I see a headline on Babblevision [aka CNBC] that the Federal Reserve is thinking of "selling its own version of government debt". Hello Mr. Booboise ! Open your wallet and look at that cash - it says, "Federal Reserve Note" above Andrew Jackson's portrait on the $20 bill. Well, the article does mention this fact. But aren't bank reserves held on deposit at the Fed really a form of debt of the Federal Reserve, too ? The Fed pays interest on those reserves now. So that is electronic debt of the Federal Reserve in electronic form. The reporter seems clueless.
Cash is zero percent government debt. I suppose the Gen X/Y/Z-ers have an excuse, since they probably don't use cash, being addicted to using a debit card for that cheeseburger. Baby boomers have no excuse.
And then I see a Wall Street Journal; article about the "asset class" of commodities having problems due to the recurring losses on the commodity futures' contract rolls. Golly, I guess those consultants and pension fund advisors never really looked at exactly what they were buying. Almost none of them "invested" in true commodities. They took long positions in futures contracts and derivatives, not actual commodities. Those contracts aren't real assets. For every long, there is a short. The net value in those is zero. How much does one doing "asset allocation" allocate to a "class" with zero net value ? Zero is what Fischer Black taught me at MIT about 30 years ago.
So now they see they are just speculating perpetually in commodity futures, paying large costs in the roll. Sigh ....
Buying timberland is investing in a true commodity asset. So is buying a cattle ranch or farmland growing corn or investing in farms in Brazil growing soybeans. And buying oil in storage is also truly buying an asset. Buying gold in physical form or through the GLD ETF is buying a true asset. But buying a derivative or a commodity future or a commodity ETF fund that uses derivatives or futures is not investing in an asset. It's just speculating in a net zero value, paper market.
Markets
Down yesterday. The dry bulk shippers were very strong. I can find no news except a report that a Tier 1 firm found increased shipping activity coming out of China. If true, it's bullish.
I read AIG has lost $10 billion "insuring" the value of some derivatives for the Street. This isn't insuring defaults on actual mortgages, but just "insuring" the value of paper. This is just outrageous. That firm should just be liquidated, letting its existing business run off and selling the true insurance subsidiaries. Management is completely without credibility. And obviously they have been defrauding investors in disclosing the nature of their business.
This is one more example of the need to eliminate the "credit default swap" from financial markets. That whole market is a fraud and no more than an electronic betting parlor.
Actions
I flipped a bit of DRYS over 10 - part of the shares I added to my position under 4. I'd sell some more [some more shares I added around 4] IF it gets to 12.5 or so. At that point my position would be well sized for a long term hold.
I spent some time researching stocks yesterday and, like Santa Claus, I'm working on my list.
Word of the Day
"Nescience" - noun [$10]; and "nescient" - adjective [$10]
Nescience means lack of knowledge or awareness, ignorance.
Nescient means lacking knowledge, ignorant.
Sentence: Without a doubt, both the writers of most newspapers and the writers and faces of financial TV suffer from acute and chronic nescience of the topics on which they write.
Showing posts with label commodities. Show all posts
Showing posts with label commodities. Show all posts
Wednesday, December 10, 2008
Friday, August 22, 2008
TGIF
Markets
More wasted air time on Babblevision. The "face" is asking some fellow about the "fate" of FNMA and FreddieMac. What the hell does he know ? You ask, "OK, Bunkerman, what do you think ?"
First, I define a useful abbreviation - the "Two Fs" = FNMA plus FreddieMac.
Here is the answer: Nothing should happen until the actual losses arise on the actual mortgage loans on the books of the Two Fs really do reduce their equity to near zero. Treasury should quote J. P. Morgan that markets will fluctuate and no decision about taxpayer money for the Two Fs will be made due to market speculations in the price of their stock. Treasury should say it stands ready to support the debt and mortgage backed securities of the Two Fs. Any decision on the capitalization of the Two Fs will be made with real loss data. Then shut up.
Commodities
I see the blather about the end of the commodities is vaporizing. Copper is back at $3.50, right in the middle of its trading range for about a year or more, viz. $3 to $4. Oil is bouncing a bit. I still think it slowly goes to about $100 due to demand declines. Other metals prices popped up. I guess the world economic slowdown - it it exists - isn't a collapse.
Does anyone except me realize the difference between growth and demand ? If world GDP is stagnant, would not demand for commodities stay the same as before ? If the world produces the same amount of goods & services, would not it need the same amount of commodities to do that ? So growth means an increase in demand, barring substitutions. Demand is demand; growth is an increase in demand. They are NOT the same thing at all.
OK, these two concepts are not perfectly separate as some commodity demand is to build new capacity for the growth, not current consumption. But let's not fool ourselves - most commodity demand is for current uses, not to create growth.
So mirabile dictu, as the beefer speculators stop pushing the trend down, prices on many commodities stabilize. Golly, babblevision is so vacuous !
This reasoning is why I bought DVN, CVX, FCX and RIG on the recent big dips. These positions are doing very well lately, offsetting some weakness in the big fins.
Word of the Day
"Invidious" - adjective [$10]
Invidious means (of an action, conduct, attitude, etc.) likely to excite resentment or indignation against a person responsible, especially by real or seeming injustice- an invidious position; an invidious task.
Sentence: The invidious Russian activities in Georgia will be a long term sore, as they announced intent to permanently occupy checkpoints at key locations.
More wasted air time on Babblevision. The "face" is asking some fellow about the "fate" of FNMA and FreddieMac. What the hell does he know ? You ask, "OK, Bunkerman, what do you think ?"
First, I define a useful abbreviation - the "Two Fs" = FNMA plus FreddieMac.
Here is the answer: Nothing should happen until the actual losses arise on the actual mortgage loans on the books of the Two Fs really do reduce their equity to near zero. Treasury should quote J. P. Morgan that markets will fluctuate and no decision about taxpayer money for the Two Fs will be made due to market speculations in the price of their stock. Treasury should say it stands ready to support the debt and mortgage backed securities of the Two Fs. Any decision on the capitalization of the Two Fs will be made with real loss data. Then shut up.
Commodities
I see the blather about the end of the commodities is vaporizing. Copper is back at $3.50, right in the middle of its trading range for about a year or more, viz. $3 to $4. Oil is bouncing a bit. I still think it slowly goes to about $100 due to demand declines. Other metals prices popped up. I guess the world economic slowdown - it it exists - isn't a collapse.
Does anyone except me realize the difference between growth and demand ? If world GDP is stagnant, would not demand for commodities stay the same as before ? If the world produces the same amount of goods & services, would not it need the same amount of commodities to do that ? So growth means an increase in demand, barring substitutions. Demand is demand; growth is an increase in demand. They are NOT the same thing at all.
OK, these two concepts are not perfectly separate as some commodity demand is to build new capacity for the growth, not current consumption. But let's not fool ourselves - most commodity demand is for current uses, not to create growth.
So mirabile dictu, as the beefer speculators stop pushing the trend down, prices on many commodities stabilize. Golly, babblevision is so vacuous !
This reasoning is why I bought DVN, CVX, FCX and RIG on the recent big dips. These positions are doing very well lately, offsetting some weakness in the big fins.
Word of the Day
"Invidious" - adjective [$10]
Invidious means (of an action, conduct, attitude, etc.) likely to excite resentment or indignation against a person responsible, especially by real or seeming injustice- an invidious position; an invidious task.
Sentence: The invidious Russian activities in Georgia will be a long term sore, as they announced intent to permanently occupy checkpoints at key locations.
Thursday, June 5, 2008
A Change Occurred
I just checked a commodity research site to which I subscribe. The gasoline demand chart shows current demand vs. last year and the 16 year average. Last week's drop was a singular event. This year's demand had been trending a bit below last year, but the drop last week puts it at a new, lower level. Perhaps the summer driving season will not occur. Last week's gasoline demand was about at late-March levels. Is the US driver finally acting rationally and seriously cutting back on driving ? Doing something instead of just griping ? The drop vs. last year's demand is not large - about 4%. I think people can cut 4% of gasoline demand easily, by combining trips and thinking first about taking the SUV or the compact to go mall. Perhaps the public is doing it.
I'll monitor this for awhile and provide updates.
The implications would be that the commodity peak might pull back to a sustainable plateau. My guess has always been the $100/barrel of crude area and time frame around the Beijing Olympics. Time will tell.
Ruling Classes
WSJ: "WASHINGTON -- The Senate voted along party lines Wednesday to approve a budget resolution that includes more than $1 trillion in discretionary spending for the first time."
That's "discretionary" spending, not entitlements like Social Security or Medicare.
One trillion dollars is one million millions. There are about 300 million Americans. So that's spending over $3,000 per person. Considering that most common people get nothing from this, the amount is stunning.
Unrestricted looting ...
