tag:blogger.com,1999:blog-66301040520024961912024-02-25T08:33:46.013+00:00Reality Lenses<center>
This blog is about macro-economics, financial markets and the world that has been pulled over your eyes to blind you from the truth.
<br><br>
<b>— Neo: What truth?
<br>
— Morpheus: That you are a slave, Neo.</b>
</center>pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.comBlogger1605125tag:blogger.com,1999:blog-6630104052002496191.post-61717639607602662372018-05-10T22:26:00.000+01:002018-05-10T22:26:20.555+01:00Warren Buffett has sold completely out of IBM (at a loss)In November 2011, when Berkshire Hathaway announced they invested in IBM, <a href="https://realitylenses.blogspot.fr/2011/11/buffett-buys-stake-in-ibm-at-historical.html" target="_blank">I wrote</a> that it was a big mistake he was making.<br />
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Well, on May the 4th, <a href="https://www.cnbc.com/2018/05/04/warren-buffett-says-berkshire-hathaway-has-sold-completely-out-of-ibm.html?__source=yahoo%7Cfinance%7Cheadline%7Cstory%7C" target="_blank">CNBC reported that</a> <i>Warren Buffett says Berkshire Hathaway has sold completely out of IBM:</i><br />
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Buffett says Berkshire has ended a difficult chapter in its investment in IBM while ramping up its stake in Apple.<br />
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Well, this is something that took a very long while to happen, much longer than I thought, but it finally did.<br />
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Here's IBM's stock price since Nov 2011, and Berkshire has made a sizeable loss on that, or as Buffett puts it: <i>Berkshire has ended a difficult chapter in its investment in IBM</i>.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWHdemQ-7DwKLBt6k1AwNYeI8rMKFCbpNKFEp4rJZH9K9XniL0VUSJsrKGaR6mBxKOrgcDZGdCbXUkoMKG4bphCi4kxm76TZUFoGQ6eAAvR7ttOY3I07S6phZAEiOsFLe1Vsk-1iFYG8g/s1600/Screen+Shot+2018-05-10+at+23.21.38.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="166" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWHdemQ-7DwKLBt6k1AwNYeI8rMKFCbpNKFEp4rJZH9K9XniL0VUSJsrKGaR6mBxKOrgcDZGdCbXUkoMKG4bphCi4kxm76TZUFoGQ6eAAvR7ttOY3I07S6phZAEiOsFLe1Vsk-1iFYG8g/s400/Screen+Shot+2018-05-10+at+23.21.38.png" width="400" /></a></div>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-32049617421746251352015-04-29T16:01:00.001+01:002015-04-29T16:01:33.755+01:00Euro UpdateI can't believe the last post I made was already three months old. It's been 3 "crazierest" months as would come them as it seems like the world economies are imploding while the market participants are as euphoric as ever.<br />
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Anyway, here's a quick update on the EUR side:<br />
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<ul>
<li>Euro pessimism has been lopsided for three more months, and sentiment is still extremely negative and speculator positioning historically short against the EUR as measured for example by the COT. </li>
<li>While sentiment has been still extremely negative and traders kept increasing their positioning against this currency, it's a very bullish sign than the EURUSD actually bottomed around the 12th of March (more than a month and a half ago).</li>
<li>A massive rally in the EURUSD has started a few days ago, and this could mark the beginning of the short covering (aka short squeeze) which in turn could lead to an as impressive rebound in the EUR than the collapse of the previous many months.</li>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-sgi4XK3Hmk6GenNDxgZNeL4yCAmEx9IAy-1Cm3bbQ2txp-g7Tn0nlhgCpWPYT1ODJEci9LB0LfuvCgXgsjqbKcEI7ajktl_LEOhFqD6y6f2s3KPf0JNm0mA6HLrTl6x34uVCpcBv_VI/s1600/Screen+Shot+2015-04-29+at+16.48.57.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-sgi4XK3Hmk6GenNDxgZNeL4yCAmEx9IAy-1Cm3bbQ2txp-g7Tn0nlhgCpWPYT1ODJEci9LB0LfuvCgXgsjqbKcEI7ajktl_LEOhFqD6y6f2s3KPf0JNm0mA6HLrTl6x34uVCpcBv_VI/s1600/Screen+Shot+2015-04-29+at+16.48.57.png" height="287" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="text-align: left;"><span style="font-size: x-small;">Speculator positioning historically short against the EUR as measured for example by the COT</span></span></td></tr>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyJiceKVDrETk2jQYilDU_oCXzdPiw1SXMujN4TZD5b6XxQ-sz61tvyW952CFS2Z5E-dMSwYigNX-DoNOj78jJdoM2NfdOmxkxnon6BQaWqXLWUpoxU3O0Km47owYoCUHSZTf3TzsUxcI/s1600/Screen+Shot+2015-04-29+at+16.51.31.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyJiceKVDrETk2jQYilDU_oCXzdPiw1SXMujN4TZD5b6XxQ-sz61tvyW952CFS2Z5E-dMSwYigNX-DoNOj78jJdoM2NfdOmxkxnon6BQaWqXLWUpoxU3O0Km47owYoCUHSZTf3TzsUxcI/s1600/Screen+Shot+2015-04-29+at+16.51.31.png" height="215" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="text-align: left;"><span style="font-size: x-small;">it's a very bullish sign than the EURUSD actually bottomed around the 12th of March</span></span></td></tr>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLC_sk0x9xVo6154_DanO2ABW_76uiqH4zF-lyivg4DSNu7fDURv00Pzx_FT7EXbm-rQZEtZaddfOFD7fUGFVl1Xal0kJ82GyjluyAstBwQmCoWfqc-DVcpo_UCxrkPH7c_mAWaCIQdTI/s1600/Screen+Shot+2015-04-29+at+16.52.17.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLC_sk0x9xVo6154_DanO2ABW_76uiqH4zF-lyivg4DSNu7fDURv00Pzx_FT7EXbm-rQZEtZaddfOFD7fUGFVl1Xal0kJ82GyjluyAstBwQmCoWfqc-DVcpo_UCxrkPH7c_mAWaCIQdTI/s1600/Screen+Shot+2015-04-29+at+16.52.17.png" height="223" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="text-align: left;"><span style="font-size: x-small;">A massive rally in the EURUSD has started a few days ago</span></span></td></tr>
</tbody></table>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYgIwX6dowzo1xhzefJU4kgdufyFolq4NEjwJv9_lSxHkGLdSKcgu1lFRUDOEMyo1rDQ7xwtOVAGXxn74d0eLNiDsMGldP-YhBo4UtumRJWXHxN2PY-E-GkgSOdFXZRm1WFozpHK8A2hc/s1600/Screen+Shot+2015-04-29+at+16.55.50.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYgIwX6dowzo1xhzefJU4kgdufyFolq4NEjwJv9_lSxHkGLdSKcgu1lFRUDOEMyo1rDQ7xwtOVAGXxn74d0eLNiDsMGldP-YhBo4UtumRJWXHxN2PY-E-GkgSOdFXZRm1WFozpHK8A2hc/s1600/Screen+Shot+2015-04-29+at+16.55.50.png" height="221" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="text-align: left;"><span style="font-size: x-small;">This could lead to an as impressive rebound in the EUR than the collapse of the previous many months.</span></span></td></tr>
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<span style="font-size: x-small;">Disclosure: I have a long EUR position at about 1.12 EUR/USD and another one at about 1.06 EUR/USD</span><br />
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pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-15023143129040142172015-01-23T10:35:00.000+00:002015-02-09T08:59:11.503+00:00A Rally on the EUR is about to start<div class="separator" style="clear: both; text-align: left;">
The Euro has been on a one-way downtrend since May 2014 where it was trading at 1.39xx against the USD all the way down to 1.12xx which it reached as I'm typing this post.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMvVOX96O6dONxCSMZgHTsfYeVosEFn-mUqJiL9c42hCh07YHlcqbjeuLzlzmZIuvxg77wa1emZUapfb-6c96ZK-zt-sE85CRHohZSOiMDrhq1-CO8ITRA_RWhkqmTGx0zw6u0I-HROtU/s1600/Screen+Shot+2015-01-23+at+11.05.01.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMvVOX96O6dONxCSMZgHTsfYeVosEFn-mUqJiL9c42hCh07YHlcqbjeuLzlzmZIuvxg77wa1emZUapfb-6c96ZK-zt-sE85CRHohZSOiMDrhq1-CO8ITRA_RWhkqmTGx0zw6u0I-HROtU/s1600/Screen+Shot+2015-01-23+at+11.05.01.png" height="342" width="400" /></a></div>
