Marc Faber Sees US Dollar Strength and Market Correction

Marc Faber (Dr. Doom) made a macro call on CNBC last week. Faber sees US Dollar strength and a market correction in the next few months. That has been the correlation these days. Nouriel Roubini (Dr. Realist) also asks him a few questions during the segment. Faber also believes the US Government is in a bubble. Aired on August 12.
"What we have is a bull market in assets between 2002 and the end of 2007, early 2008, and a weak dollar during that time. 2008 was the opposite, a strong dollar and all asset markets went down except for bonds. And now 2009 we bottomed out on the S&P at 666 in March and since then have rallied strongly and in emerging markets even more, but the dollar was weak. And I expect now maybe for the next couple of months a period of a recovering dollar and a correction time in asset markets..... Because a strong dollar means global liquidity is tightening." Watch the full interview."

2nd Half Economic Recovery Update From WalStreetPro

WalStreetPro's 2nd half economic update is up. Go to his site at WalstreetPro2.

Tyler Durden of Zero Hedge Speaks With Max Keiser

The man, the myth, the legend, Tyler Durden of Zero Hedge speaks with Max Keiser about high frequency trading and the Fed.






Source:
On the Edge with Max Keiser – The Fed, front running, ponzi schemes (MaxKeiser.com)
Max Keiser's Youtube channel at http://www.youtube.com/user/MaxKeiserTV
Also visit ZeroHedge.com

Bob Janjuah of RBS: Global Stock Markets Will Test March Lows

Uh oh, this just out at Telegraph.co.uk. Bob Janjuah, Chief Credit Strategist at RBS believes the V shaped recovery will fail and "expects global stock markets to test their March lows". He made some good calls last year: RBS issues global stock and credit crash alert (Telegraph, June 18, 2008). This could explain the elevated put/call ratios on SPY today. Watch out for black swans!

Read full article:
RBS uber-bear issues fresh alert on global stock market (Telegraph.co.uk)

Simple Explanation on High Frequency Trading

Here is a simple explanation on high frequency trading with Market Place Senior Editor Paddy Hirsch explaining co-location, algorithms, program trades, automatic market makers and flash orders. Visit my previous post with CNBC/Bloomberg guests explaining HFT.



High-frequency trading from Marketplace on Vimeo.



Source: http://vimeo.com/6056298

John Paulson Keeps GLD Investment, Watching Symmetrical Triangle

From his most recent SEC filing, John Paulson's fund Paulson & Co. kept it's 31.5 million share position in GLD (the gold ETF). This position could be a hedge against inflation and/or a hedge on one of his funds denominated in gold. I bet he is watching this symmetrical triangle though. OR he dumped post June 30, we'll see. I'm looking at his whole portfolio later.


GLD (Gold ETF)


Here is when we first heard about his $GLD position:
Paulson Buys GLD, GDX. Laidi Long Gold/Oil Pair Trade (May 20)

Jim Rogers Not Buying Chinese Stocks, Buying During Collapse (Video)

This is a 2 weeks old. Jim Rogers on Bloomberg talking about Chinese equities and commodities. He's staying away from buying Chinese equities at these levels. Yeah, $FXI has doubled over the past 9 months ($20 to $40), I see some hedging going on but someone might be buying a 50% retracement spike. Check next post.

  • Not buying any stocks in China, bought last shares in October and November of 2008
  • The market has more than doubled over the last 9 months
  • Much rather buy when things collapse, got another 10, 15, 20, 30 Years
  • Real estate has boomed in last 2-3 months, back around 2004 bubble levels
  • Certainly not selling but market has doubled in 9 months, usually a worrisome sign (buying puts Jim?)
  • Down 70-80% a year before that
  • To play China buy commodities, China has to buy commodities
  • We are "told" that the Chinese are spending Dollars on real things
  • Water treatment, infrastructure, agriculture booming in China no matter what happens

Steve Forbes Eating A Cheeseburger At McDonalds, 1996 Campaign Trail

Now on Distressed Volatility History Channel. Ever wanted to eat dinner with Steve Forbes at McDonalds? Well now is your chance. Virtually via time warp. Steve Forbes ran for President in 1996 and campaigned through Iowa (Youtube below). You can watch the full 55 minute video including his press conference at MediaBurn.org. Also check out "The 90's" series. It shows footage of the 1989 Tiananmen Square political uprising with students in China discussing the revolt. There was also an educational segment on crack cocaine in Hell's Kitchen, NY, and a bit on the early stages of the internet and email via "Wired In". Interesting retro videos there, btw futures are up.
"Steve Forbes one of the many 1996 Republican Presidential candidates makes a campaign stop at a McDonalds before the Iowa Caucuses. The awkward silence speaks for itself. You can watch the full video and learn more about the filmmakers here" full video is at MediaBurn.org

Commanding Heights: Privatization in Britian (Video)

This video is from Commanding Heights a series made on PBS. The video below is called the "Privatization of Britain" about targeting state-owned industries, the economics of coal, breaking the miners' strike and socialism turned back. The battle of socialism vs. capitalism and free markets vs. State ownership. It took place in the early 1980s. The full series is at PBS.org.

