.
He didn’t have much affect on US stocks [maybe
a day or two] when he uttered the famous “irrational exuberance” line in 1996.
But who knows, maybe he has more influence
apart from his previous official role.
So
it’s Greenspan Unplugged.
We’ll see tomorrow how these comments affect markets.
Despite it all, the Chinese and US ended their trade talks with some progress.
Those looking for the Chinese to cave on
their currency manipulation were disappointed.
It would have been remarkable for any other outcome.
And, it may not be a good thing for the US or China to let the yuan rally too much.
Perhaps more important today was news from the subprime mortgage area that “the worst may be over” as some
mortgage related stocks rallied sharply--ranging from 10-25%.
Closely associated with mortgage markets is the condition of
the 10 year bond.
It doesn’t look promising
but we remain in a trading range.
Oil supplies were higher but products rallied on concerns
about tight refinery production, Middle East
unrest [what else is new?] and the start of hurricane season next week.
‘
As you may have noticed over the past two weeks we’ve been
keen to follow the progress of both Small-Caps and tech.
Things were going along well until late this
afternoon.
Greenspan’s comments could “torch” the Shanghai markets tonight.
[He’s not alone in thinking Chinese stocks
are overvalued as other pundits have been loudly proclaiming.]
Could that create another late February
bust?
Possibly, and also to Emerging
Markets in general; but, there are other forces clearly affecting US
markets.
Some old soldiers should just fade away, but I think the former
chairman wants to make some money in his old age having missed-out [theoretically]
on the bull market during his long term.
The quote of the day comes from a line in MarketWatch referring to a proposed promotion by AXP:
“American Express is set to unveil the first
program that allows consumers to charge mortgage payments--and rack up rewards.”
I’ll have to think about this for awhile, but
I’ll bet Chucky will love it!
Have a pleasant evening.
Disclaimer:
Among
other issues, the ETF Digest maintains long or short positions in:
FXI, EEM, GLD, DBE, RYE, RCD, IWM, QQQQ and IGM.