Showing posts with label links. Show all posts
Showing posts with label links. Show all posts
Sunday, August 10, 2008
Friday, August 08, 2008
Why the Dollar Rally?
The U.S. Dollar Index has taken off and I'm left wondering; why? I understand gold and oil sold off, the broad indexes are undergoing a bear market rally, and the Fed kept rates steady and expressed concerns over keeping inflation in check. So, how do you connect the dots (if they can be connected) and what else am I missing?
The articles I have found so far give the following correlations:
-The European Central Bank announced expectations of slowed Euro growth. OK, that might explain the Euro/U.S$ correlation, but there are multiple currencies within the U.S.$-index.
-A short squeeze? "The euro crashed through "big support levels in a short period of time," said Kenneth Broux, an economist at Lloyds TSB. "A lot of participants were caught out and forced to liquidate" long euro positions." Perhaps the Euro-zone is slowing down and starting to mirror the situation the U.S. economy has been in for the past 9 months (a.k.a. recession whispers)?
-"...better-than-expected U.S. pending home sales data Thursday and, in particular, the Chinese government's recent imposition of new currency controls were likely among the catalysts for the dollar's broad surge in Asian trading."
"Currency strategists at Commerzbank also downplayed the ECB's role, saying the moves during Asian hours were clearly a reflection of broad "dollar strength," rather than euro weakness...Obviously many market participants are currently re-positioning their currency allocations and [betting] on an end of the prolonged sideways movement."
-"The Chinese measures may be among the triggers they said, leaving investors who had bet on high-yielding currencies or continued gains by China's yuan currency with few alternatives other than the dollar. That backdrop also underpins the Japanese yen, they said, as traders abandon carry trades in which they borrow low-yielding currencies then use the funds to buy assets denominated in higher-yielding currencies."
- Commodity positions are unwinding. "...investors are long commodities, the currencies of countries that benefit from increases in commodity prices, their stocks and their bonds. In addition, many investors are invested in countries benefiting cross-border capital flows tied to increases in commodity prices (Eastern Europe, for example, which, according to the BIS, has been a major recipient of money from the Middle East). The U.S. dollar is a major safe-haven amid this major unwind." This I can see having a pretty broad ripple effect.
-As part of the above explanation, the Australian dollar continues to slide. The longest consecutive decline since 1980. Another commodity correlation.
-Some more articles can be found here. I think my understanding is clearer, but still a little fuzzy.
The articles I have found so far give the following correlations:
-The European Central Bank announced expectations of slowed Euro growth. OK, that might explain the Euro/U.S$ correlation, but there are multiple currencies within the U.S.$-index.
-A short squeeze? "The euro crashed through "big support levels in a short period of time," said Kenneth Broux, an economist at Lloyds TSB. "A lot of participants were caught out and forced to liquidate" long euro positions." Perhaps the Euro-zone is slowing down and starting to mirror the situation the U.S. economy has been in for the past 9 months (a.k.a. recession whispers)?
-"...better-than-expected U.S. pending home sales data Thursday and, in particular, the Chinese government's recent imposition of new currency controls were likely among the catalysts for the dollar's broad surge in Asian trading."
"Currency strategists at Commerzbank also downplayed the ECB's role, saying the moves during Asian hours were clearly a reflection of broad "dollar strength," rather than euro weakness...Obviously many market participants are currently re-positioning their currency allocations and [betting] on an end of the prolonged sideways movement."
-"The Chinese measures may be among the triggers they said, leaving investors who had bet on high-yielding currencies or continued gains by China's yuan currency with few alternatives other than the dollar. That backdrop also underpins the Japanese yen, they said, as traders abandon carry trades in which they borrow low-yielding currencies then use the funds to buy assets denominated in higher-yielding currencies."
- Commodity positions are unwinding. "...investors are long commodities, the currencies of countries that benefit from increases in commodity prices, their stocks and their bonds. In addition, many investors are invested in countries benefiting cross-border capital flows tied to increases in commodity prices (Eastern Europe, for example, which, according to the BIS, has been a major recipient of money from the Middle East). The U.S. dollar is a major safe-haven amid this major unwind." This I can see having a pretty broad ripple effect.
-As part of the above explanation, the Australian dollar continues to slide. The longest consecutive decline since 1980. Another commodity correlation.
-Some more articles can be found here. I think my understanding is clearer, but still a little fuzzy.
