Archive - Mar 2011 - Blog entry

Bring your black berets, Breton shirts, and packs of Gitanes and Gauloises. Enough charts, tables, graphs, and statistics will be tossed at you to keep your ears ringing for a week. I’ll be looking for my front teeth, which I lost in a Left Bank riot in 1968.

A number of Black Swan events have been ignored / killed by the markets (for the time being). Apart from Nikkei, there was no signficant follow through of selling in other markets, and dips have been bought hand over fists. Also, there have been news of significant buying of Japanese equities by western investments. Perhaps, this was among the the main reason for strong buying of Yen on 16 March 2011, rather than pure speculation or repatriation (Yen surge was later fought by G7 intervention).

Several trades were triggered based on previous analysis of January newsletter, details can be found below.

The Financial World has entered a period that is strikingly similar to that of 2008, at least regarding three key issues. They are:

1) The Oil/ USD correlation (as noted recently on ZeroHedge)
2) Bearish bets against the US Dollar
3) “In the Know” investors getting out of the market

The main banner ad running on Zero Hedge this morning said: "Public Health Alert: Reishi May Help Avoid Radiation Injury". I've done a little research on the topic, so - for those who are interested - here's a little background ...

How can we compare Japanese radiation levels to "background radiation" ... when radioactive cesium and iodine DON'T EXIST in nature?

Residential real estate is a downright mess, and its getting worse despite multiple proclamations from Treasury Secretaries past and present that the worst is behind us. We have already qualified, by any metric imaginable, as a real estate depression. Is anyone curious as to how we got here? Well, I have some keen observations...

Remember, the interest-rate based derivatives market in the US is $196 TRILLION. If the Fed lets interest rates get out of hand, then the entire system breaks down even worse than it did in 2008: 2008’s crisis was triggered by the credit defaults swap market which was just $50-60 trillion in size (less than 1/3 of the interest rate based derivatives market).

Tsunamis to the left of me TEPCO Clowns to the right...

AUDUSD is firing on all cylinders in the long zone whilst 65.81% traders are short and actually made it to the strong short zone in Fridays session before pulling back a little into the long zone. Both EURUSD and GBPUSD are now well within the neutral zone. Pending Home Sales coming out of the US at 10:00am EST is the big new event of the day and if we do have a strong deviation from consensus we expect it to have a strong influence on retail positioning.

This weeks review of COT and Retail trader positioning analysis.

Alright all you Zero Hedge bears, time to weigh in on my latest comment (sarcasm ON)...

I think that we’re experiencing a sort of stock market survivor’s high, where investors are so relieved we didn’t crash that they’re ignoring the fact that there’s another cliff just ahead.

States can't have their proverbial cake & eat it, too. In times of economic and financial distress, they can jack-up taxes on "the rich," to their hearts' content, but they cannot do so without consequence. States prosper when the fortunes of "the rich" increase and share in the pain when they decrease.

Is the US FED about to roll out a surprise rate increase?

Is the guy that is saying there is nothing to worry about willing to indulge in some Fukushima sushi and a bottle of fresh tap water?