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The Seven Per Cent Solution


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#16 depends

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Posted 22 March 2004 - 09:39 AM

Any guesses on when the DOW breaks below 10,000?
I pick 9:35 a.m. on 3/22/04

I'll take 12.00 - high noon.

When do you think the curbs go in? Like kiddie curbs at the bowling ally.

#17

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Posted 22 March 2004 - 09:40 AM

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#18 machinehead

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Posted 22 March 2004 - 09:41 AM

Why in the world global tensions would arise for something as trivial as vaporizing (with a rocket), a blind old man in a wheelchair as he departs a place of worship... is simply beyond me.

Yeah, can you believe these hotheads --

Egyptian President Hosni Mubarak, who had been using his influence to press ahead with peace efforts, called [the assassination] “cowardly."

Asked about its likely impact on the peace process, he replied: “What peace process?”

Mubarak cancelled plans for a few Egyptian legislators to participate in a celebration tomorrow in the Israeli parliament of the 25th anniversary of the Egypt-Israel peace treaty. The treaty was the first between Israel and an Arab state.


Why do the heathen rage?
"GOLD -- it's not just for misers anymore."

"Dollahs -- fire-starters for the K-wave winter." - Drano

"Three humps and a dump." - anotherone, 21 SEP 2004

"No gold was harmed in the making of this movie." - Bizarro Greenspan

[i]"Da Track. Da place where Morons bet on Animals Controlled by Criminals."
- our jickiss

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Posted 22 March 2004 - 09:42 AM

Goldman anal cyst on CNBS right now stating his belief that US has overstated GDP growth by a factor of 2...otherwise know as LIED.

#20 Hiding Bear

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Posted 22 March 2004 - 09:50 AM

Dr. John Hussman quotes a CSFB report on the mortgage market, which is now larger than the Treasury market (!):

The GSE's (Fannie Mae, Freddie Mac) among others, have been busy trying to redistribute this prepayment risk to broker dealers, among others. One way they do this is by buying an OTC interest rate option. This explains why the notional amount of interest rate options purchased by Fannie Mae has increased from about $27 billion at the end of 1998 to a whopping $444 billion by September of last year. In a nutshell, an increasingly small group of dealers are taking on an increasingly large amount of prepayment risk. Their hedging creates a feedback loop because dealers, collectively, will tend to buy Treasuries when interest rates are falling and sell them when interest rates are rising. Simultaneous hedging by dealers has the capacity to turn a relatively small move in interest rates into a relatively large one.


The net position in global interest rate options written by dealers (including FDIC insured banks like J.P. Morgan, Citigroup, and Bank of America) has exploded from a neutral position in 1999 to a net short position of -$888 billion in notional value.


Tail wags dog

Haven't we seen this movie before? It ran in Oct. 1987. It was called "portfolio insurance."

If mortgage rates start rising, the dealers who are $888 billion net short on rates are going to dump Treasuries by the ton into a market with no bids.

Will we experience the first bond market crash, in which bonds drop by 10% or 20% in a single day?

It is perfectly clear that a major train wreck is being set up here. There is no soft landing.

Interesting suggestion, but somehow I think the 'bond market solution' from the dealers association would be just to close the market. Of course doing so would make just about every MMFs and many MFs illiquid and unable to price their shares.

Plunger - My own opinion on the GDP is that besides some hedonic adjustment problems and some phanthom income, it is overstated simply because inflation is understated.

#21 Ned38

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Posted 22 March 2004 - 09:55 AM

They deny there is global warming.........but it sure feels like things are heating up

#22 EasyAl

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Posted 22 March 2004 - 10:08 AM

I just read somewhere that the administration, after some internal debate, has decided to add mother nature in their axis of evil list.

#23 machinehead

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Posted 22 March 2004 - 10:11 AM

They deny there is global warming.........but it sure feels like things are heating up

It's got me to thinking about Gold Liberation Day. Intraday high on the nearby future was $429.70, several weeks ago.
"GOLD -- it's not just for misers anymore."

"Dollahs -- fire-starters for the K-wave winter." - Drano

"Three humps and a dump." - anotherone, 21 SEP 2004

"No gold was harmed in the making of this movie." - Bizarro Greenspan

[i]"Da Track. Da place where Morons bet on Animals Controlled by Criminals."
- our jickiss

#24 Lock Limit Down

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Posted 22 March 2004 - 10:12 AM

I think today gonna be UGGGGLY

Added to my shorts on the Russel and Spoos a few minutes ago.

Stops are very loose up at 1111.25

The PPT has their hands full.
Posted Image
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." --- Thomas Jefferson

#25

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Posted 22 March 2004 - 10:14 AM

With apologies to MWH...

I'm Sportin' Wood!

#26

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Posted 22 March 2004 - 10:15 AM

I think today gonna be UGGGGLY

Added to my shorts on the Russel and Spoos a few minutes ago.

Stops are very loose up at 1111.25

The PPT has their hands full.

Drawing straws to see who gets to pull the plug today. <_<

#27 HiHat

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Posted 22 March 2004 - 10:17 AM

If there is anyone here who gets FED data, can you
alert the rest of us, if you see them throwing money
at this thing???? thanx.

#28

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Posted 22 March 2004 - 10:19 AM

Michael Metz of Oppenheimer just recommended "CASH" as the preferred asset class today.

#29

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Posted 22 March 2004 - 10:21 AM

Hey Kudlow...

How's that gold short workin' for ya?

#30 HiHat

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Posted 22 March 2004 - 10:25 AM

I call this a CALIGULA day...as in the Historians quip....comment on Caligula being stabbed 35 times

"ON That Day, Caligula, Found Out ; He Was Not A God".





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