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Sentiment has been very negative for a while now:<br />
<ul>
<li>Daily Sentiment Index (DSI) falling to just 6% Euro bulls (<a href="http://www.dailyfx.com/forex/technical/article/forex_strategy_corner/2015/01/02/Range_Jan_2.html" target="_blank">source</a>)</li>
<li>Daily Sentiment Index (DSI) fell to just 4% EUR bulls (<a href="http://www.dailyfx.com/forex/technical/article/forex_strategy_corner/2015/01/05/PT_JAN_5.html" target="_blank">source</a>)</li>
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"Everybody" hates the Euro, while on the contrary, everybody loves the US dollar, and that trend has been going for a number of weeks now, so I'm expecting it to reverse very soon.</div>
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The biggest catalyst is probably going to be the fact that the ECB had purposefully leaked the number 50 billion of their money printing, currency debasing project, in order to "positively surprise" the market a couple of days later by announcing 60 billion euros being printed every month. </div>
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Now, this "positive surprise" is priced in. Speculators are massively short, as shown on the COT report below.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGSXvpNjh_IhL_lS-UvBmtVT3qGTNRbqGWuhcg4Mj57brceTCYcnn5U73E5oqeqCss4BrT0AByK7PSQXf2-wQQ78z4lhpkKVYbp8cFIuqSPGI-aEoTKEXp2f8bmM3PFe8I-AnnjnfDb7U/s1600/Screen+Shot+2015-01-23+at+11.11.33.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGSXvpNjh_IhL_lS-UvBmtVT3qGTNRbqGWuhcg4Mj57brceTCYcnn5U73E5oqeqCss4BrT0AByK7PSQXf2-wQQ78z4lhpkKVYbp8cFIuqSPGI-aEoTKEXp2f8bmM3PFe8I-AnnjnfDb7U/s1600/Screen+Shot+2015-01-23+at+11.11.33.png" height="300" width="400" /></a></div>
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It makes sense for contrarians to bet against the crowd at this level and expect a bounce.<br />
As usual, I will make an update to this post when I open the position.<br />
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[Update: I purchased EURUSD options on Friday when the EURUSD was trading at 1.132x. This should give a limited downside risk, specifically given that I believe the EUR bottomed just after I posted this blog, and in the case of a rally, I would have a very good leverage.]</div>
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pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-88531095253356094462015-01-15T13:56:00.002+00:002015-01-15T14:18:09.750+00:00Swiss Franc Surges 30% Against the Euro In 13 MinutesThis is not a typo, the EURCHF has collapse 30% in a matter of minutes, moves unseen in European FX markets:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEsvTcsI3IA6yWda83cWNwx_2uO4XLN-fpcHxx3LkuFW6amUOBqut4TcImYI8thyphenhyphenngMPPnRGtVsoC7QhhxGcq6tSCoJNwW6BrSFofxJJUI00ePDswFoWhExFS9lqteR3OuMPaTIulwuEw/s1600/Screen+Shot+2015-01-15+at+14.48.28.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEsvTcsI3IA6yWda83cWNwx_2uO4XLN-fpcHxx3LkuFW6amUOBqut4TcImYI8thyphenhyphenngMPPnRGtVsoC7QhhxGcq6tSCoJNwW6BrSFofxJJUI00ePDswFoWhExFS9lqteR3OuMPaTIulwuEw/s1600/Screen+Shot+2015-01-15+at+14.48.28.png" height="370" width="400" /></a></div>
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All the way from 1.20 down to 0.86, the fall of the EUR following the SNB decision to halt their peg. The peg had been put in place back in September 2011, which had caused a 10% move in the currency (<span style="color: #0b5394; font-family: inherit;"><a href="http://realitylenses.blogspot.fr/2011/09/swiss-franc-collapses-as-central-bank.html" style="text-decoration: none;">Swiss Franc Collapses as Central Bank Announces Pseudo-Peg</a>)</span><br />
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Central banks are once again creating chaos, after failing to achieve their unrealistic control of markets. It will be interesting to see which players of the markets will get wiped out by such a move, as casualties there will be after such a move.<br />
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It will be interesting for the SNB to announce what they intend to do with the dozens and dozens of billions of Euros it's been accumulating of the last 3 years.<br />
<br />pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-19736076857640399832014-12-12T17:20:00.001+00:002014-12-12T17:20:27.730+00:00Crude Oil at 5 years low — Sentiment and News Flow Extremely Negative<div class="separator" style="clear: both; text-align: left;">
Crude Oil has been dropping like a rock over the past few weeks, which leads the total decline of CL1 (the front trading WTI contract) to more than 45% since it was trading at above $100 dollars at its peak in June to $58 today.</div>
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This is a historical decline. Not the biggest drop in history (that was in 2009) but still a historical one.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3De5DyhOW6v7TZy1_CM9X4Soq-tgENuw4CjBYvBZKyVsRK3p9Hv2aw_oHr8hmu2hyGYdfl06KZQ8ZPaEFlfybOegD94cCuvlWTQdbCVX2QP4ztn-_mEaG1fTd7r4KfFFJOtOpllC2ImA/s1600/Screen+Shot+2014-12-12+at+17.28.44.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3De5DyhOW6v7TZy1_CM9X4Soq-tgENuw4CjBYvBZKyVsRK3p9Hv2aw_oHr8hmu2hyGYdfl06KZQ8ZPaEFlfybOegD94cCuvlWTQdbCVX2QP4ztn-_mEaG1fTd7r4KfFFJOtOpllC2ImA/s1600/Screen+Shot+2014-12-12+at+17.28.44.png" height="320" width="309" /></a></div>
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USO — the largest oil tracking ETF — is now trading well under $22 (currently trading at $21.87, while typing this post), making a historical low, below the 2009 crash level when WTI bottomed and bounced off at about $32 (The reason is the roll cost of commodities contracts, and show that buy and hold in futures contract is very inefficient).</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmtc_4X88VQUQxqG9B3judPIyrVVorQPdKkrZuDPeEfX4Nv3Cbeh_g1VTTKLasyYaKAtZFISwNKgULRP-QYjqx9EpYx4DwM1GHSiBtuzkEnprFU28cQejiEr_sS02a7wILcMiQIJ-CvI0/s1600/Screen+Shot+2014-12-12+at+16.25.49.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmtc_4X88VQUQxqG9B3judPIyrVVorQPdKkrZuDPeEfX4Nv3Cbeh_g1VTTKLasyYaKAtZFISwNKgULRP-QYjqx9EpYx4DwM1GHSiBtuzkEnprFU28cQejiEr_sS02a7wILcMiQIJ-CvI0/s1600/Screen+Shot+2014-12-12+at+16.25.49.png" height="280" width="320" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2wsQ8zSBJ743fq1WI8SKvLW2lCiDDUFegLfiwCQYgdM6Z0K9lWSx46acZIuZvMPefr4IKRAoFUaxXQGv9yZ9i4pLLBRlwA6rjCAtwpWj9bn9dKGQKC2_1bcbdBfEa0aba6pcH_G4mg2Q/s1600/Screen+Shot+2014-12-12+at+16.26.13.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2wsQ8zSBJ743fq1WI8SKvLW2lCiDDUFegLfiwCQYgdM6Z0K9lWSx46acZIuZvMPefr4IKRAoFUaxXQGv9yZ9i4pLLBRlwA6rjCAtwpWj9bn9dKGQKC2_1bcbdBfEa0aba6pcH_G4mg2Q/s1600/Screen+Shot+2014-12-12+at+16.26.13.png" height="274" width="320" /></a></div>
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Everybody bets on oil dropping, the newsfeed is only negative, and even at one of my clients, a tech shop, the PA knows that it will drop until at least $50 until mid Jan.</div>
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Quote from <a href="http://www.bloomberg.com/news/2014-12-09/yen-holds-surge-on-haven-demand-gold-near-six-week-high.html" target="_blank">Bloomberg</a>:</div>
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“I can see no news that would give any reason to buy oil at the moment,” <a href="http://topics.bloomberg.com/christopher-bellew/">Christopher Bellew</a>, senior broker at Jefferies International Ltd. in London, said by e-mail.</blockquote>
