Financial topics

Investments, gold, currencies, surviving after a financial meltdown
vincecate
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Re: Financial topics

Post by vincecate »

Higgenbotham wrote: I believe the breakout numbers at the bottom are the official holdings of foreign central banks and the other numbers are all holdings within each country. I am not absolutely certain of that, but that's what I've always understood it to mean.
Oh, the central bank holdings are broken out into Bills vs Bonds & Notes, not the total of all holdings. Yes, then the numbers add up and make sense.

Thanks!

So we can say, "foreign central bank holdings of US treasuries went down $21 billion in one month".

I have searched for a bit but can not find a similar thing for GSE debt. Anyone know where this is reported? As it seems less publicized, it would make sense for foreign central banks to bail out of that first.
Last edited by vincecate on Wed Jan 19, 2011 7:39 am, edited 1 time in total.

vincecate
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Re: Financial topics

Post by vincecate »

I saw a commercial for Etrade where they were talking about how easy it was do do conditional orders with them. People may think it is safe to invest because, "if it drops I will get out automatically". We have talked about this before, but if many people are putting in orders of the form "if Y drops to $X then sell" then when the drop starts all kinds of sells get triggered, which causes the drop to go further, which triggers more sells, and you can get a flash crash.

I remember back when the NASDAQ was really high there were commercials talking about "where do you find such great companies, in the NASDAQ". It seemed to me that those commercials helped drive the NASDAQ up to crazy levels.

Anyway, commercials talking about conditional trades may have helped set things up for a big crash.

burt
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Re: Financial topics

Post by burt »

I agree with John's today's post and yours about the FUTURE crash. This is a REAL problem, but for when, tomorrow or within 20 years?? And that nobody knows.
vincecate wrote: Anyway, commercials talking about conditional trades may have helped set things up for a big crash.
AND
John wrote: Wall Street investors today are in dreamland, thinking that they're protected from a similar crash.

* Some people think that NY Stock Exchange circuit breakers will protect them. But those circuit breakers will be no more effective in a panic than the Dhaka circuit breakers were.

In fact, it's much worse in NY than in Dhaka because of of the heavy use of computerized trading. When computers sense a panic, they're self-protection algorithms will kick into gear in nanoseconds, and they'll sell off, causing a panic much more rapid than if humans were doing everything. I'm always mindful of the old saying, "To err is human, but to really f--k things up takes a computer.

* A lot of people have stop orders on their portfolios, something like, "If the stock price falls 10%, then automatically sell immediately." But these stock orders have no more chance of surviving a panic than circuit breakers do.

There's an additional wrinkle about computerized trading that makes this situation even worse for the small investor. You know that when you visit a web site, it can take a few seconds to get a response to a click. Well, that's true of programs, sitting in some stock broker's office, that are supposed to execute your stop order. But those computers will have to wait several seconds to get a response. Meanwhile, the big Wall Street banks have direct network connections into the NY Stock Exchange, and their sell orders will be executed more quickly, by nanoseconds or even seconds. That means that your sell order won't even be processed until the panic has been going on for a while.

* A lot of people believe they're protected from big losses because they've hedged their investments by offsetting their stock investments with short sales. The problem is that in a full-scale panic, a lot of people will go bankrupt, and those shorts will not be paid.
The logic is perfect, this is a REAL problem, with all the derivative market, BUT when???
For example predictions of John for 2009 were completly wrong, even if the logic were good.

Bengladesh is NOT India, so the question are:
-a-will Bengladesh's panic moves to India, there is NO reason for that?
-b-WHEN will S&P crashes, with the derivatives market and the help of all the the banks in the world it could be in 20 years.

There is NO known reason to panic YET.

We ARE in a BULL market, there will be retracement, for sure, and with the remark of Higgenbotham it could perfectly be in march and a retracement of 400 points, Even so, it does NOT mean a full electronic panic without end (as it could happen tomorrow in Bengladesh which is a small market WITHOUT industry.

As written by Morgan you have to measure different PER for different markets, not 1 PER, and, even if John disagrees, the future PER is what people look at, before making a bet, BUT this not the only factor, and as described once by Michael Pettis, there are different kinds of punters on the "market"(which is NOT a market, but a Poker game, as I wrote before).
What make different countries differents is how many different types of punters you can find. (In Benglasdesh it looks like there is only one type of punters, this is no more the case in India)

In the main "markets", central banks can also buy future at night time to give the sensation that the "market" is going up.

