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

To: Tommaso who wrote (81351)	5/1/2007 3:20:07 PM
From: orkrious	Read Replies (1) \| Respond to of 110194

April auto sales plunge -- trotsky, 14:39:46 05/01/07 Tue "Nissan Motor Co. (Tokyo:7201.T - News), which some analysts had expected to buck the industry-wide downturn, reported an 11-percent monthly sales decline." car sales disaster in detail conclusion: buy stocks! these numbers are so bad, they can only get better! (in case you wondered). # Erle@going shopping -- trotsky, 13:52:03 05/01/07 Tue i have little doubt that consumers have finally hit the wall in terms of their capacity to spend. ironically, just as the economy is obviously imploding, the entire world of market speculators, from retail to hedge funds to brokerage firms is leveraged as never before (it dwarfs anything seen before the 1929 crash). the crunch in the markets will be sight to see when it comes. it really is only a question timing imo, and for put buyers betting on a big move the timing isn't even important - one simply throws a few bucks at far ootm puts in every other expiration cycle - when they eventually come home, the cost will be insignificant by comparison to the gains (especially with vola premia so low). my only worry w.r.t. this is that i don't trust the electronic market platform 100%. i think we could see such a devastating plunge that the system will be unable to cope with the trading volume and possibly break down in mid flight. this is something one should keep in mind - Tokyo's exchange couldn't even handle an 800 point panic dump last year (which really isn't all that big for the Nikkei). on Feb. 27, the Dow Jones Industrial Average calculation system broke down. it seemed as if the Dow had gone from minus 200 points to minus 500 points in a second (they failed to capture the Dow values in between). this actually cost me some money, as i sold a few puts too early (believing that down 200 was where we were at, a belief apparently shared by market makers and other market participants in the options pits at the time). the only good thing is that the options exchanges are independent of the NYSE in platform terms. also, the 1987 syndrome of brokers simply no longer picking up the phones isn't relevant anymore. these days its a working internet connection that's important (one should have a back-up just in case). @US trade deficit -- trotsky, 11:24:21 05/01/07 Tue as i have often pointed out in the past, a decline in the US trade deficit will ultimately be bearish for the stock market. since the trend of the trade deficit has recently reversed, it is time to pay close attention: a chink in the bubble machine's armor forum.themarkettraders.com @pm money flows -- trotsky, 10:34:48 05/01/07 Tue prices keep declining, but money flows keep improving concurrently. also, negative sentiment is off the charts, so to speak. yesterday's volume put/call ratio in the XAU hit 3.13, following a string of days when it was well over 2. the cumulative Rydex CF ratio has fallen back below 130 as well (2 points above its recently established multi-year low). in short, it still looks like we're in a routine correction. Erle@CMBS spreads -- trotsky, 23:18:54 04/30/07 Mon in fact, this is nothing new - low grade CMBS spreads have been widening dramatically for weeks. you can inspect them on markit's CMBX page, (link below) - if you click on the triple B minus indices that have been around for a while, you'll see that the spread widening began on February 27 and has continued relentlessly ever since. what is however coming down the pike is the following: many MBS backed CDOs (both those containing residential subprime tranches and commercial MBS) have traditionally been 'marked to model' by investors , using models and ratings provided by the ever helpful rating agencies such as Moody's and S&P. CDOs are big business for these agencies. there is therefore a reluctance to issue downgrades (another big conflict of interest here, remember the Asian crisis? the downgrades came when it was finally in full swing). however, the downgrades are coming, like it or not. once a 'marked-to-model' CDO becomes victim of a downgrade, the marking to market can't be avoided anymore. suddenly the losses will become a whole lot more 'real' , and then there could be big trouble. i absolutely agree with Apollo that this is beginning to look plenty ominous. after all, proclamations of 'no contagion likely' in what is one huge credit bubble fraying not at the edges, but at its very center, sound hollow at best. CMBX indices markit.com hint: puts on financials and financial stock indices are very cheap considering the risks out there. suitable for participation with limited risk and huge leverage if the bet works out. Earl@Gary North on bullion -- trotsky, 15:06:50 04/30/07 Mon regarding this sentence: ""The day the interbank payments system fails, your silver coins and gold coins will not be worth much. Don?t put faith in them. They will not buy what you will want when the trucks cease to roll. They are not money today, and they will not be until after the economy shifts to something to replace digital promises to pay." i don't really believe this. as a counterpoint, the European experience in the latter stages of WW2 may be instructive. most of the industrial infrastructure in Germany had been destroyed - the trucks sure weren't rolling anymore (except to ferry the 'last reserve' of Hitler youth and pensioners to the front, a.k.a. 'Volkssturm'). the scarcity of food was easily overcome by those who could produce gold coin in payment to their local farmers however.

To: Tommaso who wrote (81351)	5/1/2007 3:46:53 PM
From: Paul Kern	Read Replies (1) \| Respond to of 110194

Merrill Lynch, for reasons I don't yet unerstand, considers DBA too risky for its clients to buy. Time to open another brokerage account? I've bought it and sold it through Fido.

To: Tommaso who wrote (81351)	5/1/2007 11:03:23 PM
From: Tony Starks	Read Replies (1) \| Respond to of 110194

One risk for commodity ETFs is negative roll yield (i.e., losing money when you roll over future contracts in markets that are in contango). DBA and its sister funds (DBO, DBP, etc.) use an "Optimum Yield" strategy to minimize negative roll yield and maximize positive roll yield. Like DBC, the new ETFs track something Deutsche Bank calls its “Optimum Yield” indexes. All futures-based indexes must roll their contracts from one month to the next as each contract expires; typically, they simply sell the expiring contract and purchase the next, i.e., sell January and purchase February. The “Optimum Yield” indexes, however, instead have the flexibility to “select” the best-priced contract looking out as far as 13 months. That is supposed to improve the “roll yield.” As explained below, PowerShares and DB are making some bold claims about the robustness of this process; it remains to be seen whether those claims will hold up over the long hall. etf.seekingalpha.com