Word of the Day
"Sough" - verb, intransitive [$10] - pronounced "sow" to rhyme with "how" or "suf" to rhyme with "rough".
Sough means to make a moaning, whistling or rushing sounds as of a wind in trees, etc.
Sentence: Reading of the enormous size of the Federal spending sow feeding all the innumerable piglets made me sough in surprise as if suffering from food poisening. Uhhhhhhh.
I'll monitor this for awhile and provide updates.
The implications would be that the commodity peak might pull back to a sustainable plateau. My guess has always been the $100/barrel of crude area and time frame around the Beijing Olympics. Time will tell.
Ruling Classes
WSJ: "WASHINGTON -- The Senate voted along party lines Wednesday to approve a budget resolution that includes more than $1 trillion in discretionary spending for the first time."
That's "discretionary" spending, not entitlements like Social Security or Medicare.
One trillion dollars is one million millions. There are about 300 million Americans. So that's spending over $3,000 per person. Considering that most common people get nothing from this, the amount is stunning.
Unrestricted looting ...
Word of the Day
"Sough" - verb, intransitive [$10] - pronounced "sow" to rhyme with "how" or "suf" to rhyme with "rough".
Sough means to make a moaning, whistling or rushing sounds as of a wind in trees, etc.
Sentence: Reading of the enormous size of the Federal spending sow feeding all the innumerable piglets made me sough in surprise as if suffering from food poisening. Uhhhhhhh.
Thursday, May 22, 2008
Snafu
For some reason, the site to create new posts did not work until now. So I didn't get to write a blog in my usual time, viz. about 5AM ET.
I was going to hit the beefers for creating this energy/oil bubble and hurting many industries and the common man. So they are creating another mess, as they did for the credit crisis, which is mostly over. All hedge funds really need to be regulated and made to file as investment companies.
They are joined by the big pension funds pouring money into the commodity funds. Pension funds should not be permitted to "invest" in commodity futures, as those derivative markets just are not designed for that huge flood on money. If they want to invest in oil, let them invest in it physically, like timber. They should be taxed on futures profits as unrelated business income.
I'll write more later.
No word of the day today as I have some things to do.
PS: Covering the TLT short, applying my "green-red" rule, viz., if a "trade" is green and turns red, I close it out. The short is flat, but likely go red at the open, so it's sayonnara for now. Might re-enter later. This rule applies to "trades", not LT positions.
I was going to hit the beefers for creating this energy/oil bubble and hurting many industries and the common man. So they are creating another mess, as they did for the credit crisis, which is mostly over. All hedge funds really need to be regulated and made to file as investment companies.
They are joined by the big pension funds pouring money into the commodity funds. Pension funds should not be permitted to "invest" in commodity futures, as those derivative markets just are not designed for that huge flood on money. If they want to invest in oil, let them invest in it physically, like timber. They should be taxed on futures profits as unrelated business income.
I'll write more later.
No word of the day today as I have some things to do.
PS: Covering the TLT short, applying my "green-red" rule, viz., if a "trade" is green and turns red, I close it out. The short is flat, but likely go red at the open, so it's sayonnara for now. Might re-enter later. This rule applies to "trades", not LT positions.
Tuesday, September 4, 2007
Summer's Over
The CEO of DeutcheBank says it has no further undisclosed exposure to subprime, the asset backed commercial paper market is stabilizing, and credit markets are returning to normal. The stock is up solidly in Europe.
W "might" be making progress in North Korea. We''ll see. It's not over till it's over - I really dislike politicians making premature claims of success.
I suggest we pay attention to the Party Congress in Red China in October. We all might learn something about how that government is actually run. Those familiar words, "Politboro", "Central Committee" and the like have already been in the press. Is it a developing peaceful nation or is it something else? Pay attention to what is actually said and done, and don't succumb to western wishful thinking ... that is, be an exegete, not an eisegete ;-)
Golly, wheat is over $8 - this is more 1970s redux. Oh well, I had that one but got out what I got tired. A missed opportunity. :-(
Oil seems to have rejected $70 on the downside. Oil stocks are well off their highs. XLE closed over its 50 DMA and over the break point of a small bullish cup and handle formation.
XLF has a ragged inverse H&S or W formation. All that volume at the recent low suggests that was a turning point.
The S&P did make a close over the downward neckline of its inverse H&S pattern with higher volume [not absolutely high]. I'd like to see a second close here.
The woods are full of bears and they want food. So an attack is likely. Wait for dips to add - they'll give you one.
PS: Gold is at 688 this morning; approaching $700 and no one's noticing. Good!
W "might" be making progress in North Korea. We''ll see. It's not over till it's over - I really dislike politicians making premature claims of success.
I suggest we pay attention to the Party Congress in Red China in October. We all might learn something about how that government is actually run. Those familiar words, "Politboro", "Central Committee" and the like have already been in the press. Is it a developing peaceful nation or is it something else? Pay attention to what is actually said and done, and don't succumb to western wishful thinking ... that is, be an exegete, not an eisegete ;-)
Golly, wheat is over $8 - this is more 1970s redux. Oh well, I had that one but got out what I got tired. A missed opportunity. :-(
Oil seems to have rejected $70 on the downside. Oil stocks are well off their highs. XLE closed over its 50 DMA and over the break point of a small bullish cup and handle formation.
XLF has a ragged inverse H&S or W formation. All that volume at the recent low suggests that was a turning point.
The S&P did make a close over the downward neckline of its inverse H&S pattern with higher volume [not absolutely high]. I'd like to see a second close here.
The woods are full of bears and they want food. So an attack is likely. Wait for dips to add - they'll give you one.
PS: Gold is at 688 this morning; approaching $700 and no one's noticing. Good!
Tuesday, July 31, 2007
Thoughts on a Tuesday
I see Democrats can be bribed, too. WSJ: "Some Democrats are having second thoughts about raising taxes on hedges funds and private equity managers ..."
Porkmeister Sen Ted Stevens of Alaska gets home raided by the FBI in corruption investigation. Corruption? Nahhhhh. Building bridges to nowhere is purely well-intentioned. LOLOL.
Will Bancroft family be fools or take the money? Their pompous antics definitely prove again that people growing up with plenty of money are mostly idiots in practical lfe.
Taliban murders another aid worker. Hmmmm. Uh, why aren't the tribal sanctuaries for them being carpet bombed? Fuel-air bombs? Napalm? 220 kiloton groundbursts? The tribes providing sanctuaries would be targeted in totality. I could go on with effective methods in any terrain. Lyndon "said" that there would be no sanctuaries in the war on terrorism. I guess he lied. W = Lyndon, btw. We need a 21st century Teddy Roosevelt.
On Monday the Asian markets ignored the Friday US drop - they were up solidly. Perhaps the Asia markets and economies are decoupling somewhat? I have thought for some time that eventually a self-supporting East and South Asian "co-prosperity zone" [hehe, get it?] would develop. India was strong overnight today.
Hedge fund Sowood to close. Shucks.
IBD calls Monday Day 1 in its rally count. A follow-thru day is needed on or soon after Day 4.
Corn and soybean crop conditions dropped last week. Both are now below average. But the corn crop is mostly "made" now. The crucial podfilling period for soybeans is early August. Hot, dry weather will hurt yields. Still long soybeans here as the weather seems bullish. But rain can sneak in at any time via thunderstorms - very hard to predict - and coverage is crucial. Risky.
Btw, the spring wheat crop is above average.
Natural gas beefer shorts are a huge record level as of last week's COT reports. So the gains of Friday and Monday are probably short covering in light of August heat and potential hurricane developments putting those on the screens - even though new wave developments are unlikely to hit the gulf. August is a big month for potential hurricanes. It would take real production shutdowns to remove the storage overhang now, though, since July didn't help due to a cool Northeast.
PS: PCE core inflation index year over year was 1.9% - right inside the Fed's range. The Fed's inflation bias has to come off soon. This trend has three months now. One or two rate cuts this fall and winter is my expectation.
PPS: I'm starting to sell India-related stocks in my Alpha Fund. I'm still very bullish on India and will buy a mutual fund relating to India in my Krypto Fund, but I can't really follow the individual India stocks. I bought the big cap financials as a replacement and need to add to those over the rest of the year, so I need some buying power.
Porkmeister Sen Ted Stevens of Alaska gets home raided by the FBI in corruption investigation. Corruption? Nahhhhh. Building bridges to nowhere is purely well-intentioned. LOLOL.
Will Bancroft family be fools or take the money? Their pompous antics definitely prove again that people growing up with plenty of money are mostly idiots in practical lfe.
