Archive - Blog entry

China: Be cautious

Japan: Uh-oh ...

Failure to investigate and prosecute those responsible for bringing about the crisis may extend the crisis longer than any failure to spend more on stimulus...

We thought it is as good a time as ever to turn our attention back towards the hedge fund hot potato that is Freeport-McMoRan (FCX). Unfortunately, for longs, the technical picture appears to be rapidly deteriorating, developing an increasingly bearish profile ... this powder keg becomes especially apparent when viewed alongside an extremely high institutional sponsorship ratio of 79.8% ...

Check out this report on the Obama Administration's latest gift: free golf cart! This is from the Wall Street Journal. I really can't add much to this. Other than: Get one!

I'm following chatter of media and friends about the imminent doom that may come from Fed Funds rates increases, and that the market perceives a higher chance that the Fed pull away from zero interest rate policy soon. First, 2 Fed Funds charts showing no evidence the market perceives a risk that the Fed changes its policy near term. In fact, quite the opposite, bets are being put on that support extension of zero interest rates. The past 2 weeks have most definitely seen increased expectations for lengthening of current policy.

The sudden surge of optimism regarding the global economy resulted in the massive reduction in the costs of sovereign debt insurance. While the drop is not a surprise, the reasoning and the actions behind it surely are.

So, it looks like Lloyds and RBS are going to get broken up into smaller, more manageable pieces by the Brits. I think it is clear that something similar is needed in the US to dismantle the banking oligarchy. Could it happen here? Well, maybe the follow the leader dynamic that occurred during the misguided attempt to ban short sales will play out in this case as well.

An interesting report coming from McClatchy, concerning Goldman Sachs bets on the housing crash.

The deep thinkers at the Richmond Fed have come up with an analytic report on mortgages. The scary conclusion is that when the government is the provider of mortgages there is a significantly higher probability that the loan will default versus a private sector lender. In other words, Uncle Sam is a "soft touch" lender, no need to pay.That conclusion will not sit well with Congress, so it is unlikely that this report will see the light of day. I doubt that many in Congress could read it anyway.

The report breaks down each individual State's rules on defaulting on a mortgage. A must read for those thinking of going down that path.

Some 18 months ago, Verizon wired the Village of Croton-on-Hudson, New York, for FiOS, the fiber optic service that supposedly includes telephony, Internet access and, yes, high-speed HD television. But despite the fact that the Village of Croton has been wired for fiber for more than a year, no TV. Indeed, it now appears that VZ may be thinking of dumping the TV offering entirely.

The Empire strikes back...

Calling politicians prostitutes is inaccurate...

This week's link fest has a common theme: the unintended consequences of government actions. I include the US Fed in the government category for obvious reasons. Between Greenspan’s beliefs in efficient markets, Bernanke’s Great Moderation, tax credits for housing and the Fed’s current unlimited money printing, it is amazing how much damage can be done by the wrong ideas and policies.

I'll admit it to everyone, I am absolutely disgusted with my investment performance over the past two quarters. I came into the second quarter up nearly 500% for the two years running thanks to top notch research across myriad sectors and loss about half of that profit fighting the bull rally that I easily saw coming but severely underestimated the length, depth and breadth of.

I don't get too excited when I see one day sell-offs. I was talking to a trader who told me he thinks hedge funds are unwinding risk trades going into year-end. Maybe they are or maybe this is another classic shakedown of nervous investors before they bring this market much higher.