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TheCountOfNowhere

Is This The Calm Before The Storm....

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Everything just seems to be mossying along at the mo.

The lucky home owners are counting their cash.

The tories seem to have Teflon suits

The stock market hasn't crashed

Everything is getting more expensive

The rich are fine and happy.

BUT....can it last.

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Or it's the storm. Barring dramatic events you only really find out what's going on months later. Id say:

The lucky: Property owners, not home owners.

Teflon: Complacent and RW main stream media.

No comment on markets.

General Inflation: Perhaps, but matters less and less compared to housing.

The Rich: as ever, rain or shine. But it's the gulf with the poor that's the problem.

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Stock markets are are feeling fairly confident / complacent right now, with Implied Volatility(IV) around 12% on the S&P 500. ( the blue line study under the chart )

eTRZpRt.png

In other words the options markets are saying there's a 68% chance ( 1 standard deviation ), the S&P will be within a +/- 12% range of today's price in 12 months time..

This opinion changes over time, with IV, and therefore expectations of large market moves, generally increasing into market panics. So yes, it's the calm before the storm, but there's no knowing how long the calm will last..

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Stock markets are are feeling fairly confident / complacent right now, with Implied Volatility(IV) around 12% on the S&P 500. ( the blue line study under the chart )

eTRZpRt.png

In other words the options markets are saying there's a 68% chance ( 1 standard deviation ), the S&P will be within a +/- 12% range of today's price in 12 months time..

This opinion changes over time, with IV, and therefore expectations of large market moves, generally increasing into market panics. So yes, it's the calm before the storm, but there's no knowing how long the calm will last..

Have they factored in the chinese are making s**t up ?

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Have they factored in the chinese are making s**t up ?

Yes... there's a 32% chance something, possibly china, could trigger a larger than 12% move :)

Nothing is certain, but in the long run the odds do turn out to be pretty accurate ( enough to trade ), with a slight tendency for markets to over-estimate the size of future moves.

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The great thing is "they" can say "what they like" is factored in - you will never hear otherwise.

"They" is anyone who participates in the market, and each person will factor in whatever they think is important. If the markets are expecting a tight range, and you think otherwise, there's a tradable opportunity. By acting on that opinion and making that trade, you have a small influence on options prices, and this then reflects in the calculated IV number, and therefore the size of the expected move.

So the expected move calculated from IV really is what "the market" expects, overall.

Edited by ManVsRecession

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Everything just seems to be mossying along at the mo.

The lucky home owners are counting their cash.

The tories seem to have Teflon suits

The stock market hasn't crashed

Everything is getting more expensive

The rich are fine and happy.

BUT....can it last.

Broadband is getting cheaper though.

There is a theory that a crash occurs every eight years before a new president takes office. Political manoevering BS. So look out for a correction in jul Aug sep Oct.

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Yeah 'they' all factored in the financial crisis and the tech stock crash etc.

All 'they' are interested in is the next sucker to pay commission.

Look at the numbers, look at the desperate measures, look at the results, then look at Japan and think of Greece, welcome to the recovery.

Edited by frederico

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Storm brewing gradually with the poor, working and midle class now, I reckon.

Heard on tv today, some of the MSM reckon we are heading for a summer of disontent.

eg, Junior docs strike today, medics don't like the proposed contracts so could be next to strike,....

BHS, Steel, Austin Reed... jobs all on the line.

Meanwhile much of the general public not happy as they are made more aware of politicians expenses, use of offshore accounts.

Plus the cost of housing keeps going up for the young and middle aged now as more are forced to pay high rents....

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I think we're definitely in the eye of it, August/New Year stock shocks were all down to the truth becoming reality but things are a little different this time, more props so pain continually postponed, in China's case they've gone nuts to do whatever keeps things going forward but even they aren't rich enough to halt what is about to happen with their bad loans and insane property bubbles.

The MSM is almost pathetic in it's clambering for pockets of positivity at the moment, the indifference in the news readers irks me on a daily basis, but it's all about sentiment and ad revenue.

Here's my uneducated personal view list of troubles to come:

1. Oil will dip again, everyone getting excited about the "less severe than predicted" loss for BP today. Well stockpiles are building up, Saudi plan to diversify economy looks unconvincing and they don't want to let others take over, Iran now exporting more than predicted, U.S shale getting ready if oil hits $50 so will never really climb above this level for years to come. North Sea oil still by far the most expensive to extract, expect Aberdeen to turn into another Dundee in next 5 years.

2. China property insanity in recent months with dodgy loans and deposits on credit cards, blowing up every possible bubble with the lungs of Brian Blessed.

3. Iron Ore prices to drop by about 50% by year end

4. Steel glut still on it's way, China is unstoppable. Simply unfeasable to bail out Port Talbot etc, EU won't allow it anyway.

5. U.S. GDP looking miserable, lot's of hope for June hike but that could be a nail in the coffin moment if goes ahead, expect U.S. to quite typically promote their financial health and amazing employment figures in a bombastic way but the fundamentals are poor, PEOPLE are poor. Possible car loans blow up to come.