Taliban murders another aid worker. Hmmmm. Uh, why aren't the tribal sanctuaries for them being carpet bombed? Fuel-air bombs? Napalm? 220 kiloton groundbursts? The tribes providing sanctuaries would be targeted in totality. I could go on with effective methods in any terrain. Lyndon "said" that there would be no sanctuaries in the war on terrorism. I guess he lied. W = Lyndon, btw. We need a 21st century Teddy Roosevelt.
On Monday the Asian markets ignored the Friday US drop - they were up solidly. Perhaps the Asia markets and economies are decoupling somewhat? I have thought for some time that eventually a self-supporting East and South Asian "co-prosperity zone" [hehe, get it?] would develop. India was strong overnight today.
Hedge fund Sowood to close. Shucks.
IBD calls Monday Day 1 in its rally count. A follow-thru day is needed on or soon after Day 4.
Corn and soybean crop conditions dropped last week. Both are now below average. But the corn crop is mostly "made" now. The crucial podfilling period for soybeans is early August. Hot, dry weather will hurt yields. Still long soybeans here as the weather seems bullish. But rain can sneak in at any time via thunderstorms - very hard to predict - and coverage is crucial. Risky.
Btw, the spring wheat crop is above average.
Natural gas beefer shorts are a huge record level as of last week's COT reports. So the gains of Friday and Monday are probably short covering in light of August heat and potential hurricane developments putting those on the screens - even though new wave developments are unlikely to hit the gulf. August is a big month for potential hurricanes. It would take real production shutdowns to remove the storage overhang now, though, since July didn't help due to a cool Northeast.
PS: PCE core inflation index year over year was 1.9% - right inside the Fed's range. The Fed's inflation bias has to come off soon. This trend has three months now. One or two rate cuts this fall and winter is my expectation.
PPS: I'm starting to sell India-related stocks in my Alpha Fund. I'm still very bullish on India and will buy a mutual fund relating to India in my Krypto Fund, but I can't really follow the individual India stocks. I bought the big cap financials as a replacement and need to add to those over the rest of the year, so I need some buying power.
Tuesday, July 24, 2007
Summer Tuesday Ramblings
S&P cash recovered OK and its chart looks like a bullish continuation pattern. The Nazz and Nazz 100 were flatish, but those charts were better anyway. The Russell 2000 is still the weakest - that will hurt the beefers this Q. The Dow Industrials chart looks strong. Trannies are OK, too. I still have that S&P long futures position - it's a trade, by the way.
EDU reported OK earnings - small beats of estimates on EPS and revenues. EDU is an Alpha Fund long position.
Soybeans and natural gas got smashed yesterday - ugh! My commodities trades have stunk lately. It's good I reduced my position sizes and leverage there. Still long. Joe keeps pounding the table on a very hot August. I'll give him some more rope.
Inflation data points: homeowner's insurance on my Mom's house in Ohio is down 10% year over year. This is an example of how inflation is low away from the coasts and Florida and areas overwhelmed by rich people buying everything. Starbucks raises prices - well, anyone being gouged $5 or more for a cup of coffee can't rationally complain about inflation.
Underwriters are having trouble selling some LBO debt - I hear the issue is terms mainly. The terms of last spring are long gone - they were idiotic anyway. This is a problem with bridge loans. The borrower has less incentive to agree to market clearing terms & rates, since they have a deal already. I guess underwriters are re-learning a lesson of the late 1980s.
These very large Chinese equity investments in private equity firms and deals are interesting. I'm still noodling over them.
PS: stocks went down hard today. It's wierd that I hear all this talk of disaster & panic from the traders and perma-bears like Bill Gross (wrong for over a year), yet is a single fact actually discussed? Maybe I'm missing them. Or they aren't there. Hmm. people who lend money to weak credits are ... losing some money ! What a shocker. I'll think some more. So far this looks like a beefer bear raid on the XLF. They can short that with impunity, especially in the summer. And with derivatives. Oh well. I'll have to figure out if anything is different.
EDU reported OK earnings - small beats of estimates on EPS and revenues. EDU is an Alpha Fund long position.
Soybeans and natural gas got smashed yesterday - ugh! My commodities trades have stunk lately. It's good I reduced my position sizes and leverage there. Still long. Joe keeps pounding the table on a very hot August. I'll give him some more rope.
Inflation data points: homeowner's insurance on my Mom's house in Ohio is down 10% year over year. This is an example of how inflation is low away from the coasts and Florida and areas overwhelmed by rich people buying everything. Starbucks raises prices - well, anyone being gouged $5 or more for a cup of coffee can't rationally complain about inflation.
Underwriters are having trouble selling some LBO debt - I hear the issue is terms mainly. The terms of last spring are long gone - they were idiotic anyway. This is a problem with bridge loans. The borrower has less incentive to agree to market clearing terms & rates, since they have a deal already. I guess underwriters are re-learning a lesson of the late 1980s.
These very large Chinese equity investments in private equity firms and deals are interesting. I'm still noodling over them.
PS: stocks went down hard today. It's wierd that I hear all this talk of disaster & panic from the traders and perma-bears like Bill Gross (wrong for over a year), yet is a single fact actually discussed? Maybe I'm missing them. Or they aren't there. Hmm. people who lend money to weak credits are ... losing some money ! What a shocker. I'll think some more. So far this looks like a beefer bear raid on the XLF. They can short that with impunity, especially in the summer. And with derivatives. Oh well. I'll have to figure out if anything is different.
Monday, July 23, 2007
Bullriding
Every so often I watch a sport called "Bullriding" on TV. A cowboy tries to ride a huge bull for eight seconds with only one hand holding a rope. The cowboys and bulls are experienced pros, and some bulls are very tough to last a full ride.
This bull market is a pretty tough ride, too, as Friday showed. Those beefers are doing their best to scare us off. So they use a summer Friday options expiration to paint the charts.
The S&P cash is back on support, still over the 50 DMA. The Nazz shows a choppy bullish flag; the Nazz 100 still shows an uptrend. The Dow Industrials shows a choppy bullish flag, too.
Sheesh. Bubblevision puts Sutty on - he's a bear, making a big deal of the pharmas. Since when are the pharmas leaders?
The NYSE short interest hit a new record again - five months in a row. NYSE short ratio increased to 8.4 days from 8.0 days. The Nazz reports this week, and a new record there seems certain. You readers were smart not to take my sucker bet on the record short interest.
Seems like the beefers bears uses GOOG to try to start a panic. Huh? Uh, year over year earnings were up 43% and revenues up 58%. GOOG bounced on the 50 DMA. I think the bears will get hurt on that one.
Brent still is at a premium over WTI. Nat gas has pulled back - I'm worried about that low - have a small loss now after being green. Any Green-red move mandates re-thinking a trade. Soybeans are still chopping around. Today's crop conditions reports might set the trend there. We are approaching the crucial podfilling period. A weather service I use says the first 20 days of August will be the hottest period of the summer. So that's why I'm long both those commodities.
Vermont was great fun - very tiring, but hugely enjoyable. I'm really, really good at the T&E adjustments on the M1919A4s - I use M1917 tripods. Also with handling the M60 "Rambo" style. I even was impressing line staff with my M14 handling - that has a huge kick on full auto. Few men can handle that one, but Bunkerman can hehehe ;-) The M1928 Thompson worked great with the L Drums with brass cases. Dumping a drum in one pull is a thrill every time I do it. Friday we did it in the rain hehehe ;-) Saturday weather was perfect :-)) I came home dirty, greasy, and tired, but looking forward to next year.
PS: I've been getting the "Blue Screen of Death" on my eSignal computer frequently now ["KERNEL_STACK_INPAGE_ERROR"]. I didn't install anything new - neither software or hardware. So the Windows suggestions are worthless. Anyway, I'm transferring vital files to my new Vista computer, one folder at a time since I got a Blue Screen when doing all of "My Documents". Strange error - some say it's a hard drive problem. Windows computers suck is all I can say. I'll call Dell for service once I get the vital files transferred. They might want to replace the hard drive.
PPS: RIG and GSF agree to merge in sort of a merger + recapitalization as lots of cash is included. Interesting. Alpha Fund owns both.
This bull market is a pretty tough ride, too, as Friday showed. Those beefers are doing their best to scare us off. So they use a summer Friday options expiration to paint the charts.
The S&P cash is back on support, still over the 50 DMA. The Nazz shows a choppy bullish flag; the Nazz 100 still shows an uptrend. The Dow Industrials shows a choppy bullish flag, too.
Sheesh. Bubblevision puts Sutty on - he's a bear, making a big deal of the pharmas. Since when are the pharmas leaders?
The NYSE short interest hit a new record again - five months in a row. NYSE short ratio increased to 8.4 days from 8.0 days. The Nazz reports this week, and a new record there seems certain. You readers were smart not to take my sucker bet on the record short interest.
Seems like the beefers bears uses GOOG to try to start a panic. Huh? Uh, year over year earnings were up 43% and revenues up 58%. GOOG bounced on the 50 DMA. I think the bears will get hurt on that one.
