Can Dubai get quickly back to growth again?

Filed under: Dubai Property, Marc Faber, UAE Stocks, US Bonds, US Dollar, US Stocks — peterjcooper @ 10:36 am

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Yesterday this blog explored the emerging market business cycles as suggested by Dr Marc Faber in his book ‘Tomorrow’s Gold’ and saw Dubai situated in phase five and entering phase six.

The real dilemma is looking forward to the next phase: phase zero. The last time Dubai came anywhere close to this phase was in 1999 with oil prices at $10 and local stock prices on the floor, at the tail-end of the Asian Financial Crisis.

The fear at that time contrasted with the much more modest business slowdown of 2000, and a quick resumption of growth back through the business cycle to our present position. Will it be the same again this time?

Phase zero

Certainly a long phase zero is a nasty business. Dr Faber identifies its characteristics as: flat per capita income; high unemployment; low capital spending; domestic instability; falling profits; capital flight; no foreign investment; hotels empty; stock market at a bottom base; stocks very undervalued; press very negative; credit tight; Swiss bankers give up.

Oil economies are perhaps a little different to this general model for all emerging markets. Capital spending is generally sustainable, and an exit of foreign guest workers leaves less scope for internal unrest.

Indeed, what is needed to quickly exit phase zero is also available. Dr Faber says it needs a ’spark’ or ‘catalyst’ to start the recovery cycle. For oil economies an upturn in oil prices is the usual catalyst, although the long stretches of low oil prices in the 80s and 90s should not be forgotten.

However, if you believe in a commodities super-cycle that began around 2000 then today’s oil price crash should not last long. The supply and demand economics of oil favor a higher price to encourage more oil exploration to replace dwindling reserves, which must sooner or later impact price levels.

It would also have an impact on all the markets in the financial sector, especially in foreign exchange and cryptocurrency market.  To save your situation, it is best you should take the help of automated software.  Our site will guide you through the entire process and benefits of choosing the trading software.

Oil is king

It should be no surprise to realize that recovery prospects in the region depend on oil prices. Dubai, as the regional logistics, commercial and financial capital takes about six months to feel an upturn in oil prices as it feeds through the orders pipeline.

But will the world’s economy get quickly back on its feet? That is a far more difficult question to answer. Clearly if that took several years, and not just until Q3 as some hope, then it would be bad news all round.

However, the global stimulus packages look hugely reflationary, and oil prices would surely be one of the first signs it was working. That would make buying assets associated with oil economies at this time a wise move, especially for those who can afford to wait a while.

January 27, 2009

Dubai in phase five of the business cycle

Filed under: Dubai Property, Hotels, Marc Faber, Media, Oil Prices, Travel, US Bonds, US Dollar, US Stocks — peterjcooper @ 10:34 am

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Reading Dr Marc Faber’s investment classic ‘Tomorrow’s Gold’ it is interesting to note how Dubai has moved into phase five of his seven phases of the emerging market business cycle.

The symptoms of phase five are: tight credit; falling consumption; profits collapse; stocks crash; real estate prices fall sharply; big players go bankrupt; companies issue bonds or shares to raise cash; hotel vacancies rise; unemployment up; brokers lay off staff; tourism declines.

Of this list Dubai has yet to see any big players going bankrupt, and emergency fund raising is in its early stages. But all the rest of the list apply. For what lies ahead then we need to turn to the description of phase six of the cycle.

Phase six

This comprises: investors give up on stocks; capital spending falls; interest rates fall; foreigners exit; currency weakens; press very negative; equity funds down 90%; hotels, flights empty; taxi drivers discuss how much they have lost; men go out for work in suits but sit in parks.

Dubai is not quite in phase six. But lower interest rates could be on the cards soon, and a weakening of the US dollar due to money supply growth is very likely. Job losses are clearly mounting but UAE labor law will not allow people to sit on park benches, they will go back to their countries of origin.

