2:00 Update
Thursday we went 1-2 on our plays. Winning with Washington St. +12 and losing with Milwaukee +5.5 in the NBA and losing with VMI +13.5. It was a tough one with VMI as they were only down by 6 with 1.5 Min left:( We also had a setup in college hoops on UL Monroe +3.5 and they covered easily winning the game by 11!
We get a break today before the onslaught on Saturday. 100 games again on Saturday. Should be a wild day.
You can get on board before the Saturdays game by hitting the paypal button on the upper right. I can have you added to my private twitter feed within a few minutes. Hope to see you on board.
Good luck Tonight on Plays
It was a wild ride in the overnight markets as a result of Japan announcing negative interest rates. Not bad unless you like to keep your money in the bank. This is another QE scheme in order to prevent the collapse of the world’s banks and the world’s economy.
As Bernanke put it “Deflation was not going to happen on his watch” Thats why they called him Helicopter Ben. He said he would flood the markets and people with liquidity in order to avoid deflation.
Here is what to expect if deflation hits:
“As unemployment rose, demand for goods and services fell. Prices dropped 10% a year. As prices fell, companies went out of business. More people became unemployed. When the dust settled, world trade essentially collapsed. The amount of goods and services traded fell 25%, but thanks to lower prices the value of this trade was down 65% (as measured in dollars).”
What is worse inflation or Deflation:
“Deflation is worse because interest rates can only be lowered to zero. As businesses and people feel less wealthy, they spend less, reducing demand further. Prices drop in response, giving businesses less profit. Once people expect price declines, they delay purchases as long as possible. They know the longer they wait, the lower the price will be. This further decreases demand, causing businesses to slash prices even more. It is a vicious, downward spiral.”
The gist is the picture is very bleak when full scale deflation hits. Helicopter Ben knew the answer ….it was the same as the pilot who finds himself in a full spin. Very tough to get out of the spin but considering the alternative you best try everything you can do!
What you dont do is flood the country with stifling regulations. You do not pass laws that create an impossible climate for small business;s to operate under (think Affordable Care Act) , And you do not raise the minimum wage or raise taxes and interest rates.
But wait what you do not do is exactly what the U.S. Government is doing right now:) How can that be? Well that is the million dollar question. If you find out the answer please let me know.
The markets are showing some life this morning up almost 3/4% 40 min before the open. This is most likely due to Japan stepping up to the plate and the Fed finally not bragging how 4 rate hikes this year may not be enough. They did hold rates steady yesterday but what they did not do is give the market stabilizing talk that they would do whatever they have to avoid deflationary events.
I have 2 trades short and 1 long right now. I have jettisoned my portoflio on the last run up. And my mean reversion trades all triggered exits. My thoughts now is its a setup specific trading market. My opinion is the lows will be tested in the near future. But Japan has given the world a short term reprieve.
RickJ
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