Brent still is at a premium over WTI. Nat gas has pulled back - I'm worried about that low - have a small loss now after being green. Any Green-red move mandates re-thinking a trade. Soybeans are still chopping around. Today's crop conditions reports might set the trend there. We are approaching the crucial podfilling period. A weather service I use says the first 20 days of August will be the hottest period of the summer. So that's why I'm long both those commodities.
Vermont was great fun - very tiring, but hugely enjoyable. I'm really, really good at the T&E adjustments on the M1919A4s - I use M1917 tripods. Also with handling the M60 "Rambo" style. I even was impressing line staff with my M14 handling - that has a huge kick on full auto. Few men can handle that one, but Bunkerman can hehehe ;-) The M1928 Thompson worked great with the L Drums with brass cases. Dumping a drum in one pull is a thrill every time I do it. Friday we did it in the rain hehehe ;-) Saturday weather was perfect :-)) I came home dirty, greasy, and tired, but looking forward to next year.
PS: I've been getting the "Blue Screen of Death" on my eSignal computer frequently now ["KERNEL_STACK_INPAGE_ERROR"]. I didn't install anything new - neither software or hardware. So the Windows suggestions are worthless. Anyway, I'm transferring vital files to my new Vista computer, one folder at a time since I got a Blue Screen when doing all of "My Documents". Strange error - some say it's a hard drive problem. Windows computers suck is all I can say. I'll call Dell for service once I get the vital files transferred. They might want to replace the hard drive.
PPS: RIG and GSF agree to merge in sort of a merger + recapitalization as lots of cash is included. Interesting. Alpha Fund owns both.
Wednesday, July 18, 2007
Inflation Data Points
Today we get the CPI number. The core number is what's important: monthly and year-over-year. A stable or downtick number is good.
My dictionary purchases mentioned in my prior post again provide data points that inflation is not as large as some think. I think the price of an unabridged dictionary is down from 20 years ago. And the Oxford English Dictionary was on sale for $1000 compared to its regular price of $3000. No inflation there.
I bought some soybeans this morning at about $8.72 per bushel. The critical period for soybeans is early August when pod formation and filling occurs. The crop needs every bushel as plantings were way down as farmers planted too much corn. Carryout is very tight, even though there was a large carryover from last year's bumper crop. The beefers have been selling heavily for two days so the selling should dry up soon. This is a risky trade.
Futures are way down this AM. Maybe due to Intel margins, or due to the Bear, Stearns hedge funds being worthless and more MBS selling and liquidations, or maybe just to beefers pressing shorts again. If the CPI data is OK, I might try another long trade in the S&P futures.
PS: Bought some Nat gas - September. Selling looks dried up and August looks very hot. Risky.
PPS: Core CPI was 0.2% expected. Core CPI year over year was 2.2% which is the same as for May. That's good news. The futures point towards S&P cash around 1540 - my re-buy point. I just bought the S&P e-minis September contract.
My dictionary purchases mentioned in my prior post again provide data points that inflation is not as large as some think. I think the price of an unabridged dictionary is down from 20 years ago. And the Oxford English Dictionary was on sale for $1000 compared to its regular price of $3000. No inflation there.
I bought some soybeans this morning at about $8.72 per bushel. The critical period for soybeans is early August when pod formation and filling occurs. The crop needs every bushel as plantings were way down as farmers planted too much corn. Carryout is very tight, even though there was a large carryover from last year's bumper crop. The beefers have been selling heavily for two days so the selling should dry up soon. This is a risky trade.
Futures are way down this AM. Maybe due to Intel margins, or due to the Bear, Stearns hedge funds being worthless and more MBS selling and liquidations, or maybe just to beefers pressing shorts again. If the CPI data is OK, I might try another long trade in the S&P futures.
PS: Bought some Nat gas - September. Selling looks dried up and August looks very hot. Risky.
PPS: Core CPI was 0.2% expected. Core CPI year over year was 2.2% which is the same as for May. That's good news. The futures point towards S&P cash around 1540 - my re-buy point. I just bought the S&P e-minis September contract.
Sunday, July 15, 2007
Sunday Papers
I spend early Saturday and Sunday mornings reading the "paper" newspapers of all week: Wall Street Journal, Investor's Business Daily and Barron's. During the week I get the current news from many online sources and a little from Bubblevision [aka CNBC]. But there's no way I could find out all sorts of interesting topics, articles and occurrences with real "paper" newspapers to scan and read. It would take hours on online searches . Real paper beats them all.
So what's up?
Blogs have existed for 10 years now. The WSJ article covered may blogs of the famous. It also mentioned terms like "feeds" and automated searches. I have to learn how to do those things to make this blog more accessible - stuff like "feeds" and "syndication". I've tried to figure those out, but the "Help" needs a lot of help. :-( Maybe in August I'll have time for that upgrade has lots of interesting.
A WSJ story illustrated how the public loses big money in commodities by not doing what I wrote to do if speculating in commodities, viz., monitor position size carefully. There were amazing stories of greed vying with greed: greedy stupid speculators and greedy unscrupulous futures brokers.
Adjacent was a story about people wanting no risk investments being put into mortgage securities. Du'h? Nuns investing the MBS? Life insurance proceeds for a widow & child into margin accounts? Hello compliance? That's definitely a growth industry - compliance officers. With all the wealth of the baby boomers needing invested for retirement income, and all the greedy piratical brokers wanting a yacht, compliance officers are going to be in huge demand. And even better, a compliance officer can't be replaced by a guy in India. He's got to be on site to check out the broker's tales. [OK, many - most - brokers are good people. Mrs. B's broker is a good person, from what I've seen.]
IBD had an interesting article on why Google leads in search and is getting more and more advertising dollars.
Barron's was thin gruel this week.
Without real "paper" newspapers - and books, I'd miss all sort of good investment ideas and important societal and political developments.
So what's up?
Blogs have existed for 10 years now. The WSJ article covered may blogs of the famous. It also mentioned terms like "feeds" and automated searches. I have to learn how to do those things to make this blog more accessible - stuff like "feeds" and "syndication". I've tried to figure those out, but the "Help" needs a lot of help. :-( Maybe in August I'll have time for that upgrade has lots of interesting.
A WSJ story illustrated how the public loses big money in commodities by not doing what I wrote to do if speculating in commodities, viz., monitor position size carefully. There were amazing stories of greed vying with greed: greedy stupid speculators and greedy unscrupulous futures brokers.
Adjacent was a story about people wanting no risk investments being put into mortgage securities. Du'h? Nuns investing the MBS? Life insurance proceeds for a widow & child into margin accounts? Hello compliance? That's definitely a growth industry - compliance officers. With all the wealth of the baby boomers needing invested for retirement income, and all the greedy piratical brokers wanting a yacht, compliance officers are going to be in huge demand. And even better, a compliance officer can't be replaced by a guy in India. He's got to be on site to check out the broker's tales. [OK, many - most - brokers are good people. Mrs. B's broker is a good person, from what I've seen.]
IBD had an interesting article on why Google leads in search and is getting more and more advertising dollars.
Barron's was thin gruel this week.
Without real "paper" newspapers - and books, I'd miss all sort of good investment ideas and important societal and political developments.
Monday, July 9, 2007
Summer Monday Ramblings
Gold looks interesting. It's a bit early for the seasonal physical buying, but the chart might be setting up a bottom. I see a budding H&S bottom in the December gold chart and this morning's pop puts it over the downtrend line. This might just be a beefer trying to run buy stops ...
But since my Krypto Fund asset allocation model is telling me to buy some gold & silver, I took a nibble in the futures. I'll average in, looking to convert to physical gold later this fall.
Year to Date -
Krypto Fund: +5.64% [held down by gold/silver, TIPs, bonds and real estate allocations - those total 50% of the assets in the Krypto Fund.]
Alpha Fund: +44.2%
Commodities: +27.2% [darn, high was 42%, that dumb recent corn & nat gas play cost $$$ :-( ]
I read an article in Barron's about mortgage and CDO securitizations. The guy was either stupid or being polemical using sophistry or was a plant by a bearish beefer. He seemed to make a big deal out of triple B classes losing money. Du'h. Read the definition of a BBB rating: obligations rated Baa/BBB have strong financial charateristics, but are subject to moderate credit risk. They are more likely to be affected by adverse business conditions than are higher rated obligations and as such may possess certain speculative characteristics. [I merged S&P and Moody's into an all-inclusive explantion].
He doesn't understand, or intentionally obfuscated, the diversification and other credit enhancements. The housing market is undergoing a severe downturn. The REALITY is that unless some of those structured bonds DO lose some principal, the ratings are overcollaterized, in my opinion. In 1,000 obligations, even a Aaa/AAA default rate of .1% produces one (1) bond with a loss of at least $1. And a lot more of the Baa/BBB security SHOULD lose something. That is statistics for a large sample. Why else do those Aaa/AAA holders get paid about 80 bps MORE than a US Treasury?
