Animal Spirits, Bubbles, Mania’s and Market Peaks. Daniel Mankani /24th December 2017/ Daniel Mankani – Animal Spirits is a late stage market event in which bubbles get created by a herd Mania in a collective illogical intuition { cognitive bias } culminating into market peaks and eventually its bust.

Animal Spirits.

There comes a time when rational thought takes a backstage and excessive risk-taking behaviour trumps, Alan Greenspan first referred to this as “Irrational Exuberance” in the 1970’s, although he may have got it wrong this first time around. Today this has now become an important part for all students of Behavioural Finance.

For the most part, Humans are expected to be rational in the management of their affairs. They plan and coordinate their affairs to the best of their abilities for self-preservation and thereafter their goals are enhanced for even better positive potentials and outcomes by the deployment of their self-capabilities.

“Nothing infuriates a man more than the sight of other people making money.”

This risk-taking behaviour is inherent in all of us. A parent takes the risk to provide for a baby, an entrepreneur does the same when he goes into business and A trader wages his bet based on his own statistical understandings with attempts to tweak outcomes to his advantage.

Yet, there comes a time when all rationality is lost. Driven by either fear or greed, intuition begins to drive decisions of oneself, which in itself is without any conscious reasoning and simply an output and/or recollection of cognitive bias.

With participants overestimating self-capabilities and potentials, a deviation from the norm occurs and rationality in judgement takes centre stage, whereby inferences from other people and situations is drawn upon in an illogical fashion.

I know the price I am paying is absurdly high, but somewhere out there is a greater fool than I am. Who will when the time comes pay an even higher price.

Humans like Animals find safety in collective thoughts, a sense of stability prevails within the herd and like every herd headed to the slaughterhouse, the leader of the pack has to be in confirmation or else he loses his position as a leader, he is bounded by this collective thought and the pact follows him as a means to collective bias.

Animal Spirits is a late stage event that occurs in every market and in 1998 we documented the story of the Internet boom and its subsequent bust. It’s a very interesting read and demonstrates how irrational collective herd behaviour leads to the slaughterhouse.


The Federal Reserve has consistently fed one bubble to another since the start of the millennium and just like in 1998 with the bailout of “Long-Term Capital Management”, resulting in the Nasdaq rallying from the lows near 1000 into 5000 all in a matter of fifteen months.

LTCM Bailout, Market bottoms and huge rally, the greedy george soros also turns long.

This upturn was all that what was required to bring all the naysayers of the times into compliance and once the greatest fool of all has gone long, the market peaks and ends in tears for all those without rational thoughts, herds into the slaughterhouse.

More importantly what was missed out then and is valid even today is the times prior to the March 2000 Peak. The bust of “1997 Asian Financial Crisis” had very little positive economic growth, present were the depression like conditions with negative GDP’s across the Asian region, elsewhere Russia was facing pressures on its sovereign debt and Europe was in the midst of adjustments welcoming the Euro.

All these culminated into capital and resources pouring into the “Technology Bubble” as a be it end all.

Bankers quit their jobs to join start-ups, Underutilized resources such as “Office Spaces” were offered to start-ups for a share of their equity, Companies added an “E” or “I” to their business names, everything technology related became a buy. Irrational Thought driven by Greed or Fear became prevalent all across the board. See the chapter Greed.

All those without any understanding of the inner workings of technology were now on board. Today its no different, there are Parallels in the economy, mathematical relationships and equations we can draw upon.

A bubble is created when irrational thought and outright stupidity are visible to the naked eye and yet it remains as a doubt not to be questioned due to the collective bias of the herd, while the herd in itself is together for the very same reason and illogical intuition drives human behaviour to confirm. Today we have bitcoin.


Most Market Mania’s have almost universally similar characteristics, Beginning with this time is different and easy money mentality. There is almost always no underlying valuation attributes or anchoring to any fundamentals. Early participants overestimating everything with overblown claims of growth stories and infuriating those who have yet to participate, a fear of missing out prevails greatly. 

