If the Commodity Downturn Hurts -- You're Too Heavily Exposed

by: Roger Nusbaum

The US Treasury knows how and when to take care of their primary dealer pals (Bear Stearns, Goldman Sachs et al) with some extra cash to keep trading desks with enough chips to manipulate push stocks higher. If you follow these liquidity injections, program trading, and record earnings from trading... well, you get the picture. Why isn’t the mainstream financial media connecting the dots?

The following should take care of trading desks for the next two weeks:

CONTACT: Investment Management Division
Thompson Sawyer: 202-874-7150
Auction Date: September 14, 2006
Auction Number: 251
Placement Date: September 15, 2006
Maturity Date: September 28, 2006
Term: 13 days
Treasury’s Offered Amount: $16,000,000,000
Total Accepted Amount: $16,000,000,000
Total Bid Amount: $34,340,000,000
Bid-to-Cover Ratio: 2.15
Highest Bid Rate: 5.480%
Lowest Accepted Bid Rate: 5.165%
Percentage Allotted at Lowest Accepted Bid Rate: 22.83%

I want to be a Primary Dealer too! Where does one apply?

Two days in a row and big news with ETFs! The PowerShares/Deutsche Bank combo filed to issue a bull and bear series based on the Dollar Index. As I said yesterday, this is terrific since existing Rydex currency issues are almost impossible to short for retail investors wanting to hedge their currency exposure or speculate.

Not to be outdone in the filling needs department, ProShares has filed to issue a large load (66) of inverse ETFs. The SEC filing statement is here. I’m excited!

So, the “hard to short” ETF challenge for retail investors and retirement plans is being resolved, if the SEC approves the issues. But this is the SEC we’re talking about.

The featured players this past week are commodity markets, as they continue their now serious descent.

Other more defensive sectors are still performing well, but have slackened recently as investors are switching quickly to growth and willing to take more risk. (At least on the trading desks.)

Disclosure: The ETF Digest is long S&P 500 Index (NYSEARCA:SPY), iShares Dow Jones Select Dividend ETF (NYSEARCA:DVY), iShares Dow Jones US Real Estate ETF (NYSEARCA:IYR) , Utilities SPDR ETF (NYSEARCA:XLU) and iShares S&P 500 Value Index ETF (NYSEARCA:IVE).

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