Otherwise, Barron's was full of bearish reasons to stay out of the market. More wall of worry. Good! :-)
The cash S&P does look like a bullish consolidation for new leg higher. The Nazz and Nazz 100 show much life - good up trends now after bouncing off their 50 DMAs. The Russell looks like a bullish consolidation pattern, too.
I still have my long futures so I'm about 200% long for the Alpha Fund.
But since my Krypto Fund asset allocation model is telling me to buy some gold & silver, I took a nibble in the futures. I'll average in, looking to convert to physical gold later this fall.
Year to Date -
Krypto Fund: +5.64% [held down by gold/silver, TIPs, bonds and real estate allocations - those total 50% of the assets in the Krypto Fund.]
Alpha Fund: +44.2%
Commodities: +27.2% [darn, high was 42%, that dumb recent corn & nat gas play cost $$$ :-( ]
I read an article in Barron's about mortgage and CDO securitizations. The guy was either stupid or being polemical using sophistry or was a plant by a bearish beefer. He seemed to make a big deal out of triple B classes losing money. Du'h. Read the definition of a BBB rating: obligations rated Baa/BBB have strong financial charateristics, but are subject to moderate credit risk. They are more likely to be affected by adverse business conditions than are higher rated obligations and as such may possess certain speculative characteristics. [I merged S&P and Moody's into an all-inclusive explantion].
He doesn't understand, or intentionally obfuscated, the diversification and other credit enhancements. The housing market is undergoing a severe downturn. The REALITY is that unless some of those structured bonds DO lose some principal, the ratings are overcollaterized, in my opinion. In 1,000 obligations, even a Aaa/AAA default rate of .1% produces one (1) bond with a loss of at least $1. And a lot more of the Baa/BBB security SHOULD lose something. That is statistics for a large sample. Why else do those Aaa/AAA holders get paid about 80 bps MORE than a US Treasury?
Otherwise, Barron's was full of bearish reasons to stay out of the market. More wall of worry. Good! :-)
The cash S&P does look like a bullish consolidation for new leg higher. The Nazz and Nazz 100 show much life - good up trends now after bouncing off their 50 DMAs. The Russell looks like a bullish consolidation pattern, too.
I still have my long futures so I'm about 200% long for the Alpha Fund.
Sunday, July 8, 2007
What is a Beefer ?
Because of some questions from newer readers, I am re-posting my first blog post from January 14, 2007. This post explains what a "beefer" is and why understanding them is crucial to one's investing health.
***BEGIN RE-POST***
To understand stock and commodity markets, you need to know who are the important participants. Today the principal ones are index funds, hedge funds, Street proprietary trading funds, mutual funds, the active public, and the inactive public.
For fun and because the classification works in explaining market activity, I group hedge funds, active trading mutual funds and the Street proprietary trading operations together as the Big Evil Funds. Long Term Capital Management was one, as was Amaranth until they blew up; Janus of the 1990s was one, too. I'll going into the "evil" appellation later.
For now, imagine a large group of wild elephants at a water hole. They drink & drink & drain it, then they stop around in the mud for awhile to decide what direction to go to find another water hole. At some point they decide which way to go, and they are off in a stampede to another water hole. If they get there and it's small or dry, they stomp around more & then go off in another direction. You can see the metaphor at work.
The action in the stock & commodity markets since the first of the year is a fine example of the big evil funds at work. I call them "beefers" - derived from "Big Evil Funds" shortened to BEFunds, hence "beefer" - since "beefer" has humorous secondary meanings. Besides being a country term for cattle - hence the herd stampeding, etc. - see the Urban Dictionary for more.
Early in the year they rolled into tech stocks & out of energy. then after a few days - as they realize tech water hole was too small - they all barge out of tech & mill around. Some barge into retail, some back to energy. Always they are searching for more water. The press daily comes up with nonsense about the "market" thinking one thing and then another. Trying to put reasons on this action is silly - it's just beefers searching for a trend, milling around, stomping in the dust. Don't get confused by trying to rationalize this kind of action.
[By the way I started this post on Jan. 14 and finished today, Jan. 22 - I'm learning how the blogger dates posts and wanted to clarify the timing of this post.]
***END RE-POST***
A questioning reader's comment reminded me I omitted an important thought. Here it is as a "PS" [It's in the comments, too. Thank you Bud.]
PS: A "normal" investor can imagine himself/herself as a "cute" little chipmunk trying to get some food. Some beefers can be like hawks [ hehe, hyena sounds better ;-) ] - evil predators trying to eat you. Or are like big elephants stomping around. From the point of view of a normal investor trying to make some money, beefers mindlessly or intentionally running his stops & crushing his breakout buys are "evil" and "dangerous". And the pundit explanations of all market moves as "the market is thinking xyz" are just nonsense. Most market moves are just a few "mindless" or "evil" beefers swinging a few milion shares/contracts "thinking" they are smart or trying to run stops. And then another beefer takes the other side after that beefers' selling/buying ends. So the "valueless cycle" continues. I'm warning the small mammals (i.e. we "real" investors) to avoid the thirsty elephants stomping around: Don't get stomped as they mill around. And don't get eaten by that nearby lurking beefer hyena ;-)
Here's the key point: WAIT FOR A TREND. Then climb on that "wonderful" elephant's back [safe from the hyenas] and RIDE to the next waterhole. :-))
***BEGIN RE-POST***
To understand stock and commodity markets, you need to know who are the important participants. Today the principal ones are index funds, hedge funds, Street proprietary trading funds, mutual funds, the active public, and the inactive public.
For fun and because the classification works in explaining market activity, I group hedge funds, active trading mutual funds and the Street proprietary trading operations together as the Big Evil Funds. Long Term Capital Management was one, as was Amaranth until they blew up; Janus of the 1990s was one, too. I'll going into the "evil" appellation later.
For now, imagine a large group of wild elephants at a water hole. They drink & drink & drain it, then they stop around in the mud for awhile to decide what direction to go to find another water hole. At some point they decide which way to go, and they are off in a stampede to another water hole. If they get there and it's small or dry, they stomp around more & then go off in another direction. You can see the metaphor at work.
The action in the stock & commodity markets since the first of the year is a fine example of the big evil funds at work. I call them "beefers" - derived from "Big Evil Funds" shortened to BEFunds, hence "beefer" - since "beefer" has humorous secondary meanings. Besides being a country term for cattle - hence the herd stampeding, etc. - see the Urban Dictionary for more.
Early in the year they rolled into tech stocks & out of energy. then after a few days - as they realize tech water hole was too small - they all barge out of tech & mill around. Some barge into retail, some back to energy. Always they are searching for more water. The press daily comes up with nonsense about the "market" thinking one thing and then another. Trying to put reasons on this action is silly - it's just beefers searching for a trend, milling around, stomping in the dust. Don't get confused by trying to rationalize this kind of action.
[By the way I started this post on Jan. 14 and finished today, Jan. 22 - I'm learning how the blogger dates posts and wanted to clarify the timing of this post.]
***END RE-POST***
A questioning reader's comment reminded me I omitted an important thought. Here it is as a "PS" [It's in the comments, too. Thank you Bud.]
PS: A "normal" investor can imagine himself/herself as a "cute" little chipmunk trying to get some food. Some beefers can be like hawks [ hehe, hyena sounds better ;-) ] - evil predators trying to eat you. Or are like big elephants stomping around. From the point of view of a normal investor trying to make some money, beefers mindlessly or intentionally running his stops & crushing his breakout buys are "evil" and "dangerous". And the pundit explanations of all market moves as "the market is thinking xyz" are just nonsense. Most market moves are just a few "mindless" or "evil" beefers swinging a few milion shares/contracts "thinking" they are smart or trying to run stops. And then another beefer takes the other side after that beefers' selling/buying ends. So the "valueless cycle" continues. I'm warning the small mammals (i.e. we "real" investors) to avoid the thirsty elephants stomping around: Don't get stomped as they mill around. And don't get eaten by that nearby lurking beefer hyena ;-)
Here's the key point: WAIT FOR A TREND. Then climb on that "wonderful" elephant's back [safe from the hyenas] and RIDE to the next waterhole. :-))
Friday, July 6, 2007
Friday Folly
Bubblevision is hyperventilating about the monthly jobs report. With the huge revisions being so common, I don't see a big reaction unless there's a major change in trend. Any number between 75,000 and 200,000 is OK with me.
India markets near the 15,000 level on the Bombay Stock Exchange aka BSE. The index I quote is the BSE Sensex.
