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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: roguedolphin who wrote (111326)	5/6/2010 8:01:55 PM
From: roguedolphin	1 Recommendation Respond to of 116555

CNBC: NYSE says no "fat fingered" trades... Message 26516827 From: SliderOnTheBlack 5/6/2010 4:45:03 PM 1 Recommendation of 21802 CNBC: NYSE says no "fat fingered" trades... NYSE CEO Duncan L. Niederauer says no evidence of any erroneous, fat fingered trades from Citigroup, or anyone else. Just computerized trading doing what it was designed to do. Welcome to black boxes gone wild... Front running algorithms, front running other algorithms. That ought to wake up a few people. As far as what to do? I'd highly recommend going back and reading this post: Message 26307281 The Black Swan, Nassim Nicholas Taleb talks about positioning for rogue wave market events. A few of Taleb's favorite trades come up at the beginning of the video around the 11 minute mark... -- A paired ratio trade: Short the S&P/Long PM's (Gold, Silver, Palladium, Platinum) at a ratio of 1.5 to 1. -- Make a small bet on maximum out the money LEAP puts on the S&P and US Treasuries (short both). -- Make a small (hyperinflation) bet on maximum out of the money LEAP calls on gold & PM's. Taleb left out the VIX, which last month became a gift-horse, risk:reward bet that had to be made... and just paid off to the tune of a +100% 3 week run. If you didn't watch that video, I'd go back and watch it tonight. Also, Jim Chanos is warning about Muni bonds: Video: cnbc.com And he's not the only one warning about them. I posted this a month ago - comments from a senior SEC policy advisor... Message 26445084 Lot's of retirees are sitting in Munis. Lot's of pension funds. Lots of insurance companies. Today was a wake up call as to what can, and more than likely, ultimately will happen. Investors have become complacent believing that systemic risk to the global financial system has been eliminated. WRONG! While the risk at the forefront of this market is sovereign debt, the same international banks that we bailed out 18 months ago, are the same ones most exposed to this sovereign debt. A PIIGS failure will trigger an even larger bank failure, and this time, I don't Congress is going to be willing to hand the bankers another $4 trillion dollars. They beauty of putting on insurance (put options/$VIX/Bear ETFs) into strength, is you're buying that insurance when it's cheap... and it allows potentially huge returns in a very short period of time in volatile disconnects - like we saw today with the $VIX up +60% intra-day. They've done nothing to eliminate too big to fail, only they have a helluva lot less money to throw at the problem today, than they had 18 months ago. There's still $1.5 quadrillion in opaque derivatives still out there... It's time to not only be thinking about "Black Swan" events, but also planning for them. SOTB PS: Fwiw, Niederauer also says he expects an "ugly opening" tomorrow.