Then out of sudden a period of Irrational Exuberance prevails with a decline in credit standards leading many to borrow with Ponzi Financing fueling the bubble to unsustainable levels. In a self-fulfilling prophecy, higher prices bringing in even more participants leading to even higher prices, eventually surprising even the early participants, who then refuse to reinvest their Rich returns and proceeds. Finally culminating into the bubble bursting where the latecomers almost always end up holding the baby.

Further Reading.
Signs of the Euphoric. The Bust is almost near!
BITCOIN – A Fraud and Ponzi in a Disillusioned World

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Technopreneurship – The Successful Entrepreneur in the New Economy – Daniel Mankani. Published 2003. Pearson Education Asia – All rights, copyright reserved Daniel Mankani { ISBN0-13-046545-3 }

Chapter The Greed >>> Technopreneurship-The Successful Entrepreneur In The New Economy.

Back to the Beginning.
BITCOIN – A Fraud and Ponzi in a Disillusioned World:
The Greed:
The Hope:
The Ignorant, Zombies:
Perception vs Reality:
Chart Patterns:
Introduction to Technical Analysis.


Revolutionary Transformation Ongoing.
– Global Economic Collapse January 18, 2016

The 5 Fatal Flaws of Trading

Close to ninety percent of all traders lose money. The remaining ten percent somehow manage to either break even or even turn a profit — and more importantly, do it consistently. How do they do that?

That’s an age-old question. While there is no magic formula, EWI’s own Jeffrey Kennedy has identified five fundamental flaws that, in his opinion, stop most traders from being consistently successful. We don’t claim to have found The Holy Grail of trading here, but sometimes a single idea can change a person’s life. Maybe you’ll find one in Jeffrey’s take on trading. We sincerely hope so.

The following is an excerpt from Jeffrey Kennedy’s Trader’s Classroom Collection eBook.

Why Do Traders Lose?
If you’ve been trading for a long time, you no doubt have felt that a monstrous, invisible hand sometimes reaches into your trading account and takes out money. It doesn’t seem to matter how many books you buy, how many seminars you attend or how many hours you spend analyzing price charts, you just can’t seem to prevent that invisible hand from depleting your trading account funds.

Which brings us to the question: Why do traders lose? Or maybe we should ask, “How do you stop the Hand?” Whether you are a seasoned professional or just thinking about opening your first trading account, the ability to stop the Hand is proportional to how well you understand and overcome the Five Fatal Flaws of trading. For each fatal flaw represents a finger on the invisible hand that wreaks havoc with your trading account.

Fatal Flaw No. 1 — Lack of Methodology
If you aim to be a consistently successful trader, then you must have a defined trading methodology, which is simply a clear and concise way of looking at markets. Guessing or going by gut instinct won’t work over the long run. If you don’t have a defined trading methodology, then you don’t have a way to know what constitutes a buy or sell signal. Moreover, you can’t even consistently correctly identify the trend.

How to overcome this fatal flaw? Answer: Write down your methodology. Define in writing what your analytical tools are and, more importantly, how you use them. It doesn’t matter whether you use the Wave Principle, Point and Figure charts, Stochastics, RSI or a combination of all of the above. What does matter is that you actually take the effort to define it (i.e., what constitutes a buy, a sell, your trailing stop and instructions on exiting a position). And the best hint I can give you regarding developing a defined trading methodology is this: If you can’t fit it on the back of a business card, it’s probably too complicated.

Fatal Flaw No. 2 — Lack of Discipline
When you have clearly outlined and identified your trading methodology, then you must have the discipline to follow your system. A Lack of Discipline in this regard is the second fatal flaw. If the way you view a price chart or evaluate a potential trade setup is different from how you did it a month ago, then you have either not identified your methodology or you lack the discipline to follow the methodology you have identified. The formula for success is to consistently apply a proven methodology. So the best advice I can give you to overcome a lack of discipline is to define a trading methodology that works best for you and follow it religiously.

Fatal Flaw No. 3 — Unrealistic Expectations
Between you and me, nothing makes me angrier than those commercials that say something like, “…$5,000 properly positioned in Natural Gas can give you returns of over $40,000…” Advertisements like this are a disservice to the financial industry as a whole and end up costing uneducated investors a lot more than $5,000. In addition, they help to create the third fatal flaw: Unrealistic Expectations.

