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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (5290)	2/3/1999 1:04:00 AM
From: bobby beara	Respond to of 99985

James, the retail smo's are buying calls with both hands at zee topp. chart czech Monthly OEX chart. trendline touch 5.96, 7.97, 4.98, 7.98, 1.99 bb

To: James F. Hopkins who wrote (5290)	2/3/1999 7:18:00 AM
From: Monty Lenard	Read Replies (1) \| Respond to of 99985

Thanks Jim, very interesting. Max Pain.

To: James F. Hopkins who wrote (5290)	2/3/1999 8:31:00 AM
From: John Pitera	Respond to of 99985

Jim H, Check out those medieval Japanese<<G>> The Central Bank can not directly buy Japanese Govt' debt...Who would of thought that..... fortunately, the good Sir Knight Bob Rubin is showing them the light on how to run the printing presses full time on a 24/7 schedule. <<VBG>> Best Regards, John Wednesday February 3, 2:05 am Eastern Time ANALYSIS-Pressure mounts on BOJ to rein in yields By Yoshiko Mori TOKYO, Feb 3 (Reuters) -Pressure on the Bank of Japan (BOJ) to rein in galloping Japanese long-term yields is mounting as more investors shift money from Japanese government bonds (JGBs) into yen cash in search of a safe haven, senior economists say. One option for the BOJ is direct debt underwriting, a contentious step that is advocated by some politicians in the ruling Liberal Democratic Party and some economists. "The recent yield rise reflected a vicious cycle of fears of bond price falls promoting a temporary exit out of JGBs into cash, which only aggravated the original fears," said Ryutaro Kono, a senior economist at Dai-Ichi Life Research Institute. Fears of falls in bond prices arise from massive debt issuance by the government to finance economic pump-priming steps. "It's not that there is no money in the market place, but the demand on the only safe haven perceived by markets-cash, but nothing else-is escalating. The central bank can help correct this harmful misallocation of money instead of letting it correct itself naturally," Kono said. The outstanding volume of Japan's money market shot up to 35 trillion yen ($312 billion) by Tuesday from 31.7 trillion two weeks ago, according to Tokyo Tanshi Co Ltd - Japan's largest money broker. Senior LDP official Okiharu Yasuoka said on Friday a party panel he heads on financial restructuring would consider the idea of having the BOJ directly underwrite JGBs to boost money supply and alleviate deflationary pressure on the economy. Ichizo Ohara, an informal adviser to Prime Minister Keizo Obuchi, told Reuters on Wednesday that he was considering proposing the BOJ directly underwrite five trillion yen worth of JGBs over two years. Under Japanese law, the central bank cannot directly underwrite government bonds except in an emergency. But there is no definition of what would constitute an emergency. Sources close to the BOJ said the central bank is in fact considering that option, but the amount of clamour surrounding the issue had prevented it from taking the step. U.S. Treasury Secretary Robert Rubin said on Saturday that Japan needed to look at all available steps relating to monetary policy as it may have exhausted most fiscal options. Some politicians and analysts argue that direct underwriting by the BOJ would eventually lead to runaway inflation, while others dismiss such a risk. "There is no risk that BOJ's debt purchases would set off inflation, as the economy is still suffering from overcapacity after the bursting of the economic bubble in the early 1990s," said Yasushi Okada, chief economist at Credit Suisse First Boston Securities (Japan). "More danger lies in the possibility that the effect of the fiscal stimulus would be cancelled out by rises in interest rates and the value of the currency. The BOJ must keep this risk at bay by providing more liquidity," said Okada. On Wednesday, the yield of the benchmark 203rd 10-year JGB briefly rose as high as 2.440 percent, its highest level since June 1997. The dollar also took a dive of over three yen to below 112 yen in just two days following the JGB yield rise. Analysts were also divided over whether Japan's still embryonic economic recovery should be put to the challenge of a natural correction to yield rises. "Even without the BOJ's assistance, yields will be corrected downwards when too much demand on cash pushes up the JGB yield to the point where it could undermine the economy-then JGBs will become a good buy. But this involves a risk of neutralising the impact of past stimulus steps," Dai-Ichi Life's Kono said. Yasuyoshi Masuda, head of Research for Finance and Currency at Fuji Research Institute, said: "What's happening now is a very exotic case of flight to liquidity. But this won't last forever, because JGBs are also liquid, low-risk assets. The BOJ must not lend a hand in reversing the current capital flows." Meanwhile, money exiting JGBs is not flowing into more risky assets such as stocks and overseas assets, as investors' aversion to risk is expected to heighten towards book closings by Japanese companies at the end of financial year on March 31, Masuda said. The Japan Securities Dealers' Association said city banks were net sellers of 1.113 trillion yen in yen bonds and insurers of 314.2 billion yen worth in December. Banks were also net sellers of 64.9 billion yen in foreign bonds in the four months to November, Finance Ministry data shows. "A more fundamental problem is not that the money is shifting out of JGBs into cash, but that it is not flowing into the real economy," said Teruhiko Mano, an adviser to the president of the Bank of Tokyo-Mitsubishi. Yoshiichi Taguchi, a strategist at Tokio Marine MC Asset Management Co Ltd, said: "Most of the recent discussions on the BOJ's bond purchases centred on the need to boost money supply. But the question is to do what (with increased money supply)?" Taguchi, who is also a former senior BOJ official, said: "The option must be considered only after the government makes clear what such high-powered money generated by the BOJ would be used for." It is apparent that money poured into traditional public works projects only delays a much-needed restructuring of Japan's construction industry, Taguchi said. ($1=112 yen)

To: James F. Hopkins who wrote (5290)	2/3/1999 10:04:00 AM
From: James F. Hopkins	Respond to of 99985

Hi Monty ; Just so no one will mistake what part I agree with I've cliped it. Despite across-the-board declines in the major stock indexes Tuesday, call interest continued to outstrip puts by a two-to-one margin in equity options traded on the Chicago Board Options Exchange. The excess call buying represents a euphoric level of speculation that points to a significant decline sometime before the February 19 options expiration, Hegarty said. -------------------- It's simple when the call buyers, ( like put buyers )go all out one way or another , it's generally the result of "Speculators" the ones writing these contracts are the ones who can see to it that the prices move to create the most pain. AS the writers more often than not have the power, to send the stocks the way they need to. Even when they don't have that power they front run their positions. Bigger players when they sell, say Puts, if the market for some reason goes on down to where they can get hurt they short the stocks prior to the put buyers being able to sting them. They don't buy the puts back, the speculators have to sell them to other speculators, the writers keep the premium and at best you can put a stock to them that they are already short, mean while they are writing more puts at a lower strike. Jim