[MrBill]

This is interesting:
$this->bbcode_second_pass_quote('', 'A')pplying modern finance to America's biggest asset class

THERE are many ways to manage risk in America's markets, but the country's sophisticated web of financial products has a $21.6 trillion hole in it. That is how much wealth is tied up in residential property—far more than even the $15 trillion value of America's publicly traded equities. And unlike investors in shares, bonds and many other assets, those with a stake in housing do not have an easy way to hedge the risks. However, the Chicago Mercantile Exchange (CME) is planning to fill that gap.

In the next few weeks, the CME is likely to open trading in financial futures and options linked to American house prices. Investors who want to hedge the risks of residential property—or merely to speculate on the market's direction—will be able to bet on a rise or drop in a house-price index, without having to buy or sell bricks and mortar. With interest rates on the rise, prompting worries that the recent housing boom is about to give way to a downturn, the potential appeal of these new hedging products is easy to see.

Punters will be able to bet on price changes in ten cities from Boston to San Diego, as well on a national index that aggregates all ten. The indices will be part of the CME's Alternative Investment Products group, which fosters derivatives linked to economically important trends and events not directly related to underlying securities or commodities. The group already has products based on the weather and on economic data such as non-farm payrolls.

Creating a useful and reliable index of house prices is tricky, since no two homes are identical and the market is full of messy transactions. But a pair of economists, Karl Case and Robert Shiller, have spent more than a decade sorting out many of the problems, and for several years have published proprietary indices that highlight trends in the market. (Mr Shiller, a tauricidal academic who has spent much of his career slaying bulls and their foaming theories, has a special interest in tracking American house prices, which he has claimed are ripe for a fall.) The Case-Shiller indices have now been tweaked a bit to create a version suitable for trading.

Because the new derivatives will allow bets up to only a year ahead, homeowners will not be able to use them to hedge long-term risks. That limits their usefulness for ordinary folk. For many companies in the property industry, however, they should be helpful. A property developer or contractor, for example, can start a housing project without worrying whether prices will fall sharply by the time it is completed. Monika Piazessi, an economist at the University of Chicago's Graduate School of Business, says that half the volatility in the price of individual homes is linked to city-wide changes in prices. So the CME's new city indices could go a long way towards lowering the risks.

Financial firms such as mortgage lenders will also no doubt find uses for the new derivatives. And so will investors with a view about America's residential property market—whether they expect a continued boom, or a bust.

[cube]

$this->bbcode_second_pass_quote('MrBill', 'T')his is interesting:
$this->bbcode_second_pass_quote('', 'A')pplying modern finance to America's biggest asset class

THERE are many ways to manage risk in America's markets, but the country's sophisticated web of financial products has a $21.6 trillion hole in it. That is how much wealth is tied up in residential property—far more than even the $15 trillion value of America's publicly traded equities. And unlike investors in shares, bonds and many other assets, those with a stake in housing do not have an easy way to hedge the risks. However, the Chicago Mercantile Exchange (CME) is planning to fill that gap.

[MrBill]

$this->bbcode_second_pass_quote('cube', '')$this->bbcode_second_pass_quote('MrBill', 'T')his is interesting:
$this->bbcode_second_pass_quote('', 'A')pplying modern finance to America's biggest asset class

THERE are many ways to manage risk in America's markets, but the country's sophisticated web of financial products has a $21.6 trillion hole in it. That is how much wealth is tied up in residential property—far more than even the $15 trillion value of America's publicly traded equities. And unlike investors in shares, bonds and many other assets, those with a stake in housing do not have an easy way to hedge the risks. However, the Chicago Mercantile Exchange (CME) is planning to fill that gap.

[MrBill]

Sorry have not been very chatty today. Problems with email so not getting some research and my technicals are a mixed bag. Obviously, turning down due to 4-days of sustanined losses off the highs, but this morning the hourly charts turned upwards for a bit of profit taking.

