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.

Monday Blues

Futures are down early AM - why, I don't know. No news.

If you are looking for a good newspaper, I recommend the Financial Times. It's now really a lot better than The Wall Street Journal, which has declined in value a lot in the past few years, becoming a bit like a business version of "People" magazine with these endless descriptions of how one person is dealing with an issue. Ugh.

The Financial Times has real writing and covers the world really well. Also, its non-business stories are quite advanced and cultured. So try it if you want a newspaper and can get it delivered same day. A one year subscription is really cheap - $99/year.

See http://www.ft.com/home/us. Also, the web site is good and has free content if you register.

Markets

Short interest is very high in the markets and growing as these double short ETFs and moronic 130/30 funds gain popularity.

Word of the Day

"Razzia" - noun [$100] this is an Algerian word that was absorbed into French in the 19th century. The initial "a" is short as in "act" and the stress in on the first syllable.
Razzia means a plundering raid.
Sentence: Will the beefers* take a vacation this summer or will they try a few razzias to make some fees before the end of the quarter ?

*beefers = big evil funds.