Another quote from another <a href="http://www.bloomberg.com/news/2014-12-10/how-oil-trading-god-hall-made-money-as-crude-fell.html" target="_blank">Bloomberg report</a>:<br />
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“It’s a new era,” said Carl Larry, a former trader who is now a Houston-based director of oil and natural gas at Frost & Sullivan </blockquote>
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[...]</blockquote>
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Known for his conviction that oil prices will rise in the long term and that U.S. shale drilling is overhyped, Hall — [pej: aka Oil Trading ‘God’] — still sees reasons for an oil rally -- eventually. First he sees crude prices falling further to as low as $50 a barrel before recovering in the first half of next year, according to his Dec. 1 letter to investors.</blockquote>
Based on this, I have decided to bet against the crowd, and opened an initial position in USO @21.90pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com2tag:blogger.com,1999:blog-6630104052002496191.post-6840642442830503962014-12-09T17:40:00.001+00:002014-12-09T17:40:31.891+00:00Contrarian Signal — Barron's Cover Blasts "This Time is Different"<div class="separator" style="clear: both;">
The sentence "This Time is Different" is usually known as the most expensive sentence in the history of investing: it is always used as a exuberant reaction trying to rationalize unsustainable and impossible trends into the future.</div>
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Additionally, Barron's is a first class candidate for the <a href="http://en.wikipedia.org/wiki/Magazine_cover_indicator" target="_blank">Magazine Cover Indicator</a>. </div>
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While I haven't read the full report, amazingly, Barron's states on the cover they know that this the "most dangerous words on Wall Street", but we still dare to say it. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-Zc1uWlom9hTyz1h5xpj4LM584zTd6stoYANKjXLbUUdwUhov6hh3u5GqOmCb7XEbCwb2-RPa3VHaEEESvXJRyi3PPO0gdQLC_JbW6Cj1UNce5QUNr-vgjN2sNkNebx-2tvvOcr1cbTE/s1600/barrons+cover_0-This+time+is+different.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-Zc1uWlom9hTyz1h5xpj4LM584zTd6stoYANKjXLbUUdwUhov6hh3u5GqOmCb7XEbCwb2-RPa3VHaEEESvXJRyi3PPO0gdQLC_JbW6Cj1UNce5QUNr-vgjN2sNkNebx-2tvvOcr1cbTE/s1600/barrons+cover_0-This+time+is+different.jpg" height="320" width="320" /></a></div>
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The magazine is dated the 8th of December (yesterday), which, unsurprisingly to contrarian investors, marked a big down day. Today seem to be another down day too.<br />
<br />
So the conclusion from this post should be that we have either already hit the top of the multi-year bubble, or are very very close to the crest — probably a few weeks maximum.<br />
<br />
I keep my ammo for a shorting early Jan, but I might change my mind before that, in which case, I'll mention it on the blog.pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-24534168786587403792014-12-08T13:22:00.002+00:002014-12-08T13:22:46.171+00:00Ukraine Property Prices Down approx 83% from Peak<br />
In 2010, when I wrote a post titled: <a href="http://realitylenses.blogspot.fr/2010/06/massive-inflationary-booms-always-end.html" style="color: #888888; font-family: 'Trebuchet MS', Trebuchet, Verdana, sans-serif; font-size: 16px; text-decoration: none;">Massive inflationary booms always end in tears induced by the resulting deflationary bust — Here's the case of Ukraine</a>. I had concluded that:<br />
<blockquote class="tr_bq">
Prices will have to decline by 82% from the 2007 top to reach the 2002 levels, after a 562% boom. As corrections are always overdone, I wouldn't be surprised to see a 90% decline. Remember: if you buy an asset after a 80% decline, but that the actual peak to trough is 90%, you loose 50% on your investment.<br />Ukraine is just another story of inflationary boom from a corrupt political class that allowed banks to push credit so much without any of the limits that a Free Market would impose. The resulting deflationary bust is going to be extremely hard, specially since the global economy is also falling into the abyss. There isn't going to be any exogenous support possible...</blockquote>
Remember that By March 2010 Kiev house prices had dropped 40.5% from their August 2008 peak<div>
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By 2012, prices had dropped by <a href="http://www.nytimes.com/2012/07/12/greathomesanddestinations/real-estate-in-ukraine.html" target="_blank">about 50% from the peak</a>:</div>
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<blockquote class="tr_bq">
<span style="background-color: white; font-family: georgia, 'times new roman', times, serif; font-size: 15px; line-height: 22.0049991607666px;">The housing market has been in a downward spiral since the global financial crisis, making Kiev a buyers’ market. “Since 2008, prices have fallen twice,” said Igor Darmogray, a lawyer in the Kiev office of the Berlin firm Werner & Partners. “Two years ago, the prices were simply unimaginable, they were extremely high. The apartments which cost $1 million, now it’s difficult to sell them at $500,000.”</span></blockquote>
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<br />According to the data found on <a href="http://www.globalpropertyguide.com/real-estate-house-prices/U" target="_blank">this page</a>, the second leg of the price collapse has started as is even more violent that the first one, with<b> prices crashing by about 30% just in Q2 and Q3,</b> <b>in nominal terms</b>:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6thtI-Ma595vvxXd5yLnR-4LaO4Ccfey7qG_lI0TDT2AAoQa1tPG15-fOPci_Bf-6PZGBNdzX5a_ZjF9pcs3JC_AfDGRz3Dc_b4Y12KvLZFs9pZxW5RJ8wchKicPQwNW4IWJm_vuMBoA/s1600/Ukraine-property-prices2014-12-08_14-07-27.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6thtI-Ma595vvxXd5yLnR-4LaO4Ccfey7qG_lI0TDT2AAoQa1tPG15-fOPci_Bf-6PZGBNdzX5a_ZjF9pcs3JC_AfDGRz3Dc_b4Y12KvLZFs9pZxW5RJ8wchKicPQwNW4IWJm_vuMBoA/s1600/Ukraine-property-prices2014-12-08_14-07-27.png" /></a></div>
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Now, add to the fact that the local currency, the Hryvnia has also crashed by about 50% against the USD in the past 12 months alone, and you'll get a picture of the devastation that has happened in the property prices of Ukraine.<br />
<br />
<a href="http://globaleconomicanalysis.blogspot.com/2014/12/ukraine-needs-second-bailout-currency.html" target="_blank">Quoting Mish</a><br />
<blockquote class="tr_bq">
Since November 30, 2013, the Hryvnia has gone from 8.15-per-US$ to 15.34-per-US$. That's a decline of 46.87% in just over a year.</blockquote>
With the very little details I have been able to find, we can try to do some basic calculations, starting from a price of 100 in 2008, the price would have been about 50 in 2012. They dropped another 30 odd percents in 2014 after staying relatively flat in 2013. So we're now at 35. Finally, accounting for a 50% drop in the currency against the USD, it means that in USD terms, the prices is now about 17. <b>This is an 83% drop in property prices in a bout 6 years</b>, and there's still room for further drops, since Q4 2014 should also mark a decline given the situation in Ukraine. I wouldn't buy yet, but prices should now start looking attractive.<br />
<br />
