Tuesday, June 10, 2008

Tuesday Tidbits

As mentioned recently, I have started reading the Financial Times daily. This newspaper continues to show superior news reporting and writing compared to The Wall Street Journal. Yesterday I found two really interesting stories with some real facts.

First, an article about the oil markets included the fact that "just 5m [million] barrels per day of light, sweet crude is actually available in the open market", viz., not otherwise under contract. The light sweet grade of oil is most suitable for low sulfur fuels, which Congress in its wisdom [not!] has forced the diesel-based trucking industry to adopt. Some math: 5 million barrels per day times 30 days per month times $135 per barrel equals $20.25 billion. So only $20.25 billion can control an entire month's free, open supply of light, sweet crude. Who is so stupid as to not realize that pension fund flows and beefers in the futures market can drive its price any place they wish ? Thanks Congress, for those sulfer rules - you were told that they would increase prices and ignored that testimony. And thanks, pension funds and beefers and Congress for making this vital commodity a ping pong ball.

Second, an article on the funding differences between US and European banks was illuminating. Data show that "European banks had secretly increased their dependence on dollar funding by about $500b [billion] in the last four years. ... Much of this funding was apparently borrowed from US banks. However, American banks, by contrast, have been raising most of their funding from money market funds, which they have lent on to other banks, such as those in Europe." This data is from the Bank for International Settlements. So some of the tension in the interbank markets has occurred as US banks cut back interbank lending, putting pressure on European banks. Only US banks have direct access to the Fed's liquidity programs.

This made me think ... where are the petrodollars ? That is a really large amount of dollars overseas. This data make it appear those dollars are not being deposited in European banks. Where are they ? Still thinking ...

Markets

My bank stocks got crushed yesterday, on the LEH news, I suppose. Ugh !!! This selling seems at insane levels but ... the beefers can push them anywhere they wish in these markets. Tax issues make it difficult for me to make any moves now. If I sell some winners I would have ST gains which are taxed at 40%. I think I'll wait for new money to arrive and then double up on some to hold for 30 days and then take a tax loss on the older shares. This can save me a lot of money on the large gold & silver profits I took earlier this year.

Word of the Day

"Timocracy" - noun [$10]
Timocracy means 1. a form of government in which possession of property is required in order to hold office; 2. a form of government in which rulers are motivated by love or honor. Sometimes a timocracy is called, "rule by the best".
Sentence: While the early government of the United States could be called a timocracy on both counts, it's obvious that the current United States Congress is not a timocracy, as they are motivated by power and payoffs.

49 comments:

Bud said...

Bman sure is a cynic.......if he thinks everyone in congress is a timocrat

i'm more of an optimist.......sort of like ronald reagen

Bud said...

beefers shud be barred from buyin oil futures???

huh????


PS.....can the Bman please provide a list of approved beefer investment products and also the minimum holding period?? will day-trading be a violation of federal securities laws if the Bman is SEC chairman ???

Bunkerman said...

Beefer position limits should be enforced including ICE and swaps. They are going around the rules. As usual.

Bunkerman said...

I don't like huge, secret pools of money sloshing around, evading disclosure rules and causing trouble for the common man - the average Joe.

Position limits, disclosure should be rigorous - no exceptions. Including offshore beefers. Fake "hedgers", etc.

Pension funds - they should be ejected from all derivative markets - futures, swaps, etc. The "innovation" that let them in should repealed and the UBIT re-applied.

mern said...

bud u made a great pt yesterday.

however i DO NOT believe the president is supposed to "fix" everything. i just believe the president should be very bright, able to delegate and most importantly understand the structual and secular problems that faces this nation and the world.

u have to be kidding me if out of 350 mil americans that these two r even in the top mil, of potential candidates............

out of anyone who got close, my choice, clearly wud have been Ron Paul.

remember fiscal discipline/ socially liberal. new foreign policies that include GLASS.

mern said...

i watched JPM get hammered yesterday.

i hope all this hard work and new learning dont get butt slammed by a vicious bear market in the fins.

