ES -- DX/CL -- isee -- cboe put/call -- specialist/public short ratio -- trinq -- trin -- aaii bull ratio -- abx -- cmbx -- cdx -- vxo p&f -- SPX volatility curve -- VIX:VXO skew -- commodity screen -- cot -- conference board

Thursday, August 27, 2009

 

sornette and the china echo bubble


i added a link to didier sornette's financial crisis observatory in the sidebar last month after jck at alea followed up via twitter on an earlier post referencing the july 10 paper co-authored by sornette calling for a top in chinese equity.

sornette's group modeled a window stretching from july 10 to august 10, with a 20-80 confidence interval from july 16 to july 27.

the peak turned out to be august 4, and all future calls by sornette are now worth watching closely.

if this is in fact the bursting of the chinese echo bubble brought on by massive forced lending by the state-managed banking system, there should be plenty of downside left in china. fund my mututal fund discusses steps being taken in china to rein in such lending. and, as pragmatic capitalist has hammered on recently, china has been the leading indicator par excellence in this crisis.

UPDATE: one can also cross reference this post from pragmatic capitalist on the divergence between hong kong equities and the baltic dry index to derive potential motivation for further disruption in stock prices.

UPDATE: more on sornette's group via new scientist.

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Welcome back! Thank you for such an informative blog.

Cheers,

Jason

 
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