Monday, July 28, 2008
Clinton's Role
An interesting read via Stewie's blog regarding the mortgage crisis. Jason Leavitt does a fantastic job summing up the role's played by each variable of the mortgage melt-down. But, ultimately, Bill Clinton seems to deserve to be held accountable as well. Leavitt writes;
"...on November 12, 1999. With the CEO of Citigroup looking over his shoulder, Bill Clinton signed into law the Gramm-Leach-Bliley Act which repealed the Glass-Steagall Act of 1933.
The Gramm-Leach-Bliley Act permitted commercial and investment banks to consolidate, and almost overnight behemoth financial service companies that supplied everything to everybody were born. Smith-Barney, Salomon Brothers, PaineWebber and many other well-known and respected investment banks were gobbled up by Citibank, JP Morgan etc, and while the lay public didn’t have a clue what was going on, conflict of interests were rampant. Suddenly the banking arm of one of these financial service companies was pressuring the investment arm to raise its ratings on stocks to help lubricate the deal-making process. (As a quick side note, Citigroup played a major role lobbying for an end to Glass-Steagall. Starting in 1998, the finance, insurance and real estate industries together spent more than $200 million to get Glass-Steagall repealed, and not so coincidentally, only a couple days after Clinton signed Gramm-Leach-Bliley into law, recently-departed Treasury Secretary Robert Rubin was hired by Citigroup as a member of its 3-person office of the chairman.)
If you start with today and work backwards with intentions of figuring out when “all this mess started,” you’ll find many parties that played a role in adding fuel to a fire which was spinning out of control, but your journey won’t end until November 12, 1999 when Bill Clinton tore down the walls within the financial community.
I’m not going to go as far to say if Bill Clinton had not repealed Glass-Steagall, we wouldn’t be in the financial situation we’re in, but I can certainly say it would have been much more mild and probably isolated. When second and third parties are involved in a transaction, more due diligence is done, more scrutiny is applied, and less risk is taken."
It's a very interesting read. And to top it all off, the article ends with a great photo of Bill Clinton after signing the Gramm-Leach-Bliley Act. Looks like a circle-jerk at an occult sacrifice...not that I know what one of those would look like, but I've seen some movies.
"...on November 12, 1999. With the CEO of Citigroup looking over his shoulder, Bill Clinton signed into law the Gramm-Leach-Bliley Act which repealed the Glass-Steagall Act of 1933.
The Gramm-Leach-Bliley Act permitted commercial and investment banks to consolidate, and almost overnight behemoth financial service companies that supplied everything to everybody were born. Smith-Barney, Salomon Brothers, PaineWebber and many other well-known and respected investment banks were gobbled up by Citibank, JP Morgan etc, and while the lay public didn’t have a clue what was going on, conflict of interests were rampant. Suddenly the banking arm of one of these financial service companies was pressuring the investment arm to raise its ratings on stocks to help lubricate the deal-making process. (As a quick side note, Citigroup played a major role lobbying for an end to Glass-Steagall. Starting in 1998, the finance, insurance and real estate industries together spent more than $200 million to get Glass-Steagall repealed, and not so coincidentally, only a couple days after Clinton signed Gramm-Leach-Bliley into law, recently-departed Treasury Secretary Robert Rubin was hired by Citigroup as a member of its 3-person office of the chairman.)
If you start with today and work backwards with intentions of figuring out when “all this mess started,” you’ll find many parties that played a role in adding fuel to a fire which was spinning out of control, but your journey won’t end until November 12, 1999 when Bill Clinton tore down the walls within the financial community.
I’m not going to go as far to say if Bill Clinton had not repealed Glass-Steagall, we wouldn’t be in the financial situation we’re in, but I can certainly say it would have been much more mild and probably isolated. When second and third parties are involved in a transaction, more due diligence is done, more scrutiny is applied, and less risk is taken."
It's a very interesting read. And to top it all off, the article ends with a great photo of Bill Clinton after signing the Gramm-Leach-Bliley Act. Looks like a circle-jerk at an occult sacrifice...not that I know what one of those would look like, but I've seen some movies.