Of course, some will argue that with civil war in Ukraine, it's expected for the prices to have fallen so much and that nobody could have forecast that. This would be wrong. It would be easy to argue but difficult to convince that war is a consequence of economic depression and not the other way around. Should Ukraine be a country with a booming economy, chances are none of the clashes and wars would have started in the first place.<br />
<br />
This is my thesis, and this is why it is possible to forecast the price drop without knowing which event will trigger the crash.</div>
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pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-37169722428432513292014-12-02T17:44:00.000+00:002014-12-02T17:44:14.465+00:00[ZH] Silver Soars 17% From Intraday Lows: Biggest Swing On RecordThis is a follow up on the post on Friday about buying Gold and Silver.<br />
Here's a quote from <a href="http://www.zerohedge.com/news/2014-12-01/silver-soars-17-intraday-lows-biggest-swing-record-gold-tops-1210-70-lows" target="_blank">ZeroHedge</a>:<br />
<blockquote class="tr_bq">
<span style="background-color: white; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; line-height: 17.3333320617676px;">Silver is up over 17% from its intraday lows today </span><strong style="background-color: white; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; line-height: 17.3333320617676px;">- this is the biggest positive swing since our data began</strong><span style="background-color: white; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; line-height: 17.3333320617676px;">. All the previous major swings have been downshifts, most recently in September 2011 (-22% and -18% over 2 days). Volume is very high also. </span><strong style="background-color: white; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; line-height: 17.3333320617676px;">Gold is back above $1,210,up over $70 from its intraday lows</strong><span style="background-color: white; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; line-height: 17.3333320617676px;">...</span></blockquote>
Those who where planning to bottom fish had a very narrow opportunity both in terms of market depth and duration of the window in the middle of the night in the Asian hours.<br />
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Here are the screenshots (they do not show the Asian hours).<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSDfbdhcXh5sE-s-bSMKgClQe8M8EjL_zGWCpEUEGfLN6ftdKUuJBQ1X8hQFy8PfIoHtDnqRy1URRy3gWrzzc-rWRFpbs2vbWlMG1Gnww-eo22QSBpYuq56C_FeXWZP5mPmkRbXJqtwYE/s1600/GLD-2014-12-02_10-49-54.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSDfbdhcXh5sE-s-bSMKgClQe8M8EjL_zGWCpEUEGfLN6ftdKUuJBQ1X8hQFy8PfIoHtDnqRy1URRy3gWrzzc-rWRFpbs2vbWlMG1Gnww-eo22QSBpYuq56C_FeXWZP5mPmkRbXJqtwYE/s1600/GLD-2014-12-02_10-49-54.png" height="347" width="400" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivs3XZ11lpgd5N8r9CHWJhfj__eRI_4pdRF0cAOCqtRv0BgQMl4GtjnHSQ5kLy3d9A479iD0gHTVohbcJtQd5NRNA37iQi0WdeZGqUK32g2fq08PNdMiSkOa0YTzjozKnfLF0VB1n5B-c/s1600/SLV-2014-12-02_10-49-33.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivs3XZ11lpgd5N8r9CHWJhfj__eRI_4pdRF0cAOCqtRv0BgQMl4GtjnHSQ5kLy3d9A479iD0gHTVohbcJtQd5NRNA37iQi0WdeZGqUK32g2fq08PNdMiSkOa0YTzjozKnfLF0VB1n5B-c/s1600/SLV-2014-12-02_10-49-33.png" height="351" width="400" /></a></div>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-84804345480820586222014-11-28T16:51:00.000+00:002014-11-28T17:00:12.125+00:00Contrarian Signal — Citi's Dutch Strategist calls "useless Gold a 6,000 years bubble, the longest-lasting bubble in human history"After more than 3 years of steady decline (as forecast on this blog), pessimism around gold and silver have reached such extremes that these assets should now become vey attractive to true contrarian investors.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDNr1Srfnc-YLyOuYAVrh0xvbYeWnSd0BMTaL-1ty2ZAQseYrDsWp16A6RnUg9nw28YKkuTkk_YUQfZ_92AGSV7kTWuPUpVRF2nBlj8Ri9WWeZuDcqHu5Fc9qmKk6BpyQN8_JU2i78_ks/s1600/SLV-2014-11-28_17-48-58.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDNr1Srfnc-YLyOuYAVrh0xvbYeWnSd0BMTaL-1ty2ZAQseYrDsWp16A6RnUg9nw28YKkuTkk_YUQfZ_92AGSV7kTWuPUpVRF2nBlj8Ri9WWeZuDcqHu5Fc9qmKk6BpyQN8_JU2i78_ks/s1600/SLV-2014-11-28_17-48-58.png" height="263" width="320" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhx6w0zgLT5-1OQbKVDmg5fuxZF8SFZI-ZbFhktUWduzypvVBX_n-M7P3GnnD3Nv_Jg_yrKjSm-x40RHgsCoVo1R697n-xxcPXcLSi6uMZqr-SiE3KPtJp6TlvJlTD6xK1Bi70NGMXojSU/s1600/GLD-2014-11-28_17-48-30.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhx6w0zgLT5-1OQbKVDmg5fuxZF8SFZI-ZbFhktUWduzypvVBX_n-M7P3GnnD3Nv_Jg_yrKjSm-x40RHgsCoVo1R697n-xxcPXcLSi6uMZqr-SiE3KPtJp6TlvJlTD6xK1Bi70NGMXojSU/s1600/GLD-2014-11-28_17-48-30.png" height="274" width="320" /></a></div>
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Here's the <a href="http://www.zerohedge.com/news/2014-11-27/gold-6000-year-old-bubble-citis-dutch-strategist-throws-all-over-gold-days-after-dut" target="_blank">most anti-gold report</a> I have <b>ever</b> read in my life:</div>
<blockquote class="tr_bq">
<span style="background-color: white; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; font-style: italic; line-height: 17.3333320617676px;">The gold bubble is, of course, pretty impressive. Intrinsically useless gold has positive value. </span><strong style="background-color: white; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13px; font-style: italic; line-height: 17.3333320617676px;">It has had positive value for nigh-on 6,000 years. That must make it the longest-lasting bubble in human history.</strong></blockquote>
The author even question the fact that gold has any value at all, and calls it a 6,000 years bubble. Can you get any more bearish than that? I can't see how.<br />
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Based on this, I have added to my GLD (@113.29) and SLV (@14.99) positions.</div>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-68128495447940601182013-12-11T16:50:00.001+00:002013-12-11T16:50:16.612+00:00Buying Gold and SilverQuick update: I have bought some gold (GLD@121.50) and silver (SLV@19.60) as I find the correction to be very substantial and sentiment readings to be extremely negative.<br />
<br />
Again, this is a short term trade as on the long term, I believe PMs will drop in value over the next few years, with silver trading in the single digits at some point, and that's the view I've been sharing since silver was close to $50.pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-21109084988938130952013-09-25T16:41:00.001+01:002013-09-25T16:41:51.717+01:00Closed Gold and Silver positionI've been away for too long and have missed a number of opportunities with the markets... Including selling my gold and silver when the sentiment peaked a few weeks ago...<br />
<br />
I just closed my long gold (open GLD@119.28 - close GLD@129.09) and a long silver positions (open SLV@18.24 - close SLV@21.09) with a small gain, but disappointing compared to what it could have been if I had more time on my hands!pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-79191857780116905882013-08-08T14:35:00.003+01:002013-08-08T14:35:59.259+01:00Fukushima Leaking 300 tonnes a day of highly contaminated water into the oceanI have made countless posts <a href="http://realitylenses.blogspot.sg/search?q=fukushima&max-results=20&by-date=true" target="_blank">about Fukushima</a> over the past several years as to me, it's the <b>biggest and largest man-made disaster in history</b>.<br />
<br />