WTF is paulson doing, saying we mite intervene in USD? that has never worked!

mern said...

well if this is the beefers, in oil and food, then they will get stuffed like they do everytime. like mfl pointed out yesterday, for every winner on a long trade (in commodities) there is a loser. until there is not, then the sellers win it all back.

however if this is stagger lee, and is just really secular new demand, regulating it will only make it worse.

practically everyone i speak with thinks oil is going LOWER.

hmmmmmmmmmm

mern said...

wind fall profit taxes.

1 trillion in discretionary spending for DC/lobbyists.

GUT THE FUCKING THING!

Bunkerman said...

Oil uptrend is real, but not this spike.

Corn is mostly due to Congress, weather. Ditto wheat, soybeans.

All commodities are probably up 10-20% on pension fund buying. Rest is weather, beefers, etc.

Problem idenfication matters.

Bunkerman said...

It seems like modern man can't deal with problems that have more than one cause. So he always blames one, but misses other major contributions.

I guess that Fed fool Fisher wants to Paul Volcker Award for causing the most job losses for a career. Award is a trophy with a hand out streched.

mfl59 said...

Bunkerman what makes you say that the selling in the banks is at "insane" levels? what are the facts sir?

Spin-em said...

PERSONAL FOUL!!!!!..15 YARD PENALTY WITH LOSS OF DOWN....kicking a man in the nuts while he's down.......

mfl59 said...

i throw the red flag...i want that reviewed....i simply want to hear his thesis....remember, we deal in facts here, not rhetoric....

maverick said...

In 2006 people were still making money 'flipping' houses
In 2007 the financial media confidently told us the problem
would be
small and contained
not spread to other areas
only affected non bank lenders
wouldn't affect solid high end housing

The events since then have laid waste to the first 3 and heres todays
headline

Housing crunch, 90210
Places like Beverly Hills, Calif. and Greenwich, Conn. have been hit by
steep price declines, and a jump in foreclosures.

Bunkerman said...

hmmm ... Mav writing in free verse ... very elegant ;-)

Frosty said...

CFC foreclosing on Ed Mcmahon...a 90210 common working man screwed by the system...hiiiiihoooooooooo.

Bunkerman said...

will write later re mfl ... I am still conducting a local support operation in the home improvement industry ;-) ... aka paying lots of $ to fix up my barn ... must inspect final work.

then must go buy beer - it's hot here.

Frosty said...

ppsstttt...bunky...book value.

Frosty said...

no frosty malted beverages...you sir lack preperation skills...MRE ppfffttt.

Bunkerman said...

MREs are for armageddon - civil disorder ... gotta save those, Bud says it's coming ;-)

Bunkerman said...

My thinking on the big commercial banks is a four dimensional object: price, time, competition and future outlook.

1. Price: From my experience, 90% of book is insanely cheap for a major quality financial stock. I also think the many market-based "marks" are too much and will mostly reverse as real losses aren't going to be so bad.

2. Time: This "crisis" has been going on for almost 18 months from the first twinkle in the bears eye. So I think all the truly bad news is out.

3. The big commerical banks will take business from teh investment banks and small mortgage banks in the future, hence gain market share. They will also be able to raise prices - i. e. spreads on their loans. An extra 50 bps is huge; competition from Europe and investmetns banks will be much weaker.

4. I think the housing market is at bottom and that defaults are peaking now and so house price swil go up in the fall. And corporate profits wil be fine; export business will roar. And the consumer is ok - not great - since he has a job,and is finally making his teenager work to pay for the clothes and gasoline.

So in my thinking the correlation of forces points to "insanely" cheap prices for the big banks.

Bunkerman said...

now I've talked myself into wanting to buy more.

Bunkerman said...

obviously the bears disagree with me.

Bud said...

armageddon is comin for sure

and that is gonna result in a complete wipeout of the GOP in november

pelosi will have a minimum 70 seat majority...and i think the dems will gain 8-10 seats in the senate....not only filibuster proof ....but i think enuff to tell joe lieberman to F' off


only john mccain stands in the way of a liberal coup de'tat



go BIG JOHN!!!!!!!!!!!!!!!!!!!!!

mfl59 said...

a couple thoughts sir:

how reliable are the numbers used in calculating these "book values"?

what evidence is there that the housing market has bottomed? arent bottoms usually found after the fact?