Yes, it is possible to experience above-average returns trading your own account. However, it’s difficult to do it without taking on above-average risk. So what is a realistic return to shoot for in your first year as a trader — 50%, 100%, 200%? Whoa, let’s rein in those unrealistic expectations. In my opinion, the goal for every trader their first year out should be not to lose money. In other words, shoot for a 0% return your first year. If you can manage that, then in year two, try to beat the Dow or the S&P. These goals may not be flashy but they are realistic, and if you can learn to live with them — and achieve them — you will fend off the Hand.

Fatal Flaw No. 4 — Lack of Patience
The fourth finger of the invisible hand that robs your trading account is Lack of Patience. I forget where, but I once read that markets trend only 20% of the time, and, from my experience, I would say that this is an accurate statement. So think about it, the other 80% of the time the markets are not trending in one clear direction.

That may explain why I believe that for any given time frame, there are only two or three really good trading opportunities. For example, if you’re a long-term trader, there are typically only two or three compelling tradable moves in a market during any given year. Similarly, if you are a short-term trader, there are only two or three high-quality trade setups in a given week.

All too often, because trading is inherently exciting (and anything involving money usually is exciting), it’s easy to feel like you’re missing the party if you don’t trade a lot. As a result, you start taking trade setups of lesser and lesser quality and begin to over-trade.

How do you overcome this lack of patience? The advice I have found to be most valuable is to remind yourself that every week, there is another trade-of-the-year. In other words, don’t worry about missing an opportunity today, because there will be another one tomorrow, next week and next month…I promise.

I remember a line from a movie (either Sergeant York with Gary Cooper or The Patriot with Mel Gibson) in which one character gives advice to another on how to shoot a rifle: “Aim small, miss small.” I offer the same advice in this new context. To aim small requires patience. So be patient, and you’ll miss small.

Fatal Flaw No. 5 — Lack of Money Management
The final fatal flaw to overcome as a trader is a Lack of Money Management, and this topic deserves more than just a few paragraphs, because money management encompasses risk/reward analysis, probability of success and failure, protective stops and so much more. Even so, I would like to address the subject of money management with a focus on risk as a function of portfolio size.

Now the big boys (i.e., the professional traders) tend to limit their risk on any given position to 1% – 3% of their portfolio. If we apply this rule to ourselves, then for every $5,000 we have in our trading account, we can risk only $50 – $150 on any given trade. Stocks might be a little different, but a $50 stop in Corn, which is one point, is simply too tight a stop, especially when the 10-day average trading range in Corn recently has been more than 10 points. A more plausible stop might be five points or 10, in which case, depending on what percentage of your total portfolio you want to risk, you would need an account size between $15,000 and $50,000.

Simply put, I believe that many traders begin to trade either under-funded or without sufficient capital in their trading account to trade the markets they choose to trade. And that doesn’t even address the size that they trade (i.e., multiple contracts).

To overcome this fatal flaw, let me expand on the logic from the “aim small, miss small” movie line. If you have a small trading account, then trade small. You can accomplish this by trading fewer contracts, or trading e-mini contracts or even stocks. Bottom line, on your way to becoming a consistently successful trader, you must realize that one key is longevity. If your risk on any given position is relatively small, then you can weather the rough spots. Conversely, if you risk 25% of your portfolio on each trade, after four consecutive losers, you’re out all together.

Break the Hand’s Grip
Trading successfully is not easy. It’s hard work…damn hard. And if anyone leads you to believe otherwise, run the other way, and fast. But this hard work can be rewarding, above-average gains are possible and the sense of satisfaction one feels after a few nice trades is absolutely priceless. To get to that point, though, you must first break the fingers of the Hand that is holding you back and stealing money from your trading account. I can guarantee that if you attend to the five fatal flaws I’ve outlined, you won’t be caught red-handed stealing from your own account.

