Tuesday, May 11, 2010

What is the next BlackSwan?

What a wonderful month so far for markets a swing of near 6% downside in a week and a 4% upside in a day ,Credit goes to European Officials single handedly making the markets to dance according to there tune and also we yet to know the reasons for 1000 point swing of Dow Jones..rumors in market are mistake by iIbank in selling e-mini S&P worth 15Billion USD, large Europe bank liquidated its positions. and high frequency trading ..any way leave it...we will get to know more on it in few days..

So What exactly happened during the past week and weekend ? what made europe for the changes in there policy towards bailing out countries all the while opposing towards that idea. I guess this weekend will be recorded in history for sure. European Bank offered a trillion dollars package to weak countries?  Will this solve the current problem? From where will they bring 1T $ ? Print Money.if so..haha..LOL..that will have ripple effect in coming days for sure ..if not ..Why didn't they do this much earlier? when bonds were yielding much lesser..Now when they are higher they are buying them..pretty bad i guess ..its like buying at high price and selling at low price...If thats not the case..then Markets are doomed to come down again...for now europe went up..but still there are problems around euro..i dont think in a weekend all there problems are solved ..May be am wrong..will see..

So what next for markets..inch higher for now until we see another blacksawn. If there arent any events like that then by default we have the great driver of our ENGINE ...yep its China..Many are suspicous of China coz they dont reveal much data to the rest of world and we have to speculate a lot on its conditions..
I personally feel China is the ultimate culprit for making Metal Prices ,Oil to go up in 2008 coz of Olympics it conducted  which lead to massive cornering of metals...to build the stadiums,roads,infrastructure..and it drove Oil prices like anything coz it piled up huge reserves of Oil to use as backup fuel  in case of occurrence  of  Earth Quake. Once the event is over we had a oversupply of commodities,Oil and it crashed. Now again if  oil or metals to go up we need such a kind of demand...

So even without any real  demand metals going up..means expect a fall in near future which is already happening in China..Thats why am bit worried of China Throwing a Bomb on us..Have to be carefull in knowing the next BlackSwan timing


  1. Greece is preidcted to have 150% of its GDP as debt by 2013 and will be paying 7.5% of its GDP as interest on debt .. I think they will be ousted out of the EURO zone and will be forced to rely on their own currency soon ..

  2. Yes Right..But Greece Goes out of Euro then i feel many other countries will follow the same as they will be in a better position to manipulate there own currency ....
    And to add that...My client is a Italian company and what i hear from my on site folks in Italy is that many Italian people are favoring a local currency rather than EURO..

  3. EU has a GDP of approx 16 trillion dollars. So I think it is not a huge problem for them to get 1 trillion dollars. That too only part of it was by them. some 300 billion dollars(not sure with this number) is to be obtained from IMF, according to the plan. So, the amount is just around 5% of their economy. It took so long to announce the bailout coz no country wants to share its money to rescue other countries. but finally reality of what happens when Greece defaults has stuck them and now they have got into action. I guess if the bail out package was implemented, the Black Swan can be prevented.

  4. The story about China and crude oil is interesting. Where did u get that story from?

  5. I guess they agreed for a package to sooth the markets..am not sure the logistics of the package usage..but for now markets are a bit cooled but i guess the CBOE Volatility is around 30 down making the market participants a bit nervous

    Here is another article : Did Taleb create his own Black Swan? http://www.optionmonster.com/news/article.jsp?page=commentary/in_the_news/did_taleb_create_his_own_black_swan_45180.html&cookie_test=0

  6. Type OIL and Chinese Olympics..we will have number of articles on it..but market people generally will caught in euphoria and forget the past ..Here is one such article which talks about that ..