So far, my observations are (just to write it down, we'll see):
- a major low was hit in march 2009 (see the volume of the Dow for that)
- as usual, after a main low, people stay pessimist and the first leg up is with low volume
- We should hit all time high very soon (the DAX before the others). Not an observation, but a thought.
- We have striclty no sign of retracement

so we should be close (this year or 2012) of a decisive trading point : or we go past all time highs and then we are on a track for a 10 years up market OR we are going to hit all time highs and then retrace to march 2009 lows.
Today people are much too pessimist ... so the market should go up, whatever the PER tells us..

A REAL panic has always precursor signs (these are NEVER panic signs, NEVER anxiety, but signs of degradation within an optimistic pattern): look at the Bengladesh, but, because of the size of market, extend the graph by a factor ten on the axis, this would be a sign for a crash.... may be in 20 years, today there is NO sign neither of optimism, neither of the typical parabolic curve you see on the Bengladesh market.

PANIC IS NOT FOR NOW, otherwise, please study what panic means and give me historical proofs. I think I experessed my logic, what is yours?
Inside a logic, TIME is everything, I can be right, but dead before being able to see it... (as said by someone I don't remember the name)

Regards
Last edited by burt on Fri Jan 21, 2011 8:02 am, edited 1 time in total.

vincecate
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Re: Financial topics

Post by vincecate »

burt wrote:I agree with John's today's post and yours about the FUTURE crash. This is a REAL problem, but for when, tomorrow or within 20 years?? And that nobody knows.
[...]
PANIC IS NOT FOR NOW, otherwise, please study what panic means and give me historical proofs.
It amuses me that you can say "nobody knows" and then imply it is not now unless someone can give you a proof it is now. There are at least two logical flaws in this line of thinking.

burt
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Re: Financial topics

Post by burt »

>Vincecate

May be I was not clear enough, or my english was not good enough:
-a- Nobody knows the future
-b- On MY knowledge (with the tools I'm using), panic is not for now
-c- I'd be interested in knowing others' logics
-d- I see a lot of writing about "panic" on this blog, but I cannot find on it any historical description on how panics happen (sequence and timing) and no clear difference between panic, crash and a low, and, on the other hand, a financial collapse (if short cannot be paid) (why should there be one, yet)?

So my point of view (only mine): No panic now, Being too emotional on "panic" does not help (speaking on panic makes panicking), I'd be happy to have other's description on where we are yet.

vincecate
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Re: Financial topics

Post by vincecate »

burt wrote: -c- I'd be interested in knowing others' logics
Here is my stuff:
http://pair.offshore.ai/38yearcycle/
http://howfiatdies.blogspot.com/

I would be interested in knowing the URLs for other people's stuff too. I think there are at least a few others that have blogs or something.

Higgenbotham
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Re: Financial topics

Post by Higgenbotham »

burt wrote:So my point of view (only mine): No panic now, Being too emotional on "panic" does not help (speaking on panic makes panicking), I'd be happy to have other's description on where we are yet.
These would be some of the reasons why I think a panic is close (from most important to least important):
  • US Muni bond indices collapsing
    US State bankruptcy procedures being seriously discussed, indicating bankruptcies are imminent
    Several US housing markets making new post bubble lows and the trend appears to be accelerating
    Rising US, German and French bond yields, while at the same time PIIGS bond yields remain elevated
    Recent Gallup spending survey shows a collapse in US consumer spending in January 2011
    Leading Asian stock markets have been rolling over since November
    Russell 2000 Index lost 3% last week while the Dow gained 1%
    Many sentiment indicators near or at records
    Recent speeches by top Fed officials indicate dissent and fear is building
    Oil and gasoline prices moving into danger zone (subject to interpretation)
    US Mutual Fund cash levels at record lows (this condition can persist for months)
    NYSE and NASDAQ short interest at post 2007 lows (same here)
    High NYSE margin debt (and here)
    Silver prices starting to lag gold prices (probably not by enough yet to cause concern)
    ECRI and CMI Indices lagging stock market (this could be interpreted as bullish)
    US traffic volume still well under its 2007 high and not improving much (and here)
One final comment would be what we see here in this forum. Reading the forum from its inception until about May 2009 and comparing that to now is like night and day. Back then it was a given on this forum that deflation would continue. I remember one debate about whether the Dow would go to 4000 or 1000. Low stock prices convince most people that lower stock prices are to follow. High stock prices convince most people that higher stock prices are to follow. And it will forever be thus.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

vincecate
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Re: Financial topics

Post by vincecate »

Higgenbotham wrote: These would be some of the reasons why I think a panic is close (from most important to least important):
Thanks, that is a very good list. There were some places where you had "(and here)" which made it look like this was written with links but the links did not make it. Do you have links that were supposed to be with this?

