I have sold all my longs, except for one long position in oil. It is amazing to me how the market does not have the capacity to absorb more than one crisis at a time.
1. Does the market honestly believe that the Middle East crisis is over? Has the news about Bahrain been missed? Do you remember what happened to the market if a simple rumour about tanks heading from Saudi Arabia to Bahrain got wind? Wake up! It’s real! They have sent thousands of troops going to Bahrain to “restore order”.
This is setting up for a covert war between Saudi Arabia and Iran who are the ones backing up the Shiite population in Bahrain. The U.S. in its conflicted position is powerless as it was in Libya. The Libyan crisis will also worsen, as Gadhafi closes in on rebels, and the world fails to take advantage of the best opportunity to rid us of a vicious tyrant.
2. I am short S&P futures, along with a handful of other stocks, as I still remain quite bearish. The problems in Japan are far from over. We have never seen anything quite like this in a major industrial centre. I still remain quite baffled by the markets resilience in the face of this crisis and I’m now predicting another 3-5% drop from here in the overall stock market.
3. European central bankers have yet to get their act together. Trichet has been sidelined, as national leaders can’t come to an agreement on unilateral guidelines. Greece, Ireland, and Portugal are in serious financial trouble and I do not believe the current bailout program will do anything other than delay the inevitable default.
4. Problems are continually brewing in Israel as Syria attempts to de-arm Gaza. Another war in Israel will create a massive tipping point moment in the Middle East crisis.
5. And for some reason we continue to avoid focus on our own Budget crisis. Many of our major municipalities are actually insolvent, but the local politicians continue to mask the realities.
Click Here for the other five reasons.