What can I say. Twice long today. Twice took profit too early so missed the bulk of the correction. Still in European time zone, Mr.Bill's Rule has held and we have been in essentially a 95-100 point range. Some position squaring ahead of this afternoon's UN report on Iran, which Iran has already pooh poohed as being the nothing more than the behind the scenes lobbying of the the US in any case. So regardless of what the report says, it will not be news. Reformulated hash maybe?

Still, I sold a little here just to be contrarian, but would look to take it back ahead of $7100 before the report comes out just in case. It is not a long weekend, but many players will still be taking the May 1st holiday, and between May 5th (Spanish) and May 7th (Russian) many take this block of time off. However, it is a Friday and Iran is on everyone's mind, so likely better to be square ahead of the weekend.

Here are some metals comments by DRKW
$this->bbcode_second_pass_quote('', ' ') Market comment
Gold: A volatile day for precious metals yesterday as sideways trading
clouded the extent of the ranges covered. Gold began by drifting lower and reached a low of 628.50, down -$10 from the open of 638.70, as China raised rates by a quarter point. However, subsequent comments from Bernanke focusing on US imbalances and potential rate hike pauses weakened USD and boosted metals across the board in the afternoon. Gold posted a high of 643 before further profit taking saw the price slip back ahead of resistance between 645/50 and the metal closed finally at 632.80. Going into a long weekend holiday in Europe, volatility is likely to remain a key feature, as Iran says it does not ‘give a damn’ about the UN resolution.

Silver: Silver shadowed gold’s trading pattern, but the $0.80 hi-lo range was crossed 3 times, from 12.80 opening to 12.30 low to 13.08 high back to close at 12.47. Falling early in the day with gold and base on China rate news, silver recovered sharply as Bernanke’s comments coincided with a final approval statement from SEC for the silver ETF. The silver ETF is expected to begin trading today on the American Stock Exchange, and initial trading and demand perceptions will drive the silver price this afternoon.

Platinum: The market remained undecided about the new platinum levels
coming through yesterday as the price yo-yo’d with silver. Moving from 1,126 to 1,140 by the London AM Fix, platinum lost ground in the general liquidation before finding buyers on the dip back to 1,120 and finally rebounding to 1,138 on USD/rate comments. Prices remain firm this morning despite the JPY strength after USD weakened.

Palladium: Completing the quartet palladium showed a similar, if a little more restrained trading pattern. Opening levels around 360 gave way to lows of 345, but the metal recovered the opening levels by the close. The failure to break higher in the afternoon with the rally in other commodities may signal a short term warning of further consolidation.

[MrBill]

Um, forget that game plan. Market already spiked another 50 cents since I penned those words, so I am stopped out even before NY walks in the door and we see the contents of the UN report. Oh well, greatness will have to wait for next week. See ya.

[Chaparral]

Went long one HU-M06 at 20620 and exited at 20720 figuring I'd better not chance waiting for it to hit 20800. So much for that guess, it's at 21040 now. Dare I short?

[MrBill]

$this->bbcode_second_pass_quote('Chaparral', 'W')ent long one HU-M06 at 20620 and exited at 20720 figuring I'd better not chance waiting for it to hit 20800. So much for that guess, it's at 21040 now. Dare I short?

[highfructose]

I think oil just erased that spike and could resume its move up the near term trendline. The spike up could have been a huge example of "buying the rumour (Iran cutting off oil) and selling the news".

[Chaparral]

I'm sorry. I couldn't help myself. When I smelled blood i lunged for the kill and sold CL-M06 at 7230

Makes me feel a little less bad for having sold off all my gold this morning at 6474

[drew]

Bitten in the ass today. Stop loss orders are supposed to be your freinds right? I had begun placing them again last week at ten % below my holdings. That damn barclays silver exchange caused my CEF.NV.A to drop enough to sell. I didn't "REALLY" want to sell did I??? Funny thing is the adage 'buy on rumour sell on news' is true. CEF dropped very breifly to 9.95, on the news and then is right back up to 11.00 in after hours bids when I checked this morning. That's a nice 10% I just 'lost' by failing to hold on. Oh well, live and learn.

