Wednesday Outlook: Commodities, Emerging Markets

<< Return to page 1 - Rumors A-Plenty

Breaking news from Bloomberg is that the Treasury and Fed are considering a conservatorship for AIG. Great! Maybe we can create another cabinet level agency as a garbage can for private market trash. Politicians love creating another agency. More patronage and civil servants is their cup of tea. Bill Gross loves the idea since Pimpco owns a lot of you know what. That news isn’t sitting too well in After Hours trading:

click to enlarge


Another problem surfacing late is the rumor that Vanguard’s Reserve Primary Money Market fund broke below $1 a share, given Lehman exposure. I don’t know if that’s true but that’s supposed to be safe, readily available money. [Ed.: The rumor was false; the fund that 'broke a buck' is The Reserve's Primary Fund, not a Vanguard fund. See Vanguard's statement.]

So rumors dominate the action. This creates volatility and launches program trading activity from nervous trading desks and hedgies.

There’s nothing wrong with carrying high cash balances in this environment and that’s precisely what we’re doing.

Have a pleasant day.

Disclaimer: Among other issues the ETF Digest maintains long or short positions in SDS, QID, SMN, SIJ, SDP, IEF, TLT, EFA, EFU, EEM, EEV and FXI.

Comments

[kkin365:]

FXI's 9/17 premarket indication is 32.78, breaking 35 level you mentioned. What now? Your comments on GLD are intriguing. The indications are indeed so. What now? Why gold is still in disfavor?

2008 Sep 17 09:21 AM

[David Fry:]

Rumors weren't clear and my reference to Vanguard's Money Fund was incorrect. Many funds have similar names using Prime Reserve Fund in their description.

www.bloomberg.com/apps...

This aforementioned article clarifies the matter and states it's NOT Vanguard. I repeat, NOT Vanguard. They're a little upset with me today. It's understandable but so many names seemed the same and as I indicated my source was a "rumor". This should clarify things.

2008 Sep 17 09:54 AM

[pitaking:]

FXP is the double short of FXI, it's had a HUGE run over the last couple of weeks, very voitile but you can catch some nice trades.

2008 Sep 17 10:08 AM

[HBWOW:]

Why is gold in disfavor? It is and has been under considerable manipulation by foreign countries who like the U.S. are running their
paper money printing presses on overtime. These countries sell at little
to drop prices, then buy more than they sell. This is a slow but methodical way to obtain gold and gold mining stocks at bargain prices.
Gold should be $1000 and set to soar to $2,500+ based on the world economic conditions and the swelling fiat currenies being printed.

2008 Sep 17 11:15 AM

[johnthebear:]

FXP was up $30 per share today to $144 new all time high.

FXI is on it's way to $20/share.

Still no word on how they make it work. I love it, and hope it never breaks.

2008 Sep 18 12:05 AM

[johnthebear:]

Next day, (Thursday) FXP is down $35 to $108

So how will proposed rules on short selling affect FXI and IYR?

Should I stop using Proshares anyone?

2008 Sep 19 12:01 AM