Today, <a href="http://globaleconomicanalysis.blogspot.sg/2013/08/300-tons-day-of-nuclear-waste-from.html" target="_blank">Mish has posted a few links</a> which should give anyone shivers. Here's what Reuters announced: <a href="http://www.reuters.com/article/2013/08/07/us-japan-fukushima-pm-idUSBRE97601K20130807">Japan says Fukushima leak worse than thought, government joins clean-up</a>
<br />
<blockquote class="tr_bq">
<br />
Highly radioactive water from Japan's crippled Fukushima nuclear plant is pouring out at a rate of 300 tonnes a day, officials said on Wednesday, as Prime Minister Shinzo Abe ordered the government to step in and help in the clean-up.<br />
<br />
The revelation amounted to an acknowledgement that plant operator Tokyo Electric Power Co (Tepco) has yet to come to grips with the scale of the catastrophe, 2 1/2 years after the plant was hit by a huge earthquake and tsunami. Tepco only recently admitted water had leaked at all. [...] </blockquote>
<blockquote class="tr_bq">
"We think that the volume of water (leaking into the Pacific) is about 300 tonnes a day," said Yushi Yoneyama, an official with the Minister of Economy, Trade and Industry, which oversees energy policy.<br />[...]<br /><br /> Tatsuya Shinkawa, a director in METI's Nuclear Accident Response Office, told reporters the government believed water had been leaking for two years, but Yoneyama told Reuters it was unclear how long the water had been leaking at the current rate.<br /><br />Shinkawa described the water as "highly" contaminated.</blockquote>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-87036728512084746122013-07-29T16:30:00.003+01:002013-07-29T16:30:45.731+01:00Short ES futures contract [Updated]I just shorted the ES SP500 contract @ 1682.00<br />
I intend this trade to be short term trade, lasting only a few days, but I keep my options open.<br />
<br />
Update: Call it luck, but the ES just dropped 5 points within minutes of entering my trade. I now have a GTC stop order @ 1681, making sure that this trade will not lose money.pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-34605476331918953462013-06-26T17:24:00.001+01:002013-06-26T17:24:23.073+01:00Gold and Silver TradeIt's been a very long while since I last posted here, as I've been extremely busy working 12 hours a day on the three projects that I have tried to run in parallel (most probably a mistake to have thought I could do that!). I have not even been in a position to find the time to trade or follow the markets as closely as I would have wanted.<br />
<br />
But with gold and silver so depressed, I see value in them right now — at least for a short term trade, on the long term, I favor the depressed one digit silver price that I have been forecasting for a while. I've been quite vocal about all these "experts" who forecasting silver $150 or gold $3000 and took the short side of that trade while people were piling in on silver $47 all the way down to $36 but now that Silver is down close to 60% from the top, it seems like not a single soul is bullish on it... That's the right time for us, the realists and the contrarians, to become bullish and courageous and take the opposite side of that view.<br />
<br />
Consequently, I have just opened a long gold (GLD@119.28) and a long silver positions (SLV@18.24). It might not be the very bottom, but probabilities are a in a favour of a relatively nice bounce.pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-90717723364014561372013-04-07T13:03:00.001+01:002013-04-07T13:03:10.145+01:00Another Major Leak of Radio Active Water at Fukushima<br />
As I have stated many times before, the Fukushima meltdown is probably the biggest and largest man-made disaster in history.<br />
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<br /></div>
Yet, the public's awareness of this human, ecological and economic catastrophe has been very much tamed by the political parties all over the globe and their principal propaganda arm: the mainstream media.<br />
<br />
Here's the latest news coming out of Fukushima, and it's awful.<br />
<blockquote>
<a href="http://www.japantimes.co.jp/news/2013/04/07/national/fukushima-tank-springs-major-leak/" target="_blank">JapanTimes</a> - 2013-04-07 </blockquote>
<blockquote>
Around 120 tons of contaminated water with an estimated 710 billion becquerels of radioactivity has probably leaked into the ground under the Fukushima No. 1 power plant, Tokyo Electric Power Co. revealed Saturday. </blockquote>
<blockquote>
“It is the largest amount of radioactive substances that has been leaked” since the crippled facility’s cold shutdown was declared in December 2011, Tepco official Masayuki Ono said.</blockquote>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-36751892671145915742013-02-03T15:36:00.003+00:002013-02-03T15:36:58.871+00:00The Entire Dutch Banking System is on a Government LifelineYou thought Hollande and more generally speaking Nordic countries had a better fiscal state? and no real estate bubble? And their banking system was safe? And they would save the Euro? <i>Think again</i>.<br />
<br />
Apparently, there has been a proper depositor run on this bank, and investors didn't want to put more capital in the institution. That says quite a lot on the dire state of this bank.<br />
<br />
The good news is, this time, shareholders and subordinate bond holders have been wiped out.<br />
<br />
Still, overoptimism in state interventionism and denial of reality persist as <span style="background-color: white;"><i>experts said SNS Reaal's near-collapse didn't signal a crisis for the wider Dutch banking sector. </i></span><br />
<br />
The <a href="http://online.wsj.com/article/SB10001424127887323701904578277253567195598.html?mod=googlenews_wsj" target="_blank">WSJ reports</a> (via GoogleNews):<br />
<blockquote class="tr_bq">
AMSTERDAM—<b>The Dutch state Friday nationalized troubled banking and insurance company SNS Reaal NV</b>, following <b>unsuccessful talks with private investors on a capital boost</b> after heavy outflows of deposits had pushed the lender close to collapse in recent days.
</blockquote>
<blockquote class="tr_bq">
<b>The Dutch state will inject €2.2 billion ($2.99 billion) into the company, write off €800 million from an earlier bailout and €700 million on the value of SNS Reaal's toxic property loans</b>. It will also provide an additional €6.1 billion in loans and guarantees to put the firm on a sound footing. The burden to taxpayers will be eased somewhat through <b>a €1 billion contribution from the other Dutch banks through a special levy</b>.</blockquote>
<blockquote class="tr_bq">
The government rescue was inevitable after SNS Reaal suffered a run on deposits and failed to raise capital on its own, Finance Minister Jeroen Dijsselbloem said. "<b>Without a solution, SNS Reaal would have gone bankrupt, and put the financial system in severe and immediate danger.</b>"
</blockquote>
The truth is that the bankruptcy would have made the financial system stronger. This action from the government made the country's balance sheet much weaker, the economy as well, and kept an insolvent company which should have disappeared in business, to compete against sounder institutions. <br />
<blockquote class="tr_bq">
The nationalization deals a fresh blow to public finances at a time when the Netherlands, considered a "core economy" in the euro zone, is battling to meet European Union budget targets. [...] </blockquote>
<blockquote class="tr_bq">
<b>The Dutch government now owns two of the largest banks in the Netherlands,</b> following the rescue of ABN Amro Bank NV in 2008. <b>The biggest bank by assets, ING Groep NV has yet to repay a government bailout</b>.
