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

To: orkrious who wrote (33943)	6/5/2005 3:37:24 PM
From: russwinter	Read Replies (3) \| Respond to of 110194

Here's my explanation, and you get my stuff as well as anybody, so if you're still lost? In March the dealers and their proprietary trading desks (who I call Pig Men), took the long side of the Treasury trade against the Boyz (hedge funds, who were hugely short). I believe this was done in concert with the Wizards. The COT is a good proxy for measuring this, and I provided the March 8th figures. I believe the large purchases from Caribbean and UK that showed up in March flow of funds report reflect Pig Men, not hedge fund (Boyz) activity. Caribbean to me translates "unregulated", and there is no reason to think it's just hedge funds, could be any of the big financial operatives setting up wild men there for trading purposes. The hedge funds were using short Eurodollars and other notes, in part to finance carry trades into foreign securities and against the USD, and long various commodities. They were way offside, which is something I repeatedly pointed at here at the time. The hedge fund interconnected offside trades have been unwound. Their USD short portion is covered, and in fact they've become Dollar Bulls. Their commodity trades are also unwound, as they all now buying into the bogus cognoscenti playbook about the slowing economy being the key or only variable. Of course now that they are out, those commodities are rising again without them. I've given my view why. The hedge fund part of the rate complex short has come unwound. There is a residual of small specs still short the rate complex. In the ED both the commercials and large specs are continuing to fillet the small specs. In the rest of the complex 2-5-10-30, the commercials are no longer aggressively long, but the big specs are squared off against the small specs. That suggests the bond rally is getting terminal. The ideal before shorting notes or bonds though, would be to see the commercials short in aggregate against all the specs.