Archive - 2010 - Blog entry

What do "hot money," gold, sovereign debt, foreign trade, and Germany and China all have in common? Everything. They are all lined up against the U.S. and our new quantitative easing (QE2). There is fallout related to quantitative easing, and the markets are reacting, from the Fed's perspective, badly.

Earlier in the week we posted that Market-Neutrals were deleveraging, we then further speculated that a market drop would soon follow as liquidity disappeared and small sell block trades would move the market. We received many emails from individuals asking for further explanation of this metric and why we feel it is a useful indicator to look at. While this is merely a theory with no empirical evidence, we would like to display the following chart 2-year with daily closes in which m/n's rapidly delevered days before a market drop. On all 5 occasions, the rapid decline in HSKAX was indicative of the S&P500 index experiencing further weakness.

Visiting the world’s most overpriced asset. The recent action in the markets suggests that the big turn may finally be behind us. Why have bond prices been falling for the past month, despite an assumed promise by the Fed to provide unlimited amounts of liquidity? (TBT).

China is decades ahead of the global curve when it comes to understanding the strategic importance of rare earths. But with demand set to double to 225,000 tons by 2015, not accounting for the burgeoning green energy industry, nobody's immune to the coming supply shortfall, including China.

Marginal macro news, the upcoming G20 meetings, rising commodity margins, and enough uncertainty to make even Heisenberg jealous had the market once again bobbing up and down like Shyla Stylez trying to make her rent.

The central banking PhD rash that just keeps coming back...Ladies and Gentleman....Maestro!!!!!!!

Did CPPIB just overtake the Caisse as Canada's largest pension fund?

Things are lining up for a hard landing in a few years.

Countries used to destroy their neighbors by sending in invading armies of screaming warriors swinging great long swords. Today, you simply buy their currency. Foreign banks are using their balance sheets to speculate in the currency markets and boost profits. Adding fuel to the fire has been efforts by the People’s Bank of China to diversify out of the dollar as a reserve asset by pouring new cash flows into the yen. This explains why the central bank’s intervention efforts to slow the yen’s appreciation have been an abject failure. How this kabuki play will end. (FXY), (YCS).

We may be forced to start taking real fundamentals into consideration, battling the Fed and QE. Shadow inventory will push heavily in the favor of fundamentals - or to put it more plainly, beware the return of reality!

But not yet as bad as the great 1349 crash in Florence.

The third annual ranking of the chief executive/applied finance group wealth creators—and destroyers—sees new contenders surface and several that sustained performance through tough times.
Now in its third year, the wealth creation index developed by Chief Executive, Applied Finance Group and Great Numbers! attempts to identify those business leaders who have performed best in creating true economic value—as opposed to mere accounting value—as measured by GAAP metrics.

Retail traders are notoriously wrong at picking market direction/tops and bottoms. Most retail traders very naturally seem to adopt a counter-trend stance and this offers very accurate signals for individuals looking to trade against this group. This daily report is designed to help traders focus their efforts on higher probability pairs.

This is an article I did for a local newspaper for which I write a regular column on economics. It was meant for a general audience. Size limitations required the article to be very concise, thus a "deep" philosophical treatise on theory, epistemology, and intellectual trends was not possible. But I think it came out well. What do you think?