Thursday, July 17, 2008
reads
Three great reads can be found here:
The Big Picture - Stick it to 'em
Who Holds all that "Agency Debt?" (a whopping 25% of GDP, or $1-trillion is held by China)
Why can't people take sound advice when it's smacking them in the face? Here's an excerpt from this link; taking note it was written in September of '07:
"...if loans were extended to people who shouldn't have received them, real estate prices would have been bid up higher than they should have been. And it is a propagation mechanism in the sense that, as long as house prices continued to rise, all sins were forgiven. Even a completely fraudulent loan would not go into default when there's sufficient price appreciation, since the perpetrator is better off repaying the loan in order to enjoy the capital gain.The problem is that, as this process gets undone, both effects operate in reverse. A credit crunch means that some people who should get loans don't receive them, depressing real estate prices, and as prices fall, some loans will become delinquent that otherwise might not. If such fundamentals are indeed contributing factors on the way up and the way down, the magnitude of the resulting decline in real estate prices, and their implications for default rates, could be much bigger than the reassuring numbers Mishkin invites us to remember based on the historical variability of these series. What worries me in particular is, if we see this much in the way of delinquencies and short-term credit concerns in the current economic environment, in which GDP has still been growing and house price declines are quite modest, what can we expect with a full-blown recession and, say, a 20% decline in average real estate values?"
The Big Picture - Stick it to 'em
Who Holds all that "Agency Debt?" (a whopping 25% of GDP, or $1-trillion is held by China)
Why can't people take sound advice when it's smacking them in the face? Here's an excerpt from this link; taking note it was written in September of '07:
"...if loans were extended to people who shouldn't have received them, real estate prices would have been bid up higher than they should have been. And it is a propagation mechanism in the sense that, as long as house prices continued to rise, all sins were forgiven. Even a completely fraudulent loan would not go into default when there's sufficient price appreciation, since the perpetrator is better off repaying the loan in order to enjoy the capital gain.The problem is that, as this process gets undone, both effects operate in reverse. A credit crunch means that some people who should get loans don't receive them, depressing real estate prices, and as prices fall, some loans will become delinquent that otherwise might not. If such fundamentals are indeed contributing factors on the way up and the way down, the magnitude of the resulting decline in real estate prices, and their implications for default rates, could be much bigger than the reassuring numbers Mishkin invites us to remember based on the historical variability of these series. What worries me in particular is, if we see this much in the way of delinquencies and short-term credit concerns in the current economic environment, in which GDP has still been growing and house price declines are quite modest, what can we expect with a full-blown recession and, say, a 20% decline in average real estate values?"
Thursday, June 26, 2008
Thursday, May 29, 2008
Water re-visited
I made this post just over a year ago pertaining to the potential (likely?) global water crisis.
Here's an article addressing this issue and how GE has been investing in the infrastructure to deal with this problem.
Here's another article discussing the topic of "Peak Water." Interesting stuff.
Currently PHO (PowerShares Water Resource ETF) is approaching resistance (around $22.50) at it's 52-week high and up 22% since this time last year.
Here's an article addressing this issue and how GE has been investing in the infrastructure to deal with this problem.
Here's another article discussing the topic of "Peak Water." Interesting stuff.
Currently PHO (PowerShares Water Resource ETF) is approaching resistance (around $22.50) at it's 52-week high and up 22% since this time last year.
Friday, April 18, 2008
WTF?
How could the Market be "Bullish on Citigroup Despite Big Quarterly Loss."?? They posted a second straight quarterly loss totaling nearly $15-Billion so far. They have also suffered more than $46 billion in "write-downs" since the middle of 2007. They slashed their dividend and raised more than $30 billion in debt, I mean, "capital." Book value per share (assets minus liabilities) fell to $20.73 from $22.74 at year end. Return on equity was negative 18.6 percent! in the quarter. And yet, the "Market" is bullish on Citigroup!? shmucks
Here's a link to a more honest outlook on what the "markets" should keep in mind.
Here's a link to a more honest outlook on what the "markets" should keep in mind.
Wednesday, March 19, 2008
so much for follow-through
The excitement of a potential "bottom" was put in check today. It's kinda laughable when, after one day, the talking heads start stirring up speculation of an all's-good scenario.
The Nasdaq erased all gains from yesterday.
The S&P500 and the DJIA both gave away most of their gains from yesterday leaving us with an inside day. 
The Russell2000 is hurtin' and after today's session we were left with some dark-cloud cover.
Tomorrow is Triple Witching.
Futures took a beating today under some serious liquidation/profit-taking.
