KeNo's Housing and Economic Portal: Monday June 22 Housing and Economic stories

TOP STORIES:

A Derivatives Bomb Exploded Within The Last Two Weeks - (www.investmentresearchdynamics.com) I’ve never seen so many sophisticated Wall Street’ers this scared in my entire career. – This comment comes from a very well-connected Wall Street/DC insider and is in reference to how illiquid the bond markets have become Something deep and dark has transpired behind the Orwellian “curtain” used by the elitists to hide the inner workings of the financial markets, especially with regard to big bank balance sheets and OTC derivatives. What’s happening right now reminds of the movie “Jurassic Park.” You can hear and feel the monster coming but you can’t see it yet and you don’t know it will pop up in your face or how big it is. It was the sudden firing of Deutche Bank’s co-CEOs this past weekend – The Brown Stuff Is About To Hit The Fan – that prompted me to spend more time analyzing a sequence of events which indicate to me some sort of derivatives position, possibly at Deutsche Bank, has exploded. In addition, the stock and bond markets have been emitting some curious signals which reflect that fact that something happened in the global economic and financial system.

The $6.5 Trillion China Rally That’s Making Stock-Market History - (www.bloomberg.com) It’s enough money to buy Apple Inc. eight times over, or circle the Earth 250 times with $100 bills. The figure, $6.5 trillion, sums up the value created in just 12 months of trading on Chinese stock exchanges -- and why some see a rally that’s gone too far. As China’s boom surpasses the headiest days of the U.S. Internet bubble, signs of excess are cropping up everywhere. Mainland speculators have borrowed a record $348 billion to bet on further gains, novice investors are piling into shares at an unprecedented pace and price-to-earnings ratios have climbed to the highest levels in five years. The economy, meanwhile, is mired in its weakest expansion since 1990. “We have a wonderful bubble on our hands,” said Michael Every, the head of financial markets research at Rabobank International in Hong Kong. “Of course, there’s short-term money to be made. But I fear it will not end well.”

Why you should care that Robert Prechter is warning of a ‘sharp collapse’ in stocks - (www.marketwatch.com) Based on Prechter’s analysis of where the stock market is positioned within its wave structure, he believes the bull market is in a “precarious position.” For one, he said the sentiment indicators he follows have reflected extreme optimism for over two years. That is often viewed as a contrarian signal, because it suggests those looking to buy have already done so, leaving fewer buyers to step in if the market starts slipping. In addition, Prechter said a number of momentum indicators have been revealing a “dramatic lessening” in the number of stocks and indexes that have participated in the rally in recent months. For example, when the Dow Jones Industrial Average DJIA, +1.42% reached a record closing high on Feb. 27, there were 172 NYSE-listed stocks that achieved new 52-week highs, and 31 stocks that hit 52-week lows. But when the Dow rose to it is latest record on May 19, the number of new highs had fallen to 118, while new lows rose to 38.

A $3 Trillion Traffic Jam Is Seen Looming in Credit by Citigroup - (www.bloomberg.com) For all the concern that Wall Street’s shrinking balance sheets will fuel a liquidity crisis when investors flee credit markets, Citigroup Inc. strategist Stephen Antczak says investors may be overlooking an even bigger catalyst. The size of the U.S. corporate-bond market has ballooned by $3.7 trillion during the past decade, yet almost all of that growth is concentrated in the hands of three types of buyers: mutual funds, foreign investors and insurance companies, according to Citigroup. That combination could lead to more selling than the market can absorb when the Federal Reserve raises interest rates for the first time since 2006, Antczak said. “All the money is going to the same place, and when something adversely impacts one, chances are the same factor adversely impacts everyone else, and there’s nobody there to take the other side,” Antczak said in a telephone interview. “We used to have 23 types of investors in the market. Now we have three. In my mind, that’s the key driver.”

Tactics Of Sleazy Bill Collectors - (www.mfi-miami.com) About two years ago, I wrote an article about how sleazy bill collectors are now using social media sites like Facebook to get you pay your debts and how they are using some pretty innovative ways to get you to disclose information. One common practice is to set up fake accounts using pictures of internet models to con you into becoming friends. When you become friends, they immediately send you messages through Facebook tell you to contact, “Mr. Smith about your debt”. Since I wrote that piece, I began getting mail from people telling me about their run-ins with sleazy bill collectors using social media to coerce money from them. Bill collectors use scantly clad women to lure you to be friends with you on Facebook If you owe some money and are on Foursquare, debt collectors are tracking you and have no problem paying you a visit. Are you on professional social media sites like LinkedIn? Debt collectors are watching you and your employment status and using your job status to figure out how to collect money from you now that you have a good paying job or at least one where can enter into a payment plan.

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These Charts Show the Astounding Growth in Emerging Market Corporate Bonds - (www.bloomberg.com)