How do you make money in the middle of all these hedge funds and private equity funds? Here is one strategy…
Marla Guthrie
Jul. 20, 2007

Every market is acting in strange way in technical sense. Traders find that the tradition analytic tools are failing as markets move in one direction with little care for any significant correction.

That makes a nightmare come true for a trader. But the traders and investors are now taking advantage of this big dominance by the massive hedge funds and private equity funds.

As macro level volatility increases, long-term (more than six months to expiry) options are becoming extremely costly. The higher premium is giving a chance to profit.

The traders have started focusing on position trades than the day trades. With high premium on options, an arbitrage strategy works well. Buy the future on underlying financial instrument, write in the money call for a fat premium and then buy a way out of money put for protection against any crash.

London’s MAN Group tells the real impact of the subprime mortgage meltdown – as leveraged M&A goes tougher so do the stock merkets worldwide
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. New home construction companies are taking the approach of the car manufacturing companies. Their approach is to build better and more sophisticated homes and somehow get enough incentive and other financial stimulus to get a family in.
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How do you make money in the middle of all these hedge funds and private equity funds? Here is one strategy…
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But the traders and investors are now taking advantage of this big dominance by the massive hedge funds and private equity funds.
READ MORE>>

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The result is an inflation-deflation combination. Inflation from commodities, energy, and deflation is everywhere else. Now try to find a single textbook which talks about anything like this.
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Most likely, the meltdown will be accompanied by a nasty deflation-inflation combination. The commodity inflation will be intact. But the rest of the economy will be in deflation.
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A manufacturing stagnation is confirmed by the lower Philadelphia Fed number
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The service sector and manufacturing are headed towards a major slowdown. Philadelphia Fed number always provides an early lead.
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