Sell MAR 06 Copper Ftrs @200.40
Risk=208 (weekly close)
Complement to the GEM thesis below.

Sell EWJ (Japan-Nikkei) @12.82
If no break below 12.49 before 12/12, cover.

Global Emerging Markets: 2005 highs will likely print early this week (DEC 5-7).
A buying panic has been transpiring accross the GEM spectrum since late October. Thirst for beta has forced many into stocks in anticiaption of a year-end rally. We believe the infamous 'year-end' rally many expect and are now fully positioned to exploit will develop into a race to monetize meager gains and salvage performance before books close on DEC31.

Coincidently, Central Bankers of the G7 met this past weekend. The group is clearly targeting asset prices and global liquidity:

"There's clearly concern in Washington and Frankfurt that financial conditions are still too loose," said Jim O'Neill, chief global economist at Goldman Sachs. He added that Japan may lag, but will also need to mop up abundant global cash.

This month Ferguson urged policy-makers to pay more attention to asset prices. "We need to be more attentive now to financial markets because asset prices affect spending to a greater degree than before and because asset prices provide us with a greater amount of timely information to guide policy," he said.

Another method of gauging liquidity is used by Goldman Sachs, which compiles a financial conditions index for the major economies based on debt, equity and currency prices.

The index has declined steadily -- indicating cheaper money -- even as Fed tightening has been in full swing over the past 18 months, and plumbed new lows in this summer. It popped higher in September, but resumed its decline in November.

So, if there was collective G7 concern last September that global liquidity was too high -- it will not have gone away.

"I'd say relatively little progress has been made -- debt spreads are still very narrow, asset prices are still very high and real and nominal long yields are very low," said Larry Kantor, head of global economic research at Barclays Capital.

"It's not the whole story, but to some extent that must be contributing to the decision of the ECB to start tightening and the Bank of Japan to consider its options too."