Archive - 2013 - Blog entry

The vise is tightening.

Europe’s banks are totally insolvent and have not been fixed. No EU leader is going to tell you this because their jobs depend on convincing people that everything is fine. Bankia was supposedly “fine” right up until the truth came out. Just like the Wall Street banks were “fine” going into 2008.

Oh, this 35% Apple correction, drop in margins, increase in competition and decrease in competitiveness of products is a temporary thing. Seriously!!! That Reggie guy shouldn't even be allowed on TV. Really!!!

Reports indicating that Americans have invested more in equity funds here in 2013 than they did all last year have given rise to talk of the "Great Rotation". The idea is that Americans are selling fixed income investments bought during the financial crisis and now buying shares. We are less sanguine. There is a third asset class that needs to be integrated into the analysis: cash. After surveying the data and various reports, it looks to us that the flows into equities is not coming out of fixed income but rather money market funds and deposits.

The price action in the foreign exchange market is choppy as short-term participants seem nervous after being whipsawed yesterday. Sterling fell nearly a cent to new multi-month lows following the BOE's inflation report that confirmed official expectations that price pressures will remain above target and King welcomed the recent depreciation of the point. Also of note the Australian dollar, which staged a sharp recovery off the year's lows yesterday and has seen follow through buying today, helped perhaps by gains in a consumer confidence measure.

The was nothing in the rogue G7 sourced comment yesterday that that Japanese Finance Minister Aso did not say prior to the G7 statement and before the weekend. The pace of the yen's depreciation was too fast. The market reacted to it at the time.

We have gone from a supply and demand market to a funds flow market and this really sucks for consumers. 

Michael Woolfolk took the anti-gold position and Komal Sri-Kumar defended a gold standard on Bloomberg TV.  Is it true that we don't have enough gold for a gold standard?  Is it true that a gold standard is established by government fixing the price of gold?

I think that FERS and MRS are adding to the Debt Owed to the Public in a significant way.

If you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We're literally at most a few months, and very likely just a few weeks from Europe's banks imploding, potentially taking down the financial system with them. Think I'm joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.

Four good reasons to move all food and beverages away from the computer right now! 

Now that Enterprise Products Partners LLP has let the cat out of the bag that less than a month after expanding the Seaway pipeline capacity to 400,000 barrels per day, The Jones Creek terminal has storage capacity of 2.6 million barrels, and it is basically maxed out in available storage. 

As debate about currency wars heats up, there's been little talk about which currencies will prove safe havens. We think the Singapore dollar tops the list.

The problem with “too-big-to-fail” is first and foremost the behavior of our beloved political leaders in Washington

The G7 issued a statement that essentially endorses stimulative policies in Japan and elsewhere, but reaffirmed its commitment to market determined exchange rates. This is a green light to buy dollars against the yen and to buy euros.

The first two months of the year have seen volatility crushed downward in this two month bullish rally in assets as new money came rushing into markets needing to get off to a positive start for the year.