However, Marc Faber notes that the down cycle in emerging markets does not have to be very long, and he points to the Asian Financial Crisis of the late 90s which took a year to bottom out and a couple of years to start a recovery: phase zero.

Oil prices

In the oil-rich Middle East there ought to be considerable room for optimism about a similar early recovery on the back of higher oil prices. But that would still not seem to mean that phase six can be avoided. It just means that anybody buying assets in that period will not have long to wait to be rewarded.

No doubt many would argue ‘it is different this time’ in Dubai. However, as the great investor Sir John Templeton explained these are often the most expensive words in the English language for investors who believe them. It might be different this time but if you bet against history the odds are stacked against you.

New GCC single currency agreed, will it include gold?

Filed under: Gold & Silver, Inflation, Oil Prices, UAE Revaluation, UAE Stocks, US Bonds, US Dollar — peterjcooper @ 8:56 am

08-12-12-goldashxGulf Cooperation Council leaders yesterday concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010.

Saudi Arabia is the largest economy in the GCC and boasts substantial gold reserves. But whether gold will be included in the currency basket has not yet been decided.

Golden opportunity

GCC assistant secretary-general Mohammad Al Mazroui told Gulf News: ‘We first have to decide on the location of the Central Bank, then the Central Bank and Monetary Council will have to decide on the gold reserves for the Central Bank’.

The creation of the GCC single currency – likely to be known as the Khaleeji which means Gulf in Arabic – is a major gold event for two reasons.

First, the breaking of their dollar pegs by the Gulf Arab nations is clearly dollar negative. Secondly, any inclusion of gold either as a part of the monetary basket, or in the reserves of the new GCC Central Bank will create additional demand for the precious metal.

2009 deadline

The project is gathering pace, and no lesser figure than Saudi Arabia’s King Abdullah has directed that GCC economic integration committees speed up their work and complete the whole exercise by September 2009.

It is only a couple of months since a group of Saudi businessmen allegedly bought $3.5 billion worth of gold, believed to be the largest ever single transaction for the precious metal. Perhaps in 2009 it will be gold rather than local currencies which become of interest to speculators about monetary reform in the GCC.

Gulf countries are keen to break away from the link with the US dollar because it ties them to inappropriate monetary policies that exaggerate the boom-to-bust cycle in their economies.
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Peter Schiff says move to Dubai!

Filed under: Dubai Property, GCC Currency Union, Peter Schiff, US Bonds, US Dollar, US Stocks — peterjcooper @ 4:03 pm

047038378xReading Peter D. Schiff’s ‘Little Book of Bull Moves in Bear Markets’ it was intriguing to see him become so frustrated with the US economy that he advocated emigration, at least for a few years.

‘If you are more adventurous, you might consider the nations of the Persian Gulf, such as Dubai, Qatar, Kuwait, or the United Arab Emirates,’ he opined. ‘Flushed with petro-dollars and unburdened by taxes or regulation, the Arab world seems destined to reclaim a more prominent role in the years ahead.’

How prescient! Of course, clearly neither Mr Schiff or his proof readers have much knowledge of the region or they would know that Dubai is a city in the United Arab Emirates and not a separate nation.

The ADX is not used to know what the trend is but instead it is used to indicate whether the current trend is strong or is turning weak on Crypto CFD Trader. The indicator is used in the market when the market is trending since it lets you understand whether you should still hold on to your positions or sell them off.

That much any American reader ought to establish before jumping on one of the excellent new Emirates Airlines’ flights from the States and rushing into business in Dubai, and that is what he suggests, ‘if you’ve ever had any inclination towards entrepreneurial life.’ Well, at least buy a copy of my book ‘Opportunity Dubai’ before taking that advice!

Changing times

The problem is that Mr. Schiff’s world view – only completed this summer – already looks a bit out-of-date. His world then was one of high oil prices, a falling dollar and a US economic collapse isolated from the rest of the world.

What we now know is that high commodity prices insulated commodity producing countries from the sub-prime crisis until the summer. But once commodity prices collapsed – oil from $147 to $34 a barrel – so did these supposedly immune economies.