Today's title is partly taken from the famous book of Erasmus, "Praise of Folly" written around 1500. I heard a lecture about it on the drive to/from Ohio last week in the "Great Authors of the Western Literary Tradition" course I have on CDs. The book is styled as a "declamation" [aka a harangue at a feast] by the Greek goddess, "Folly" about why she is the greatest of all gods. It's a fun read [I not finished yet - will write more about it later].
The Nazz and Nazz 100 charts are looking OK. The S&P shows a possible bullish continuation pattern similar to March. The Rut is still in a consolidation pattern.
Earnings season will be important, as always. We might get clues about the next leg up. If new leadership groups show up, I'll try to find some new stocks in them.
I gave Mrs. B more $$$ yesterday - she wanted to buy MCD and CLX. Her broker talked her out of buying MCD in March :-( I bought in the Alpha Fund [ :-) ] and held it until April 15 when I sold it to pay taxes. So we didn't lose much of its recent move. Mrs. B is learning about stocks. I set up a full service account for her with a real broker and stay away from it [mostly ;-) hehe, I drop hints once in a while]. I wrote about it before - I call it the "Sky Fund" after our Kelpie puppy, Sky. So far it's working out well. :-)
Uh ... notice I put my $$$ where my mouth is ... buying dips.
PS: Some birds built a nest in a large rhodedendron bush in front of my ... uh ... bunker [great camo ;-) ]. This is probably a second nesting. The little birds are sure chirping away. It's very pleasant living near nature. I just saw a Blue Jay on a tree outside a window [oops, firing port hehehe] preening itself. Very, very pleasant most of the time.
PPS: Note the oil ETF - USO - should NEVER be bought as a long-term investment. It's just a trading vehicle. When it was created, the ETF's price was about equal to the nearby crude price. Now look: nearby oil is about $72 and USO is only $55. That ETF loses money every month due to the contango in the crude markets. The underlying futures contracts lose money every money as nearby crude is cheaper than forward crude. So unless that market goes to backwardation, stay away from USO for long-term investments. As a trade for a few weeks, it's fine.
India markets near the 15,000 level on the Bombay Stock Exchange aka BSE. The index I quote is the BSE Sensex.
Today's title is partly taken from the famous book of Erasmus, "Praise of Folly" written around 1500. I heard a lecture about it on the drive to/from Ohio last week in the "Great Authors of the Western Literary Tradition" course I have on CDs. The book is styled as a "declamation" [aka a harangue at a feast] by the Greek goddess, "Folly" about why she is the greatest of all gods. It's a fun read [I not finished yet - will write more about it later].
The Nazz and Nazz 100 charts are looking OK. The S&P shows a possible bullish continuation pattern similar to March. The Rut is still in a consolidation pattern.
Earnings season will be important, as always. We might get clues about the next leg up. If new leadership groups show up, I'll try to find some new stocks in them.
I gave Mrs. B more $$$ yesterday - she wanted to buy MCD and CLX. Her broker talked her out of buying MCD in March :-( I bought in the Alpha Fund [ :-) ] and held it until April 15 when I sold it to pay taxes. So we didn't lose much of its recent move. Mrs. B is learning about stocks. I set up a full service account for her with a real broker and stay away from it [mostly ;-) hehe, I drop hints once in a while]. I wrote about it before - I call it the "Sky Fund" after our Kelpie puppy, Sky. So far it's working out well. :-)
Uh ... notice I put my $$$ where my mouth is ... buying dips.
PS: Some birds built a nest in a large rhodedendron bush in front of my ... uh ... bunker [great camo ;-) ]. This is probably a second nesting. The little birds are sure chirping away. It's very pleasant living near nature. I just saw a Blue Jay on a tree outside a window [oops, firing port hehehe] preening itself. Very, very pleasant most of the time.
PPS: Note the oil ETF - USO - should NEVER be bought as a long-term investment. It's just a trading vehicle. When it was created, the ETF's price was about equal to the nearby crude price. Now look: nearby oil is about $72 and USO is only $55. That ETF loses money every month due to the contango in the crude markets. The underlying futures contracts lose money every money as nearby crude is cheaper than forward crude. So unless that market goes to backwardation, stay away from USO for long-term investments. As a trade for a few weeks, it's fine.
Monday, July 2, 2007
Monday Morning Rambles
iPhone appears to be a sales success. Now it's gotta perform well.
One of my computers has the blue screen of death - nice homecoming surprise :-(( At least the on-site service contract has a month to go. That's the second Dell computer I have that seems to have some kind of hard disc problem. I wonder if they downgraded the quality of their hard drives a few years ago.
Uh, the world did NOT end over the weekend. Bears were wrong again ;-)
My home town definitely has the best pizza in the country. I had to go to another shop one evening. So I went to an old favorite shop from my high school days. Excellent. Pepperoni, onion, green peppers, black olive and mushrooms. :-))
I have to do some self-analysis this week about some trades - corn and natural gas. I've been really distracted the last few weeks and maybe missed something. Certainly the charts say so. I'm still long those, but gave up my profits and an very red now on those.
Stock futures are up solidly, perhaps due to new quarter money. The bears will hit the pop. Let's see if they have more ammo. The S&P cash chart shows a clear rectangular consolidation pattern. I suspect really buyers are putting money to work at the S&P cash 50 DMA.
Gee, some jerk suggesting we should let China has preferential treatment and sell harmful goods here. Are these guys just stupid?
Golly, WSJ says a prime Manhattan office building is going for $1,589 per sqare foot. That's a big price! I remember when $500 per square foot was considered a huge price. The article says the buyers are Europeans who see NYC as cheap vs. London, etc.
PS: Did anyone notice that oil hit $71 today? Demand is so strong. Prices have to rise to ration supply. The falling dollar makes oil cheaper in the rest of the world. $70 was a resistance on the weekly chart.
One of my computers has the blue screen of death - nice homecoming surprise :-(( At least the on-site service contract has a month to go. That's the second Dell computer I have that seems to have some kind of hard disc problem. I wonder if they downgraded the quality of their hard drives a few years ago.
Uh, the world did NOT end over the weekend. Bears were wrong again ;-)
My home town definitely has the best pizza in the country. I had to go to another shop one evening. So I went to an old favorite shop from my high school days. Excellent. Pepperoni, onion, green peppers, black olive and mushrooms. :-))
I have to do some self-analysis this week about some trades - corn and natural gas. I've been really distracted the last few weeks and maybe missed something. Certainly the charts say so. I'm still long those, but gave up my profits and an very red now on those.
Stock futures are up solidly, perhaps due to new quarter money. The bears will hit the pop. Let's see if they have more ammo. The S&P cash chart shows a clear rectangular consolidation pattern. I suspect really buyers are putting money to work at the S&P cash 50 DMA.
Gee, some jerk suggesting we should let China has preferential treatment and sell harmful goods here. Are these guys just stupid?
Golly, WSJ says a prime Manhattan office building is going for $1,589 per sqare foot. That's a big price! I remember when $500 per square foot was considered a huge price. The article says the buyers are Europeans who see NYC as cheap vs. London, etc.
PS: Did anyone notice that oil hit $71 today? Demand is so strong. Prices have to rise to ration supply. The falling dollar makes oil cheaper in the rest of the world. $70 was a resistance on the weekly chart.
Friday, June 29, 2007
TGIF and the EOQ, Finally
EOQ = End of Quarter, by the way.
Perhaps we should call rebalancers, "remodelers" to correspond with the painters (i. e., tape painters) and window dressers who predominate the tape in the final week of the quarter. I think remodelers predominate the last few days of every month. I noticed that a few months ago and said I'd monitor it. I've seen enough evidence to convince me. At least for commodity-stock rebalancing - ooops, remodeling. Thanks, Frosty, for pointing out the stock rebalancing in yesterday's comments. I'm very distracted this week and hadn't put those facts together this week.
Bud gets the golden exegete award. [ I wonder what shape that should be ? ;-) ] His observation and questioning of, "working people got lobbyists" [ lolol - that still has me cackling ] was exquisitely existential and then finding they were Wall Street piranhas seeking a bailout was a fine example of exegesis. [see early comments from yesterday]
Crude is over $70 as I write.
Futures are down on a London bomb that was found before detonating. Good job, London police.
It's still a bull market. Use time diversification and rebalancing for your Krypto Fund. Find good stocks for your Alpha Fund. I thnk we grind higher or base awhile, then ramp up. Good entries might present themselves.
PS: Sheesh, my dog Spike is crazy about strawberries. She's pestering me endlessly this morning for MORE!
PPS: Santelli said year over year core PCE was 1.9%. That's an excellent number. :-)) The downtick and downtrend continues. Disinflation rules ! That's a very bullish number !
