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IDS World Markets Tues 24th April 07


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This action in gold feels like they're shorting it and using the proceeds to pump up the market, LoL

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Feels like a massive bounce in the USD is coming with a GOLD smack down.

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absolutely amazing how they can get away with this when very little are actually selling their gold.

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The golden bearaids usually have this flavor. Smack the miners to build the warchest and then blast gold. When TRE stalls after a quick runup and when DROOY finally pops up it is late in any rally.

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? Global Liquidity in renewed upswing, despite downtick in March 2007. Cycle

unlikely to peak before 2008

? Pause in US and Chinese liquidity expansion, but Japan, Eurozone and emerging

markets edge higher

? US Free Reserves climb to US$1.71bn, compared to US$1.01 at end-January.

Asian Central Banks step up US dollar purchases. Custody holdings of US dollars

up 25.5% annualised over three months

? Eurozone liquidity high following its three-year boom, and ECB seems to be

easing again. Net Liquidity Provision jumps to E443bn in early April

? Japanese liquidity gradually edging higher. Expect rebound over coming months

 

 

We have remarked many times that the collapse in stock market volatility, as

measured by America?s latest sub-12% VIX index, is secular and bullish, NOT

cyclical and bearish. It reflects the parallel plunge in forex market volatility. See

Figure 2. This is the ?elephant in the room? that many investors feel but cannot see, and

so wrongly ascribe to ?complacency?. In fact, it has been indirectly engineered by Central

Banks as they try to stabilize their paper currencies against each another, but the

secularly weak Yen (pace the exaggerated ?carry trade?) is making their task harder. As

a result Global Liquidity is rising.

 

 

http://www.liquidity.com/default.asp

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For those who are "bullish" on liquidity, you have an opportunity to put your money where your mouth is on Kentucky Derby day on Saturday, May 5.

 

One of the entrants is a horse named "Liquidity".

 

A son of 2000 Horse of the Year Tiznow, the only horse to win the Breeders' Cup Classic twice (2000 and 2001), Liquidity has been a disappointment on the track. He has faded in the stretch in his last five races and only has one win to his credit, a maiden victory in his first start back in October at Santa Anita.

 

Liquidity certainly has the breeding and the connections to win the Derby. His trainer, Doug O'Neill, is one of the hotter conditioners in the country, though he has never saddled a Derby starter. Liquidity's time ratings are competitive in a race with no real standouts and he has the natural speed to be well-positioned early in the race without the need to gun for the lead.

 

O'Neill has announced that he will remove Liquidity's blinkers (blinders) for the Derby. Blinkers are often added to keep a horse's mind on his business and often result in the horse going faster earlier in a race. The equipment change could allow Liquidity to relax a bit more in the early going and allow him to conserve energy for the big finish that has eluded him so far in his career.

 

Clocker reports out of Louisville note that Liquidity is training very well in his warmups for the Derby so far and that he appears to be a "changed" horse. Given his lack of success, he is likely to go off between 15-1 and 20-1 in a race that will likely attract the full complement of 20 entries.

 

Liquidity's owner, J. Paul Reddam, is a former philosophy professor turned loan shark. He owned a mrotgouge loan company that he sold to GM in 1999. He is now the president of Cash Call, a company that provides cash---at exorbitant fees---to tapped-out punters at casinos, poker rooms and racetracks nationwide via their ubiquitous ATMs. Cash Call is the DiTech of the gambler set.

 

I'm not ready to tout Liquidity in the Derby, especially given the fact that he's faded in the stretch against similar company in his last five races. But if "liquidity" is the watchword for the U.S. markets in 2007, then Liquidity just might be a horse for our times in the Derby. At a price, no less.

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Gap closed on the spider (spy).

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Since last summer, the SPY chart has more gaps than Leon Spinks' choppers.

 

One filled, many more to go, if the SPY chooses that path. You can find gaps all the way back at 1225.

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