Drew

[MrBill]

$this->bbcode_second_pass_quote('drew', 'B')itten in the ass today. Stop loss orders are supposed to be your freinds right? I had begun placing them again last week at ten % below my holdings. That damn barclays silver exchange caused my CEF.NV.A to drop enough to sell. I didn't "REALLY" want to sell did I??? Funny thing is the adage 'buy on rumour sell on news' is true. CEF dropped very breifly to 9.95, on the news and then is right back up to 11.00 in after hours bids when I checked this morning. That's a nice 10% I just 'lost' by failing to hold on. Oh well, live and learn.

Drew

[Typhoon]

I thought that crude would test the $69.20 area. Not only was this previous resistance, but it's also the 38.2% Fibonacci retracement of the move up from the February low to the recent high at $75.35. However, yesterday's price action convinces me that crude will continue higher.

I think that tomorrow's inventory report will show a small drawdown of gasoline. Refinery capacity utilization should be near 90%. Gasoline drawdowns will stop soon, but I think that the lack of crude oil supply will become evident. Net imports are 3.6% below year-ago levels. Are exporters temporarily shipping less oil to the U.S. as a result of the refinery bottleneck here? I don't think so. Due to the contango in the market, it is advantageous for refiners to continue to build inventories.

Commitments of Traders reports continue to be a concern for the bulls. Large speculators are very bullish while hedgers are increasingly bearish. This tends to be bearish for oil prices over the intermediate term, which is why I said that the current rally might be overextended. However, after thinking about the fundamentals, I'm still bullish. I think we'll see $80 before we see $65 again. Keep in mind that precious metals continue to rally despite extreme bullishness among speculators. Hedgers are not always omniscient!

[Chaparral]

Yeah, i calculated 68.30 and I was anticipating getting out at say 6870 and whattya know it rings the bell at 7380 the next day. The peak oil cat is out of the bag and it's going to register on the markets. PO is all over the agriculture and trading forums now. I'm going to tread very carefully when it comes to shorting.

[MrBill]

$this->bbcode_second_pass_quote('Chaparral', 'Y')eah, i calculated 68.30 and I was anticipating getting out at say 6870 and whattya know it rings the bell at 7380 the next day. The peak oil cat is out of the bag and it's going to register on the markets. PO is all over the agriculture and trading forums now. I'm going to tread very carefully when it comes to shorting.

[MrBill]

Metals comments by DRKW
$this->bbcode_second_pass_quote('', 'M')arket comment
Gold: Higher again for gold after the May Day holidays as buyers came into commodities led by a number of factors – weaker USD, silver ETF participation, Iran threats to attack Israel on any US aggression over uranium enrichment, higher oil on geopolitical and supply concerns, and continued debate over rates and inflation potential. Trading cautiously up to the holiday highs of 662 in the morning, gold accelerated through resistance in the afternoon reaching highs of 667 and closing on those highs. Few sellers are
currently found and volatility remains firm although short term vols did not move higher again yesterday. There is little in the way of points between here and 700, with support so far found on the dips within the uptrend towards 650.

Silver: With volumes on the silver ETF still proving reasonably consistent, and investor interest in commodities continuing, silver prices resumed their upward path yesterday, looking for 14.70/75 highs from April this year. Momentum has turned higher again and although silver again approaches overbought territory after dipping towards oversold following the sharp sell offs, with most of that fall now reversed silver could well continue higher towards 15.00. Borrowing is again evident with the forwards moving sharply in thinner trading and nearby futures prices pushed back below spot prices. Support might be expected at 14.20, 14.00 and 13.20.

Platinum: The sharper 2-month uptrend continues in platinum with prices becoming more overbought. Corrections have followed such stretched levels in the past few months, although the dips have then found buying interest from the corporate sector at lower levels. The supportive commodity environment means that further tests higher cannot currently be ruled out.