ProShares UltraShort Real Estate ETF SRS Faces Lawsuits -Video

$SRS faces class action lawsuits.. As you can see from the chart SRS tried to stay alive in July but the sharp market rally combined with leverage killed SRS violently with a hanzo sword.

Economic Activity Leveling Out, Inflation Will Remain Subdued (FOMC 8/12/09)

Here is the FOMC statement on August 12, 2009. I provided charts of GLD (gold), UUP (us dollar bullish), TLT (long Treasury bond) and SPY (S&P 500) reactions. As of 3:20 $SPY is +1.71%, $TLT -1.22%, $UUP -0.55% and $GLD +0.34%. Below are 1 min/3 hour charts at 3:30est.

Release Date: August 12, 2009
For immediate release

Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

GLD Trade Setting Up Here + UUP, AUDJPY Pre FOMC

Update: The biggest trade set up in the history of GLD (gold etf) might be forming through a symmetrical triangle. It is being squeezed to the point of no return and will break soon with momentum. After the commodity currency $AUDJPY sold off to 78 last night, it quickly reversed earlier this morning and broke above 80 resistance. It is trading at 80.10 and awaiting the Fed and will follow commodities +/- Australia/Japan economic data and debt. It hit the 2 year 50% retracement level a few days ago. UUP is down 0.59% and awaiting a catalyst (yesterday's post on technicals/recent volume). Get ready for some action.

AUDJPY Selling Off After Hitting Retracement Level

AUDJPY has come a long way since the late 2008-09 commodity crush. The Australian Dollar is a commodity currency and is imported by China to purchase Aussie goods. When traders have appetite for risk they can utilize the AUDJPY (Australian Dollar/Japanese Yen) carry trade where they borrow cheap yen to buy higher yielding Australian dollars/assets. When this trade gets overextended AUDJPY sells off and these days it's coupled with commodities and risky assets. AUDJPY hit the 50% retracement level a few days ago and is selling off (2007 highs to 2008 lows). It also broke through 80 support. If the reflation trade (RFLA) reprices here, AUDJPY would follow suit IMO.. The reflation trade needs jumper cables part 2.

US Dollar Index ETF Sees Volume Ahead of FOMC ($UUP)

The US Dollar Index ETF (UUP) is setting up for the FOMC meeting tomorrow. From the chart below you can see that volume rushed into UUP during the past few trading sessions. UUP implied volatility is up in the last week with UUP call IV (14.11%) at a slight premium to put IV (13.35%) from ivolatility.com. A large amount of UUP September calls are open between the 24-27 strike with a large block of puts open at 22. Btw there are 25,000 March 2010 $26 calls open, interesting to say the least. At the close of Aug 11, the put/call open interest ratio stood at 0.63. If you remember from March the UUP put/call ratio was at 6.41 before the big US Dollar implosion. Either way I see hedges or speculative bets being made on UUP. Watch the SPX, FOMC reaction, safe haven appetite, real yields and global yield differentials. Let the market decide. It still needs to break above the 50 day moving average and downtrend. Utilize hedges, remember UNG this year?

Hedging a Market Pullback Using The VIX

The optionMONSTER Volatility Sonar reported yesterday that someone bought 25,000 Sep $37 VIX calls for 0.65. "It's a continued hedge on a major pullback". VIX futures have been trading at a premium to spot recently which is interesting (charts). Today the VIX is up 5.56% to 26.38. I'm also watching for a USD breakout.

Dow 1929 Bear Market Rally Compared To 2009 Rally (Charts + Smoot Hawley)

And now for a comparison between the 1929 bear market rally and the current 2009 rally. During the 1929 bear market rally the Dow rose 48% and pierced through the 50% retracement level before breaking down (198 - 294). Looking historically, the Smoot Hawley Tariff Act of 1930 was the downside catalyst for the stock market. Massive protectionism and cartels ruined trade and prices. Read Rothbard's America's Great Depression (quote below) also the Economist in 2008.

High Frequency Trading, Flash Orders Explained (Videos + Articles)

I provided a collection of news articles and video interviews regarding the high frequency trading/flash orders debacle. First of all props to ZeroHedge for bringing up the issue a few months back. Here are Google search links of "high frequency trading flash orders" on Zero Hedge.com and Zerohedge.blogspot.com. Here's a recent post out of ZeroHedge: Is The SLP The NYSE's Answer To Direct Edge's "Advance Look" Enhanced Liquidity Provider Program Or You Trade You Lose, You Trade Goldman Wins (link) and Direct Edge CEO Redirects Flash Anger Back To Exchanges (link). If firms are using flash orders to front run trading activity it is bullshiz. Senator Schumer challenged flash orders recently and Mary Shapiro talked about HFT on CNBC.

The Onion Is Out With Potential Market Moving News For Equities and Treasuries

The Onion could move the markets this week after these articles.

Solitary Crow On Fence Post Portending Doom, Analysts Warn (TheOnion)

"GREELEY, NE—Experts confirmed Monday that a single black crow perched ominously on a fence post in rural Nebraska is almost certainly a harbinger of great doom and despair for all Americans." Read full article