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EJ
12-06-06, 10:48 PM
Economic storm brewing in America (http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2006/12/07/do0702.xml&sSheet=/opinion/2006/12/07/ixopinion.html)
December 6, 2006 (Ambrose Evans-Pritchard - Telegraph UK)

America's stock markets typically start crumbling four months before each recession, anticipating the crunch in profits. Shares then grind relentlessly down for 10 months or so until they have on average knocked 26 per cent off the S&P 500 index, Wall Street's listing of top companies.

So if you think the US property slump is looking scary after October's 9.7 per cent drop in new home prices, it may be time to take a little money off the table. It has been a lucrative autumn rally, but the four-year bull market is long in the tooth by any standards.

As we report today, the rate of insider stock sales by company directors on both sides of the Atlantic is the highest since records began 20 years ago, with sales outnumbering purchases by 60:1.

AntiSpin: Any of our readers who had the balls to stay in this market this long, congratulations for riding this to beast to the tippy top. Time to get off.

The story goes on:
It makes scant difference whether your shares are on Wall Street or the London Stock Exchange. The FTSE 100 index is a global play these days. The lion's share of profits come from overseas, while London's AIM market has become a bet on Chinese and Russian companies nesting there by the dozens.

The world economy is what matters, and I don't like the smell of it. Nor, apparently, does Hank Paulson, who made $700 million at Goldman Sachs before taking over the US Treasury this year. He has reactivated a crisis team with a command centre in Washington to cope with the "systemic risk" in a market melt-down. His worry? 8,000 unregulated hedge funds with $1.3 trillion at hand, and derivative contracts now worth $370 trillion. "We need to be very careful here," he said.

A well-sourced article in Washington's Weekly Standard says Mr Paulson fears a "serious crisis that would be a body-blow to the US economy".

Average house prices have fallen from $244,000 in April to $221,000 last month, with more violent corrections in Florida, Arizona, and New England. Builders have warned of a "death spiral" as they slash prices to off-load a glut of unsold homes.

"The US needs a trillion dollars a year just to stand still," says David Bloom, currency guru at HSBC. Modern financial crises have always begun on the peripheries of global economy, setting off a chain reaction. Mr Bloom says the seizure this time will be at the heart of the system as the dollar buckles, pressing down on the "aorta of capitalism".
So perhaps we get a rapid "Ka" event after another quarter or two of the slow motion housing bubble meltdown.

There will be a crisis soon. It is imminent. It will likely occur no later than the end of Q1 2007 but perhaps as soon as the end of the current quarter.

Whatever USIPs (http://www.itulip.com/glossary.htm#USIP) and private equity firms are into, I'm getting out of. They will soon all be selling at the same time.

For macro-economic and geopolitical currency ETF advisory services see "Crooks on Currencies" (http://www.isecureonline.com/reports/CRC/WCRCGB01/)[/URL]
To receive the iTulip Newsletter or iTulip Alerts, [URL="http://ui.constantcontact.com/d.jsp?m=1101238839116&p=oi"]Join our FREE Email Mailing List (http://www.bullionvault.com/from/itulip)

Copyright iTulip, Inc. 1998 - 2006 All Rights Reserved

All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer (http://www.itulip.com/forums/../GeneralDisclaimer.htm)

akrowne
12-07-06, 12:06 AM
The best part was insider sales hitting 60:1 (a record).

Those who stay in this "rally" are betting against people much richer than themselves.

Christoph von Gamm
12-07-06, 04:57 AM
As with all investment vehicles there are three major steps to be found:

1. The smart money moves out. These are the insiders with the least emotional detachment to an investment vecicle, even if it is their own company. Still, the hype goes on so even after the smart money has moved out, there might be still some gains to be made. But it starts to tip. The smart money is maybe 5-10% of the total financial community.