Short and beating returns in a rising market

Short For Three And A Half Years And Outperforming 98% Of Traders: This Hedge Fund Did It
One of the most flagrant “conventional wisdom” market lies is that if one is positioned net short, one is doomed to be crucified, margined out and left penniless, broke and homeless in this quote unquote market, which has been micromanaged by all central banks since 2009 as a confidence-boosting policy vehicle whose only purpose is to levitate higher while creating the wealth effect, ignoring reality, and failing at what used to be a market’s primary function: discounting the future.
So what is the truth?

As it turns out one of the best performing hedge funds in the past 4 years is neither a net-long, nor a market neutral, but Horseman Capital, which as of July is -54.2 net short, and has been short since the start of 2012.

Here are the Horseman’s stunning returns by years:
2012: 16.27%

2013: 19.15%

2014: 12.63%

YTD: 7.63%

This means that Horseman’s cumulative return in the past 3+ years has outperformed 98% of all hedge funds, and certainly most of the net-long biased ones.
How did he do it? By using a long bond position as a natural hedge. In fact, Horseman’s net equity short is more than offset by a 60% net long in bonds.
This means that, big picture, while stocks have levitated higher, bonds have levitated higher-er.
So the next time you hear every single pundit on propaganda TV or in Wall Street research desperate to sell you stocks (which they currently hold), or to force you to sell your bond holdings (to them), think why for a few seconds.

Traders Talk; Putting on the O’hare Spread – Dreamer, Schemer, In Vain Redeemer –

Anyway, no drug, not even alcohol, causes the fundamental ills of society. If we’re looking for the source of our troubles, we shouldn’t test people for drugs, we should test them for stupidity, ignorance, greed and love of power. P.J. O’rourke

It was rollover and I was standing close to the center of the bond pit so that I would have access to both the spread paper and 2nd month brokers, when Darrell Zimmerman walked up to me. The bond market was experiencing a brief respite from it’s usual frenzied trading activity and Darrell had taken the opportunity to come by and talk to me. He informed me that he was working with some large institutional traders in New York and overseas, and that they were going to be trading some size in the 30 year. He then asked me if I would like to fill their orders, or at least a portion of them. I explained to Darrell that although I occasionally did brokerage, it was only as an accommodation to the floor brokers I stood next to, so that they would be able take a break or have lunch.The majority of the time I functioned as a trader, and I wasn’t interested in being taken out of the market, to fill some orders. Besides, I didn’t know who these customers were. Darrell went on to tell me that there was going to be a considerable amount of business, and that if I did a good job, I could have the deck. I respectfully declined his offer and Darrell walked away. It wasn’t long before I saw Darrell talking to another broker on the other side of the pit, and then another. Little did I know, that I had just made one of the smartest decisions of my life.

I had met Darrell and his wife Lisa, who doubled as his clerk, in the lounge of my clearing firm. He was a very talkative and gregarious guy, but in a used-car-salesman kind of way. He was a perennial bust-out, kicked out of numerous clearing firms at both the Merc and the Board, but now had an account where I cleared my trades. There were a lot of Darrells that hung around the Merc and Board; ego-driven dreamers that chronically blew up their trading accounts, yet always found a way to get back in the game; hanging on a little while longer before justice was inevitably meted out. A lot of them would quietly disappear, while others would get jobs on the floor, evaporating into the milieu of floor clerks never to be seen or heard from again, yet always fantasizing about making it big one day.

Every trader did it; dreamed about the big trade; fantasized about taking a shot. Chicago’s traders had their own mythical way for making this dream come true, the O’hare spread. The idea was to put on an incredibly large position, get in a cab, and head for O’hare airport. If the trade was a winner, you either returned home or got on a plane to Hawaii – if the trade was loser, you bought a one way ticket to a country that did not have an extradition agreement with the U.S. We also had a saying, “If you are going to blow out, blow out big” If your debit was too small, your clearing firm would write off the loss, and then write you off. But in the CBOT’s version of “too big to fail”, if you hurt your clearing firm bad enough, they would arrange a way for you to generate the income necessary, to pay them back. Apparently, Darrell had taken these fantasies to heart having already already planned to put on an O’hare spread, before he approached me in the pit that day. While I had refused his offer, he did manage to enlist 9 unwitting brokers to assist him and his partner, Tony Catalfo, in a scheme that would bring down one of the oldest clearing firms at the CBOT.

