All about the dollar
Recession Probabilities for the U.S.
All of Inflation's Little Charts
Worldwide Growth in Fertilizer Usage
Misleading Growth Statistics Give False Comfort
No silver lining as prices take a tumble
Global Long Term Interest Rates
Desperate Measures: India Closes Soybean Oil, Potatoes Exchanges to Fight Inflation
Sucker's Rally? - I think so..
Scale-up sells in the 1420-1440 range - I like this approach
A Rally with Serious Muscle
Thursday, May 8, 2008
Wednesday, May 7, 2008
What I'm Thinking
Well now. It appears many things are coming together for my EUR/USD short. I check out FT for one last bit of reading before I call it a day and I come across this.
Now that is certainly something. The highlights:
"Senior eurozone officials believe that the dollar-euro rate had reached levels unhelpful to both the US and Europe."
"The US is still a long way from agreeing to intervene in currency markets or identifying desired exchange rates. But both sides believe fundamentals and central bank policies are turning in the direction of relative dollar strength. After cutting interest rates aggressively, the Federal Reserve has indicated its desire to pause. Meanwhile, the ECB is softening its hawkish tone, and could shift further if weaker growth reduced inflation risk."
"The central banks have not co-ordinated their policies to manage the exchange rate. But policymakers feel communicating the change in relative fundamentals and monetary policies may be effective"
I'm curious if officials agreed to come out like this in hopes of sidetracking oil. Macro Man and Brad Setser both have been writing about how central banks that were dollar sellers have turned dollar buyers in the past couple of weeks. And we also have a recent string of negative economic data coming out of the Eurozone. I'm thinking EUR/USD can see sub 1.50 in the next month. And I'm positioned accordingly to take advantage of that.
Now that is certainly something. The highlights:
"Senior eurozone officials believe that the dollar-euro rate had reached levels unhelpful to both the US and Europe."
"The US is still a long way from agreeing to intervene in currency markets or identifying desired exchange rates. But both sides believe fundamentals and central bank policies are turning in the direction of relative dollar strength. After cutting interest rates aggressively, the Federal Reserve has indicated its desire to pause. Meanwhile, the ECB is softening its hawkish tone, and could shift further if weaker growth reduced inflation risk."
"The central banks have not co-ordinated their policies to manage the exchange rate. But policymakers feel communicating the change in relative fundamentals and monetary policies may be effective"
I'm curious if officials agreed to come out like this in hopes of sidetracking oil. Macro Man and Brad Setser both have been writing about how central banks that were dollar sellers have turned dollar buyers in the past couple of weeks. And we also have a recent string of negative economic data coming out of the Eurozone. I'm thinking EUR/USD can see sub 1.50 in the next month. And I'm positioned accordingly to take advantage of that.
What I'm Reading & Thinking
Bond Investors Play a Waiting Game
Hoenig Says Inflation 'Serious' and may prompt rate rise
Hoenig Says Inflation 'Serious' and may prompt rate rise
Vallejo, CA officials vote to file for bankruptcy
The short view: Crunchy Credit
Yield of 4% Beckons in Treasurys
Seeing Inflation Only in the Prices that Go Up
Win Some, Lose Some - How to Come Out On Top
Cyclicals are Still Overpriced
Soros Says Impact of Crisis on Economy Just Starting
Home Improvement Investment has a Significant Downside Potential (Short HD?)
U.S. Consumer Debt Surges in March
Silver: Still dependent on gold for upside
Peruvian Miners set to strike May 12th. Silver should see benefits
World Silver Survey authors say silver outlook is still positive
Current Thoughts:
*Home Improvement Stocks look like good short candidates
* I really like how I'm positioned right now (short EUR/USD, long my FF future spread trade, and long Dec ED futures). I'm feeling a little less bullish on my SLV holding. Gold is tracking pretty closely to USD movements, especially EUR/USD.