2. The big money moves out, often caused by raises in interest rates or tightening of lending standards. Mostly institutional investors are here on the go, but not investment funds for private and retail clients or even worse - pension funds. Big amounts are being moved, high trading volumes. If that happens, the case is severe.

3. The dumb money goes out. Unfortunately Pension funds, life insurances and others need to be counted to those as well, as well as invdividual retail stock holders who have been urged (like in 2001) to "stay patricotic" to stay in the market.

Of course there is even a "dumber than dumb" money. These are those who stay in even after the total bust and hope that everything comes back, such as the Nasdaq riders in 2002...

We are in the mid of Phase 1.

DanielLCharts
12-07-06, 05:46 AM
right on, right on.


Economic storm brewing in America (http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2006/12/07/do0702.xml&sSheet=/opinion/2006/12/07/ixopinion.html)
December 6, 2006 (Ambrose Evans-Pritchard - Telegraph UK)

America's stock markets typically start crumbling four months before each recession, anticipating the crunch in profits. Shares then grind relentlessly down for 10 months or so until they have on average knocked 26 per cent off the S&P 500 index, Wall Street's listing of top companies.

So if you think the US property slump is looking scary after October's 9.7 per cent drop in new home prices, it may be time to take a little money off the table. It has been a lucrative autumn rally, but the four-year bull market is long in the tooth by any standards.

As we report today, the rate of insider stock sales by company directors on both sides of the Atlantic is the highest since records began 20 years ago, with sales outnumbering purchases by 60:1.

AntiSpin: Any of our readers who had the balls to stay in this market this long, congratulations for riding this to beast to the tippy top. Time to get off.

The story goes on:
It makes scant difference whether your shares are on Wall Street or the London Stock Exchange. The FTSE 100 index is a global play these days. The lion's share of profits come from overseas, while London's AIM market has become a bet on Chinese and Russian companies nesting there by the dozens.

The world economy is what matters, and I don't like the smell of it. Nor, apparently, does Hank Paulson, who made $700 million at Goldman Sachs before taking over the US Treasury this year. He has reactivated a crisis team with a command centre in Washington to cope with the "systemic risk" in a market melt-down. His worry? 8,000 unregulated hedge funds with $1.3 trillion at hand, and derivative contracts now worth $370 trillion. "We need to be very careful here," he said.

A well-sourced article in Washington's Weekly Standard says Mr Paulson fears a "serious crisis that would be a body-blow to the US economy".

The world economy is what matters, and I don't like the smell of it. Nor, apparently, does Hank Paulson, who made $700 million at Goldman Sachs before taking over the US Treasury this year. He has reactivated a crisis team with a command centre in Washington to cope with the "systemic risk" in a market melt-down. His worry? 8,000 unregulated hedge funds with $1.3 trillion at hand, and derivative contracts now worth $370 trillion. "We need to be very careful here," he said.

A well-sourced article in Washington's Weekly Standard says Mr Paulson fears a "serious crisis that would be a body-blow to the US economy".

Average house prices have fallen from $244,000 in April to $221,000 last month, with more violent corrections in Florida, Arizona, and New England. Builders have warned of a "death spiral" as they slash prices to off-load a glut of unsold homes.

"The US needs a trillion dollars a year just to stand still," says David Bloom, currency guru at HSBC. Modern financial crises have always begun on the peripheries of global economy, setting off a chain reaction. Mr Bloom says the seizure this time will be at the heart of the system as the dollar buckles, pressing down on the "aorta of capitalism".
So perhaps we get a rapid "Ka" event after another quarter or two of the slow motion housing bubble meltdown.

There will be a crisis soon. It is imminent. It will likely occur no later than the end of Q1 2007 but perhaps as soon as the end of the current quarter.

Whatever USIPs (http://www.itulip.com/glossary.htm#USIP) and private equity firms are into, I'm getting out of. They will soon all be selling at the same time.

