ROBERT PRECHTER : 6 TRENDS ABOUT TO REVERSE

Here's an article I came across in 'The Business Insider' > Robert Prechter: These 6 Trends Are About To Reverse‎

"

Prechter argues there are several themes out there right now that investors, economists, and markets all believe to be true just like they did with interest rates in the 1980s.

• 
  
  The dollar - everyone is bearish.


• 
  
  Interest rates - everyone thinks they're going to rise.


• 
  
  The stock market - everyone is bullish but corporate insiders.


• 
  
  Inflation expectations - everyone thinks it is going to go higher.


• 
  
  Economy - everyone is confident in 2011.


• 
  
  Oil - everyone thinks it is heading higher.

"

He makes some really valid points. Ignore the principles of 'Madness of crowds' and 'mean reversion' at your own risk.

BANK STRESS TEST = NON- EVENT => What Next?

In the first week of March 2009, Wall Street was preparing for Financial Armageddon. Just a month later we are on the road to recovery and the stock market rally continues - totally ignoring any negative / bearish news flow. When markets totally ignore bad news or interpret any bad news as ‘better than expected bad news’ its wise to be cautious.

The Banks that were on the verge of total collapse are now quite confident of raising billions of dollars in capital from the private sector.
Gigantic derivative positions still haunt these ‘solvent banks’, and it's hard to believe these guys have enough capital to sustain further losses from derivatives/ mortgage backed securities/credit card loans.
For their sake, the economy better recover really quickly or we will be headed into round 2 of the ‘save the banks’ game.

It's important to note that as markets staged their incredible recovery, the USD has lost some ground, and commodities like Copper, Crude Oil and precious metals Gold & Silver have recovered somewhat. US Treasuries yields are also rising and the FED may have to step up its purchases here, as it struggles to keep rates down.

Rising commodity prices and rising treasury yields could derail any ‘green shoot recovery’ that the pundits claim they now see!!

Links:
Why We Are Absolutely Screwed
Bank of America May Need About $34 Billion of Capital
The Bottom
DROWNING GOP RATS BEGINS TO CLING TO RON PAUL
Preliminary Stress Test Results
Here's Ron Paul again - The one guy who still continues to grill Bernanke!




EDIT : FRIDAY 8th MAY 2009:
I just came across Ron Paul's reaction to the Bank Stress Test results.