Saturday, April 18, 2009

Interesting tidbits in financials

He's often over the top even in the doom & gloom department, but he often has very curious information that I don't see anywhere else.

Banks Must Brace for New Losses by Jim Willie, CB. Editor, Hat Trick Letter April 16, 2009

Here are some points that caught my attention. I don't even know they are independently verifiable, but curious. (Do your own due diligence, always.)

  • "A movement pervaded Lower Manhattan offices to formally call in all Citigroup shorted shares on loan. " - so that could be the reason why some investors/funds have been frantically covering (or trying to cover) their short positions in the past week or so...
  • "Other ‘C’ share games were played that enabled preferred shares to serve as collateral on common share shorts, as the plebeian shares descended to $1/share value." - the hedge funds have been long preferred and short common on C and other commercial banks deemed vulnerable, that is somehow a known piece of information. But I didn't know that preferred shares were used as collateral. So then their common short was naked shorting?
  • "The story behind the scenes that captured my attention centered on German demands to return all their gold bullion held in custodial accounts on US soil." ... [To cover the March physical delivery of gold] "Deutsche Bank saved the COMEX bacon with a last minute 850,000 ounce delivery, courtesy of the Euro Central Bank at the eleventh hour. " - no wonder Germans are nervous.

Friday, April 17, 2009

Re-inflation Rally

Here's an article from iTulip.

Re-inflation Rally Part I: falsehoods, fantasies, fabrications, and fake-outs

"...Without a shred of proof to support the theory that economy-wide price fixing of capital and under-pricing of debt by governments through manipulation of interest rates cures the economic ills caused by previous price fixing and debt subsidy schemes, global Keynesian stimulus as an alternative to debt cancellation is a triumph of ideology over evidence that will end in inflationary tears. Shall we as investors go all-in with the bulls to play the intermediate results of the fiscal fantasy plan in execution -- the stock market rallies and the price distortions in bonds and commodities -- or a solid position for the end game with the doomers, wait it out with bars of gold, a sidearm, and a case of Scotch? Is there a rational position to take between these extremes?" [emphasis by me]

Good question. But alas, their answer is only for iTulip paid subscribers in Re-inflation Rally Part II.

But here's an interesting snippet from this article:

"The cornerstone of the economic recovery story is the fallacy that the stock market can see into the future, and that today’s rising stock market foretells economic recovery. A review in of past recessions reveals that stock markets are blind to the onset of recession, fall coincident with economic contraction, and recover coincident with economic growth, sustained or temporary. " [emphasis by me]

Thursday, April 16, 2009

Jim Rogers: Put all your eggs in one basket

He says ..

"Diversification is something that stock brokers came up with to protect themselves, so they wouldn't get sued [for making bad investment choices for clients]. Henry Ford never diversified, Bill Gates didn't diversify. The way to get rich is to put your eggs in one basket, but watch that basket very carefully. And make sure you have the right basket."

Jim Rogers: How He's Investing After the Crisis (Newsweek)

Wednesday, April 15, 2009

Treasury International Capital data for February 2009

Treasury Department released the Treasury International Capital (TIC) data for February 2009.

"Monthly net TIC flows were negative $97.0 billion. Of this, net foreign private flows were negative $106.3 billion, and net foreign official flows were positive $9.3 billion."

December 2008 figure was net positive $86.9 billion, and January 2009 was net negative $146.8 billion.

Japanese in the 90's

Dr. Doom Marc Faber's latest post led me to recall how it felt like in Japan during the so-called "lost decade".

I'd read recently somewhere that the price deflation during the lost decade in Japan was a myth. Maybe, but what I remember is indeed cheaper prices across the board - not just big ticket items like houses, condos, golf-course membership but everyday items. Food, drinks, clothes.

There was an unmistakable sense of relief in the society that they didn't need to keep running anymore, keep chasing the money, higher return, pricier condo, what have you. Sense of "Let's slow down here and take it easy." And that wasn't a bad feeling.

Tuesday, April 14, 2009

Sea of Red

in American Bulls index page.

Other than some gold indices, there are interesting "buy-if"s.

  • DJ distillers and brewers
  • DJ tobacco
  • DJ pipelines
No idea about pipelines (other than crude oil is still in contango), but the other two are true-blue recession plays, aren't they? Drink and smoke to forget the troubles of the world.

Bloomberg Commentary

Fed’s Flood May Leave Democracy Needing Bailout: Kevin Hassett

"Many economists believe that helping financial institutions turn their less liquid assets into hard cash is a key step toward returning them to good footing. The best way to achieve that in a democracy would be for Congress to appropriate the funds to acquire the assets and for Treasury to borrow the money that it needs.

But Congress is unwilling to appropriate enough money, so Treasury and the Fed have cooked up a work-around: the Fed buys the assets instead. Since the Fed exists outside of the normal budget process, no permission from elected officials is required. "

The economic activities are not the only area affected by the monetary policies.

Monday, April 13, 2009

Taxpayer subsidizing Paper?

Taxpayers Subsidizing Paper? (Econompic Data)

Paper mills, that is. Unintended consequence of supporting alternative energy, taxpayers ending up paying the paper mills for the process that they have used for long time without any government subsidy.

Is China going to buy IMF gold?

'China ready to buy IMF gold with a telephone call' (Business Intelligence Middle East)

Officially Reported Gold Reserves (Wikipedia)

Check out the table in Wiki. Gold percentage of the total Chinese reserve is only 0.9%. Maybe Japanese (1.2%) or Russians (2.2%) want to convert their foreign currency reserve to gold..?

Sunday, April 12, 2009

Market Mover?

Treasury Directs GM to Prepare for Bankruptcy Filing
Will this be a market mover for Monday? Or a yawn? Futures down but not by much so far.