The T Report: Look for Credit To Lead the Way
Stay Long Until IG18 Hits 95
I’m not sure what else to say. As I look through the various markets, I remain convinced that CDS is rich and will continue to get squeezed. That strength in credit will filter into other markets.
I find it harder and harder to like U.S. stocks.
I don’t believe in Apple and will soon go out on a limb and short it. The attitude difference around Apple vs Europe is amazing. Everything in Europe is dismissed as priced in or won’t happen, everything with Apple is new news or will be good.
I think the LIBOR banks are at risk as more LIBOR stories come out. In the end, I don’t think the losses will be anywhere near what the WSJ put out today, but we could see some ugly headlines.
The shorts on the other hand sound like a broken record. Nein, nein, nein, nein, nein, nein, nein…. I cannot begin to count how many times I saw Nein in the headline. Yet here we are, with every indication that the ECB is slowly moving towards taking action in spite of the German negativity. There is a real risk that Europe doesn’t do anything new or significant, but as I read actual quotations and full articles, it seems many people are too quick to highlight only one or two comments, sometimes out of context.
I doubt we get anything significant out of Jackson Hole, but I’m not convinced we need it.
In the end, too many people are playing for “The Big Short” for it to happen. We rarely get a big sell-off when so many people are calling for it, and people are calling for it and positioned for it. The pain will be low volume, low volatility, grind, forcing people out of their short positions. Until then, I don’t see a significant sell-off without some new real news. I think the Bad Bear Tells remain in place.