It was interesting that the insider-selling/insider-buying ratio had a divide by zero error, probably for the first time ever. There were no insiders buying.

http://www.zerohedge.com/article/inside ... prior-week

Higgenbotham
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Re: Financial topics

Post by Higgenbotham »

vincecate wrote:
Higgenbotham wrote: These would be some of the reasons why I think a panic is close (from most important to least important):
Thanks, that is a very good list. There were some places where you had "(and here)" which made it look like this was written with links but the links did not make it. Do you have links that were supposed to be with this?

It was interesting that the insider-selling/insider-buying ratio had a divide by zero error, probably for the first time ever. There were no insiders buying.

http://www.zerohedge.com/article/inside ... prior-week
I didn't have any links; after one item I had written that "(this item can persist for months)". Then after the next item on the list I had written "(same here)", meaning that item can persist for months. NYSE margin debt has been pretty high all through 2010. But I think the really important thing is the combination of all of the items. To be honest, this situation appears to me to be much more dangerous than anything leading up to the 2008 collapse.

And you're right, I forgot to add the insider selling statistics. Insider selling doesn't mean the market is going to go down next week, but added to all these other things, it's significant in my mind.

Just taking the last (least important in my view) item on the list, most people do not realize that the US population has stopped driving more each year. Miles driven peaked in 2007. This has never happened before. The proportion of the US economy that is auto dependant is enormous. It doesn't mean the stock market is going to go down next week, but if people aren't driving more it is very difficult for me to see how the economy will pick up. I don't see any discussion of this anywhere.

Another item I forgot to list is the declining employment to population ratio. There has been a massive, unprecedented decline in this ratio. If people aren't working and don't want to work, the economy can't grow. There's some discussion of this, but not much.
http://research.stlouisfed.org/fred2/series/EMRATIO

And how about 42 million people on food stamps? Not a problem?
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

burt
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Re: Financial topics

Post by burt »

Higgenbotham wrote: To be honest, this situation appears to me to be much more dangerous than anything leading up to the 2008 collapse.
The actual situation is VERY dangerous, yes:

2 points:
-a- thank you to you and Vincecate about the list you gave,
I could add graphics on
(IF SOMEONE COULD TELL ME HOW TECHNICALY TO ADD A GRAPH to my post, I'd be happy to do it)
$NDX:$SPX
$CYC:$SPX
$RUT:$SPX
EEM:EFA

+ The 25 Countries Whose Governments Could Get Crushed By Food Price Inflation (http://www.businessinsider.com/governme ... ion-2011-1#)

"Houston we have a problem"

BUT a-2)
Almost everyone I follow, aggrees that a CORRECTION is due, (so do I) this doesn't mean a PANIC, why should there be a crash or a panic (2 differents human acts)???
That is the point I do not understand. The last big panic was in 1987, from that time there has been small ones, (and one in 2008, for sure), lows can happen at any time without panic, but you can have crash as in 2000-2003, with a lot of quite small panics but not really a big one, except at the bottom (if my memory is good... so feel free to refresh it)
Higgenbotham wrote: And how about 42 million people on food stamps? Not a problem?
-b- A NO time the Stock market was related to the actual economy, WE HAVE A HUDGE ECONOMICAL PROBLEM (but not for everyone, the middle-class is clearly the target since the second term in office from Reagan (the one who made this actual world, who started the unravelling of our world), this does NOT mean a terrible problem for the Stock "market"
+ a NEW point (true starting from the 90's) because of the globalization, when you buy a Stock at New-York, this company could make most of its business in Asia, so sorry about that, but people could starve in the US or in Europe and Stock Market could go up
Last edited by burt on Sun Jan 23, 2011 11:28 am, edited 1 time in total.

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