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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (3269)	12/12/2003 7:42:42 AM
From: yard_man	Respond to of 110194

Chicago Mercantile Exchange and Merrill Lynch Launch Gold TRAKRS CHICAGO, Dec. 4, 2003 — Chicago Mercantile Exchange Inc. (CME) yesterday launched Gold TRAKRS(SM) futures, the sixth in a series of non-traditional futures products developed by CME and Merrill Lynch (NYSE:MER). In a special opening procedure concluded at 1 p.m. Wednesday, 5,759,346 Gold TRAKRS contracts representing approximately $144 million were traded. This was the most successful launch yet of TRAKRS, exceeding the previous record of 5 million contracts traded in a special opening procedure for Commodity TRAKRS on July 1, 2003. Gold TRAKRS are the latest of the innovative new products offered by the CME in collaboration with Merrill Lynch. Gold TRAKRS are non-traditional futures contracts designed to provide investors with an efficient way to gain exposure to the Gold TRAKRS Index. The Gold TRAKRS Index is designed to track the spot price of gold and a total return component that will reflect an accrual at a rate equal to the one-month lease rate for gold. The lease rate is intended to represent the compensation an owner of gold would receive in return for lending gold for a period of one month. A more complete description of the Gold TRAKRS and the Gold TRAKRS Index is presented in the Gold TRAKRS Disclosure Document Supplement available at www.trakrs.com. Gold TRAKRS will begin their regular trading schedule today, and will trade on business days from 8:30 a.m. to 3:00 p.m. (Central time) on CME’s GLOBEX® electronic trading platform. TRAKRS, or Total Return Asset ContractsSM are designed to enable investors to track an index of stocks, bonds, currencies, commodities or other financial instruments. Previous TRAKRS offerings include Long-Short Technology TRAKRS, Select 50 TRAKRS, LMC TRAKRS, Commodity TRAKRS and Euro Currency TRAKRS. TRAKRS are the first broad-based index products traded on a U.S. futures exchange that can be sold by securities brokers. Furthermore, when purchased by non-institutional investors, they are the first futures contracts that can be held in securities accounts. Each TRAKRS contract, for which CME receives significantly lower than usual clearing fees, has a notional value of $25 at launch. TRAKRS differ from traditional futures contracts in significant ways. TRAKRS are not leveraged for most long non-institutional investors, who are required to post 100 percent of the TRAKRS market value at the time of purchase. As a result, non-institutional investors establishing long TRAKRS positions will not be subject to margin calls or any requirement to make any additional margin payments throughout the life of their TRAKRS positions. Non-institutional investors establishing short TRAKRS positions post 50 percent of the price. Short positions held by non-institutional investors are subject to certain maintenance payments if the settlement price increases substantially. Alternatively, if the settlement price decreases significantly, the non-institutional investors will receive a maintenance payment. Securities brokers, subject to notice registering with the National Futures Association, are able to solicit trades in TRAKRS from non-institutional investors. TRAKRS contracts may be held until their expiration (generally three years from their offering date), when they will be cash-settled, or they may be liquidated on GLOBEX during regular trading hours. Qualified Institutional Buyers (QIBs) – both buyers and sellers – must post performance bonds to be determined by CME’s Clearing House Division consistent with its normal margining requirements for futures contracts. QIBs generally include institutions or entities that in the aggregate own and invest on a discretionary basis at least $100 million in securities. Members of CME are treated as QIBs for purposes of trading TRAKRS. TRAKRS positions of QIBs are carried in traditional futures accounts and can only be handled by securities brokers who are also registered with the Commodity Futures Trading Commission to handle futures. Merrill Lynch is one of the world's leading financial management and advisory companies, with offices in 36 countries and total client assets of approximately $1.4 trillion. As an investment bank, it is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets, with assets under management of $473 billion. For more information on Merrill Lynch, please visit www.ml.com. Chicago Mercantile Exchange Inc. (www.cme.com) is the largest futures exchange in the United States. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX® electronic trading platform. CME offers futures and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. As of Nov. 30, 2003, CME’s Clearing House managed $34.1 billion in collateral deposits. CME is a wholly owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE: CME), which is part of the Russell 1000® Index. GLOBEX is a registered trademark of Chicago Mercantile Exchange Inc. TRAKRS, Total Return Asset Contracts, Gold TRAKRS and Gold TRKARS Index are service marks of Merrill Lynch. TRAKRS are U.S.Patent Pending. Further information about CME and its products is available on the CME Web site at www.cme.com.