<br />
</blockquote>
<blockquote class="tr_bq">
"It is worrisome. <b>Nearly the entire Dutch banking system is now on a government lifeline</b>," said Arnoud Boot, a professor of corporate finance at the University of Amsterdam. </blockquote>
<blockquote class="tr_bq">
SNS Reaal has more than €30 billion in deposits and regulators have put it in the "<b>too-big-to-fail" category.</b> The company, based in the city of Utrecht, was groaning under steep loan losses on real-estate projects in the U.S., Spain and the Netherlands. The losses have eroded its capital base and ability to repay a government bailout received in 2008. </blockquote>
<blockquote class="tr_bq">
The company last summer entered talks with private investors to raise capital and avoid nationalization. But most parties—including a consortium of Dutch banks—were wary of getting involved because of the distressed property loans.[...] </blockquote>
<blockquote class="tr_bq">
The government said it used a new bank-intervention law, aimed at giving the state more powers to intervene in troubled banks and protect depositors. <b>By wiping out shareholders as well as subordinated-debt investors, it took a drastic step</b>, analysts said. "It certainly [is] the harshest treatment to bondholders for any large European bank," BNP Paribas said. </blockquote>
<blockquote class="tr_bq">
[...] <span style="background-color: yellow;"><b>Still, experts said SNS Reaal's near-collapse didn't signal a crisis for the wider Dutch banking sector. </b></span>"The problems at SNS Reaal weren't new. They have been simmering for years, but they were never dealt with," said Harald Benink, professor of banking and finance at Tilburg University.</blockquote>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com1tag:blogger.com,1999:blog-6630104052002496191.post-72537568916687426622013-01-29T15:19:00.001+00:002013-01-29T15:19:47.815+00:00Bullishness and Complacency - Extreme AgainAgain and again, bullishness and complacency reach extreme levels, not seen since the peak of 2007. This means that the mania area is not finished yet, and the third bubble within 15 years has now been blown by the socialist governments (all of them, really, as they all have a socialised, centrally controlled money and interest rate) and their main branch: the Central Banks.<br />
<br />
Here are some of the indicators of such extreme bullishness and complacency:<br />
<ul>
<li><a href="http://etfdailynews.com/2013/01/28/new-record-highs-for-dow-jones-transports-and-russell-2000-a-very-positive-signal/" target="_blank">New Record Highs For Dow Jones Transports and Russell 2000</a> — Well, as you know, the Russell 2000 is the Junk equivalent of US equity, and it's at an all time high. </li>
<li><a href="http://www.bloomberg.com/news/2013-01-18/vix-slips-to-lowest-since-2007-as-s-p-500-reaches-five-year-high.html" target="_blank">VIX Slips to Lowest Level Since 2007 as S&P 500 Rallies</a> — The VIX traded for 12.xx a few days ago, the lowest since the all time high in shares.</li>
<li><a href="http://www.bloomberg.com/news/2013-01-21/investors-most-optimistic-on-stocks-in-3-years-on-eve-of-davos.html" target="_blank">Investors Are Most Optimistic on Stocks in 3 1/2 Years</a> — <br />
International
investors are the most bullish on stocks in at least 3 1/2 years, with
close to two- thirds planning to raise their holdings of equities during
the next six months, according to a Bloomberg survey. </li>
<li><a href="http://www.bloomberg.com/news/2013-01-22/german-investor-confidence-increases-to-2-1-2-year-high.html" target="_blank">German Investor Confidence Increases to 2 1/2-Year High</a> — <br />German
investor confidence increased to the highest in 2 1/2 years in January,
adding to signs that Europe’s largest economy may gather momentum. <br />
The ZEW Center for European Economic Research in Mannheim said its
index of investor and analyst expectations, which aims to predict
economic developments six months in advance, jumped to 31.5 from 6.9 in
December. That’s the highest since May 2010 and the biggest gain in 11
months. Economists forecast an increase to 12, according to the median
of 39 estimates in a Bloomberg News survey. </li></ul>
So... Where from here? :-)pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com1tag:blogger.com,1999:blog-6630104052002496191.post-19145270541034995082013-01-26T06:50:00.000+00:002013-01-26T09:38:45.963+00:00Apple - How to Disappoint both Consumers and MarketsAs a long term investor in Apple — I bought my shares back when they were trading at $26 before the 2 to 1 split; which, means $13 of today's shares — I have been writing periodically about the company, Steve Jobs, and more recently, the incompetents who have taken the leadership positions at the firm, including Scott Forstall (thankfully, he was let go not long ago) and Tim Cook, ex-bean-counter trying to take the genius and visionary seat left empty by the late Steve Jobs.<br />
<br />
Back to when Apple was trading near its all time high, I wrote<a href="http://realitylenses.blogspot.sg/2012/08/aapl-at-new-all-time-high-while.html"> AAPL at New All-Time High While The Internal Destruction of Steve Jobs' Legacy Has Begun.</a><br />
<br />
So, what has happened? Let's ignore the markets for a moment, as the share price doesn't tell anything about how the good a companies products are. Let's focus on the products then:<br />
<ul>
<li>The share buy-back plan announced when the share price was in the $600s... How clever does that look now that it's in the low $400? </li>
<li>The new iMac</li>
<ul>
<li>It's basically the same old iMac stripped off it's optical drive and packaged in a much nicer design, but as with the iPhone, its design too far to difficult and expensive to produce. That's exactly what happens when there's no one to reign in genius designers with no commercial understanding. </li>
<li>Not only is it difficult and costly to produce, a major commercial mistake was committed by announcing it in August/September and not making it available until late December. In the meantime, no pre-orders were taken and the old iMac was taken out of the picture. So not a single iMac was sold for almost 3 months! Yet, in case nobody at Apple saw that coming... they <a href="http://www.macrumors.com/2013/01/23/apple-blames-low-mac-sales-on-imac-supply-constraints/" target="_blank">blamed low Mac sales on the supply iMac issues</a>!</li>
</ul>
<li>The iPhone 5</li>
<ul>
<li>The iPhone 5 is flawed the same was that the iMac is: extremely difficult to produce, and expensive due to its base materials. In addition to that, it's plain ugly, and it lacks any killer feature to get people to upgrade. So basically, since the iPhone 4 (where the retina display itself, was a good reason to upgrade) there has been very little innovation made to the iPhone, only pushing the limits of what was already there. That's not the area were Apple used to strive, that was Microsoft's domain!</li>
<li>Apple still refuses to create different screen sizes, yet, many people would prefer a larger display, even though the one person in charge of the iPhone's design might disagree.</li>
</ul>
<li>The Maps fiasco</li>
<ul>
<li>Why did Apple need to go in the Maps business? Specially when there is not a single dollar of profit coming from it?</li>
<li>Even
though Apple wanted to go into that business, it was too arrogant to
buyout a struggling Nokia or even TomTom. We can do maps better than
anyone, and beat something Google has been refining for 9 years, in 1
year. Major sin.</li>
<li> In the end, Google Maps for iPhone is a killer. It's beyond any map apps, and it is really saving Apple's ass.</li>
</ul>
<li>iOS</li>
<ul>
<li>iOS has not been making any progress for quite some time now. Over the past 5 years, there has not been any real UI progress made on the iPhone, even though people have now been able to adjust themselves to touch screens and several interface widgets have now emerged as intuitive and successful, and are widespread (used in FaceBook and GMail and so forth). Such widespread widgets used by say 90% of the iPhone users should be embraced instead of suffering from the "<a href="http://en.wikipedia.org/wiki/Not_invented_here" target="_blank">not invented here</a>" syndrome.</li>
<li>On my iPad, GMail, Chrome and GMaps have replaced Mail, Safari and Maps. They make more productive, are faster and work far better than the Apple's equivalent. The issue again is that Apple has lost its time implementing ridiculous UI animations and useless tools such as the PassBook and its shredder...</li>
<li>In addition to that, something I really don't understand is why Apple doesn't implement a shorter release cycles for the iOS apps it bundles. Google is, using the AppStore, pushing numerous versions very month, and making their tools better and better by the week. On the other side, Apple has created the AppStore but will update its own apps only with operating system upgrades. How silly! Google is really killing Apple using the limited set of tools and within the anti-competitive rules that Apple has set for the iOS ecosystem!</li>
</ul>
<li>iPad / iPad mini</li>
<ul>
<li>The iPad mini is a killer; and it's going at lower price tag than the iPad 2 which is still on sale. Who's going to buy that??</li>
</ul>
<li>Mac OS</li>
<ul>
<li>Yet again, no real innovation or revolution for several years now. It seems like most of the staff is now working on iOS.</li>
<li>They have made some horrible UI decisions with the Contacts and Calendar apps which make them unusable. So I now use Google Calendar and only contacts on the iPhone.</li>
<li>No updates to iLife or iWork since 2009...</li>
<li>Reverse porting things like launchpad to the Mac is stupendously stupid. They are not meant for keyboard+environment and do not fit in nicely. </li>
<li>Same for Aperture. So I replaced Aperture by the much better and nicer Lightroom. </li>
</ul>
</ul>
While I was eager to upgrade my Macs and my iPhone, I was sorely disappointed and have since decided to not upgrade and wait & see... <br />
<br />
I use my iPad and iPhone mostly for:<br />
<ul>
<li>Browsing (Chrome these days)</li>
<li>email (on my GMail)</li>