Tuesday, May 6, 2008
What I'm Reading
Medvedev Boxed In by Oil as Putin Bequeaths Economic "Dead End"
Fed Survey Shows More U.S. Banks Tighten Loan Terms
Updated Year-End S&P 500 Price Targets
Sales Tax Collections Decline in Most States
Jitters in the Eurozone
Will BofA-Countrywide Deal Get Done?
Economists Look for ECB Signal on Rates - I'm short EUR/USD but I doubt anything new will come out of this meeting
Shorting Puts - Interesting...
Commodity Prices in Historical Perspective
A little Yield Analysis
YoY NFP - A little different take
More on Earnings Expectations
Bulltrap: ABCP and Level 3 Bombs
Time for money market funds to help - Good article from FT that explains why "banks afraid to lend to other banks" is wrong
NYSE April Month End Short Interest
Some Signs of an Upturn for the Dollar
Disconnect
TED Spread is Improving
Housing Burst Duration
What's behind the Slide in Gold and Silver?
May 4th Got Gold Report - Money flows are increasing into SLV (current holding) as the price has declined
Dollar Demand is Strong Among European Banks
Brics offer investors a varied harvest
Wrong time to enter vulture business
Fed Survey Shows More U.S. Banks Tighten Loan Terms
Updated Year-End S&P 500 Price Targets
Sales Tax Collections Decline in Most States
Jitters in the Eurozone
Will BofA-Countrywide Deal Get Done?
Economists Look for ECB Signal on Rates - I'm short EUR/USD but I doubt anything new will come out of this meeting
Shorting Puts - Interesting...
Commodity Prices in Historical Perspective
A little Yield Analysis
YoY NFP - A little different take
More on Earnings Expectations
Bulltrap: ABCP and Level 3 Bombs
Time for money market funds to help - Good article from FT that explains why "banks afraid to lend to other banks" is wrong
NYSE April Month End Short Interest
Some Signs of an Upturn for the Dollar
Disconnect
TED Spread is Improving
Housing Burst Duration
What's behind the Slide in Gold and Silver?
May 4th Got Gold Report - Money flows are increasing into SLV (current holding) as the price has declined
Dollar Demand is Strong Among European Banks
Brics offer investors a varied harvest
Wrong time to enter vulture business
Monday, May 5, 2008
What I'm Reading
Hussman Weekly Market Comment
NYFR
Indicator Review for May 5th
Mark Kiesel: Slimming Down - I strongly agree with what this article has to say
What Uncle Sam Gives in Rebates, OPEC Takes
Economy May Face Prolonged Pain, History Suggests
Departures May Change More Than the Look of ECB
Economists React: Jobs Report
Economists React: Fed Statement
Economists React: GDP
Non-Residential Investment: Still the Key
Q1 Sector EPS Growth vs. Estimates - Estimates were right on for the S&P according to BIG, but I'm not sure the date they used for the start of earnings season. Their figure is different from the one I cited in my inital post on earnings.
NYFR
Indicator Review for May 5th
Mark Kiesel: Slimming Down - I strongly agree with what this article has to say
What Uncle Sam Gives in Rebates, OPEC Takes
Economy May Face Prolonged Pain, History Suggests
Departures May Change More Than the Look of ECB
Economists React: Jobs Report
Economists React: Fed Statement
Economists React: GDP
Non-Residential Investment: Still the Key
Q1 Sector EPS Growth vs. Estimates - Estimates were right on for the S&P according to BIG, but I'm not sure the date they used for the start of earnings season. Their figure is different from the one I cited in my inital post on earnings.