P^3S: And I like the subdued reaction. More wall of worry. Excellent number and reaction. The bump & grind up. :-))
Perhaps we should call rebalancers, "remodelers" to correspond with the painters (i. e., tape painters) and window dressers who predominate the tape in the final week of the quarter. I think remodelers predominate the last few days of every month. I noticed that a few months ago and said I'd monitor it. I've seen enough evidence to convince me. At least for commodity-stock rebalancing - ooops, remodeling. Thanks, Frosty, for pointing out the stock rebalancing in yesterday's comments. I'm very distracted this week and hadn't put those facts together this week.
Bud gets the golden exegete award. [ I wonder what shape that should be ? ;-) ] His observation and questioning of, "working people got lobbyists" [ lolol - that still has me cackling ] was exquisitely existential and then finding they were Wall Street piranhas seeking a bailout was a fine example of exegesis. [see early comments from yesterday]
Crude is over $70 as I write.
Futures are down on a London bomb that was found before detonating. Good job, London police.
It's still a bull market. Use time diversification and rebalancing for your Krypto Fund. Find good stocks for your Alpha Fund. I thnk we grind higher or base awhile, then ramp up. Good entries might present themselves.
PS: Sheesh, my dog Spike is crazy about strawberries. She's pestering me endlessly this morning for MORE!
PPS: Santelli said year over year core PCE was 1.9%. That's an excellent number. :-)) The downtick and downtrend continues. Disinflation rules ! That's a very bullish number !
P^3S: And I like the subdued reaction. More wall of worry. Excellent number and reaction. The bump & grind up. :-))
Tuesday, June 26, 2007
Screeching Bears
Bubblevision had a number of bears on early. One bear was blabbing about CDOs and Bear Streans. He really didn't understand the risks of the securities in them. So why was he on TV? Because he is a bear and the doom-mongers are getting all the air time.
Structured securities have default risk and prepayment risk They are completely DIFFERENT but both can hurt a securities market value. I'm not going into the details, but those differences are why one can lose money in a AAA/Aaa security. And trying to sell those illiquid AAA/Aaa securities prematurely can magnify losses. Just letting them burn off will recover their value. Most people just don't understand the mathematics of mortgage backed securities or how the risks of the underlying instruments are divided into pieces. Some of those pieces are small and illiquid and should NEVER be funded with margin debt. It seems like the BS "geniuses" made that mistake. They knew better but got greedy.
This will pass. Focus on this week's Fed meeting. That is truly important.
PS: Many corn fields here look stunted. A few of the finer fields look OK. So I think lots of the corn planted on marginal acres will have poor yields. Holding my bushels for July weather.
PPS: I've been pounding the table on GOOG for weeks. I hope you are long. Full position here.
P^3S: The BSC short suggested late last week worked, too, if you tried it. Not in due to this trip.
Structured securities have default risk and prepayment risk They are completely DIFFERENT but both can hurt a securities market value. I'm not going into the details, but those differences are why one can lose money in a AAA/Aaa security. And trying to sell those illiquid AAA/Aaa securities prematurely can magnify losses. Just letting them burn off will recover their value. Most people just don't understand the mathematics of mortgage backed securities or how the risks of the underlying instruments are divided into pieces. Some of those pieces are small and illiquid and should NEVER be funded with margin debt. It seems like the BS "geniuses" made that mistake. They knew better but got greedy.
This will pass. Focus on this week's Fed meeting. That is truly important.
PS: Many corn fields here look stunted. A few of the finer fields look OK. So I think lots of the corn planted on marginal acres will have poor yields. Holding my bushels for July weather.
PPS: I've been pounding the table on GOOG for weeks. I hope you are long. Full position here.
P^3S: The BSC short suggested late last week worked, too, if you tried it. Not in due to this trip.
Friday, June 22, 2007
TGIF and More
Looking at the index charts I again wonder if the Nazz isn't about to lead while the S&P & Dow rest. At least the big cap Nazz stocks, as the Russell seems sluggish. My Nazz big caps are AAPL, GOOG and ORCL in the Alpha Fund.
Rains have caused selling in corn. Wheat has gotten dragged along. Still sticking to my positions but I "should" have traded more aggressively. Oh well. That's harder for me now.
Remodeling & improvements here to my bunker & defenses seem to be winding down. Thank goodness. I was being driven loony by all the people working around here & the deliveries & general annoyance. At last maybe some peace.
I plan to drive to Ohio on Monday for the week to visit Mom. Posts might be sparse, but I think I will take a laptop. I'll take Spike, too. She's a real trooper on road trips and is good company.
Lyndon reported to consider closing Gitmo. What a weak-minded boob! I guess he's trying to create a "legacy" and be loved by the press, like Jimmy Carter did for years after his disastrous leadership. Ugh!
PS: S&P Futures down about 1/2% reportedly on more "concerns" about Bear, Stearns beefers & mortgage bond CMO liquidations of exotic securities. The report says that BS [sic] offered to assume $3.2 Billion in liabilities of its beefers. Very odd. Something seriously wrong there. I wonder if BS [sic] has a lot of inventory in similar securities? BSC [the real ticker] might be under real pressure today. Shorting is for you traders, but I'd look at it.
PPS: I have to reiterate that the GOOG chart & fundies seem really good. Some news this AM says their search data for May was very strong. GOOG chart shows a fine bullish C&H. Blue skies over 526. Full position in my Alpha Fund.
P^3S: Looks like stops and/or panic selling in corn. It's raining in the midwest. But July is when the corn crop is made or ruined - that's when yield is determined. Leaning towards buying some more today. The ridge still looks OK [beware - weather is weather & can change]. Moderate temps in the big eastern cities is hurting Nat Gas. Ugh. Giving back some gains in the commodity account. Holding for July heat here. :-(
Rains have caused selling in corn. Wheat has gotten dragged along. Still sticking to my positions but I "should" have traded more aggressively. Oh well. That's harder for me now.
Remodeling & improvements here to my bunker & defenses seem to be winding down. Thank goodness. I was being driven loony by all the people working around here & the deliveries & general annoyance. At last maybe some peace.
I plan to drive to Ohio on Monday for the week to visit Mom. Posts might be sparse, but I think I will take a laptop. I'll take Spike, too. She's a real trooper on road trips and is good company.
Lyndon reported to consider closing Gitmo. What a weak-minded boob! I guess he's trying to create a "legacy" and be loved by the press, like Jimmy Carter did for years after his disastrous leadership. Ugh!
PS: S&P Futures down about 1/2% reportedly on more "concerns" about Bear, Stearns beefers & mortgage bond CMO liquidations of exotic securities. The report says that BS [sic] offered to assume $3.2 Billion in liabilities of its beefers. Very odd. Something seriously wrong there. I wonder if BS [sic] has a lot of inventory in similar securities? BSC [the real ticker] might be under real pressure today. Shorting is for you traders, but I'd look at it.
PPS: I have to reiterate that the GOOG chart & fundies seem really good. Some news this AM says their search data for May was very strong. GOOG chart shows a fine bullish C&H. Blue skies over 526. Full position in my Alpha Fund.
P^3S: Looks like stops and/or panic selling in corn. It's raining in the midwest. But July is when the corn crop is made or ruined - that's when yield is determined. Leaning towards buying some more today. The ridge still looks OK [beware - weather is weather & can change]. Moderate temps in the big eastern cities is hurting Nat Gas. Ugh. Giving back some gains in the commodity account. Holding for July heat here. :-(
Thursday, June 21, 2007
CMO/CDO/CBO/CLO Fallout Will End Soon
Yesterday's selloff on no economic news made me think it was caused by beefer liquidations and margin calls sparked by the auction off assets of two Bear, Stearns CMO hedge funds. A number of CDO/CBO/CLO securities were also downgraded in the past few days due to unexpectedly high delinquencies. So every beefer holding that stuff - that's many, many - got a big haircut and probably had to lighten up on a lot of other more liquid positions to maintain a safe margin of solvency.
Mern's late comment yesterday was a good data point that this process is happening and affects some aggressive brokers, too. Thanks, Mern.
So I think this dip will create a good buy point - just like the one a couple weeks ago - when the dust settles. Perhaps at the S&P cash 50 DMA?
XLE got hit hard - again I think it is beefer liquidations and / or traders rotating or shorts. The oil inventory data is a non-event. The oil companies can make that number whatever they want by managing imports. Gasoline demand was up again year over year. That means higher oil prices over time and strong refining margins over time. Energy stocks have had a great run and might rest awhile. Again, let the dust settle and look for a good entry if you need one.
Mern's late comment yesterday was a good data point that this process is happening and affects some aggressive brokers, too. Thanks, Mern.
So I think this dip will create a good buy point - just like the one a couple weeks ago - when the dust settles. Perhaps at the S&P cash 50 DMA?