The bell rang at 7:20 AM on a Thursday morning and Tony, who had strategically placed himself in the Bond options pit, was buying up every at-the-money put he could get his hands on. Meanwhile, Darrell was putting in huge sell orders in the bonds to the 9 brokers whose help he had enlisted earlier. Tom Baldwin was on the other side of the bulk of these orders, and when the options traders started to lay off the puts they sold to Tony, with short hedges in the bond futures, panic ensued and the market had nowhere to go but down. Darrell then entered the pit himself and began to sell more bonds. In the Bond options pit, the put options were going through the roof, and Tony was beginning to take profits on his long put position. This all took place before 7:30 AM, when an economic release came out which was negative for bond prices. In a stroke of incredible luck, the market broke even more and Tony covered the balance of his position for about a 1.5 million profit, while Darrel was now short about 12,000 bond futures, and up about 5MM on his open position. The feedback loop of selling they had created was working perfectly.

Darrell had been dismissed long ago from my clearing firm, and along with Catalfo, was now clearing Stern & Co., a family run business that was founded by Lee B. Stern. Lee had made his fortune trading grains, and owned the Chicago Sting soccer franchise, a piece of the White Sox, and was one of the most respected members of CBOT. Lee rarely came onto the floor anymore, but when he did make an appearance in one of the grain pits, his actions were highly scrutinized by other traders, as a possible clue to where the market was headed.

Bad news travels fast in the futures industry and virally fast on the floor, so it did not take long for word of Zimmerman’s and Catalfo’s involvement in the bond panic, to reach Stern’s office. Lee’s son and a few of the firm’s employees rushed to the floor and quickly enlisted the help of the security guards. Zimmerman had lost his count and was standing outside of the pit when they grabbed him, while they physically pulled Catalfo out of the Bond options pit. After witnessing this melee, traders in both pits began to piece together what had happened. Tom Baldwin , who had been unsuccessfully taking the opposite side of Zimmerman’s orders, realized the sell-off had been artificially induced, and that traders would have to cover their shorts. He quickly took advantage of the situation and began to bid up the price of bonds. Bond futures and bond options prices reversed on a dime and snapped back with a vengeance.

Meanwhile, Stern’s employees, who had wrestled the trading cards out of Tony and Darrell’s hands, were frantically trying to get a handle on what was now, Stern’s position. In addition to the trades that Tony and Darrell had made, were the fills of the 9 floor brokers, which had to be collected and aggregated in order to get an accurate count. It took them 2 hours before they could figure out the position, and what had been a $5MM winner, had turned into an $8.5MM loser by the time the position was liquidated. Had they been able to figure out Zimmerman’s position quicker, and not tipped off floor to what was going down, Stern could have escaped with anywhere from a small loss to a small gain. Instead, Stern had to make good for Zimmerman’s $8.5MM loss, and as a result, lost it’s clearing status after 25 years in business, and had to lay off 20 employees.

Catalfo tried to collect on his $1.5MM profit on his options position, but received a 42 month prison sentence instead.The proceeds from his trades were awarded to Stern to help offset his losses, while Stern went after the 9 filling brokers for the balance. Zimmerman hopped in a cab to the airport and got on a plane to his parents home in Canada, completing the other leg of the O’hare spread. He was eventually extradited and sentenced to 42 months for his efforts. Darrell Zimmerman came very close to pulling off his insane plan, but he let his ego and his greed get the best of him. Had he executed his plan on a smaller scale, in a more restrained manner, he might not have aroused the suspicion of his clearing firm. He had the market right where he wanted it, and had he not lost his count and tipped his hand, he might have been able to cover his position while it was still a huge winner. Whether they would have let him keep his profits is highly dubious, because Zimmerman’s sole legacy from his lunatic scheme, is the eponymously named rule, that allows clearing firms to seize the profits of any trader that attempts to take a shot at them.