<li>maps on Google Maps</li>
<li>Bloomberg</li>
<li>Music on iTunes</li>
<li>Videos</li>
<li>books in ePub and PDF format </li>
<li>Trading tools</li>
</ul>
Is there anything Android cannot do? So chances are, I'll buy myself an Android tablet and phone to try them out.<br />
<br />
While it's easy to beat someone who's fallen on the ground now that the share price as fallen by about 40%, I don't think that's how this post should be perceived — after all, I saw that coming and started to beat up the management before Forstall was fired and near the all time high of the share price.<br />
<br />
It's amazing how Steve Jobs was single-handedly driving this company. It's time for Apple to look into the mirror and see that they're only the shadow of what they used to be when Steve Jobs was in charge and either make the required readjustment, or end up becoming irrelevant like Microsoft has been doing for the past 10 years.<br />
<br />
That said, I think the negativity about the stock is now very deep, and it's trading at close to 10x net earnings... So if profits don't start to fall (they are still on a positive slope, and rising), the share is good deal. One can wonder though just how much more the profits can rise with those incompetents as pilots.pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com1tag:blogger.com,1999:blog-6630104052002496191.post-60608480685749680252013-01-15T15:14:00.001+00:002013-01-15T15:14:03.858+00:00JPY Gold Silver UpdateThe Japanese Yen is making headlines. And not the kinds of headlines that sound bullish -- the exact contrarian indicator for actually building a bullish case.<br />
<br />
Here's one headline I just found (though it's not new): <a href="http://blogs.wsj.com/marketbeat/2012/12/26/shorting-yen-could-be-hedge-funds-favorite-trade-in-2013/" target="_blank">Shorting Yen Could Be Hedge Funds’ Favorite Trade in 2013</a> <br />
<br />
Here a few other points:<br />
<ul>
<li>Sentiment is ultra low. One of my friends even mentioned that the DSI is at 7% - the lowest in 8 years at least</li>
<li>Like many other bloggers, Mish has been talking several times about how low is going and how fundamentals are supporting these levels. Well, whoever thinks in terms of fundamentals when it comes to markets is just rationalising, and at this levels, they are rationalising a trend that is about to reverse.</li>
</ul>
In the meantime, gold and silver have been scrapping bottom for several weeks, and I think a tradable bounce has started a few days ago.pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-42927459160650179302013-01-15T14:36:00.001+00:002013-01-15T14:36:39.949+00:00Portfolio Update I have been away in Europe for a few weeks, and it was quite interesting to see how quickly things are deteriorating, for example en France, which looks more and more like a developing country to me.<br />
<br />
In the meantime, my stops have been hit on my EUR/USD short and my AUD/JPY short while I was away. I was stopped at about 89.00<br />
<br />
I nonetheless managed to open a new short position on the AUD/JPY yesterday only, but at a much more favorable entry point than my original one: new entry point is 92.50 and intend to grow it larger if the AUD keeps the levitation game going.pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-30995728613511199952012-12-16T13:46:00.002+00:002012-12-16T13:46:47.114+00:00France To Increase Beer Tax by 160% — But Not Wine Tax<span style="font-family: inherit;">I don't have much to add to what is included in the following Bloomberg report — expect that yet again, François Hollande's comment about health reasons (what a lie!) and the fact that he found one area where France's tax rate is not the highest in the world show again what an ignorant demagog he is. </span><br />
<blockquote class="tr_bq">
<span style="font-family: inherit;"></span><br />
<span style="font-family: inherit;">The French government passed this week a law that adds 480 million
euros ($628 million) in new taxes on beer, while leaving wine unscathed. </span><br />
<br />
<span style="font-family: inherit;"> </span><span style="font-family: inherit;">“The government doesn’t want to touch wine and Champagne
producers because they are much too powerful,” Bogaert said in an
interview at his small brewery in Aix-Noulette in northern France, which
employs eight people and has 1.5 million euros of revenue. </span><br />
<span style="font-family: inherit;">
</span><br />
<span style="font-family: inherit;"><b>With beer levies rising 160 percent</b> to bring in the extra receipts,
the 2 billion-euro industry is bracing for shrinking sales, investments
and jobs. </span><br />
<br />
<span style="font-family: inherit;">Danish brewer Carlsberg A, which owns France’s
biggest beer brand <b>Kronenbourg, says it may have to cut jobs in the
country</b>.</span><br />
<br />
[...]<span style="font-family: inherit;"> </span><span style="font-family: inherit;">The beer tax is part of the 24.4 billion euros in additional revenue
French President Francois Hollande’s government is trying to raise to
meet a pledge to cut the budget deficit to 3 percent of gross domestic
product in 2013 from 4.5 percent forecast for this year. <b>The government
also cited health considerations when it announced the beer-tax
increase.</b></span><b><span style="font-family: inherit;"></span><span style="font-family: inherit;"> </span></b><br />
<br />
<span style="font-family: inherit;"><b>Taxes from wine and Champagne makers
amount to about 120 million euros, while for brewers it’s being raised
to more than 800 million euros</b>, Chevremont says. </span><span style="font-family: inherit;"> </span><br />
<br />
<span style="font-family: inherit;">[...] The wine industry -- from grape growers and wine makers to
distributors -- employs 250,000 people in France. That compares with
about 75,000 for beer -- from barley growers to sellers of the brew. </span><br />
<span style="font-family: inherit;"> [...] </span><br />
<span style="font-family: inherit;"></span><span style="font-family: inherit;"></span><span style="font-family: inherit;">The
<b>new tax may boost beer prices by 20 percent, curb consumption and
investment and lead to job losses and possible bankruptcies</b>, the
Brewers’ Association estimates. </span><br />
<span style="font-family: inherit;">
</span><span style="font-family: inherit;">Some expect worse. </span><br />
<span style="font-family: inherit;"> </span><span style="font-family: inherit;">“With <b>the tax expected to lead to a 25 to
40 cent increase in the price of a small beer, this will further
accelerate the existing trend from café to home consumption, which has
already contributed to the closure of 12,000 establishments since 2007,</b>”
Bergeron said. </span><br />
<span style="font-family: inherit;">
</span><br />
<span style="font-family: inherit;"><b></b></span><span style="font-family: inherit;">[...] The French president shrugged off concerns, saying France’s tax rate is far from the highest in Europe.</span><span style="font-family: inherit;"> </span></blockquote>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-34481896040127011312012-12-16T13:36:00.000+00:002012-12-16T13:36:43.047+00:00Mittal Not Welcome in France Said French Industry Minister - Unions Hugely Disappointed that the 600 Jobs Have been SavedOnly in France, the land of blind socialism and wealth destruction, can you read stories such as the one below.<br />
<br />
Reading these 50 years ago during the cold war, or reading about North Korea or in some banana republic in Africa or Lat Am would not surprise me. But this is France, still one of the largest economies in the world, even though the speed of its collapse seem to be on track to be of historical proportions.<br />
<br />
By employing the <a href="http://en.wikipedia.org/wiki/Duck_test">Duck Test</a>, I can hence conclude that <i>France is banana republic</i>, in between a communist regime and a dictatorship by some uneducated and unintelligent leader.<br />
<br />
The question remains: Who would still want to do business in France, create jobs or companies there, after seeing this?<br />
<br />
By a complete lack of understanding — or maybe a total demagogic lie — the French Prime Minister concludes: <i>The government has shown its ability to intervene to find positive outcomes for jobs and investment.</i><b> OMG!</b><br />
<blockquote>
(Bloomberg) 2012-11-27 — President Francois Hollande will meet today with Lakshmi Mittal, chief executive officer of ArcelorMittal, the world’s biggest steelmaker, after a member of <span style="background-color: yellow;">the French government called for the nationalization of the company</span>’s troubled local unit.
The meeting at the Elysee presidential palace in Paris follows <span style="background-color: yellow;">Industry Minister Arnaud Montebourg’s remarks to Les Echos newspaper yesterday that the state “doesn’t want Mittal in France anymore,”</span> accusing the company and its CEO of lying and calling Mittal “the problem.” Mittal’s family told Le Monde dated today it was “extremely shocked” by the comments. </blockquote>
<blockquote>
Montebourg’s remarks, which also include a call for a temporary state control of the company’s activities at the Florange steel-making site in north-eastern France, are the first sign the government will hold industrial companies to commitments on jobs and long-term investments, said Karine Berger, a lawmaker from the Socialist Party.
[...] </blockquote>
<blockquote>
While ArcelorMittal wants to shut down the furnaces at Florange, it wants to continue operating other activities at the site. It is opposing the sale of the whole of the Florange site, saying that would risk the viability of the rest of its operations in France, where the company employs 20,000 people. Montebourg says he wants the company to accept one of the two offers that he has for the whole of the Florange site. </blockquote>
<blockquote>
(Bloomberg) 2012-12-01 — <b>ArcelorMittal won’t go ahead with planned job cuts at its Florange steel mill in northeast France and will invest 180 million euros ($234 million) in the plant over the next five years, French Prime Minister Jean-Marc Ayrault said</b>.
