Let's play pretend for a minute. Pretend you're Big Al greedspin. Last year you saved the markets from imminent collapse in the LTCM scandal and before that the Russian,Mexican,Asian etc. collapses by injecting artificial liquidity into the markets and manipulations behind the scenes. If you don't believe that this happened, you are sadly mistaken. LTCM should have been allowed to collapse. There was a saying that if you default on a million you go to the poorhouse, a hundred million you go to jail, and a billion you go to your bankers to renegotiate the debt. Well the point is, the FED has gotten used to making the markets pain go away. Now as you are pretending that you're Big Al and a liquidity crisis in the form of Y2K shows up, what are you gonna do? (Incidentally, it showed up at precisely the time commodities took off, inflation became obvious and the rest of the world began to look at us as though we were Japan in the 80's). So what do you think old Al's gonna do? Go down in flames by doing the right thing like Volker did way back when? Hell no. You're gonna lie. Why not? It works for Bill. So you start out by adopting some tough talk. Then you ease into some rate hikes all the time passing coupons, and creating special liquidity facilities behind the scenes. Then when the shit really hits the fan, you start selling options on cash for year end to make the banks calm down so they themselves don't spook and freak the market. You sell 370 billion one week and then announce the following week that you're gonna sell another 450 or so billion. That's almost a trillion dollars in options. Holy bigass options position Batman! Holy freaking liability for the American people! Because as you will see from these articles below, to do anything but fake (govt stats) and stuff (liquidity into the markets) would certainly cause people to wake up and panic because of the danger your Fornicator in Chief has put them in.

For educational and future stock market collapse notification only:

CHICAGO, Dec 2 (Reuters) - U.S. dollar swap spreads expanded in the longer dates Thursday, widening as Treasury prices remained under pressure following two weeks of steady erosion. Dealers said weak Treasury prices were beginning to have an impact on swap spreads, causing them to widen in tandem with spreads on government agency and mortgage bonds that investors have recently been so eager to hold. "It looks like spread product, agencies and mortgages, that seemed so bullet-proof before, are now leading swap spreads wider. The spread product is now a little more vulnerable to these selloffs" in Treasuries, said a swaps trader at a U.S. bank. Treasury securities, whose interest rates have risen, could now start to outperform competing debt products, the trader said. The benchmark 30-year cash bond fell 10/32 to end at 97-13/32, yielding 6.31 percent. Ten-year swap spreads pushed out to 80 basis points, midmarket, from 78-1/2 basis points the day before, and may have hit bottom at the recent low of 76 points, the trader said. Two-year swap spreads were unchanged at 54-1/4 points and three-year spreads also held steady at 63 points. Five-year spreads widened by one point to 69-1/2, and seven-years expanded by 1/2 point to 74-1/4. Dealers cautioned swaps trading remains very thin and spreads vulnerable to exaggerated movements due to the illiquid year-end conditions. The markets Friday will be riveted on the U.S. employment report for November. Economists in a Reuters poll look for non-farm payrolls to have expanded by 226,000, compared with a 310,000-job gain in October. The unemployment rate was seen holding at 4.1 percent, with average hourly earnings forecast to rise 0.3 percent, compared with the previous month's 0.1 percent increase. Traders are especially wary of a further dip in the unemployment rate or jump in hourly earnings that could portend wage inflation and further hikes in U.S. interest rates. ((Susan Kelly, Chicago Derivatives Desk 312-408-8750 chicago.derivatives.newsroom@reuters.com))

(Nothing like "friendly jobs data" to give the bond boys a woodie!)