Caroline Baum: Wall Street CEO Chorus is Singing Out of Tune
What are corporate bonds worth in a recession? (Spreads Have Further to Tighten)
Slow German Growth Sounds Poverty Alert
Weyerhaeuser's Loss - WY is on my value watch list
Tentacles of Recession and the Great Unwind
John Authers: Uncertainty in markets
What I'm Thinking
CFC is down about 15% today on an FBR analyst call that BofA will renegotiate their deal. He has a price target of $0 to $2 and cites BofA's May 1st filing that states there is no assurance that any of CFC's debt will be assumed. I agree with the analyst's call that this is a first step in a renegotiation process over the acquisition of Countrywide. I actually think there is a strong possibility that CFC will just go bankrupt. A quote from the report:
"Countrywide's loan portfolio has deteriorated so rapidly that it currently has negative equity and the proposed takeover of the company will be a drag on Bank of America's earnings due to the elevated credit expenses at Countrywide, analyst Paul Miller wrote in a note to clients...
If mark-downs on Countrywide's loan portfolio are less than $22 billion, then Bank of America can likely offset the adjustments with fair value debt adjustments and the difference between tangible equity and its purchase price of Countrywide, he estimated."
It's really tough to estimate book value for these financial companies now, but I certainly am in the camp that believes mortgage resets will lead to greater financial losses than the market currently expects. I think what we have going on here is a case of BofA looking under the hood of CFC and finding that they don't really like what they see. I think that CFC doesn't go any higher than $6.20, which was the high of its recent trading range. The original BofA acquisition price was for $7.16 a share. So with an upside of $3-5 and a downside of $1, I think we have a pretty good case here for a short of CFC. I'll be looking to get in at a better price later in the week.
"Countrywide's loan portfolio has deteriorated so rapidly that it currently has negative equity and the proposed takeover of the company will be a drag on Bank of America's earnings due to the elevated credit expenses at Countrywide, analyst Paul Miller wrote in a note to clients...
If mark-downs on Countrywide's loan portfolio are less than $22 billion, then Bank of America can likely offset the adjustments with fair value debt adjustments and the difference between tangible equity and its purchase price of Countrywide, he estimated."
It's really tough to estimate book value for these financial companies now, but I certainly am in the camp that believes mortgage resets will lead to greater financial losses than the market currently expects. I think what we have going on here is a case of BofA looking under the hood of CFC and finding that they don't really like what they see. I think that CFC doesn't go any higher than $6.20, which was the high of its recent trading range. The original BofA acquisition price was for $7.16 a share. So with an upside of $3-5 and a downside of $1, I think we have a pretty good case here for a short of CFC. I'll be looking to get in at a better price later in the week.
What I'm Thinking
A quick update:
Since we broke through the psychological barriers of 13,000 for the DOW and 1400-06 for the S&P 500 along with breaking through and closing above 200 dma's, I have closed out all of my short positions in U.S. equities.
I have kept my long Silver position. It is close to my review point and this time of the year is considered seasonally weak so I may close out this position as well. I haven't put down my thoughts yet on silver but long term I am extremely bullish on this play. I'll get to it in time.
Last week I put on a Fed Funds spread trade that basically makes money as long as the Fed doesn't raise rates by November. More on it later...
Tech stocks have been extremely strong lately. The chart looks bullish, money managers are optimistic, etc. etc. I have added some low-delta calls on the QQQQ. Will probably sell during this week.
I remain of the opinion that this is a sucker's rally. The VIX is signaling extreme complacency and I'm looking to setup a VIX trade in the near future to go long vol.
Since we broke through the psychological barriers of 13,000 for the DOW and 1400-06 for the S&P 500 along with breaking through and closing above 200 dma's, I have closed out all of my short positions in U.S. equities.
I have kept my long Silver position. It is close to my review point and this time of the year is considered seasonally weak so I may close out this position as well. I haven't put down my thoughts yet on silver but long term I am extremely bullish on this play. I'll get to it in time.
Last week I put on a Fed Funds spread trade that basically makes money as long as the Fed doesn't raise rates by November. More on it later...
Tech stocks have been extremely strong lately. The chart looks bullish, money managers are optimistic, etc. etc. I have added some low-delta calls on the QQQQ. Will probably sell during this week.
I remain of the opinion that this is a sucker's rally. The VIX is signaling extreme complacency and I'm looking to setup a VIX trade in the near future to go long vol.
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