That should about settle it. If you are not already short...it is probably too late now.
With the Hang Seng now down 667 points overnight and the Nikkei down 300, that should about settle the issue of whether we are going up or down in Equity Markets. I had thought that the Bond Market had already made that pretty clear in it's decline of the previous week...but maybe that's just me.
The catalyst for the decline in Asia? A much better than expected rise in Japanese GDP of 3.5% and Poor Consumer Confidence numbers here in the States were listed as the 'official reasons' for the decline. But 'fools' should know better. Prices went too high and this is just a correction, and will likely be a steep one. We are heading into the Fall and everyone is on Vacation. Perfect time for a good 'ol fashion NYSE kick in the nuts.
I just hope Japan can produce an egg once their currency comes into anything closely resembling a level playing field with the USD, but that's an old, old story and a score that has yet to be settled. Since the GDP numbers were quite good, expect to see the YEN strengthen and drag the dollar up with it, thus allowing for our most bizarre coupling of Dollar/Equity markets to play out and not offend foreign investors here in our own markets.
If this isn't the most obvious manipulation of both foreign and domestic investors, I don't know what is. This must be a Goldman Sachs idea. Their last great idea was to place a Police Report asserting that the theft of their Proprietary Software could cause 'market manipulation' if it fell into the wrong hands ... that one still has me rolling on the floor with laughter. This was what started the High Frequency Trading Debate in which Goldman has made INCREDIBLE, UNBELIEVEABLE returns in Equity markets matched only perhaps by Bernie Madoff himself. Some might even remember that just last week the SEC tightened up on the naked short rules and a few other trading details such as re-instating the uptick rule, perhaps knowing that a decline was coming. How they knew can only be attributed to pure genius or an extremely high score on the Star Cards at Psychics-R-Us.com. Yeah, the stupidest smartest guys in the room have done it again.
The problem with all of this is that it is technically correct, so you grin and bare it. We always live to fight another day. You want to see the Japanese Yen strengthen, and dragging the dollar with it will only go so far, but still it will work. GS is patching together whatever it can get it's hands on to make things happen the right way, and you do have to marvel at their willingness to take the heat. Of course they are stealing from all of us in return for this service, so some will stay quiet for a moment to see how their plan pans out. The moment it fails, GS could be in big trouble and Politicians might move quickly to change the game and put GS in the hotseat since an election is brewing in about 4 months. Jan. 1, 2010 kicks off the Election season and don't expect Congressional Leaders to be kindly to GS after it has been revealed that they have ripped off the US Taxpayer in a contrived rout of ALL MARKETS.
If there is a good reason for a stock market decline, this would be it. The US Taxpayer, it's Government and States have all gone broke because Goldman Sachs wanted to ca-ching some jingle at everyone else's expense. Touche GS. But I've got to hand it to you. To do it in plain sight, in broad daylight and to be caught red handed isn't the usual tactic. Infiltrating Government at the same time has never been tried before either, so you are way ahead of any previous record holders on this score. But you have been caught. That is the fact. Good thing you got the bonus money. you'll need it to buy your way out of trouble and the politicians will be only glad to help you out.