OT
Hi GST,
I think we rally here, but if the bonds continue to stagger around like they did today, I'll probably be selling my trading positions into the strength. Several of my stops in non-core holdings (PCLN, FFIV, THQI) filled in the past two days, and I'm not rushing to redeploy the cash. I may reenter AMZN if it doesn't gap up too huge on the WMT stumble...
That being said...
>>$25 trillion in currency related derivatives out there William -- a house of cards -- and at the base there is a pillar called gold leasing
helping to provide the leverage to hold up the house.
Are you suggesting that the high face value of the outstanding derivatives means the financial system is a "house of cards"? If so, why? I also think suggesting that gold leasing is at the base of all the derivatives out there--or a "pillar" at the base--is kind of a stretch.
>>The unified pledge not to increase gold leasing is far more important than you
seem to realize.
I'll grant you it was very important. It's great news for the IMF debt relief bureaucrats (and, by extension, finance bureaucrats everywhere who get a kick out of tweaking the U.S. Congress. If all goes well, I suppose it is good news for the inhabitants of the client countries. It's good news for Russia. It's good news for the producers, especially the marginal ones who weren't viable below 250/oz. It is good news for the many central banks who did not make the pledge and will enjoy higher lease rates as a result of the Europeans' action.
Beyond that, we don't know yet. Maybe there's a hedge fund which is hurting out there. Maybe this hedge fund's bankers had given it enough rope to hurt itself (not uncommon) and everyone else (pretty rare). If you know of anything more concrete, and are at liberty to share it, I'd love to hear it.
>>credit
spreads between classes of debt -- which, as I am sure you know, are HIGHER than last year at the worst point in the 'Asian' crisis.
Why are they flashing red and why are the sirens sounding today?
Credit spreads aren't flashing red. Yes, they are wider than they were last year. However, so far, deals are getting done, whereas last year the market was frozen. I'm sure you will agree there's a huge difference.
IMO, credit spreads are wider because the U.S. government is running a surplus and corporations are backing up the truck, both because of the strong business environment and because of the pre-y2k rush.
(I also think that high returns from equities have persisted long enough to influence expected returns and force corporate debt rates up. No clue how you would go about proving that; it is just a gut feeling.)
Best of luck, and if I haven't said it already, congrats on your superb gold call. |