China Home Price Gains Spread as Large Cities Lead Recovery

China Home Price Gains Spread as Large Cities Lead RecoveryJul 18, 2015, 9:51:05 AM
Declines in China’s new-home prices were restricted to fewer than half of the cities monitored for the first time in 15 months as sales extended a rebound after authorities cut interest rates and eased property curbs.
Prices declined in 33 of the 70 cities in June from a month earlier, compared with 41 in May, according to data released by the National Bureau of Statistics on Saturday. Twenty-seven recorded increases, seven more than in the previous month, as first-tier centers including Shenzhen and Shanghai led a rebound. Prices were unchanged in 10.
The recovery has been driven by four interest-rate cuts since November and increased incomes as Chinese equities surged about 150 percent in the year to mid-June. While about $3 trillion of that wealth evaporated in less than a month as stocks subsequently plunged 20 percent, demand from owner-occupiers is forecast to sustain sales and prices in the longer term.
The stock market rout won’t shake the fundamentals of the property market, Alan Jin, a Hong Kong-based analyst at Mizuho Securities Co., said ahead of the data. “Housing prices and volume are firmly on a recovery trajectory,” Jin said.
Bigger Increases

New-home prices in the southern business hub of Shenzhen, which is leading the residential rebound, rose 7.1 percent from May and 15.7 percent from a year earlier. Prices gained 1.3 percent in Beijing and 1.5 percent in Guangzhou, both the most in almost two years, and 2 percent in Shanghai.
The increases overshot May’s numbers in 20 cites, the statistics authority said in a statement released with the data. Less affluent cities including Shenyang and Guiyang reversed declines.
The strength of the real-estate recovery will depend largely on the stability of the stock market in the second half, Du Jinsong, a Hong Kong-based analyst at Credit Suisse Group AG, said before the data release.
China eased mortgage policies and down-payment requirements for some homebuyers at the end of March, adding to easing measures since September to aid an industry that has been weighing on economic growth. While home sales jumped 13 percent in the first half of 2015, compared with a 9 percent decrease a year earlier, investment in property development slowed to 4.6 percent from 14.1 percent.
“The trend of polarization is still evident among different cities,” the statistics bureau said in Saturday’s statement, adding that demand was robust in first-tier cities while smaller centers struggled.
Existing-home prices rose in 42 cities last month, compared with 37 in May, Saturday’s data showed. On a year-on-year basis, new-home prices still fell in 68 cities in June, compared with 69 in May.
Average new-home prices in 100 cities tracked by SouFun Holdings Ltd., which owns China’s biggest property website, rose 0.56 percent in June from the previous month.


The Bankruptcy Of The Planet Accelerates – 24 Nations Are Currently Facing A Debt Crisis

The Bankruptcy Of The Planet Accelerates – 24 Nations Are Currently Facing A Debt CrisisBy Michael Snyder
There has been so much attention on Greece in recent weeks, but the truth is that Greece represents only a very tiny fraction of an unprecedented global debt bomb which threatens to explode at any moment.
As you are about to see, there are 24 nations that are currently facing a full-blown debt crisis, and there are 14 more that are rapidly heading toward one.
Right now, the debt-to-GDP ratio for the entire planet is up to an all-time record high of 286 percent, and globally there is approximately 200 TRILLION dollars of debt on the books. That breaks down to about $28,000 of debt for every man, woman and child on the entire planet. And since close to half of the population of the world lives on less than 10 dollars a day, there is no way that all of this debt can ever be repaid. The only “solution” under our current system is to kick the can down the road for as long as we can until this colossal debt pyramid finally collapses in upon itself.
As we are seeing in Greece, you can eventually accumulate so much debt that there is literally no way out. The other European nations are attempting to find a way to give Greece a third bailout, but that is like paying one credit card with another credit card because virtually everyone in Europe is absolutely drowning in debt.
Even if some “permanent solution” could be crafted for Greece, that would only solve a very small fraction of the overall problem that we are facing. The nations of the world have never been in this much debt before, and it gets worse with each passing day.
According to a new report from the Jubilee Debt Campaign, there are currently 24 countries in the world that are facing a full-blown debt crisis…