For macro-economic and geopolitical currency ETF advisory services see "Crooks on Currencies" (http://www.isecureonline.com/reports/CRC/WCRCGB01/)[/URL]
To receive the iTulip Newsletter or iTulip Alerts, [URL="http://ui.constantcontact.com/d.jsp?m=1101238839116&p=oi"]Join our FREE Email Mailing List (http://www.bullionvault.com/from/itulip)

Copyright iTulip, Inc. 1998 - 2006 All Rights Reserved

All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer (http://www.itulip.com/forums/../GeneralDisclaimer.htm)

0tr
12-07-06, 10:21 AM
The morning that Katrina stormed over New Orleans, I saved some of the weather radar files from the NOAA site. I did not have the presence of mind to save the timed sequence of radar files as the hurricane moved over the coast and inland. It would make a nice action/animation for your web video spot. Maybe the files are still available somewhere. NOAA?

The Big Easy (economic system or market or whatever) meets "Ka"trina.

If I can find the few the pdfs or jpegs I did save, I'll send them in, if your interested.

jk
12-07-06, 10:33 AM
Whatever USIPs (http://www.itulip.com/forums/../glossary.htm#USIP) and private equity firms are into, I'm getting out of. They will soon all be selling at the same time.

what are the hedge funds NOT into? i mean that question seriously. i suppose they're not into cash, because of their leverage, or yen, because of the carry trade. i think the questions are whether to be in or out of the dollar, and if out into which currencies, and whether to be in or out of pm's. what's your opinion on those questions, eric?

spunky
12-07-06, 10:48 AM
The morning that Katrina stormed over New Orleans, I saved some of the weather radar files from the NOAA site. I did not have the presence of mind to save the timed sequence of radar files as the hurricane moved over the coast and inland. It would make a nice action/animation for your web video spot. Maybe the files are still available somewhere. NOAA?

The Big Easy (economic system or market or whatever) meets "Ka"trina.

If I can find the few the pdfs or jpegs I did save, I'll send them in, if your interested.


Nice Otr; we need some creativity here, too many charts :D

Charles Mackay
12-07-06, 11:32 AM
I just found out you can short ES (S&P futures) denominated in Euros on the IDEM exchange thru Interactive Brokers. I was afraid of shorting it in the States due to the possibility of a dollar collapse. This seems like an ideal instrument (other than the fact that it's in Italy!).

Any thoughts on this strategy?

FRED
12-07-06, 12:06 PM
what are the hedge funds NOT into? i mean that question seriously. i suppose they're not into cash, because of their leverage, or yen, because of the carry trade. i think the questions are whether to be in or out of the dollar, and if out into which currencies, and whether to be in or out of pm's. what's your opinion on those questions, eric?
[/B]

That is an excellent question re PMs and one I doubt we have much more time to answer if one is interested in trading the coming bust. I expect PMs to go down along with everything else, in a rush to liquidity... to cash. For a period, certainly cash will be king, and that's not good for PMs. The question is, what's happening to the dollar during the event? Rising or falling? What do you think?

jk
12-07-06, 01:06 PM
That is an excellent question re PMs and one I doubt we have much more time to answer if one is interested in trading the coming bust. I expect PMs to go down along with everything else, in a rush to liquidity... to cash. For a period, certainly cash will be king, and that's not good for PMs. The question is, what's happening to the dollar during the event? Rising or falling? What do you think?

if we assume "a rush to liquidity" is triggered by a financial accident- e.g. a large magnitude bank or hedge fund failure - a rush to safety is likely to bring out old habits, with a move toward the dollar at the expense of emerging markets, not likely at the expense of the euro or yen. the yen [along with the swiss franc] is likely to rise if institutions deleverage.

the problem is that the crisis could instead be a dollar crisis. if so, then the dollar tanks and pm's are golden.:rolleyes:

i think it's not predictable, and i know I can't predict it. for now i guess i'll sit with my 25% pm position, and hope that my shorts help in a big sell off.