XLE got hit hard - again I think it is beefer liquidations and / or traders rotating or shorts. The oil inventory data is a non-event. The oil companies can make that number whatever they want by managing imports. Gasoline demand was up again year over year. That means higher oil prices over time and strong refining margins over time. Energy stocks have had a great run and might rest awhile. Again, let the dust settle and look for a good entry if you need one.
Wednesday, June 20, 2007
What Goes Around ... Comes Around
"Scared Gazans Seek to Enter Israel" ... hmmmm ... didn't they vote for Hamas in a large majority?
"Two Bear Stearns Hedge Funds To Liquidate" ... hmmmm ... didn't that firm kill other mortgage hedge funds with harsh margin calls?
An informed reader wrote me a few days ago about US foreign policy, saying that the US should treat other nations better when it's powerful [i. e. now], because otherwise the US might be treated badly if it weakens. I guess I thought the US did treat other nations well and wasn't taking advantage of them now. We know that "perception is reality". So what must change? The reality [as I see it], or the perception [of other nations]? It's obvious US leaders do a poor job of articulating US positions. What a shocker with Lyndon in charge! Perhaps a better, firmer, clearer, less mushy positions would help the perception, yes?
Decent close in the US markets yesterday - small gains in higher volume. Real buyers are being patient. Grains held overnight - waiting for more weather maps. More later.
PS: Bloomberg [the mayor] becomes an independent. I'm shocked! !NOT! Let me give the uninformed a dose of reality. ANY "liberal" Republican is really a Democrat who can't win the Democratic primary. That is true in NYC and here in Massachusetts and in other Democrat-dominated states. So all Bloomberg did was become a Republican to get on the ballot for Mayor. Once he won & is popular, he doesn't need a party affiliation or organization in NYC anymore. Non-event.
PPS: Odd non-news selloff at the open. I wonder if that liquidation of the two Bear, Streans hedge funds is pressuring prices of some debt securities [subordinated pieces of CBO/CDO/CLOs] that is pressuring other hedge funds who speculation in those complex debt securities. Just wondering?
"Two Bear Stearns Hedge Funds To Liquidate" ... hmmmm ... didn't that firm kill other mortgage hedge funds with harsh margin calls?
An informed reader wrote me a few days ago about US foreign policy, saying that the US should treat other nations better when it's powerful [i. e. now], because otherwise the US might be treated badly if it weakens. I guess I thought the US did treat other nations well and wasn't taking advantage of them now. We know that "perception is reality". So what must change? The reality [as I see it], or the perception [of other nations]? It's obvious US leaders do a poor job of articulating US positions. What a shocker with Lyndon in charge! Perhaps a better, firmer, clearer, less mushy positions would help the perception, yes?
Decent close in the US markets yesterday - small gains in higher volume. Real buyers are being patient. Grains held overnight - waiting for more weather maps. More later.
PS: Bloomberg [the mayor] becomes an independent. I'm shocked! !NOT! Let me give the uninformed a dose of reality. ANY "liberal" Republican is really a Democrat who can't win the Democratic primary. That is true in NYC and here in Massachusetts and in other Democrat-dominated states. So all Bloomberg did was become a Republican to get on the ballot for Mayor. Once he won & is popular, he doesn't need a party affiliation or organization in NYC anymore. Non-event.
PPS: Odd non-news selloff at the open. I wonder if that liquidation of the two Bear, Streans hedge funds is pressuring prices of some debt securities [subordinated pieces of CBO/CDO/CLOs] that is pressuring other hedge funds who speculation in those complex debt securities. Just wondering?
Tuesday, June 19, 2007
Lazy Days of Summer
Friday seemed to punctuate an active spring for the stock markets & I wonder if we are now in the summer doldrums. Perhaps the close of June's quad-witching day is now the official beginning of stock summer?? Monday seemed rather dull. Volume was very light on the NYSE and the Nazz.
I'm doing very little in stocks. Just holding all my longs. AAPL came back strong yesterday. That's my biggest position. One reason I've held AAPL so long is that I'm following part of the IBD thinking, namely that companies with great new products can be great "multi-baggers" in a bull market. This is the "N" in Bill O'Neil's "CAN SLIM" system. "N" means "New Products, New Management, New Highs. I read his book, "How to Make Money in Stocks" and thought a lot of it was very helpful in getting a perspective. It also helps one get over the "fear" in buying a stock well off it's lows. [I didn't need a lot of help there, being a student of Jesse Livermore.]
AAPL seems to be one of the few companies with great new technology products that are creating huge new markets.
Corn crops ratings were down 7 pts in Monday's USDA Crop Conditions report. That's more than most expected. But a little rain fell overnight in the cornbelt, so futures didn't pop. We'll see. The weather looks like a blocking ridge is developing and hot, dry conditions seem likely for the next two weeks. That gets us into the crucial period for corn. Weather markets are volatile. I still have all my bushels of corn.
The winter wheat harvest is well behind schedule. Ukraine is still dry. Dry conditions in Kansas, etc. might help the harvest get going & pressure prices. If so, I might try to re-buy on a dip. I think wheat prices might go up later in the year as the full extent of world crop problems become more recognized. "Bad crops get worse" Remember that one? [btw, the US spring wheat crop is in great shape for now.]
PS: Peter Lynch coined the term, a "ten-bagger". That's a modified baseball term for you non-baseball lovers or fans or the international soccer set ;-) Baseball is a GREAT sport ;-) In baseball a single is a one bag hit. A double is a two-bagger, etc. A home run is a four-bagger. Peter Lynch looked for stocks with "ten-bagger" potential, i. e. a stock that could go up 1,000%. Just a few of those really help a portfolio's return.
PPS: Corn & soybeans got hit around 6AM EDT. I suppose the GFS weather map update had more rain. That US model has been having problems lately and not performing well. But it's widely follow and caused some big swings and some of the volatility I mentioned. I'm sticky with the horse "that brung me" [ ;-) I'm using a little country-speak ] and that hot & dry conditions are coming for the next three weeks for the eastern cornbelt.
P^3S: What is this infatuation with shorting? I just heard about the vogue idea of long-only funds becoming 120 long + 20 short funds and or 140% long + 40% short funds. This is nuts. Shorting makes a lot of sense in special situations & in bear markets, but not as a time-independent investing philosophy. Stocks are NOT commodities, but many participants seem to be treating them as such more & more.
I'm doing very little in stocks. Just holding all my longs. AAPL came back strong yesterday. That's my biggest position. One reason I've held AAPL so long is that I'm following part of the IBD thinking, namely that companies with great new products can be great "multi-baggers" in a bull market. This is the "N" in Bill O'Neil's "CAN SLIM" system. "N" means "New Products, New Management, New Highs. I read his book, "How to Make Money in Stocks" and thought a lot of it was very helpful in getting a perspective. It also helps one get over the "fear" in buying a stock well off it's lows. [I didn't need a lot of help there, being a student of Jesse Livermore.]
AAPL seems to be one of the few companies with great new technology products that are creating huge new markets.
Corn crops ratings were down 7 pts in Monday's USDA Crop Conditions report. That's more than most expected. But a little rain fell overnight in the cornbelt, so futures didn't pop. We'll see. The weather looks like a blocking ridge is developing and hot, dry conditions seem likely for the next two weeks. That gets us into the crucial period for corn. Weather markets are volatile. I still have all my bushels of corn.
The winter wheat harvest is well behind schedule. Ukraine is still dry. Dry conditions in Kansas, etc. might help the harvest get going & pressure prices. If so, I might try to re-buy on a dip. I think wheat prices might go up later in the year as the full extent of world crop problems become more recognized. "Bad crops get worse" Remember that one? [btw, the US spring wheat crop is in great shape for now.]
PS: Peter Lynch coined the term, a "ten-bagger". That's a modified baseball term for you non-baseball lovers or fans or the international soccer set ;-) Baseball is a GREAT sport ;-) In baseball a single is a one bag hit. A double is a two-bagger, etc. A home run is a four-bagger. Peter Lynch looked for stocks with "ten-bagger" potential, i. e. a stock that could go up 1,000%. Just a few of those really help a portfolio's return.
PPS: Corn & soybeans got hit around 6AM EDT. I suppose the GFS weather map update had more rain. That US model has been having problems lately and not performing well. But it's widely follow and caused some big swings and some of the volatility I mentioned. I'm sticky with the horse "that brung me" [ ;-) I'm using a little country-speak ] and that hot & dry conditions are coming for the next three weeks for the eastern cornbelt.
P^3S: What is this infatuation with shorting? I just heard about the vogue idea of long-only funds becoming 120 long + 20 short funds and or 140% long + 40% short funds. This is nuts. Shorting makes a lot of sense in special situations & in bear markets, but not as a time-independent investing philosophy. Stocks are NOT commodities, but many participants seem to be treating them as such more & more.
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