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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 (74306)	11/17/2006 5:35:08 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 110194

Interest Rates, Carry Trades, and Exchange Rate Movements FRBSF Economic Letter 2006-31; November 17, 2006 What is the carry trade? Not profitable in theory, but profitable in practice Carry trade profits and exchange rate swings How big is the carry trade? frbsf.org Good material for anyone interested in the carry trade.

To: orkrious who wrote (74306)	11/21/2006 1:18:42 PM
From: ild	Respond to of 110194

@pm sentiment -- trotsky, 13:16:31 11/21/06 Tue there has been a big shake-out of bulls from the Rydex pm fund. from the recent interim high in the cash flow ratio we have dropped 36 points (read: an outflow of $36 million from a fund with total assets of slightly over $200m.). nearly $16 million were withdrawn yesterday alone. in short, skepticism has returned with some force, as the cumulative CF ratio is now back BELOW (10 points below to be precise) the low of May 2005. @platinum -- trotsky, 12:58:17 11/21/06 Tue oops - looks like the market has effectively debunked the ETF rumor - again. bw@democrats -- trotsky, 11:47:50 11/21/06 Tue "Democrats are anxious to get on with their agendas and have shown no recognition that the first order of business is to repeal the legislation that permits torture, warrantless detention and domestic spying." huh? as far as i'm aware all this legislation was passed with their consent. why would they repeal it? why would anyone expect the political establishment to actually REDUCE the power of the State? this weird notion that the election actually represented a 'choice' will hopefully soon expire. RIP@the euro -- trotsky, 11:12:19 11/21/06 Tue "The Euro will crumble due to economic disparities in the 'zone'." if this is an economic argument, the answer is a resounding 'no, it won't'. economic disparities are not a hindrance in using the same currency. if this argument is political, it has a wee bit more merit, as economic distress in one or more member states could lead to populist demands to 'opt out' in order to be able to inflate and devalue at will in the countries concerned. however, the euro-related bureaucracy is now well-entrenched. it will take truly extreme circumstances to dislodge it. note that the size of euro-based capital markets (i.e., debt denominated in euros) is vast. it seems nigh impossible to interfere with that - any country attempting to opt out would immediately be penalized via far higher interest rates and disinvestment. Bizarro@platinum -- trotsky, 10:55:45 11/21/06 Tue "Platinum is the ultimate alternative money..." no it isn't. it DOES have all the characteristics a feasible commodity money should possess, except one, and that one is crucial: its existing above ground stock is simply too small. also, more than 100% of annual production is currently used up by industry (catalytic converters , electronics and jewellery combined currently create a 50K oz. deficit p.a.). iow, there's nothing left over that could be added to a potential plat inventory for use as money. gold does not have a comparable liquidity problem. the LBMA alone trades the total annual production of gold every three days. @platinum ETF -- trotsky, 10:48:10 11/21/06 Tue some may wonder why platinum producers aren't all that happy about the idea, but they have good reason. the plat market is so thin that an ETF could really have an outsized effect on prices. this would spur the search for substitutes and price platinum eventually out of its major market, namely catalytic converters. this is the LAST thing the producers want to see. they're more than happy to receive prices osccillating around the $1000 mark, which is already akin to a money printing license for them. their fear in short is that an ETF could kill the goose laying the platinum eggs. RIP@Rangel's call for a draft -- trotsky, 10:21:11 11/21/06 Tue such a call must be opposed on principle. a draft merely means more cheap cannon fodder for endless wars. it is institutionalized slavery. Rangel's idea that it would lead to more pre-war deliberations because the offspring of politicians would be drafted too is risible. they will have their loopholes and expemptions, of that you can be assured (to wit: not one member of Bush's 'Iraq war cabinet' failed to avoid serving in Vietnam, in spite of a draft in force at the time). note also that his reasoning is twofold - on the one hand, he says it would help avert wars, but then he also says 'in case we need more soldiers, we'll have them', citing North Korea, Iran etc. as future flashpoints. in short, he doesn't mind adding to the cannon fodder supply at all. @Iraq -- trotsky, 10:06:08 11/21/06 Tue there aren't many comedians left in Iraq. naturally, people tend to lose their humor in a civil war/occupation combo that spirals out of control at breathtaking speed. now they even killed one of the few comedians left, Hassan. etiam satura mortua est.