Derivaties Bubble

Recently, JP Morgan announced that it was going to take a 2 billion dollar loss from derivatives trades that have gone bad. Some analysts expect the actual loss to exceed 2 billion dollar. Some even put the figure as high as 20 billion dollars. The derivatives bubble has grown very much bigger since 2008, what can cause a derivatives crisis? And how big is the derivatives market? It was reported that the 9 largest banks in the US hold more than 200 trillion dollar in derivatives, that is about 3 times the size of the entire global economy. Visit the link below for an interesting illustration.

"The Unregulated Global Casino For Banks"

Don't play play when the bubble bursts.

When to Drink water ?

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Chop Suey

 

 

 

 

 

What is next ?

The only reason for CRB to move toward 2009's low of 200 is a collapse in commodity demand due to possible global recession as indicated by a collapse in the indices of world bourses from Europe to Asia and to America.

US's Dow is the only index that is able to stay on the higher end. Chinese and Japanese stock markets have been in the downtrend channel since July 2009 and April 2010.  Many European nations are already in recession.Greek stock market is particularly bad.

Since the beginning of May this year, the Athen Index has dropped 30% from 695 to 485 (last Friday closing level). Is this the signal that Greece will have no choice but to leave Euro? Under this scenario, all eyes will focus on Greece when it started to print drachmas to see the outcome.

Light and Easy

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CRB Commodity Index

Courtesy of bloomberg.com

Thomson Reuters/Jefferies CRB Commodity Index closed at 281 on Friday. the Index has been moving in a downtrend direction in the last 12 months since end of April 2011. I expect the index to move lower until July to complete its wave 3. Wave 4 rebound may take about 4 months. Wave 5 will take another 5 to 6 months to take the index to below 200 to end the major wave C before middle of 2013.

Courtesy of traderslog.com

Soybeans may have completed its wave 5 of major wave I at 1505 level at the end of April. It closed at 1382 on Friday. Its major wave II pullback may end somewhere between 800 to 1100 for a 30% to 45% correction.

If CRB and Soybeans were to move lower, I would expect the crude palm oil price to move lower too. CPO is trading around Rm 3050 level down 14% from its mid-April high of about Rm 3560 level. It is possible that the wave 3 of major wave C has started. If it move in tandem with the CRB index, major wave C will end before middle of 2013 with a possible low of Rm 1700, another 44% drop.



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She could be a better President for MCA

Kian Sit Har



Kian defended her participation in Bersih 3.0, pointing out that clean elections and the campaign against Lynas rare earth plant in Kuantan were issues that MCA supported

"Nowadays, we cannot be neutral. We have to choose between right and wrong."

"The party may have its stand, but we must take the side of justice. We cannot just follow faithfully if BN or MCA is doing something wrong."

"After saying that Bersih wanted to topple the government, how can you ask him (Hanif Omar) to be part of the panel?"

"We (at the Bersih rally) never thought of toppling the government during the protest,"

"Malacca chief minister Mohd Ali Rustam asked me to step down. I am a MCA member, what right does the chief minister (from Umno) have to ask me to step down?"

"One thing that happens in Malacca - when the vote is counted and you know who the winner is (going to be), a new ballot box from the police or army will suddenly appear. This is unfair. All the ballot boxes must come out together."

"Whether the opposition or the ruling party, our job (as politicians) is to serve the people," she said.

Finally there are human spoken words from a MCA member.

She should be a better choice than Chua Soi Lek as the MCA President if MCA want to remain relevant to the Malaysian Chinese

A night off

Really tired mentally tonight. No Ah Jib Gor, no Lynas, no Dow, no Malaysiakini or Malaysia Chronicle, I just want to have a cup of tea, sit back and listen to this lovely song - Malaguana Salerosa




 I can listen to this song again and again and again ...........



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Great Stars In Music That Have Fallen This Year

Robin Gibb of Bee Gees passed away on Sunday (May 20) following his long battle with cancer. A song writer and a versatile singer from pop to disco and classical. His songs such as 'I started a joke', 'I've gotta get a message to you', 'First of May' and many others were great hits.

Three days earlier on May 17 another great disco singer, Donna Summer, the Queen of Disco has passed away.

Her hits such as 'I feel love', 'Hot stuff', 'I will survive' were hot favorites of young disco-goers.

Earlier in February this year another 2 great singers have passed away. they were 

Whitney Houston with songs 'I will always love you' and

'One moment in Time'

and Davy Jones of The Monkees - 'I'm a believer'

'Daydream Believer'

Thank you, all of you, for all the beautiful songs 
 

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Dow - A fast update

I still like to maintain that the  Dow is forming its mini wave (iv) which should end anytime. Dow might have broken it's lower trendline but it remains above it's mini wave (i)'s high of 12,234, still OK

The next mini wave (v) has a minimum target of 13,252, which is the mini wave (iii)'s high in March. The completion of the coming mini wave (v) can mark the end of the up-trend since March 2009 from 6547 level. So, if we are lucky, there is one more mini wave to go, the mini wave (v), which is expected to last for one month.

Chelsea - The new Europe's champion club

Chelsea beats Bayern Munich 4-3 in penalty shootout after a 1-1 draw after 120 minutes of play on Saturday to win the UEFA Champions League trophy for the first time..

And the hero is non other than Drogba

He scored the tying goal on the 88th minute to force the game into extra time and then he scored the winning goal on the penalty kick.

Two weeks ago he scored the second goal in Chelsea's 2-1 victory over Liverpool to win the FA Cup.

