Chicken De Fault II

Continuing on the default scenario, business have an odd relationship with government. Big banks, investment firms, and the corporate world have relied on the government for business, innovation,(Nasa, government research at universities,etc), and of coarse bail outs. The mere fact of a potential governmental cutoff in payments to the world is going to create a trading market death dive possibility.

However you may be saved. A story yesterday in MarketWatch had a headline that Apple was better than Gold. Now that says it all. Performance in itself by two overpriced entities reflects the push of investment dollars into those lemming flow manias which have the least resistance to selling because of a psychology about their value. It is always about the money. Apple and gold share a racing card where choices are narrowed into the ever so human habit of trading on a popular concept. The concept for gold is that it is an alternative currency. The concept for Apple is that it will forever be without peer in producing gadgetry. Gold is a medal popular in making jewelry and no one will ever use it as a currency. Every Apple product has an already functioning substitute. Sell them both.

Given the appallingly low confidence the world has in its economic future it is no doubt that investors should believe that by limiting their choices to just a few stocks or commodities, they are avoiding making bad investments. All in is always all bad.

As for stocks in general, default is like catching a cold when your immune system is already compromised with another disease. The species will survive but you may not.

Chicken De Fault

Default by the US will make interesting case studies for all the econ/business folks. At first, markets will try to determine where the next information edge will emerge from any default/recovery trading or any almost default action. Secondly however, world economic confidence in US governance and its ability to grow a recovery will slow things a bit.

You have to admire the Republicans, which is always hard to do, but at least they playing the risk side edge to the max in order to place everyone in a game of political chicken. Now the game of chicken in game theory would not just be who blinks first, but also who loses the least when no one blinks and a true collision occurs. The Republicans obviously figure they will lose the least in a default although that runs against what news talk folks are saying. But they are probably right. Since the worst possible outcome in this game is default, the least worst, if you will, is for the party not in the White House. Voters will remember the event as a leadership issue which is why the president is working so hard to avoid the default. Fair or unfair, when you are at the top, they blame you.

Forget what Geithner and everyone else is saying about the default. Everyone will line up to get paid a bit later. If we have learned anything is the last few years, the power folks always get paid and everyone else feeds on watered down economic opportunities.

Where Happiness Lives

Apple knows how to make money and game expectations on earnings. As mentioned several times on BaseOp2, analysts covering Apple are always surprised by the powerful earnings which they themselves always seen unable to anticipate. There motto should be, " if its news about Apple, its news to us."

Anyway, the tech sector has the greatest brand names which makes it easier for the forever hopeful investor to give it a shot. Debt talks yielding anything which raises the national tab will be viewed as favorable with the market Bears turning again to the Euro Zone and US jobs. A foul up on debt talk would of course scramble the nervous and the market would be playing with an unknown radical factor with weird negative volume and volatility.

There are some unusually negative indicators in the stock indexes which have been running all year. This year more than ever, every trading house of size and experience is committed to the momemtum play, running money infront of each second of opportinity. This has created an odd techinical profile which holds extremely negative downside potential if energy from the momentum lemmings decide down is where happiness lives.

Total Investment Serenity

There is a virtual drug formula which now allows the investment in all things of great potential and the same time permits one to forget about any risk. This formula, while quite simply, has been worked on for several years now by various world financial institutions, each contributing their own great thoughts to enable its completion. This drug formula will not be unveiled in any grand ceremony nor by any particular group. It is rather meant to be plugged into a central computing network to bring about Total Investment Serenity. TIS true. No more worries ever again.

The first to receive this new vaccine against economic disaster is Greece. While several drug companies have filed patents on similar notions, TIS is an attitude not a real drug. It makes you feel as if you can invest in anything stupid. Roll it all on any social network or any sovereign country debt without any unpleasant morning after effects. TIS is particularly affective on Credit Default Swaps. When used properly, TIS will create a feeling, no an obligation, that all things financial should be saved. This break through is believed to help corporations who might have given you a job feel better and also has proved affective in trial uses on the other guy who actually got the job but lives in another country. Similar trials are now being done to see if TIS works on bringing home off shore income with no taxes.

Side affects may include nausea, empty account syndrome, foreclosure, dizziness, and rash judgement.