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Earl,
In your write up on the prospects for the economy in your country you
have primarily relied upon fundamental concerns(if I understand you
correctly) which are coming to the fore now, rather being touted by the
salesmen of Wall St. now when the markets have already tanked.
These factors were not being cited by Wall St. gurus and their underlings
globally earlier on, when the markets were touching the skies.
Cant one infer from these shenanigans that "they" have
exhausted inventories and and are now re-stocking or is this
assumption erroneous? This I ask in light of the fact that sooner than
later the easing liiquidity conditions will make themselves felt in the
economy. Also how relevant are the comparisons of the U.S economy with
the Japanese economy with their structural differences( or am I again
ignorant of the similarities)?
Once Ira had posted that the Wall St. selling machine always finds
stories/concepts to tout after the current rage is dead and buried. Are
you saying that the conditions are going to be so dire that the markets
are not going to reward performance and/or the prospects of performance
of the next great "find"?
You further state in your message below, that you are willing to
change your analysis contingent upon contrary evidence emerging. Given
your very strong views what would you term conclusive evidence
keeping in view the fact the charts will essentially lead the economy and
corporate performance? Would you wait for confirmatory economic data and
enter the markets on pull backs in the new trend or trade major support
points/projections with stop losses?
Look forward to your comments.
Regards.
Rakesh
At 08:06 AM 9/8/01 -0600, you wrote:
Yes, that was a typo, I was
referring to the introduction of single stock
futures. I do not disagree with your observations as they relate to
current
market conditions. My comments are directed toward conditions existing in
a
major cyclical bear market of the type and scope we have not seen for
nearly
a century. Should those conditions emerge, I believe that the
enthusiasm
for, and regulation of, derivatives will change markedly.
I should, perhaps, add a few caveats regarding my opinions. I am
personally
extremely bearish in my view of the equity markets for the next decade.
This
is reflected in the fact that my investments have been 100% in long
term
treasuries and bond funds for well over a year now and I am even
now
completing the process of switching bond funds (most of which contain
GSE's
and corporates) for treasuries. Futures trading is another matter, I
don't
care if the market goes up or down as long as it does one or the
other,
preferably in a trending manner. Finally, my investment hat is in no
way
married to the bear case should strong evidence emerge to the
contrary,
however I am in no way interested in trying to time my investments to
catch
the absolute bottom in this market.
Earl
----- Original Message -----
From: <I4Lothian@xxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, September 08, 2001 7:32 AM
Subject: Re: [RT] Markets: Stock Index Futures and regulation
> Earl:
>
> With all due respect, stock "index" futures have been a
huge success. I
> believe you wish to be skeptical of single stock futures. And
given then
> attendance and interest shown by the futures and securities industry
this
> week at a seminar in Chicago by the Futures Industry Association, I
beg to
> differ with your conclusion.
>
> Single Stock Futures, in my opinion, will be the single largest
new
product
> we have ever seen introduced. There will be three exchanges in
the U.S.
> offering them, a very aggressive and with it Nasdaq-LIFFE, the yet
to be
> named but formidable Chicago Joint Venture of the CBOE/CME/CBOT and
the
just
> announced AMEX. What product have we had launched by three
exchanges all
at
> the same time?
>
> Keep in mind that the banks wanted nothing to do with the CBOT when
they
> launched the bonds. Six months later they were knocking down
the doors
for
> memberships and floor space. Look at the influence of stock
volumes from
> tine introduction of options trading in the 1970s and stock index
futures
in
> the 1980s. Volume took off and never looked back. Nearly
1/3 of the
weekly
> NYSE volume comes from program trading alone.
>
> The new single stock futures will offer tremendous capital and
operational
> efficiencies to some of the largest players in the industry.
No more
waiting
> t+3 for stocks to settle. Same day settlement. Marked to
the market at
the
> same clearing house, the OCC, for all the single stock futures and
options
> trading. Same clearing house for settlement and delivery of
options and
> futures contracts.
>
> Take then that the biggest corporate names in the world are U.S.
companies
> that can be traded as SSF. Take then that the U.S. capital
markets are
the
> best in the world in terms of legal certainty, regulation and
fairness.
>
> These are all parts of the equation why single stock futures will
work.
Will
> they take volume from stocks? Yes and no. That same
argument was made
when
> options and indexes were introduced and they only added to the
liquidity
of
> the market. With the movement of time we have been able to
introduce
better
> and better contracts to specifically meet the needs of traders,
hedgers
and
> investors. We no longer need to run into gold or soybeans to
hedge our
> inflation or deflation risk. These tools will only make what
people want
to
> do, and do, more efficient.
>
> And I for one and going to do my best to make sure they will
be
successful.
> Part of the reason I write my daily industry newsletter is to help
people
in
> the futures and securities industry manage the changes all around
us. Just
in
> the last week I have had a President and CEO of a U.S. exchange sign
up
for
> the letter. A Senior Vice President of one of the Chicago
exchanges
signed
> up. A large division of a clearing FCM will shortly be
announcing they
are
> going to license my letter to offer to their clients and to attract
new
> clients. They will be offering it at a single stock futures
newsletter.
>
> So, all the signs I see say that these new products are going to
work.
And
> as the Nasdaq-LIFFE said, they are going to "make" them
work. I have
never
> seen an exchange so confident, so focused on the good of the
customer, so
> focused on offering a level playing field for all participants as
the
> Nasdaq-LIFFE. And I believe them.
>
> Regards,
>
> John J. Lothian
>
> Disclosure: Futures trading involves financial risk, lots of
it! John J.
> Lothian is the President of the Electronic Trading Division of The
Price
> Futures Group, Inc., an Introducing Broker clearing Man Financial
Inc.
>
>
>
>
> In a message dated 9/8/01 7:17:41 AM Central Daylight Time,
eadamy@xxxxxxxxxx
> writes:
>
> << I doubt that stock index futures are going to get very far
off the
ground.
> Essentially, stock index futures (low margin and high
leverage) are the
last
> nail in the coffin of post-29 market regulation. I believe
that we are in
> the early stages of a major cyclical bear market and I expect
to see
stock
> market volumes diminish to levels not seen in decades as a
byproduct of
> severe price declines ... the pendulum always swings from one
extreme to
the
> other. I further expect that liquidity in the futures and
options markets
> will suffer.
>
> I find it especially ironic that the post-29 market and
banking
regulations
> were removed just as the markets moved to such excess. The
fact that
these
> regulations were seen to be inhibiting the upward move of the
markets
should
> have been a warning rather than a reason to remove the
regulations.
>
> Earl >>
>
>
> To unsubscribe from this group, send an email to:
> realtraders-unsubscribe@xxxxxxxxxxxxxxx
>
>
>
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http://docs.yahoo.com/info/terms/
>
>
>
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Rakesh Sahgal
C -165(1st Floor), Greater Kailash - I,
New Delhi - 110 048
India.
Tel.: 91-11-647-6462,91-11-643-0010
eMail: rakeshsahgal@xxxxxxx
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