In a televised statement this evening, Ayrault said the government was dropping its threatened nationalization of Florange because of ArcelorMittal’s commitments. </blockquote>
<blockquote>
<b>
“The government has shown its ability to intervene to find positive outcomes for jobs and investment,” Ayrault said. “ArcelorMittal’s engagements are unconditional, and the government will take all steps necessary in the case of non- compliance.”</b>
President Francois Hollande had given Lakshmi Mittal, the chief executive officer and biggest shareholder of the world’s largest steelmaker, until tomorrow to either keep the 600 threatened jobs at the plant, sell all of it or face its nationalization. Industry Minister Arnaud Montebourg said a week ago that Mittal is no longer wanted in France. [...] </blockquote>
<blockquote>
Some <span style="background-color: yellow;">union leaders said they weren’t satisfied</span> with Ayrault’s announcement. “<span style="background-color: yellow;">It’s not what we expected from a Socialist government,</span>” Frederic Maris, a representative of the CGT union, said in a live interview on BFM television. “We were expecting a new buyer or a nationalization. We don’t want to see ArcelorMittal any more. <span style="background-color: yellow;">It’s a huge disappointment.</span>” </blockquote>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-26938432189003475272012-12-16T12:26:00.000+00:002012-12-16T12:48:04.614+00:00Fortunes Flee France While Politicians Add Fuel to the FireA few days ago, Gérard Depardieu was leaving France and exiling himself in Belgium for tax reasons.<br />
<br />
Depardieu is one of the most famous and most respected personalities in France mostly as an actor, but not only:<br />
<blockquote class="tr_bq">
<i>Gérard Depardieu is a French actor and filmmaker. He is a Chevalier of the Légion d'honneur, Chevalier of the Ordre national du Mérite and has twice won the César Award for Best Actor. He also won the Golden Globe award for Best Actor in Green Card and was nominated for an Academy Award for the title role in Cyrano de Bergerac. Since 7 December he lives officially in Néchin, Belgium</i>. (Source: <a href="http://en.wikipedia.org/wiki/G%C3%A9rard_Depardieu" target="_blank">Wikipedia</a>).</blockquote>
His action was qualified by J-M Ayrault, the French Prime Minister, of "pathetic". Unfortunately, those socialist governing France are one of amazing lot whose ignorance of economics and politics is stunning, but also who seem to be simply acting like gangsters.<br />
<br />
Now Gérard Depardieu has published an open letter to Ayrault, letting him know that he will give up on this French citizenship: <i>"Who
are you to judge me so I ask you, Mr. Ayrault, Prime Minister Mr.
Holland, I ask you, who are you?"
"I've never killed anyone, I do not think unworthy, <span style="background-color: yellow;">I paid 145 million
euros in taxes</span> of forty-five years, <span style="background-color: yellow;">I paid in 2012, 85% tax on my income and I employ
80 people</span> (...). I am not to complain or to brag, but I refuse the word "pathetic", "says he, repeating the word that does not pass. Word choice on which Jean-Marc Ayrault has since recovered a little. "I give you my passport and Social Security which I've never used," warns the actor.</i><br />
<br />
Now the question is, who on earth would be happy to pay 85% of their income for the government made of such insane and ignorant people to go and waste it?<br />
<br />
More available on this <a href="http://www.lefigaro.fr/cinema/2012/12/16/03002-20121216ARTFIG00028-gerard-depardieu-dit-renoncer-a-la-nationalite-francaise.php?cmtpage=2#comments-20121216ARTFIG00028" target="_blank">report from the Figaro</a> (Google translation <a href="http://translate.google.com/translate?sl=fr&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&eotf=1&u=http%3A%2F%2Fwww.lefigaro.fr%2Fcinema%2F2012%2F12%2F16%2F03002-20121216ARTFIG00028-gerard-depardieu-dit-renoncer-a-la-nationalite-francaise.php%3Fcmtpage%3D2%23comments-20121216ARTFIG00028" target="_blank">here</a>). There's also a video interview, which lasts 15min and which I didn't listen to as it makes me feel sick. The one sentence I heard was that "J-M Ayrault has a big plan to fight poverty - because there are more than 8 million poor people in France" and he said that "When he sees the compensations of the CAC 40 CEOs, he is proud to have created the 75% tax bracket for those making more than 1 million euros". <br />
<br />
My comments on the two points:<br />
<ul>
<li> If the government could stop poverty, everybody would be "rich". Since being rich is a relative compared to those who are poor(-er), it would basically mean that everyone body is poor. Reducing the gaps between the rich and the poor is always a one way process: making the rich less rich and keeping the poor as poor (as there are so many poor compared to the rich ones).</li>
<li>There are 40 CEOs in the CAC40. Even if each of them would make 100 million euros, and they were taxed at 100%, the government would only bring in 4 billion euros. A drop in the bucket.</li>
</ul>
Moreover, it appears that the current government, pretending to try to lever the social gaps and reduce the poverty gap — apparently by trying to make everyone poor — is actually working on creating social class warfare and attacking the "rich" (or, basically, attacking the minority, an easy target, specially in a democracy).<br />
<br />
With people fleeing France as there are no jobs and taxes are skyrocketing, and entrepreneurs and investors having an extremely high incentive to NOT create any jobs or even companies, and also more away, the social mood is extremely low.<br />
<br />
And with the government attacking on personal grounds those who do good to the country, and, in the end, the true patriots who decides to stop funding this destructive and corrupt policies.<br />
<br />
The conclusion is that you can expect thing to sour at an exponential pace in France — the country has been in shambles since WWII and the only President over the past 70 years who made France move forward was Charles de Gaulle. Since he left every one of them has worked toward bringing the countries to its knees. And it might be that Holland will be very very successful and achieve this very quickly from here.<br />
<i></i><br />
<i></i> pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0tag:blogger.com,1999:blog-6630104052002496191.post-16796924524902017082012-12-14T13:48:00.001+00:002012-12-14T13:48:08.233+00:00Picture From ChinaAn amazing photo from Reuters:<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4dIPvnLRX94kzg7gC0D4UJl6cqMorSYpiT39KqQisztTLEhnnaTy-oaJjj6dYKgcoHKIU_iGHziaDT9Qrn8Ug20GgMvPF7YzVgqp74ZsWXztbMnoRE9yxNahHixm0EAIpb6uK9vLD-1c/s1600/Reuters+-+01EditorsChoiceRTR3AQ12.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4dIPvnLRX94kzg7gC0D4UJl6cqMorSYpiT39KqQisztTLEhnnaTy-oaJjj6dYKgcoHKIU_iGHziaDT9Qrn8Ug20GgMvPF7YzVgqp74ZsWXztbMnoRE9yxNahHixm0EAIpb6uK9vLD-1c/s640/Reuters+-+01EditorsChoiceRTR3AQ12.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">A car stops beside a house in the middle of a newly built road in
Wenling, Zhejiang province, China, November 22, 2012. An elderly couple
refused to sign an agreement to allow their house to be demolished. They
say that compensation offered is not enough to cover rebuilding costs,
according to local media. Their house is the only building left standing
on a road which is paved through their village</td></tr>
</tbody></table>
pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com1tag:blogger.com,1999:blog-6630104052002496191.post-20017829403106456552012-12-12T15:04:00.001+00:002012-12-12T15:04:52.245+00:00Extreme Sentiment: The Case of JPY and AUD - And Portfolio UpdateI have been following the JPY for some time, with my friend SS. He sent me last a few charts, confirming that the historically low bullishness (or high bearishness) has reached a new extreme, and that at the same time commitment of traders is showing extreme long speculative positions on the JPY, extreme long positions on the JPY by commercials, and the opposite extremes on the AUD, one of the bubble currencies to pop in the coming debacle.<br />
<br />
Consequently, I have opened a short AUD/JPY position in addition to my short USD/JPY position and the long USD/EUR position that I had opened a few days ago. pejhttp://www.blogger.com/profile/10958133367017526690noreply@blogger.com0