The Nasdaq erased all gains from yesterday.
The S&P500 and the DJIA both gave away most of their gains from yesterday leaving us with an inside day. 
The Russell2000 is hurtin' and after today's session we were left with some dark-cloud cover.
Tomorrow is Triple Witching.
Futures took a beating today under some serious liquidation/profit-taking.
Friday, March 14, 2008
to sum it all up
Today's inflation numbers came in flat for February. So, not to worry, those higher prices at the pump and the grocery store are not cause for inflationary alarm. I felt "The Fly" summed it up nicely:
"During the worst housing crisis in 100 years, we’ve learned, NO ONE is allowed to fail. Everyone is too big. From homebuilders to money centers to low-end brokerage houses to monoline insurers, if you need a little scratch, knock on the Governments door and they’ll help you out. This, as you know, is not capitalism. This is socialism heavy, not light, which is disgraceful."
"During the worst housing crisis in 100 years, we’ve learned, NO ONE is allowed to fail. Everyone is too big. From homebuilders to money centers to low-end brokerage houses to monoline insurers, if you need a little scratch, knock on the Governments door and they’ll help you out. This, as you know, is not capitalism. This is socialism heavy, not light, which is disgraceful."
Thursday, March 13, 2008
news
The "Carlyle/Drake Rally" pushes Gold above $1000/oz.
U.S. home foreclosure filings jumped 60% in February.
Carlyle Capital near collapse after failing to meet its $400million+ margin call.
U.S. Dollar falls to 12-year low vs. the Japanese Yen.
A penny costs 1.7 cents to make and a nickel costs nearly a dime!
U.S. home foreclosure filings jumped 60% in February.
Carlyle Capital near collapse after failing to meet its $400million+ margin call.
U.S. Dollar falls to 12-year low vs. the Japanese Yen.
A penny costs 1.7 cents to make and a nickel costs nearly a dime!
Wednesday, March 12, 2008
reading
From Minyanville:
Can the Fed Go Bankrupt?
"...central banks are still trying to convince markets that the financial system is merely experiencing “liquidity” problems. But if liquidity were the only issue, all the pumping the Fed and other central banks have been doing already should have cleared up this problem.
The problem isn't one of liquidity. It's one of solvency: loans banks made...are worth less now than when they made the loans. Because they made way (100 ways) too many of them, banks in general have no capital left. You can’t make loans if you don’t have capital.
So the Fed has to give the banks capital. This latest scheme is extremely troubling, especially for the already-battered dollar. The Fed is taking on “AAA mortgages” from the banks in exchange for Treasury Bills to give banks the capital. Of course we don’t know the price they are taking on these mortgages at and that is the crux of the matter. Everything is price.
Let’s say the mortgages continue to deteriorate in price (which is highly likely given the nature of our rating system to make them AAA) and then the banks are in no shape to take them back. If the Fed is stuck with declining assets it too will have a capital problem. But if the Fed loses capital it won’t go bankrupt like a regular company: It will just print the money to make up the difference. Literally.
If the Fed loses $50 billion, it can physically print (tell the Treasury to print) the currency to make up this difference. If there currently is $700 billion of physical currency in circulation, printing $50 billion new money would immediately devalue the dollar by 7%.
If the Fed takes on riskier and riskier loans, it becomes more and more negative for the dollar. A collapse in the dollar is a de-facto bankruptcy by the Federal Reserve and the U.S. in general."
Can the Fed Go Bankrupt?
"...central banks are still trying to convince markets that the financial system is merely experiencing “liquidity” problems. But if liquidity were the only issue, all the pumping the Fed and other central banks have been doing already should have cleared up this problem.
The problem isn't one of liquidity. It's one of solvency: loans banks made...are worth less now than when they made the loans. Because they made way (100 ways) too many of them, banks in general have no capital left. You can’t make loans if you don’t have capital.
So the Fed has to give the banks capital. This latest scheme is extremely troubling, especially for the already-battered dollar. The Fed is taking on “AAA mortgages” from the banks in exchange for Treasury Bills to give banks the capital. Of course we don’t know the price they are taking on these mortgages at and that is the crux of the matter. Everything is price.