U.S. Treasuries stand higher on friendly jobs data (Recasts, updates prices, adds new comments. New byline) By Richard Leong NEW YORK, Dec 3 (Reuters) - U.S. Treasuries stayed higher at midday Friday after a friendly set of jobs data, although analysts said there was still room for the Federal Reserve to move interest rates higher. "The employment report was softer than expected, but it is very much at the margin. It doesn't change anything fundamentally (for the Fed)," said William Dudley, director of economic research at Goldman Sachs Group Inc. in New York. "The economy has been resilient to the (earlier) rate hikes," said Doug Porter, senior economist at Nesbitt Burns Securities Inc. in Toronto. "More works still need to be done" by the Fed. The benchmark 30-year Treasury bond jumped 20/32 point at 98-2/32 to yield 6.27 percent. Shorter maturities rallied even more, with the yield on the two-year note dropping to 5.99 percent from 6.06 percent, its lowest level in a week. According to the Labor Department, nonfarm payrolls rose 234,000 last month, close to the Reuters consensus figure of 226,000, while the unemployment rate remained at 4.1 percent as expected. In addition, average hourly earnings -- a measure of wage inflation -- edged up 0.1 percent, below expectations of a 0.3 percent gain. "The figures indicate good steady growth in activity, but continued low inflation," said Carol Stone, senior economist at Nomura Securities International Inc. "It's a great scenario." Dealers and investors had braced for a stronger than forecast report that might have forced the Fed to hike rates sooner than the February meeting of policy makers, when many Fed watchers expect the central bank to tighten again. Traders said hedge funds were the biggest buyers of Treasuries following the data's release, particularly in March bond contracts. But profit-taking by money funds at the day's highs -- stemming from the "sell on strength" view -- cut some of the early gains. However, the market moved back near the session's highs after remarks from New York Fed President William McDonough, who hailed the jobs data as very good news. "With the very rapid growth in productivity, it is very difficult to see that we are having real pressures from the cost side that would give concern for near-term inflation," McDonough said. "Still, the cost side is still one that we have to watch very closely." In midday trade, the five-year note was at 99-3/32, up more than 1/4-point to yield 6.09 percent. It had been at 6.16 percent prior to the jobs data's release. Ten-year notes were up nearly 1/2-point at 98-24/32 to yield 6.18 percent -- down from 6.24 percent earlier. The three-month bill rates were unchanged at 5.10 percent, the six-month rate was down three basis points at 5.30 percent, and the year bill rate was down four basis points to 5.39 percent.

-- Gordon (g_gecko_69@hotmail.com), December 03, 1999

Answers

The Fed is inflating the money supply like crazy...the bubble expands...it's a wonderful time to steer clear of all this craziness!

Wouldn't want to have any serious money bets either for or against this monster BULL market which continues to feast on GreasePan's Super Viagra diet.

-- Sceptic (STEERclear@oftheBULL.com), December 03, 1999.

I thought the record Dow, Nasdaq close is scienetific proof that there will be no problems with y2k. This isn't liquidity chasing a return this is really smart people just knowing that internet stocks losing millions is a safe bet for my retirement mulla. I have also heard analysts working for big firms making money on all this stock churning that today is a new dawn and a new era. Stocks never go down. I know this because I have been in the market the last 5 years and it has always gone up...

The drops are always fast and furious, this one looks to be a doozie.

Got distribution?

-- squid (Itsdark@down.here), December 03, 1999.

Squid--It must be awfully LIGHT wherever you are--you got it!

-- Sceptic (STEER clearofthe@BULL.com), December 03, 1999.

I don't understand the details, but I know there's something grossly wrong when the market is jumping like this a mere few weeks away from a grave humanitarian and economic crisis. I woke up this morning thinking that even if *only* the unprepared small businesses go down, we're in a hell of a pickle. It's unavoidable. How can the market keep going up on that foundation? (And we know it's worse than that.)

-- Mara (MaraWayne@aol.com), December 03, 1999.

Mara--It's a new "Pair-a-Dime"...the original one came from the "roaring 20's". (Wonder what they'll call the 1990's?)

Ques: what if this time really IS different?...and you can continue to fool so many fools indefinitely? After all, they ARE getting their 20-30% "interest" every year aren't they? It's like shootin' fish in a barrel, with GreasePan constantly refilling the barrel.