Costa Rica



Dominican Republic

El Salvador

The Gambia







Marshall Islands




Sri Lanka

St Vincent and the Grenadines





And there are another 14 nations that are right on the verge of one…

Cape Verde









Sao Tome e Principe




So what should be done about this?
Should we have the “wealthy” countries bail all of them out?
Well, the truth is that the “wealthy” countries are some of the biggest debt offenders of all. Just consider the United States. Our national debt has more than doubled since 2007, and at this point it has gotten so large that it is mathematically impossible to pay it off.
Europe is in similar shape. Members of the eurozone are trying to cobble together a “bailout package” for Greece, but the truth is that most of them will soon need bailouts too…
All of those countries will come knocking asking for help at some point. The fact is that their Debt to GDP levels have soared since the EU nearly collapsed in 2012.
Spain’s Debt to GDP has risen from 69% to 98%. Italy’s Debt to GDP has risen from 116% to 132%. France’s has risen from 85% to 95%.
In addition to Spain, Italy and France, let us not forget Belgium (106 percent debt to GDP), Ireland (109 debt to GDP) and Portugal (130 debt to GDP).

Once all of these dominoes start falling, the consequences for our massively overleveraged global financial system will be absolutely catastrophic…
Spain has over $1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut or debt forgiveness for them would trigger systemic failure in Europe.
EU banks as a whole are leveraged at 26-to-1. At these leverage levels, even a 4% drop in asset prices wipes out ALL of your capital. And any haircut of Greek, Spanish, Italian and French debt would be a lot more than 4%.

Things in Asia look quite ominous as well.

The best trades is one in which you can’t lose.

The best trades are those in which you can’t lose or rather you can’t afford to lose. Your financial advisor or consultant will always tell you to invest only monies you can afford to lose in risky markets and instruments and will advise you to have a higher tolerance for risk on such investments. What utter crap and bullshit, what he doesn’t tell you is that, all market driven investments are risky and speculative in nature but the current environment the markets are in, its a no lose proposition as today, we don’t trade in a normal market environment but rather one that is a planned market manipulation.

Global economy weekahead – Living in interesting times

Global economy weekahead – Living in interesting times
A trader works on the floor of the New York Stock Exchange July 3, 2014.
Business »
(Reuters) – With U.S. stocks hitting record highs on the back of strong jobs growth, the European Central Bank holding out the prospect of printing money and British house prices soaring there is a lot to ponder in the week to come.

The Dow Jones index breached 17,000 for the first time last week, days after the Bank for International Settlements – the global forum for central banks – said that markets were in a “euphoric” state and that keeping interest rates too low for too long could sow the seeds of another crisis.

In fact, the world’s major central banks are operating at different speeds and, in some cases, are on opposing paths.

The Bank of England is highly unlikely to lift interest rates from a record low 0.5 percent after its monthly policy meeting on Thursday, but it is looking increasingly certain to be the first major central bank to tighten policy.

The U.S. Federal Reserve is winding up its money-printing programme but seems comfortable leaving rates low until well into next year. The European Central bank cut rates last month and may yet have to resort to quantitative easing to ward off deflation.

The British economy is growing fast and its housing market is threatening to burst out of control – prices in London have shot up nearly 26 percent from a year ago.

A Reuters poll of more than 60 economists produced a consensus that UK rates will rise in the first quarter of next year. But it attached a growing, 40 percent chance to a hike before year-end.

Only last year, the Bank was predicting no move until 2016.

Bank of England chief economist Andy Haldane said last week that raising rates was the last line of defence against asset price bubbles, but it would be surprising if property prices were not very high on the Bank’s agenda.

“With none of the BoE ostensibly being in an immediate hurry to raise rates, the August Inflation Report next month may provide a better vehicle through which to assess the need for rate rises,” said Nick Bate, economist at Bank of America Merrill Lynch.


Data last week showed U.S. employment growth jumped in June, evidence the economy is rebounding after a weather-related slump at the start of the year.

The data slate is thin in the week to come but a number of Fed officials – covering the hawk-to-dove spectrum – are speaking and investors will be tuned in to see if any think a case is building for an earlier rate rise.

