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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 (4044)	12/29/2003 8:53:44 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

Excerpt from Trim Tabs may offer a clue about money supply decline (in addition to my capital flight theory, as only about half the new fund investment is now going into domestic funds)? Message 19628935 Full three week lag Trim Tabs report: trimtabs.com SAVINGS AS PERCENTAGE OF MARKET CAPITALIZATION AT 41.10%, LOWEST LEVEL SINCE JUNE 2002. Recently we read an article in which an investment strategist claimed that massive amounts of cash are “waiting on the sidelines” to enter the stock market. To us, his comment sounds like fingernails running over a blackboard. Cash in all savings vehicles—retail money market funds, under-$100,000 bank certificates of deposit, bank savings accounts, and all bond funds—has reached its lowest level relative to market capitalization (41.10%) since June 2002 (40.80%). By comparison, the recent peak percentage was 54.76% at the end of March 2003.Cash in all savings vehicles as a percentage of market capitalization has now declined for eight straight months. Earlier this year, savings balances increased in part due to $8 billion to $10 billion per month of mortgage refinancings. Now refinancings have slowed to $1 billion to $2 billion monthly. In addition, interest rates on most savings vehicles remain very low. We suspect that much of the cash leaving savings vehicles is flowing into the stock market, although we do not know for sure. Trim Tabs expects enormous supply in February: RESUMPTION OF INSIDER SELLING + HEAVY NEW OFFERINGS = TROUBLE IN FEBRUARY 2004 Based upon reports by Thomson Financial, we estimate that all insiders—not just the top executives, board members, and major holders required to file Form 144 with the Securities and Exchange Commission—have sold an average of $3.0 billion weekly during the past four weeks, including $2.0 billion during this past week. As we wrote last week, insider selling typically slows in December and does not pick up until February. In December, insiders are reluctant incur a tax liability due the following April, so they wait until the next year to sell. In January, insiders must wait until December quarter earnings are released before they are allowed to sell. By February 2004, however, we expect insider selling to balloon to $5 billion weekly. Insider selling has already been averaging $3 billion weekly during the past four weeks, and we believe it will grow as year-end bonus money inflates the bubble even further in January. At the same time, we expect new offerings to surpass $30 billion monthly, or $7.5 billion weekly, beginning in February 2004. Remember, the fruits of this past summer’s increasing deal capacity at Wall Street underwriters will not begin to be felt until early next year. With $50 billion monthly leaving the stock market beginning in February—more than new savings in the US grow each month—the stock market will be vulnerable to any disappointment.