Dow - Mega Wave VII Option

One of the possible option for Dow is the Mega Wave VII scenario where October 2007's peak is the major wave b and March 2009's low is major wave c that marked the end of Mega Wave VI as shown below.

Under this option the uptrend since March 2009 is either the wave 1 or the first sub-wave of wave 1 as shown below. Currently Dow is forming its mini wave (iv) of sub-wave v of wave 1.

Dow is at the ending part of its mini wave (iv), it is expected to end the (iv) at around 12,500 level before starting its final mini wave (v) surge to 14,000 to complete the wave 1 of Mega Wave VII.

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Gold - Part 4

Major wave 4 correction continues.

Target - 1450 level.

Some can be that sick and that low class

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A Crazy Idea for Greece

The 3-point plan suggested by Chales Hugh Smith:
1. Renounce all debts denominated in the euro, i.e. a 100% writedown.
2. Accept the U.S. dollar as the national currency of Greece.
3. Engage in a transparent national dialog and reach a consensus about taxation and the role of the state in the Greek society and economy.

Quote
"When trust in national currencies and institutions is lost, then the black market becomes the trustworthy place to engage in trade. The world's favorite black market currency is of course the U.S. dollar."

Click "A Crazy Idea" for an interesting article by Charles Hugh Smith.




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Greek market dropped about 5% today. The Athen Index Compos dropped 32 points to 579 at the close. This is the wave 5 of major wave C. Wave 1 of C dropped 53% over 15 months. Wave 3 of C dropped 63% over 11 months. If wave 5 of C has a steeper gradient for a final shakeout and if it were to drop 50% to 60% over say 7 to 9 months, the index will drop to below 400 by end of 2012.

Thing doesn't look good in Europe. The 10-year bond yield for Spain and Italy surged to 6.22% and 5.75% respectively. The possibility that Greece will be ousted from the Euro Zone is high, very high. Its exit will press the index towards 300 and it will pull along with it the rest of the European and Asian markets.

Visit Greece when it started to print its own currency, 

thing is going to be cheap. 

Booming tourism will bring Greece the hard cash that it needs.

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After 44 years

The most dramatic win I have ever seen. Manchester City scored twice within 3 minutes of the stoppage times to beat Queen Park Rangers 3-2 to win the Premier League on goal difference from Menchester United.

QPR could have held on to their 1 -2 lead by slowing down the games during that 5 minutes of stoppage time by time wasting such as bringing in substitute and many other ways to win the match instead, it is simply a tactical error.

Quotes of the day

When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Lower and lower except the US markets

Dow ended the week at 12,820 which is about 9.5% below its 2007 historical high of 14,164 and 96% above its 2009 low of 6,547. This is despite of the economy slow down in China and the serious debt problems, austerity measures and recession in Europe, thanks to the currency printing policy of Federal Reserve.

Nasdaq at 2933 is about 2.5% above its 2007's high of 2859 and it is 131% above its 2009's low of 1,268. Is US economy really doing that well?

All other major world markets are less optimistic.

The Australian AORD is unable to break new ground since April 2010. With the second high in April 2011, it proceeded to form a 'double top' reversal pattern. It has been hovering around its neckline in the last 6 months. Will it plunge from this level triggered by events from Europe?

Asian Markets

Japanese Nikkei 225 has been moving in a down trend channel since its April 2010 high of 11,286. The index is currently 51% below its 2007's high and 25% above its 2009's low

Since July 2009, Chinese Shanghai SSE Composite continues to move lower and lower and is currently at 59% below its 2007 historical high. China's April Industrial Production rose at the slowest pace since 2009. Its April Fiscal Revenue grew at just 6.9% down sharply from its March 18.7%

Hong Kong's Hang Seng index performed much better than the Shanghai SSE. Its down trend only started in November 2010 and has been staying within the down trend channel in the last 17 months.

 

Singapore STI started its down trend in January 2011. the index has been holding up rather well. The index is only 25% below its 2007's historical high.

European Markets

German DAX has a 32% correction in August/September 2011 due to the European debt crisis. It managed to pull itself up to within 19% of its 2007's high.

 

The new French President may want to avoid austerity measures but can France continues to spend money that it does not have and risks the possibility of ended up likes Greece. The CAC40 index has a classical 'double top' pattern. The index moved back to touch its neckline in March 2012 and has started to move downwards since then.

 

Same as the German DAX London FTSE 100 remains strong and is within 18% of its October 2007's high.

Greek Athen Index continues to set new low in the last few days. It has dropped about 88% from its 2007's high of 5334. It closed the week at 613.96, a new low. It is possible that Greece may choose to leave Euro and to print huge amounts of their own currency.

Except the US markets where the Government has the luxury of printing money out of thin air, the rest of the major markets are likely to continue moving lower and lower.

Mr. Straw Hat

"There were riot police in front and behind us. I didn't know where to go. I was feeling really tired. "

And instead of playing cat-and-mouse with the police, I decided that I might as well just sit down on the road, feeling that running away would weaken the call for clean and fair elections."

"I felt at peace (sitting in the middle of the road), because I was no longer running. When on the run, I had to keep thinking about where to go. But once I sat down, I felt calm because the rest was up to the police and not me - whether they want to interfere or not." 

I was suddenly joined by a stranger, a Caucasian male, who held my hand. When I asked him why he did that, the response was, "Solidarity."

I then lowered my head, protected by nothing but my straw hat, and prepared for the incoming tear-gas canisters. The riot police lobbed a barrage of tear-gas grenades, all of which fell behind me and my new-found comrade.

Our actions apparently angered the police officer, who was about to beat us with a T-baton, but hesitated when reporters rushed forward to photograph the scene.




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