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"Parabolic" is one of the words which signifies both Great Danger and Great Opportunity to Investors and Traders. If an Investor or Trader is on the right side of a Parabolic Launch, there are great profits to be made. But the savvy know equally well that parabolic launches, or "spikes" as some call them, also carry Great Danger. Falls from the top of spikes are often violent, impelling those who did not "get out in time" to great losses. Gold and Crude Oil have been threatening to "go parabolic" recently, with robust spikes to record highs, punctuated with threatening spikes down. And equities have recently approached record highs with the DOW, flirting intermittently with 14,000, leading the way. However, Equities have also suffered from severe spikes down, reflected in the takedowns of November 7and 8, 2007, as Deepcaster Forecast. But the most substantial parabolic "spiking threats" today are in the Universe of Derivatives, a Universe, which, as Deepcaster has extensively described in his November, 2007 Letter "Market Intervention, Data Manipulation..." has a profound effect on the prices of Gold, Crude Oil and Equities, and other markets. According to a recent report, the top three U.S. Bank derivatives holders were:
JPMorgan Chase and Co.
-- over $80 TRILLION Significantly, these Banks are Primary Dealers for The Federal Reserve. But most significantly, the quarterly growth in Notional derivatives from Q1 to Q2, 2007, was $10 TRILLION, and by over 7 TRILLION in the latest Quarter. Yet obvious "End User" demand from financial institutions has been growing nowhere nearly as fast, especially after the August, 2007 Credit market Freeze-up. The obvious conclusion: The PARABOLIC increase in Notional Derivatives is due to their being demanded by The Fed-led Cartel* for the Purposes of Markets Intervention. One silver lining is that tracking these “capital interventionals” has facilitated Deepcaster’s recommending several profitable trades visible on Deepcaster’s website. And another Ominous Conclusion: More and more Derivatives are required to maintain 'Market Stability and Integrity', as it were. But we know that when any Market, including the Derivatives Market, goes Parabolic, there is Great Danger. For that Danger to materialize we need only a catalyst, as in, for example, the Universe of Future Mortgage Rate resets: Credit Suisse has provided us with a look at the future for Mortgage Rate Resets. It is Ominous. As a Credit Suisse Mortgage Rate Resets Chart shows, the future for Mortgage Rate Resets is also characterized by a half-dozen PARABOLIC SPIKES over the next 60 months. Moreover, these Resets are not limited to the Subprime Market, but extend also to the Option Adjustable Rate, Alt-A, Prime, and Agency Mortgage Categories, with Resets of these (considered in toto) spiking one month to over $50 billion and in several months to over $40 Billion, and with most monthly reset totals before 2012 spiking over $25 Billion. This reality is quite simply "Monthly Fuel" for several future Market Freeze-ups or Meltdowns. And, as we saw in the August credit Freeze-up, the consequences potentially affect much of the international financial system. So the rather Unique Situation with which we are presented is that while Gold and Crude Oil are making new highs, the financial system is under unprecedented threat from, inter alia, spiking mortgage rate resets and record OTC derivatives levels. This volatile situation surely invites Cartel Market Intervention at unprecedented levels. Based on the tracking of these “interventionals,” Deepcaster has just issued a Forecast for Gold, Crude Oil, and the Equities Markets. This Forecast responds to the Question of this Week: “Will the contagion now afflicting the Equities Markets spread to other Markets?”
*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Central Bankers to read Deepcaster’s November, 2007 Letter containing a summary overview of Intervention entitled “Market Intervention and Data Manipulation - - Consequences & Forecast for Gold, Crude & Equities and The Cartel End Game” at www.deepcaster.com/Latest Letter. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for intervention has been gleaned from publicly available records. CONTACT
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