On the back of the U.S. jobs report, J.P. Morgan brought forward its forecast for the first Fed rate rise to the third quarter of 2015, from Q4, and said a move in the second quarter was quite plausible.

Minutes of the Fed’s last policy meeting, at which it expressed confidence the U.S. recovery was on track and hinted at a slightly more aggressive pace of interest rate increases starting next year, will be released on Wednesday.

The European Central Bank faces a very different threat – deflation.

Hours after ECB President Mario Draghi held out the prospect of printing euros to rev up the economy, Bundesbank chief Jens Weidmann broke cover to say the ECB should not leave policy loose for too long.

Draghi has taken the ECB a long way with measures some of its members have found hard to swallow. Quantitative easing could prove to be his toughest test yet.

Draghi speaks in London on Wednesday – the venue for his game-changing 2012 declaration that he would do whatever it takes to preserve the euro. A number of his colleagues are also out and about in the week to come.

“Disinflationary pressures will not disappear overnight and nor will the threat of deflation. Accordingly, we still think that the ECB will need to take further action, ultimately implementing a large-scale quantitative easing programme,” said Jessica Hinds at Capital Economics.

In Japan, the focus is on Thursday’s machinery orders, which act as a leading indicator of capital spending and are expected to have resumed growing in May.

“Earnings are improving, so companies which have put off investment are now starting to invest,” said Norio Miyagawa, senior economist at Mizuho Securities Research & Consulting Co.

Bank of Japan Governor Haruhiko Kuroda speaks on Monday when the central bank holds its quarterly meeting of regional branch managers. He is likely to reiterate the BOJ’s upbeat take on the economy, which should underscore a growing market view that no further monetary easing is likely in the near future.

Top Chinese and U.S. officials will hold annual talks in Beijing on July 9-10, known as the Strategic and Economic Dialogue, with Washington again calling on Beijing to do more to allow the market to set the value of its yuan currency.

(Editing by Hugh Lawson)


Market Forecasting.

Each time the market falls, our office gets inundated with various calls, inquiring on what to buy or what to sell and we also get calls from concerned clients all the times, who have noticed the differential increase/decrease of the accounts funds performance.

Just at the start of a larger move, these are the first signs for us to usually stand up and pay attention. Which we usually do, infact we are watching the entire world and its developments and use this as our base understanding of fundamentals behind the product commodity asset we are trading. With this information, then we usually begin our next strategic phrase of trading the markets.

Which we refer to as technical analysis. As a market analyst, we invest in charting systems, we develop new algorithmic calculations to identify best probability levels of a trade and then we execute those trades in a systematic manner, remaining true to the system, till either conditions are met. Boom or bust.


INDIA NIFTY – Has 5400/5420 in view. This guy is not falling!

The last few sessions in the markets have been breath taking, Just a few days ago on FRIDAY, HOPIUM rose and the markets became once again happy go lucky!. Despite the geo political arena getting hotter, American Ships in the straits of Hormuz, plus IRAN completing their war cry exercise and demonstrating its war capability, and selectively saying, “Don’t mess with me, I have the fire power”, its possible, the USA now discounts the IRANIANS for all their empty threats.

Last year IRAN warned “No ships shall pass my seas” and a US SHIP turned back and headed further away, with that, IRAN said “IF YOU COME THIS WAY AGAIN!, I SHALL TAKE CARE OF U!.  A week later, when the SHIP returned, IRAN did nothing.

A whole lot of empty promises and lack of management displinary skills of IRANs arm forces, indeed raises many doubts, but then again, they have shown more than once, their inefficiencies, an example how they were not able to handle the naughty behavior of STUXNET or when their mililary depots blew up, due to “improperly of storage weapons” techniques.

A whole lot of questions are always raised, when it comes to IRAN, the sabre rattling has started to become boring, this could be the underestimation both parties could make, leading up to the escalation in world war three.

The USA may just push it further and strangle the IRANIAN even more, before the IRANIANS make the first move, due to fear attack.

indeed escalate world war 3, and the IRANIANS will indeed give them a tough fight, which will solve USA’s economic problems and the Industrial War Complex will once again have their way.