To: ild who wrote (3269)	12/12/2003 8:13:13 AM
From: Wyätt Gwyön	Respond to of 110194

one of their best ever.

To: ild who wrote (3269)	12/12/2003 8:30:01 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

This CI issue really hits the core of our discussion here lately. In support of my inflationary argument, the 10 UST/Fed funds yield spread chart on page six is illustrative, showing this particular spread at 25 year highs in that 3.25-3.40% area. Would seem that a "breakout" above 3.50% would send an undeniable inflation, big rate increase signal, although I feel 3.30% is signal enough. A more normalized Fed Funds rate at this point would be about 2.0% IMO, but even that will be behind the curve. Ditto the 5 USN less 5 TIPS (page seven): 2.3% is at the high end, signaling much higher inflationary expectations. It's only going to get worse.

To: ild who wrote (3269)	12/12/2003 8:49:35 AM
From: orkrious	Read Replies (1) \| Respond to of 110194

As we move into 2004, the following are just a few of what we believe to be the more important items to focus upon. well, you certainly left me hanging, not posting the items they're going to focus on. <g>

To: ild who wrote (3269)	1/4/2004 4:05:18 PM
From: yard_man	Read Replies (2) \| Respond to of 110194

I know there are a number of CI subs here. Like to comment on recent writings and interested in hearing responses. CI references prior support levels for the USD and also prior behavior of the financial markets vs slides in the USD. I think there are a number of reasons to discount this type of a comparison -- even to periods as recent as the late 80's. First and foremost, is the much larger foreign ownership of the dollar as a percentage of total reserves, US treasuries and US agency debt. Second, is the size of our current trade and current account deficits. Third, we have an unprecendented housing bubble which is supported by a much higher nominal level of debt as well as a much higher rate of debt growth required to support appreciating prices. Because of this, I think the fall of the dollar to-date is already something to be feared and will continue to work great damage, despite any bounce we might encounter. Also, I don't think we should look to the trade-weighted value of the dollar to be some kind of indicator as to the tipping pt of US financial markets. It is clear that foreign holders and buyers have no "stops." We are in the same boat with the Japanese, and the Chinese, to some extent. It is not a question of how low the dollar goes or how much Yen or any other currency is printed to buy USDs -- it is only a question of when "global printing" fails to mask the real world economic situation -- one of a massive mis-allocation of resources -- that and not a particular level for the dollar is what is key. I think it will be quite easy to simply watch government debt issuance here, housing prices, employment and consumer spending. Early indications of a turn down in any of these means doom is near. I think right now, there is already building pressure on the administration to slow fiscal stimulus. War is always a convenient excuse for major fiscal stimulus. 9-11 was a wonderful excuse as well. Absent a new conflict, even before the election there may be some move on the part of this admin to slow spending growth (yeah, yeah, I know -- slow down from what??!! I know, it is pathetic and any slowdown will not be enough -- but it is the perception). I think consumers have already slowed down. The increase of the ratio of ARMs to fixed rate mortgages and the slowdown in refis will be reflected in consumer spending -- increase in ARMs (i.e. ARM only way to afford the house -- regradless of risk of higher rates down the line) is a sign that mortgages are slowing down permanently, regardless of the direction of rates, IMO. Even at 0% financing -- take a look at the number of late model cars around you on the highway next time you are out. Only growth in real income can boost spending on autos and where can that come from?? Doesn't mean today is the top, but the early signs of the things to look for are here. That Benson fellow may be right, that it is global money expansion that counts, but it is also the efficacy of it, too. It must produce more or maintain a given level of consumption and bidding up of financial assets here -- or it will be worthless, no matter what the rate of growth is or how it is measured.