2026 TeoTwawKi ... 2032 Darkest Interregnum Message Board

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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 387.40

+0.5%

Dec 9 4:00 PM EST

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To: pezz who wrote (40960)	10/9/2008 9:17:59 PM
From: TobagoJack	Read Replies (3) of 218333

<<Some how I fell compelled to punish my self for an omission in reports ..About a little more than a week ago I bought a SPX put SPTVQ for about 36 unfortunately it wuz a day that the mkt went up 400pts so I sold it for 24.50 same day. At todays close the bid wuz 270.40....>> ouch, now that stings! ... but confession is good for the soul just in in-tray, even the super bears are running scared · It is somewhat shocking that investors are not taking more comfort from growing official actions to alleviate the credit crisis. Still it is actually healthy that investors no longer take the government actions on trust. For it is part of the ultimately cleansing process that will be the consequence of this continuing cycle of debt liquidation. · GREED & fear's view is that policy will now be the main driver of world financial markets, and that policymakers have finally capitulated and accepted that the crisis is systemic in nature and requires a systematic policy response. This means that the policy response is likely to improve from here and that the complete breakdown of the global financial system has a much better chance of being avoided. · The British Government yesterday announced the most credible policy response to the financial crisis to date with the part nationalization of the banking system. In GREED & fear's view Washington will in coming months under a new president increasingly follow the general thrust of British policy in terms of taxpayer dollars being used to recapitalize banks directly in return for equity stakes. · The Fed's decision this week to start lending money direct to companies via the purchase of commercial paper has been precipitated by the dramatic contraction of the commercial paper market caused by panic withdrawals from money market funds. The fundamental problem here is that the commercial paper market had become by the peak of the credit bubble the epicentre of Ponzi finance. · If the situation in the credit markets does not improve the Fed has both the means and the intention to adopt progressively the unconventional policies outlined clearly by Bernanke in his infamous "helicopter" speech made in November 2002. In GREED & fear's view the authorities will remain reluctant to go down this unconventional route, such as crude monetization of the bad debts outright, until they have exhausted more conventional options. · GREED & fear's guess as to the anticipated course of events remains that stock markets will commence a relief rally this month on growing hopes that recent policy actions will ease if not solve the credit problem. Still, fundamentally GREED & fear does not believe that recent policy actions can prevent a severe credit contraction. All they can do is prevent a systemic breakdown, via the injection of taxpayers' capital direct into the banking system and via related measures such as governments' blanket deposit guarantees. · The best solution is the healing process of time which allows the banking sector to earn its way out of the problem with the government having an equity stake in the turnaround. In the meantime, economic activity has to be stimulated via fiscal means with the growing likelihood in America of long overdue massive physical infrastructure spending programmes. · The most likely outcome is that political pressure and ideological monetarism causes the Fed to opt in due course for full scale monetization which ultimately risks precipitating a collapse of the US dollar and of the US Treasury bond market. At that point America loses control of its ability to set its interest rates. GREED & fear's formal view remains that the US dollar paper standard will collapse by the end of 2010. · In GREED & fear's view the negative newsflow in coming weeks is going to switch increasingly from America to Euroland. The policy response there so far remains inadequate and uncoordinated highlighting the structural deficiencies of Euroland. European banks are much more leveraged than their American counterparts since many of the major European banks contain leveraged investment banks within them. · Long-term investors can buy Asia now since in GREED & fear's view equities have discounted a worse slowdown than what will eventuate. Tactically GREED & fear would also buy Asian equities now because of the assumed counter-trend stock market rally, a rally which should be helped by growing evidence of China easing. · Still GREED & fear remains of the view that the current lows, or at least near current lows, will be retested again at a later date because of renewed growth concerns. The main risk to Asian equities remains growth not credit concerns which is why investors should remain underweight cyclical areas. The oil-led commodity complex remains in a medium term price correction and will ultimately correct further. · GREED & fear continues to believe that the gold/oil ratio is going to move dramatically in favour of gold. This should also be bullish for gold stocks which have so far been spectacularly disappointing performers. If gold keeps rising it has at some point got to be reflected in the price of companies which produce the stuff and have not sold forward their production. · The Asia ex-Japan thematic portfolio declined by 13.4% in US dollar terms last quarter. Still this meant an outperformance against the MSCI AC Asia ex-Japan index which fell by 23.9%. As for the Japanese thematic portfolio, it marginally underperformed the Topix last quarter declining by 18.1% in yen terms compared with a 17.6% fall in the Topix.

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