Chicago Mercantile Exchange buys CBOT for $8 billion– it can be a very bad sign for the economy and stocks
Peter Oberois
Oct. 17, 2006

Chicago Mercantile Exchange has decided to buy CBOT Holdings in a deal valued at about $8 billion. The deal comes as trading in futures contracts and other derivatives have increased dramatically. But behind the scene some quantitative models are manifesting analytics that can be scary for the worldwide economies.

Every major recession, depression and financial meltdown in the history were associated with super excitement in trading of the exchange seats. The bear market in 1929 and resulting depression happened after seats in NYSE were exchanged at record levels. The same was seen in Japan. The Japanese stocks lost 80% of its value after that. US stocks lost 86% of value in 1929-33 depression.

If history is an indicator, the coming depression and loss in stock market valuation can be staggering and way above we can ever imagine. At this time not only the seats are trading at record levels, the whole exchanges are being bought and sold with super premiums.

According analytic models that tracks history in financial markets, whenever a lot of money gats into the hands of few, this happens. The human greed takes over in a few. The seats and exchanges are trading at record levels. When the bubble bursts, it will be pathetic.

Another model that tracks smart money flow shows interesting results. Samrt money is buying very long term puts on the stocks.

Chicago Mercantile Exchange buys CBOT for $8 billion– it can be a very bad sign for the economy and stocks
Peter Oberois
Another model that tracks smart money flow shows interesting results. Samrt money is buying very long term puts on the stocks.
READ MORE>>

Producer Price Index fell amazing 1.3% while core PPI shot up 0.6% - what does that mean for economy, dollar, bonds and stocks?
Sam Adelton
Again and again the central banks have failed to fight stagflation. They overshoot chasing the inflation and cause eventual depression in the economy. Stagflations when fought with fiscal means end up in deflation and depression.
READ MORE>>

The stubborn capacity utilization manifests strength of economy – Dow 15000?
Paula Zubeda
Till it reaches 85, the Fed has no reason to raise rates. And if that pause happens in the middle of a capacity utilization above 80%, it is super-bullish.
READ MORE>>

A little change in core PPI says the inflation part of the stagflation is under control but inverse direction of stocks and bonds manifests start of a massive recession
Mike Moran
Lack of measures to correct the underemployment driven recession is dragging the economy down further. If slight inflation is suddenly changed into deflation (as happened in Japan in the last deade), the economy can be depressed.
READ MORE>>

A massive drop in Producer Price Index shows interesting correlation between inflation, eonomy, bonds, stocks and gold
Alan Hershey
The model shows the vulnerability of the stock market and the economy. The gold market interestingly has decoupled itself from dollar.
READ MORE>>

Investor craze over Industrial and Commercial Bank of China’s initial public offering manifests the bubble in global stock markets – the bust can be nasty
Fred Day
The closest case of such craze was in NTT DoCoMo IPO in Japan. The 1998 craze ended up in a massive Japanese equity bear market that took the the Nikkei down tens of thousands of points.
READ MORE>>

MORE ARTICLES >>