-- Sceptic (STEERclear@oftheBULL.com), December 03, 1999.

We've got "leadership" in this country that makes Nero and Caligula look like a couple of reasonable guys.

-- Not Whistlin' Dixie (not_whistlin_dixie@yahoo.com), December 03, 1999.

Let's see....what does this remind me of....

Oh yeah, Albania----Ponzi scheme.

Everyones gonna be rich.

-- LM (latemarch@usa.net), December 03, 1999.

From today's The Street.com:

..."I think there are a lot of reasons to be fearful," said John Bollinger, noted technical analyst and president of EquityTrader.com. "But [you] cannot deny that if [you] had just loaded up the boat on over-the-counter Internet stocks, you'd be sitting pretty."

Bollinger has been forecasting volatility for a while now -- and, in that, he's been spot on. But he thought that the tenor of that volatility would be to the downside, that the Fed being in tightening mode would eventually cow the bulls. Instead, the market has continue to float higher, buoyed by an immense wave of positive sentiment.

It's when sentiment gets positive like that, however, that technicians like Bollinger really begin to worry. It generally means that most of the good news is already in the market and that investors are looking at the world through rose-colored glasses. Bollinger notes, however, that a lot of bullishness among investors doesn't mean the market's heading down. "It's not enough to just identify the surge in sentiment," he said.

In some respects, an excess of bullishness is like a boat where all the passengers have run to one side. In itself, that's not enough to swamp the boat. "That's just the precondition," said Bollinger. "Were a wave to come along and nudge the ship, in fact, it might sink. That's what we have to look for now -- the catalytic event that will take this sentiment excess and start sending it in the other direction."

But what could that event be?...

Hmmm...

-- Mac (sneak@lurk.hid), December 03, 1999.

I watched a couple of minutes of KCAL news (Channel 9 in SoCA) this early afternoon. The shows financial advisor warned people to be very careful. He said something along the lines that real investors don't plunge in but make careful investments in increments over time.

-- Paula (chowbabe@pacbell.net), December 03, 1999.

Here's $0.02 more:

1. Greenspan had help from Rubin at Treasury and Rubin had help from Goldman Sachs and other trading firms in bailout of LTCM. The bailout was done by increased derivative spread rolling forward trying to spread the risk.

2. This has carried thru 1999 (so far so good unless you had shares in the hedged to the hilt gold mines (which BTW increased their short forward positions at the direction of GS/Rubin/Greenspan et al))in the Yen and Gold carry trade.

3. By 12/15/1999 give or take the major global Forex currency trades and the investment banks will take refuge from the risks of an unstable Y2K market. Their collective contingency plans will slow or stop the merry go round or more apt the game of musical chairs. Many will not get a seat and be out big time - ie unable to cover their short forward positions.

4. On a one-on-one scale the entitiy that owes can renigotiate and settle or surrender equity, Example Ashanti and Cambior an dother over hedged gold mining companies due to "minor" Gold run up in early fall 1999.

5. When there are hundreds of Ashantis with some investment banks included that are unable to fulfill commitments it is time to batten down the hatches because the three day storm will have started.

Question: Just how bad might a 3 day class fiver be if it hit and staid at one place at class five for all three days - maybe the place would be washed clean - maybe Koskinen is actually correct - a three day class five storm parked over everyone's head simultaneously!

-- Bill P (porterwn@one.net), December 03, 1999.

Sceptic:

-- squid (Itsdark@down.here), December 03, 1999.

Sceptic:

Just because its dark doesn't mean I can't see what's going down. Thanks for the slow pitch down the center.

As usual wet and dark, squid-

-- squid (Itsdark@down.here), December 03, 1999.

Tulips for sale! Tulips anyone! :)

-- Mike Lang (webflier@erols.com), December 03, 1999.