The city of Dubai’s financial market is 75 per cent down this year, among the worst performers and well ahead of the US decline of 40 per cent for the S&P. House prices in Dubai are down 40-50 per cent this autumn, far ahead of Main Street USA.

Dollar appreciation

The dollar’s devaluation also swung into reverse as capital markets imploded this autumn with a flight to quality and a recovery for the greenback. So much for the US devaluation trumpeted by Mr. Schiff. It is clear that other global economies are also in trouble, and Europe’s debt problem could be bigger than America’s.

However, Mr. Schiff’s free market prescription for US recovery: allowing lame ducks to die, bankrupting major corporations and banks and removing social security, has no chance of being adopted by President Obama.

On the other hand, a very vigorous shake-out is underway in the UAE with expatriate labor summarily dismissed with modest compensation, downsizing of major real estate projects, continued investment in major infrastructure schemes and a rapid reorganization of national debts.

In truth the UAE (and that includes Dubai) can manage something far closer to a free market solution to the economic crisis than the USA can ever hope to achieve. Perhaps Mr. Schiff is right Americans ought to move to the Persian Gulf countries.
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What does backwardisation mean for silver?

Filed under: Gold & Silver, US Dollar — peterjcooper @ 10:06 am

silveralertprofilelogoAntal E. Fekete, a professor at Intermountain Institute of Science and Applied Mathematics, and frequent writer on precious metals, answers a timely question:

Q: People from around the world keep asking me what advance warning for the collapse of our international monetary system, based as it is on irredeemable promises to pay, they should be looking for.

A: My answer invariably is: ‘watch for the last contango in silver’.

It takes a little bit of explaining what this cryptic message means. Contango is that condition whereby more distant futures prices are at a premium over the nearby. The opposite is called backwardation which obtains when the nearby futures sell at a premium and the more distant futures are at a discount.

When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists.

Silver price hike

Thank you professor! This is really an extension of the argument on this website dating back to before the summer rout of precious metal prices.

This means that the bullish trend is in most probability dying out. Similarly if the commodity chart is making a lower low but the CCI indicator is making a higher low than this means that the bearish trend is ending.

These are some ways in which the commodity technical indicators are used but they are not fool proof. You need to use them on Bitcoin Code along with the support and resistance levels to use as a confirmatory tool.

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Physical stocks are low and the futures price has been distorted by big hedge fund forced-sales – now we are coming to the day of reckoning when the physical shortage starts to determine the spot price, and not the futures market.

The upside – which should have been there all along – will now come back with a vengeance and smash the few remaining shorts. This is likely to be spectacular – but after the culling of bulls recently not all precious metal fans will be there to benefit.
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What does the $3.5bn Saudi gold rush in two weeks mean?

Filed under: Gold & Silver, Oil Prices, UAE Stocks, US Stocks — peterjcooper @ 8:22 am

saudi1_200revThe revelation on this blog, actually sourced from what appears to be a reliable story in the Gulf News, the leading regional newspaper, that Saudi Arabia has spent a total of $3.5 billion on gold over the past two weeks has naturally attracted huge worldwide interest.

I can not verify the source but all I can say is that this has the hallmarks of a genuine story, based on my 25 years in financial journalism. First, it was buried on an inside page and the amount was given in UAE currency later in the story – hardly the action of somebody looking to manipulate the gold price, more an indication that the sub-editors did not understand the importance of this story.

Second, this is how the best stories emerge from Saudi Arabia – the market is not very transparent but insiders do notice big changes and pass this information on, and it surfaces as well sourced rumor. I am afraid this is about as good as it gets in the Middle East.

Truth in rumors?

After 9/11 we had rumors about chartered 747s flying full of gold and dollars back to the Kingdom to avoid the increased scrutiny of US regulators. Was it true? Real estate here is said to have boomed on the back of this new money – that certainly happened, did the transfer? We do not know for sure.