Palladium: Also supported in the rally by ongoing speculative interest, perhaps with news of the end of Stillwater’s sales continuing to be a positive influence, palladium broke higher to reach recent resistance at 380, but crossed that threshold only today. Trading might be expected in line with platinum and silver.

[MrBill]

Surprise builds in the crude & gasoline stocks helped to kick the legs out from the rally that was threatening $7500 and bidding the front month up in the gasoline.

Crude +1.7 mio to 346.7 mio bbls
Gasoline +2.1 mio to 202.7 mio bbls
Distillates -1.1 mio to 114.50 mio bbls
Refinery usage +0.6% to 88.8%

Imports 9.81 mbpd
Gasoline Demand unch'd to 9.13 mpbd
Distillate Demand -0.7% to 4.08 mbpd
Total Demand +1.5% to 20.50 mbpd

Move down to $7365/75 after the numbers, but no plunge. Think the market is too wary for that at this juncture. Have a nice evening and speak at you tomorrow.

[Chaparral]

CL-M06 is 7305 and falling. HUM06 is pushing the 21000 mark. I shorted two days too early. I was thinking (or was it desperately hoping?) of two words last night: Double Top!.

Regarding your comment on Soybeans, a good number of $400.00 a year subscription futures gurus here in the states have been bearish on soybeans on account of the massive oversupply, meanwhile the commercial hedgers are coppering them pretty badly by going into super large net long positions. I figure that with the move of the USD vs the Real, soybeans traded in Chicago could actually be a good 30 cents cheaper to overseas buyers then they are to domestic buyers. A number of analysts predicted that soybeans would bottom out at around $5.50 USD per bushel and while they did approach that in intraday trading one day last month, they've spent a good amount of time at 5.80 this month which is pretty darn close to 5.50 where Japanese buyers are concerned given the strength of the Yen. It is also interesting to note that Brazil is giving its farmers some debt relief so they won't have to sell the beans for $3.50 to $4.00 off the backs of their trucks, they can hold on to them and sell at a more favorable time. Relatively few of the analysts who collect $35.00 from me each month for their commentary have brought this up. Imagine the same thing working with energy commodities. I always heaped scorn on long-only traders and hell, I have fun being contrarian and shorting while everyone else is bullish but the USD is not a friend of the commodities bear.

If the USD craps 1.5% during a rally in crude, might what we predict as a Fib or Gann retracement need to take the currency movement into account and be accordingly adjusted upwards?

[cube]

$this->bbcode_second_pass_quote('Chaparral', 'D')ouble Top!.

[CARVER]

$this->bbcode_second_pass_quote('MrBill', 'T')he peak oil cat may be out of the bag, but that means very little about finding any solutions. We (collectively) are still busy making the same mistakes with socialism and nationalization that we made in the 60/s & 70/s, and did not learn a damn thing from those expensive social experiments. And now that peak oil is knocking at the door we are going to waste another several decades going over the same unproductive ground as before. Twenty years from now another Iron Lady will be swept into power to deal with the resulting problems, but by that time we will be dealing with the economic fall-out and disruptions of post peak oil, and it will be too late to salvage much of our current prosperity. Kind of sad when you think of it. We are such fools because we never learn!

[MrBill]

$this->bbcode_second_pass_quote('CARVER', '
')We are also still putting puppet governments in place, supporting and protecting the leaders and wealthy families. If we can't buy them, or fail to create a coup, we will try to assassinate or even invade. We open up the country to our big corporations, cause pollution and destruction to our benefit and that of the elite while hurting the many poor locals. Run them up in debt (to pay our corporations to do projects there) so we can milk them till eternity, and call it: aid (We convince/pay the leader to dig a hole for his country and we'll dig it for them to make sure it is deep enough for them not to be able to get out by themselves). And then expect that it will not bite us in the ass at the worst possible moment. Creating lots of hostility towards us in most of the countries with the resources we depend upon more and more each day, resulting in terrorism and all. We are fools indeed! And then we even think that we are the ones that should be compensated by Big Oil (because they destroyed some of our demand?), how sad is that?