6. BTL stamp duty effect still to be seen in coming months from various reports so eagerly awaiting. Long term changes take patience but sentiment is a biatch and there's only one way it's going to go.

7. Brexit volatility until June, quickly followed by Greece drama yet again in Summer along with Italy banking crisis. More countries (including us) to adopt negative rates into oblivion.

8. Foreign buyers drying up in London, have moved outside to cheaper areas but sentiment is a virus, and it'll spread soon enough when things turn sour, after all they will have debt to pay off at home never mind continuing to pay for their extra property here which is falling in value.

9. Brazil getting even worse than predicted.

10. National living wage squeeze on employers, no ACTUAL financial benefit to employees after all the naive rejoicing in MSM, I mean it's only hit £7.20 so far and they've already tried to cut most enhanced payments and benefits! G.O. pushing "good will" of employers who are already on their knees to honour the spirit of NLW?!!!

So many more that I cannot think of right now, but the key thing to focus on is, both statistically and historically, which direction could things possibly go now? We're bobbing along, but either by the end of this year or worst case by 2018 (10 years since the last big one), things EVERYWHERE are going to go pop, when was the last time SO many factors have been on a collision course?

Edited by Barnsey

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Premier Inn made a profit, oh yeah they sell rooms for £35, the Aldi/Lidl effect, a sign of a booming rich economy!

To be fair their recently refurbed rooms are really very good indeed, makes paying the extra £6 over a Travelodge a no brainer.

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Storm brewing gradually with the poor, working and midle class now, I reckon.

Heard on tv today, some of the MSM reckon we are heading for a summer of disontent.

eg, Junior docs strike today, medics don't like the proposed contracts so could be next to strike,....

BHS, Steel, Austin Reed... jobs all on the line.

Meanwhile much of the general public not happy as they are made more aware of politicians expenses, use of offshore accounts.

Plus the cost of housing keeps going up for the young and middle aged now as more are forced to pay high rents....

You get little signs from colleagues and aquaintances that you actually pay more attention to than the macro-economics. Becomes a 'thing' when individuals realise they are not unique in their problems - a bit like how the 'housing crisis' has gradually shaped up.

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Pension funds bleeding out due to zirp contrasts wildly with the meme of recovery being peddled by the MSM but somehow the circus stays in business- we live in strange days.

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Tale of two power stations due to "challenging market conditions " http://www.bbc.co.uk/news/uk-wales-south-west-wales-31099335

http://www.bbc.co.uk/news/uk-wales-36132870

It`s just been announced the one at the second link has now been canceled....booming Britain my@rse what happened to the power cuts we were facing ?

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Storm brewing gradually with the poor, working and midle class now, I reckon.

Heard on tv today, some of the MSM reckon we are heading for a summer of disontent.

eg, Junior docs strike today, medics don't like the proposed contracts so could be next to strike,....

BHS, Steel, Austin Reed... jobs all on the line.

Meanwhile much of the general public not happy as they are made more aware of politicians expenses, use of offshore accounts.

Plus the cost of housing keeps going up for the young and middle aged now as more are forced to pay high rents....

That's a distinct possibility especially with the brexit vote happening in early summer, no matter which side wins IMHO it won't be by a massive margin. So the side that loses won't be happy, I wouldn't be surprised if there are troublemakers in both camps. If all of the constituent countries of the UK don't vote the same way that really will cause discontent. People assume it'll be the Scots, but there is a very very slim chance that England could vote to leave by a tiny margin and Scotland, Wales and Northern Ireland vote to stay by a big enough margin to keep the UK in.

Add to that heady brew job losses and things could get very interesting. What's that Chinese curse meant to be - "may you live in interesting times"?

As an afterthought just look at the independence referendum in Scotland, depending on how the elections go in May, it may have changed the politics of Scotland forever. We'll see later on this year what the unintended consequences of the brexit vote are...

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Oil may be the key. It has certainly bottomed without any input from OPEC. Rising oil prices will curb comsumer spending what little there is now

Agree with this....only reason to go window shopping will be to keep warm.;)

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Oil may be the key. It has certainly bottomed without any input from OPEC. Rising oil prices will curb comsumer spending what little there is now

Makes you wonder just how much low petrol prices for the past year have helped the economy keep going. People I know are already noticing and commenting the price rise they've gotten used to the c.100p litre of fuel.

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Makes you wonder just how much low petrol prices for the past year have helped the economy keep going. People I know are already noticing and commenting the price rise they've gotten used to the c.100p litre of fuel.

Makes you think how the economy would cope with an interest rate rise.....

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Makes you wonder just how much low petrol prices for the past year have helped the economy keep going. People I know are already noticing and commenting the price rise they've gotten used to the c.100p litre of fuel.

Makes you wonder how much ACTUAL inflation the oil prices have masked.

Deflation....my a**8e

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