So what is going on? By whom and why are these gold purchased being made? Again we can only indulge in informed speculation – nobody is ever going to give an on the record comment on this.

However, we do know that the Saudi stock market has crashed over the past two weeks. There has been an enormous amount of money cashed out. The obvious source of the money for gold purchases has to be that money.

The problem for Saudis is that by cashing out of local stocks they get their own riyals in exchange, and riyals are effectively US dollars due to the currency fixed link. The US dollar is presently high, so diversifying into another asset class makes sense.

But what do you buy? What is safe these days? Dubai villas, perhaps but the rest of regional real estate is crashing? US stocks – you must be joking?

Conspiracy nonsense

I think some of the conspiracy theorists are wide of the mark. People love to come up with elaborate rationales for actions. It is laughable to see Saudi Arabians rushing to buy gold as a conspiracy to bring down the West. The West has brought that on itself, and the Saudis are just trying to find an effective shelter for their wealth from that collapse.

Gold and silver are precious metals with a limited supply that retain their value over time. Also if we are in a repeat of the late 1970s, as this author believes, then cash and gold are the safe havens, with silver probably the best of all, if very volatile.

Therefore, my lesson to draw from the Saudi gold rush is that very much higher gold prices are coming and investors in the Kingdom are making a logical choice ahead of the global pack. If you can not beat them I would join them and preserve your capital.

Incidentally, what I would like to know is who is buying? The report in Gulf News makes it sound like the broad mass of local investors, not the government, and that would explain why such a report has surfaced. If it was the government we would not have heard about it.

So this is just a local flight to a safe haven asset class by people panicking about plunging local and global stocks. But $3.5 billion in two weeks is a big shift in demand for gold in a short period.
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Saudi Arabia buys $3.5bn of gold in two weeks

Posted on 13 November 2008 with no comments from readers

There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources.

Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: ‘Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present’.

He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.

Gold is currently trading at prices similar to a year ago, and 30 per cent off its March peak. Saudi investors clearly think this is the right time to buy and are piling into gold.

News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.

Market analysts such as the legendary gold bug Jim Sinclair have pointed out that if less than two thousand millionaires insisted on delivery of physical gold at the end of their futures contracts, as is their legal right, then the spot gold market would jump to new highs.

Saudi Arabian investors have spotted a bargain, and it may be a much better one than they think.

Jewellery sector is ranked among the fastest growing one and is also regarded as the leading segment for foreign exchange generation. Gold, silver and diamond are the major opted pieces of jewellery and account for around 87 percent of the global jewellery market. The golden exchange is considered as the potential signs for revival and growth.

In addition, these jewellery items have

  • A remarkedly high level of manufacturing along with an increased domestic consumption
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Saudi Arabia buys $3.5bn of gold in two weeks

Filed under: Gold & Silver — peterjcooper @ 8:55 am

welcome21There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources.

Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: ‘Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present’.

He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.

To narrow down on the commodity trading indicators on Crypto Code one needs to understand that the indicators cannot be used independently to give buy and sell trade signals. These indicators have to be used with the support and the resistance levels and can be used only as a confirmation to the trades. This will help to increase the probability of the trades working out.

One of the indicators used popularly to trade in the commodity markets are the moving average indicator. This is a simple indicator and also one that is very commonly used in order to tarde the commodities. Two moving averages are placed on the commodity chart and you need to look out for a crossover of the moving average.

Gold is currently trading at prices similar to a year ago, and 30 per cent off its March peak. Saudi investors clearly think this is the right time to buy and are piling into gold.

News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.

Market analysts such as the legendary gold bug Jim Sinclair have pointed out that if less than two thousand millionaires insisted on delivery of physical gold at the end of their futures contracts, as is their legal right, then the spot gold market would jump to new highs.

Saudi Arabian investors have spotted a bargain, and it may be a much better one than they think.
Order my book online from this link

Is the silver futures market about to crack wide open?

