Discussion in 'Trading' started by Spectre2007, Jan 21, 2007.
Nikkei Bull running free, should push usd/jpy up to 125.00
While I respect your opinion on this issue, you should consult with a chart. The technical resistance is somewhere around 17500 for the Nikkei.
You should also ask yourself, what happens with lower oil prices? The foreign countries who are holding US notes and bonds will now dump them back into the market. These foreign countries who had greatly benefited from the production of oil will now be using these US Treasury instruments to make up for the loss. What happens when these instruments are dumped back out on the open market? You have a rise in the ten-year.
When the ten year note has increased, this has been Kryptonite to the stock market. The ten year note 40 year cycle has now ended. We should see at least 5.25% by the summer and even higher interest rates after that. These foreign countries hold so many instruments that they could double or triple the interest rates from here in a matter of a few years.
The only way to stop the foreign countries from dumping is to have oil go back up to $65 per barrel. Otherwise, the equities market is in trouble from here. Higher interest rates will send the US economy into a wall and the asian markets will dump back down like its the tech crash all over again, but worse.
If my prediction is correct, George Bush will purposely rile the oil markets when he makes his state of the union speech. The Saudis seemed too comfortable as if they knew what was going to happen next. George Bush needs to rile the oil markets otherwise the bond market will soon tank sending interest rates up so high that it will not only crash the stock market but the housing market as well.
$30 oil is a nightmare, not a blessing. Unfortunately, this nightmare has a chance of coming true and restarting the ten year cycle back up its nasty path. It is now in George Bush's court. He will talk about energy security in his speech and that should ratchet the oil market up from here. Otherwise, its to 30 we go. . .
Dr. Michael Roberts
ANOTHER NEW HIGH!!!!!
Index Value: 2,889.91
Trade Time: 9:11PM ET
Change: Up 57.71 (2.04%)
Prev Close: 2,832.207
Day's Range: 2857.90 - 2890.11
52wk Range: 1,238.16 - 2,870.42
short sgxnk at 17425, 17430 & 17445 ;-)
why short around a breakout like this?
this could easily go 500-1000 pts before it backs off.
It gapped up. Today, it has been as low as the high of two days ago. Often after lunch, cooler heads prevail. If not after lunch, then after hours. I hope to cover at 17405.
They are at lunch now, about to come back. Today is low volume, too.
"At this time, I would like to take a moment to remember those in the military that are over-seas...The job of soldier is probably the most difficult and thankless job in the world.
The families of 9/11 were given much help, comfort and aid. However, a solider's family will never see such support. In fact, the support may just be a few hundred dollars a month and a piece of paper thanking the soldier's family.
There is a duopoly in America where only certain individuals are given attention while others are left with empty pockets.
I pay tribute to these soldiers who have made the ultimate sacrifice for a questionable cause. I sure wish there were was a hedge fund or large financial institution that would give aid to these broken families instead of passing it on to traders and executives who really dont need it.
While I believe the 9/11 families should be given support, I sure wish the same hand could be extended to other victims of American tragedies. However, I have confidence that institutions and government will just post a token American flag on their website and spread the wealth to undeserving executives instead of those who fought and died.
While institutions like Goldman Sachs and UBS celebrate record earnings, the funerals are on-going for soldiers. "
Man, I couldn't agree more. I've been thinking the same thing for quite some time.
I agree with the general thesis that a mass dumping of US debt would put our (as well as correlated ones) economy into trouble, as it would push long term yields to dangerous levels. (housing would hurt quickly)
The question thats more relevant is when and probability of this happening.
but then you have a situation where the yield curve looks more 'normal' for a healthy growth anticipating economy. furthermore, the fed could fight this long debt weakness by lowering fed funds rates, thus forcing the front of the yield curve down to exagerrated levels. This could prevent a mortgage bubble pop while at the same time providing a massive influx of liquidity to support equity markets and even the rear end of the yield curve.
the new 'carry' trade would be profiting on the massive yield spread between long term and short term debt. (borrow/sell short term debt to buy long term debt). This sort of 'arb' could contribute to rebalancing markets that were thrown out of whack by your argument.
The reality is that its all blind speculation unless you know precisely how much support long (10-30yr) treasuries are ACTUALLY receiving from petrodollars.
My thoughts: the return of the yield curve to 'healthy' historical standards would not necessarily spell economic death, since it creates new opportunity (ie mortgage market support by ARM and short term products, fed lowering of interest rates, etc). Furthermore, commodity price weakness inversely correlates to dollar strength. So with cheap oil and commodities, the fed can lower short term rates with reckless abandon, flooding markets with liquidity, and do it without fear of dollar collapse (commodity weakness spells strong currencies that can afford to weaken).
What type of doctor are you?
one more idea on this topic: lack of new petrodollars (from cheap oil) might imply -increased- demand for anything US denominated (including treasuries), since the currency would like be *stronger*. What better place to park your assets than US treasuries when the dollar goes a long way?
Furthermore, fewer -new- petrodollars means less overall liquidity, which means less demand for other reserve currencies [and associated bonds] as well (euro, chf, gbp).
PS: bad bond market historically means great equity markets...
I have no doubt the fed will fight high yield long treasury debt by moving the front of the yield curve down at any expense to offset any 'liquidity collapse' you suggest, to support housing, equity, etc. markets.
only way my argument fails is if the fed is unable to lower short term rates because being caught in an inflationary spiral -- but commodity price collapse is precisely OPPOSITE that predicament. so its all moot.
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