As leveraged assets go down in value, the leverage multiples go up. Adding to that multiple is the falling dollar and the fact that these assets are in reality debt deposits, not cash deposits, that were passed on in different forms to be leveraged over and over.
Was today's rally based purely on falling oil prices? Toddo reminds us that when we forecasted crude back to the $100 level when it was over $140 in July, we noted the initial reaction to this would be higher equities but ultimately would represent slowing global growth. Other factors could include the Chinese Purchasing Manager Index has plunging into recessionary territory and whispers that Euro-Zone is in worse shape than the US.
Minyanville staff and contributors may trade or hold securities that are discussed in an article. Staff and contributors will indicate whether they have a position in any security discussed, but will not indicate size or direction. The information on this site is not intended as individualized investment advice and all investment decisions by a reader must in all cases be made by the reader either individually or together with his/her investment professional. The views expressed in articles appearing on this site are solely those of the staff and contributors and should not be attributed to any other person or entity except where expressly stated. Minyanville staff and contributors will not respond to requests for investment advice.
Copyright 2008 Minyanville Publishing and Multimedia, LLC. All Rights Reserved.