Filed under: Gold & Silver, US Stocks — peterjcooper @ 9:23 am

The silver market has been looking interesting for months, despite the price collapse. Beneath the surface of the recent spot price falls the structure of the market is changing in such a way that a powerful bull market is being set up.

Metal holdings for Barclay’s iShares Silver Trust (SLV) have so overwhelmed selling pressure that the trust has added a total of 68,921,884 ounces of silver to its holdings so far this year, reported resourceinvestor.com. Yet late last week the COMEX futures market reportedly held 131,530,256 ounces of silver in its warehouses.

Thus so far in 2008 the leading silver exchange traded fund SLV has added the equivalent of 52.4% of all the silver metal that the COMEX futures market has in its vaults. That surely represents amazing buying pressure at a time when silver prices are in crashing. Something is not right clearly.

False market

Then as resourceinvestor.com comments: “if we consider all of the 95,873 open contracts for silver on the COMEX as of last Tuesday, then we find that the COMEX traders are trading contracts either side, long and short, of 479.4 million ounces of silver but only have 131.5 million ounces behind it.”

Why then have silver prices been falling? That brings us back to the alleged manipulation of the market by two US banks over the summer, now under investigation by the regulator.

Resourceinvestor.com says: “Exactly two U.S. banks continued to keep their thumb on the COMEX silver market as of October 7 when the silver price had already declined from $19.00 to $11.00 and change in the face of severe physical silver shortages of metal on the street. As of October 7 the two largest commercial banks still held a scandalous 23,308 net short silver contracts when the entire commercial net short position was 29,829 contracts. That’s right, two banks still dominated the small silver futures market with over 78% of all the commercial net short positioning.”

This is not only downright illegal and unfair, it is producing a false market. And in false markets things can change very rapidly. Is it any wonder that metal is now flowing out of the COMEX and into the physical market. SLV investors sense a bargain and are effectively pulling silver stocks out of the futures market where the price is false.

COMEX exit

Resourceinvestors.com notes that over two million ounces of silver have fled the vaults of the COMEX in just the last five trading days alone. How long before that trickle becomes a flood and the futures market in silver is effectively shut down and the physical spot market takes over?

Expect to see silver prices head to the moon. In the late 1970s it was a bungled price manipulation by the Hunt Brothers that sent silver prices super high, and bust the market for the next two decades. Silver today is trading at around $10 an ounce compared with an average price of $24 an ounce in 1980. What else today costs a fraction of the price 28 years’ ago?

Now it will be a bungled price manipulation by US banks that releases the silver price from its artificially depressed state. Silver bugs have gotten silver hair waiting for this to happen, but it is finally upon us and nothing and nobody can stop it.

As a new trader in the market it is important that the trade rules are followed. A single mistake could wipe out your entire capital without you having any control.

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An investment tip: stock up on physical silver, bars, coins and ‘pure play’ silver equities which should deliver the most outstanding profits of all. These are extraordinary times in capital markets and exactly the sort of period when such extraordinary events happen.
Order my book online from this link

Is the silver futures market about to crack wide open?

Posted on 02 November 2008 with no comments from readers

The silver market has been looking interesting for months, despite the price collapse. Beneath the surface of the recent spot price falls the structure of the market is changing in such a way that a powerful bull market is being set up.

Metal holdings for Barclay’s iShares Silver Trust (SLV) have so overwhelmed selling pressure that the trust has added a total of 68,921,884 ounces of silver to its holdings so far this year, reported resourceinvestor.com. Yet late last week the COMEX futures market reportedly held 131,530,256 ounces of silver in its warehouses.

Thus so far in 2008 the leading silver exchange traded fund SLV has added the equivalent of 52.4% of all the silver metal that the COMEX futures market has in its vaults. That surely represents amazing buying pressure at a time when silver prices are in crashing. Something is not right clearly.