Bunkerman said...

Early on in a downturn, the book numbers might be high. But since major writedowns have already occurred, to me they seem fine.

Correct, there is no "evidence" yet the hosing market has bottomed. My thinking has been for a bottom in Q2 ... now. Data come later.

The April existing home sales number yesterday gave a hint.

Frosty said...

Bud is creeping me out...sir, please narrow your stance.

Bunkerman said...

FT had another good article about European public and political reactions against overpaid CEOs and beefer managers. I've got to remember to use that for a blog, too.

mfl59 said...

my boy from your neck of the woods, Ken Heebner, well, there's a beefer you can respect....take a look at his numbers the last 5 years or so...CGM Focus Fund...still lives in a 2 bedroom condo....a true man of the people...

Bud said...

frosty missed you at BBQ on sunday......ann coulter was there....walkin around in a bikini

what u doin saturday? haow about some euro2008 and US open ?


go BIG JOHN!!!!!!!!!!!!!!!!

Bunkerman said...

good numbers. But it's always hard to pick them in advance.

He's sure kicking my butt this year :-(

Bud said...

"you are in the no spin zone!"

not a bad show.......but my new hero

sean hannity.....he's my boy !!!!!


i luv that guy

mfl59 said...

sean hannity.....

"my boy"

lmaooooooooooooooooo

Frosty said...

Bunkerman...have you booked long term gains AAPL?

Bud said...

do any of you guys know if GLRE is einhorn's company?? it has been movin up

mfl59 said...

no i think its a reinsurance co...it seems to be a case of mistaken identity

Frosty said...

corked bat or six superballs indeed mr nettles...Bud may need to sit for ten days...willie nelson rules now in play in south fl...checked my stats on yhoo, back to a 10 hcp.

Bunkerman said...

Yes, frosty. But re-bought a lot near lows this year and must wait on the gain on this chunk.

Bunkerman said...

re-checked - yes, all current AAPL shares are ones I bought near lows this year.

That was around when Bud said it was going to 80 in one of the armageddons. ;-))

Bud said...

yhoo '10hcp'


lmaooooooooooooooooooooo

Bud said...

AAPL is finished

double top pattern

lemme understand this.......the iphone is gettin cheaper but they will make it up on volume


lmaooooooooooooooooooooooooo

Bunkerman said...

new "inflation" datapoint: local craft beer - the best - not pastuerized, made 20 miles from here. Cost up $1 per case, first price rise in four years. That's about 1% per year inflation (case costs $26 now, was $25.

Support your local brewery.

Having a cold one as I write - an India Pale Ale they started to make - very good.

Bunkerman said...

uh ... Bud ... that's been the pattern for new technologies for ... uh ... about 130 years.

Initial price high, then lower as as costs go down with scale. It's a form of profit maximization. Taught at MIT when I was there about.

Bud said...

'MIT'


looooooooooooooooooooool


Bman pullin out his curriculum vitae to impress me ? or intimidate me ?


PS.....harvard and MIT.......what an out of touch elitist the Bman is

Bunkerman said...

Uh ... Bud + Sean Hannity ??!!??

uh ... did we have a dimensional shift to Bizzaro world ??

Bunkerman said...

not really, but I do get asked for sources sometimes. I'm sure Iowa State had the concept at the same time. But not in the hog raising classes ;-))

Bud said...

sean hannity the only anchor in america that was fair to Hillary

all the other lowlife dirtbag liberals in love with Obama

keith olbermann gives Obama a blow job on tv every nite ( that is after chris mathews tickles baracks testicles)

which is fine....they can love who they want.........but they were horribly unfair to Hillary

i'll never ever watch MSNBC again....CNN maybe


FOX rules !!!!!!!!!!!!!!!!!

mfl59 said...

uhh sir Bill OReilly was more than fair to Hillary....

fair and balanced indeed...

Frosty said...

Bunky sucking suds with the common constrution worker...a pinch of skoal in his cheek...hey lady "show me you tits"....good times.