my own biggest risk is if there is a sell off in gold and currencies. to reduce this risk, however, i would have to increase my exposure to the dollar, and i still think dollar weakness is the most predictable eventual outcome.

a lot of our discourse lacks clarity on time frames. we talk about risks in the dollar or pms, but don't specify the applicable period of time. i guess what i'm saying about the dollar is that although i'm aware of the possibility of a rise in the dollar, i feel more convinced of its eventual descent. since i have no faith in my ability to time these movements, i'm sticking with my anti-dollar stance and hope i have the guts to hold on if it's a roller coaster ride.

jk
12-07-06, 01:09 PM
I just found out you can short ES (S&P futures) denominated in Euros on the IDEM exchange thru Interactive Brokers. I was afraid of shorting it in the States due to the possibility of a dollar collapse. This seems like an ideal instrument (other than the fact that it's in Italy!).

Any thoughts on this strategy?

the only question is whether it's more efficient than doing it in 2 trades on local markets - i.e. short the s&p and hedge the currency exposure separately.

0tr
12-07-06, 02:54 PM
I sent the katrina radar images to letters@itulip.com I couldn't figure out how to get them into the thread.

Scratch that, they should be attached now.

qwerty
12-07-06, 03:12 PM
Can you post a link to the contract specs?

Are you sure this contract isn't a "quanto", where the contract is based on the S&P in USD terms, but pays out in Euros?

In that case you will NOT be hedging against a dollar decline.

0tr
12-07-06, 04:33 PM
I just found out you can short ES (S&P futures) denominated in Euros on the IDEM exchange thru Interactive Brokers. I was afraid of shorting it in the States due to the possibility of a dollar collapse. This seems like an ideal instrument (other than the fact that it's in Italy!).

Any thoughts on this strategy?

The high beta sectors would be be my targets

bart
12-07-06, 06:23 PM
Nice Otr; we need some creativity here, too many charts :D

If you insist... ;)


http://www.nowandfutures.com/grins/schwartz.jpg


http://www.nowandfutures.com/grins/schwartz.wav

Charles Mackay
12-08-06, 03:32 PM
Can you post a link to the contract specs?

Are you sure this contract isn't a "quanto", where the contract is based on the S&P in USD terms, but pays out in Euros?

In that case you will NOT be hedging against a dollar decline.


Yeah, here you go... here are the specs on that contract.
http://www.borsaitaliana.it/quotazioni/derivati/specifichecontrattuali/spmibfutures.en.htm

jk
12-09-06, 08:32 AM
Yeah, here you go... here are the specs on that contract.
http://www.borsaitaliana.it/quotazioni/derivati/specifichecontrattuali/spmibfutures.en.htm

"The S&P/MIB index shows the trend of national and foreign equities listed on the Italian Stock Exchange, which are selected on the basis of their liquidity, free float and sectoral representation. From 20 September 2004, S&P/MIB is the new benchmark for the Italian stock market and is the only underlying index for derivatives products."

s&p publishes a lot of indicies. they are not all the s&p index of 500 large cap u.s. firms. there's a reason the contract you cited is traded in italy. it represents italin stocks.

Charles Mackay
12-09-06, 11:23 AM
jk, yes, I see you are right on that contract. I thought they also did a US S&P500 ... I'll do a little more research and report back.

bart
12-09-06, 04:20 PM
This seemed as good as any thread for some new charts, etc. I found a few extra hours and finally finished the first cut of my "intervention" page.
http://www.NowAndFutures.com/intervention.html

It covers the major Fed "hot money" areas - temp repos (TOMOs), coupon passes (POMOs), treasury repos (TIOs), custodials, securities lending, etc. - and plots them against the S&P 500, 10 year Treasuries, gold, oil, etc.

No opinions, just raw facts... a viewer doesn't have to know what the various items are in order to draw valid and hopefully useful conclusions.


Here's a sample showing the S&P 500:

http://www.nowandfutures.com/images/intervention_sp500.png