capital skew

making sure it doesn't happen here

noreply@blogger.com (static age) — Thu, 11 Feb 2010 03:13:00 +0000

Ben S. Bernanke, Before the National Economists Club, Washington, D.C., November 21, 2002

"...Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation..."

blowing bubbles

noreply@blogger.com (static age) — Thu, 17 Dec 2009 01:32:00 +0000

Time Magazine's 2009 Person of the Year is Helicopter Ben Bernanke.

Time Magazine is a highly credible news source.

Time - February 15, 1999 - The Three Marketeers

Greenspan's bubble and the resulting collapse,

discretionary spending

noreply@blogger.com (static age) — Thu, 26 Nov 2009 15:25:00 +0000

A blatant sign of discretionary spending at the top of the credit bubble were the Dubai governement's highly speculative 'island' developments.

Where Vision Inspires Humanity

Eight months after the presumed risk asset lows, the Dubai GSE is failing to meet a $59 billion debt obligation.

Could Dubai Be the Spark for a Correction? (Humble Student of the Markets)

Global consumer credit continues to contract. Helicopter Bernanke's work is not done.

negative t bill yields, again

noreply@blogger.com (static age) — Fri, 20 Nov 2009 03:00:00 +0000

While risk assets are hovering at 2009 highs, short dated treasuries are once again trading with negative yields,

Short Term T Bills Go Negative (Jesse's Cafe Americain)
More on Negative T Bills (Across the Curve)

The bond market continues to steepen on the Fed's endless stimulus,

... and gold rallies as a consequence,

CME sees gold as money

noreply@blogger.com (static age) — Thu, 22 Oct 2009 11:00:00 +0000

While the mainstream media continues to categorize gold as a "commodity," the world's largest derivatives exchange views it as currency.

The CME now accepts gold to cover margin variation on all CME traded products,

(Bloomberg) CME Allows Gold to Be Used as Collateral for Trading

Gold has outperformed equities, commodities, and other currencies,

in the news: job deflation and naked shorts

noreply@blogger.com (static age) — Thu, 15 Oct 2009 23:22:00 +0000

While quantitative easing continues to work its magic by nominally reflating risk assets,

CPI and wages are reportedly flat,

(NPR) Social Security: No Cost Of Living Increase Next Year
(AP) Colorado Minimum Wage to Drop as Living Costs Fall

Employment for Wall Street traders is also in decline as the 'smart guys' have replaced the 'average guys.'

The 'smart guys' have become analysts, quants, traders, and risk managers. Increasingly complicated derivatives were developed and sold short in progressively unsustainable size (RIP: LTCM, Bear Stearns, Countrywide, Lehman, Merrill Lynch, Wachovia),

(NYT) Wall Street Smarts
(NYT) Rivals Pose Threat to New York Stock Exchange

Some perspective from the good old days of trading, when 'average guys' with modestly capitalized accounts learned to respect the market. Floor traders knew the practice of picking up pennies in front of trains would eventually lead to unrecoverable losses over the long run,

down with the USD

noreply@blogger.com (static age) — Thu, 08 Oct 2009 00:00:00 +0000

The short USD trade has become even more crowded.

The blogosphere and news media were lit up yesterday with dollar bearish headlines. The hub bub stemmed from an article by Robert Fisk in The Independent, The Demise of the Dollar.

Gold broke to an all time nominal high, topping the $1032.70 high of March 2008. This is significant and may mark the next leg of the gold bull market when, as Richard Russell believes, the general public finally gets involved.

(2 year reverse head and shoulders formation in Gold)

australian green shoots

noreply@blogger.com (static age) — Tue, 06 Oct 2009 10:56:00 +0000

Risk is bid on headlines that the Reserve Bank of Australia unexpectedly raised rates 25 bps to 3.25%.

Carry traders unite!

Stocks, Commodities Climb as Australia Raises Interest Rates

the emerging EM trend

noreply@blogger.com (Unknown) — Mon, 05 Oct 2009 12:00:00 +0000

The Obamas failed on their bid for Chicago 2016; this may be confirmation of a longer term trend.

Rio Wins 2016 Olympics as Lula’s Lobbying Beats Obama

apple and goldman sachs are on fire

noreply@blogger.com (Unknown) — Sat, 03 Oct 2009 23:33:00 +0000

Apple and Goldman Sachs are two large cap names that have outperformed SPX by more than 70% YTD.

Both AAPL and GS have rallied back to pre-crisis levels.

(AAPL in unrelenting uptrend while both XLK and GOOG vs. SPX are trading relatively sideways)

Perhaps these names are in their own worlds. Other indicators of paper assets, such as XLF relative to SPX and GBP, have been losing upside momentum of late.

I am closely watching whether GS and AAPL continue their leadership as confirmation that the broad market uptrend is intact.

(re)allocation

noreply@blogger.com (Unknown) — Fri, 02 Oct 2009 02:05:00 +0000

The bid for risk assets has seemingly stalled as we begin the fourth quarter.

Taking a step back from today's sell-off, this may turn out to be another pause in the fastest recovery rally since the great depression.

The bears observe rates breaking lower and the possible bottoming out of DXY.

The bulls will just point to what has been working all year; long the QE uptrend in SPX, credit, and beta.

forward japan

noreply@blogger.com (Unknown) — Thu, 01 Oct 2009 02:08:00 +0000

Analysts have argued (myself included) that future inflation will result from the government's massive economic stimulus policies.

We have just experienced the greatest financial crisis and credit deleveraging in a generation. Is it realistic to expect inflation in two, five, or even ten years from now? I've been pondering the possibility of Japan-style price action in the US.

Hussman and Gross have considered this (Hussman speaking japanese, Gross a buyer of treasuries).

(chart source: kshitij.com)

the jobless risk rally

noreply@blogger.com (Unknown) — Wed, 30 Sep 2009 02:37:00 +0000

New York City's unemployment rate is above 10%. Now this, the ratio of unemployed to job openings is exploding.

The government cannot end quantitative easing nor ZIRP any time soon.

Deflation first, then inflation?

VIX is still holding

noreply@blogger.com (Unknown) — Tue, 29 Sep 2009 02:51:00 +0000

Equities and credit continue to rally yet VIX remains range bound. The last time VIX traded in the 22 to 25 range, SPX was trading 1250 to 1300. The long bond has been rallying indicating renewed bets on deflation.