False market

Then as resourceinvestor.com comments: “if we consider all of the 95,873 open contracts for silver on the COMEX as of last Tuesday, then we find that the COMEX traders are trading contracts either side, long and short, of 479.4 million ounces of silver but only have 131.5 million ounces behind it.”

Why then have silver prices been falling? That brings us back to the alleged manipulation of the market by two US banks over the summer, now under investigation by the regulator.

Resourceinvestor.com says: “Exactly two U.S. banks continued to keep their thumb on the COMEX silver market as of October 7 when the silver price had already declined from $19.00 to $11.00 and change in the face of severe physical silver shortages of metal on the street. As of October 7 the two largest commercial banks still held a scandalous 23,308 net short silver contracts when the entire commercial net short position was 29,829 contracts. That’s right, two banks still dominated the small silver futures market with over 78% of all the commercial net short positioning.”

This is not only downright illegal and unfair, it is producing a false market. And in false markets things can change very rapidly. Is it any wonder that metal is now flowing out of the COMEX and into the physical market. SLV investors sense a bargain and are effectively pulling silver stocks out of the futures market where the price is false.

COMEX exit

Resourceinvestors.com notes that over two million ounces of silver have fled the vaults of the COMEX in just the last five trading days alone. How long before that trickle becomes a flood and the futures market in silver is effectively shut down and the physical spot market takes over?

Expect to see silver prices head to the moon. In the late 1970s it was a bungled price manipulation by the Hunt Brothers that sent silver prices super high, and bust the market for the next two decades. Silver today is trading at around $10 an ounce compared with an average price of $24 an ounce in 1980. What else today costs a fraction of the price 28 years’ ago?

Now it will be a bungled price manipulation by US banks that releases the silver price from its artificially depressed state. Silver bugs have gotten silver hair waiting for this to happen, but it is finally upon us and nothing and nobody can stop it.

An investment tip: stock up on physical silver, bars, coins and ‘pure play’ silver equities which should deliver the most outstanding profits of all. These are extraordinary times in capital markets and exactly the sort of period when such extraordinary events happen.

The futures in silver and gold rule statement prices of the commodity markets, the purchase and sale of 5000 troy ounces of silver with high perfection in the COMEX exchange. A good study and  this review will give the contract pricing to go upward or downward based on several factors, while the market for silver futures are opening wide as the precious metal is nearing shortage.

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Jim Rogers is shorting US treasuries

Filed under: Oil Prices, US Stocks, Video — peterjcooper @ 9:41 am


Legendary investor Jim Rogers is shorting the US treasury market. As he explains in this interview a hyper inflationary global economic environment is being created by government fixes. This will turn the current US dollar rally into a rout.

More immediately the big rally in US stocks yesterday happened when the bond market was closed for Columbus Day. Now we should have

and start putting money from their savings account into their trading account in the hope of getting back the money that they have lost. This leads to even further losses. Trading without having proper trading knowledge or without having a trade plan is an act of pure gamble. Trading is a game where one needs to work out the probabilities. One should also know ways to control emotions and pick up trades carefully that has a higher probability of working out.

It is really dangerous to trade based on recommendations by brokers or analysts on TV’s. The new trader follows these tips blindly. The regular day of a novice trader starts with switching on the TV in the morning and jotting down the trades that the so called trading pundits give on TV. As soon as the market opens they rush to place the trades that they had noted down in the morning. Understand that not every analyst on TV is an expert and following then blindly will do you no good. It is important that you do your own research before taking the trades. You should rely on your research or research done by an expert brokerage firm to decide on what to buy and what to sell in the market.

Trading using margins seems tempting. It feels like you are trading using some free money. When the broker gives you margin money to trade on then this lets you trade for more amount of capital than what you have in your trading account. This however just means that now you have more open positions. If you tend to lose on the Bitcoin Trader platform then you will have to pay off from your own pocket which could be paying from your savings. Margin trading is definitely not recommended to those who are new to trading.

an enormously concentrated sell-off in bonds as a follow through from yesterday’s equity rally – that should be the end of the bubble in bonds.