UPDATE: My “Quick Hit” pick for the week is killing it. The stock is down 12.7% outright from its December 31 close. My put option pick on this stock is now up 50% based on where it could have been bought Monday morning and the last point of trade today.
China seems intent on popping the global fiat currency and debt bubble. It seems that China’s moves to devalue the yuan are causing a bit of a stir in the global markets so far this week. This could be the “Red Dragon” version of the infamous Black Swan for which everyone has had their eyes peeled.
The S&P 500 dumped 26 points today (1.3%) after China’s yuan deval triggered a 7% limit-down drop in the Shanghai Stock Exchange and China pulled the plug on the electricity to the exchange. Ditto tonight.
I love the way the financial media wants to blame the U.S. stock market woes on China. The truth is that the U.S. economy is collapsing on its own merits. Macy’s did not announce dismal holiday sales and 4,000 more job cuts today because China’s economy is slowing down. The price of oil is the “tell” on the world economy, including and especially the U.S. economy.
The price of oil has now crashed below its low from the 2008-2009 recession. It’s at its lowest price since before Bush Government invaded Iraq. The plummeting price of oil is not China’s bad. The U.S. is, by far (18mm barrels/day vs. 10mm for China), the largest consumer of oil in the world. The plunging price of oil is due to the plummeting demand from the world’s largest buyers of oil.
Subscribers to my Short Seller Journal who took advantage of the two ideas in this week’s weekly report are up 5.6% and 7.8% on each idea vs. their close on December 31. One of the ideas should eventually be a home run and is a great way to play Wall Street’s demise. The idea that’s up 7.8% was a “Quick Hit” idea which I thought would sell-off this week with just a little weakness in the market because it had run up on nonsense the week before. The put option play I recommended is up about 30% based on where it could have been purchased Monday morning and the closing bid side today.
Click here to subscribe: SHORT SELLER’S JOURNAL. It’s a weekly report delivered to your email on Sunday evenings. I present two ideas per week and include some commentary that you find on my blog.
Dave – In regards to oil…….
Housing to follow?
Dave, perhaps oil has replaced gold as the new canary in the coal mine ?
Unwinding of the massive Yen carry trade