Let’s say the mortgages continue to deteriorate in price (which is highly likely given the nature of our rating system to make them AAA) and then the banks are in no shape to take them back. If the Fed is stuck with declining assets it too will have a capital problem. But if the Fed loses capital it won’t go bankrupt like a regular company: It will just print the money to make up the difference. Literally.
If the Fed loses $50 billion, it can physically print (tell the Treasury to print) the currency to make up this difference. If there currently is $700 billion of physical currency in circulation, printing $50 billion new money would immediately devalue the dollar by 7%.
If the Fed takes on riskier and riskier loans, it becomes more and more negative for the dollar. A collapse in the dollar is a de-facto bankruptcy by the Federal Reserve and the U.S. in general."
Sunday, February 10, 2008
Like Surround Sound?
Than here's a set-up for you to drool over. A little on the excessive side, but who am I to judge with my little 32" TV and no cable service.
Saturday, February 09, 2008
Thursday, February 07, 2008
Free Healthcare...
...unless we're bankrupt. An interesting blog posting here telling of the setback Governor Schwarzenneger is experiencing as he tries to provide healthcare to those without. The worrisome economic status of the state of California has led Governor Schwarzenneger to declare a fiscal emergency in January, as the fifth largest economy in the world battles with a $14-billion deficit. An attempt to raise revenue by increasing tobacco taxes was strongly opposed and unable to pass as a measure in the past election. So, we're left with school and hospital funding cuts in order to trim the budget. It's a sad statement on where priorities lie. Higher taxes on tobacco products? Hell no! Cut school and hospital funding? Who cares, so long as you don't raise the cost of my cigarettes. And since California will likely be the last state to feel the full effect of the mortgage/credit crisis pinch the seriousness of this problem is only just surfacing. 'tis a shame.
Monday, February 04, 2008
Pretty Cool
If you were/are a fan of the Volkswagen Westfalia camper van then you'll appreciate this. The Ursa Minor ECamper.
Sunday, February 03, 2008
Friday, February 01, 2008
Busy doing other things
Lots of market related items to read here.
Some funny and intriguing things to read here.
Me, Im reading up on some MACD. Specifically settings for the moving average lengths. Of interest so far is using 65, 90, 12 inputs on the hourly chart. I'm looking to make up a crossover strategy performance read-out.
It seems every quarter that goes by is "the most profitable quarter ever" for XOM, though it didn't do much good for their stock price today (or gas prices for that matter).
Some funny and intriguing things to read here.
Me, Im reading up on some MACD. Specifically settings for the moving average lengths. Of interest so far is using 65, 90, 12 inputs on the hourly chart. I'm looking to make up a crossover strategy performance read-out.
It seems every quarter that goes by is "the most profitable quarter ever" for XOM, though it didn't do much good for their stock price today (or gas prices for that matter).
Wednesday, January 30, 2008
Fed Day
'twas a snorer of a narrow range day yet again right up until 2:15 when the Bernanke rate cut announcement. Some great long moves in the 45 minutes or so after the cut, and then even greater moves on the short side for the last hour of the day. So, where do we go from here. It feels like the expected rate cut was priced in to market by now and there's more down side to come. That's what it feels like at any rate. Though it's not what the trusted pros think. A blog posting on Cnbc by Tom Brennan suggests the bottom is in and it's time to buy. Especially the financials. As his blog states; "The Fed's move was "incredibly positive," Cramer said, adding that "we are basically out of the woods." So, I guess this is less Tom Brennan's opinion but more so of Jim Cramer's. "Financials should be bought," Cramer said."
Maybe we'll get an upside Cramer bounce and see how the bears respond. Which is first, 1250 or 1450??
Maybe we'll get an upside Cramer bounce and see how the bears respond. Which is first, 1250 or 1450??
Monday, January 28, 2008
good one
Here's a good article that I found while at TeresaLo's website. The title about says it all; "Global Economy now run by Fucknuts."
"The world has been brought to the brink of depression by a ridiculous consumer spending spree fuelled by cheap credit and home makeover shows. So let's keep it going."
"The world has been brought to the brink of depression by a ridiculous consumer spending spree fuelled by cheap credit and home makeover shows. So let's keep it going."
Tuesday, January 22, 2008
Cali feels the pinch
California should certainly be the last to feel the pinch of the sub-prime mortgage crisis. Just a reminder that the affects of this mess are far from over. California defaults have soared in Q4 and are up over 114% versus the same quarter of '06. The other shoe will soon drop.
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