And Sasol when it looked like it was under-performing in January.
Ain't grid is failing in SA because of decades of no investments? What would happen to Sasol when electricity runs out?
Well, obviously the P/E was not 50 when I bought it. And I sold it yesterday on the rally. +25-30% since mid-January. I am out.
Quote:
Massey Energy plunged $2.92, or 7 percent, to $38.81 and Consol Energy fell $5.26, or 6.6 percent, to $74.62.
It closed yesterday at $78.65.
I bought Sasol because it looked cheap due to the ZAR being beaten down. The lack of investment and the shortages of electricity are reasons why the ZAR was weak. Now the currency is recovering, although we will know more today after their budget is announced.
Electricity is not going to run out in S. Africa. They have a chronic under investment in new capacity. That is political and not due to shortages of coal. But Sasol will get their electricity first because they can afford it and S. Africa cannot allow a Sasol to fail!
S. Africa has what the world needs. And as far as The Lost Continent is concerned it is head and shoulders above its neighbors as a place to invest and do business. That is why I also took a punt on Standard Bank. My feeling is that they have exposure to companies involved in mining, energy and commodities, and their share price has been battered down as well as hurt by a weak rand. But we'll see? The positions are tiny and highly speculative at this point in the cycle.
Quote:
Energy Watch
Supply issues trump cyclical demand weakness
Although demand growth has been weaker than expected, the structural supply issues driving long-dated prices have been stronger than expected. As both offset one another, we are maintaining our 2008 WTI price forecast of $95/bbl even as we reduce our 2008 demand growth outlook
Oil decouples from equities market, closing above $100/bbl
After trading in near lock-step with the equity markets, oil prices have decoupled and moved sharply higher over the past week as economic growth concerns have been trumped by long-term structural supply issues that recent news flow has highlighted. Oil now joins metals and agriculture in structurally driven price rallies. While most commodity prices are at or above all-time highs, forward timespreads, the cyclical component of prices, are much weaker than when last at these levels, which is consistent with the economic concerns. However, this weakness in spreads has been more than offset by stronger long-dated prices, the structural component of prices, which has generated record prices despite demand concerns.
Window of opportunity for a cyclical price pull-back is closing
While the recent short-covering and increased speculative buying raises the potential for another near-term liquidation off renewed concerns over the economy, it is important to emphasize that this window of opportunity for a cyclically driven pull-back in crude oil prices is closing quickly. Looking toward the second half of this year, the balance of risks begins to shift to the upside both cyclically and structurally, and we continue to expect oil prices to trade above $105/bbl in 2H08.
Capital Controls will likely excacerbate the structural problems
To end this investment phase and the structural rally in energy prices, substantial investment in productive capacity is required. That investment, however, is constrained in the current political environment, which creates significant restrictions on the flow of capital and the ability to freely make investments in commodity-related infrastructure. While the commodities themselves are free to flow in a global market, the capital is not free to invest in any commodity production capacity. In other words, while the commodity markets are increasingly globalized in terms of consumption, they are increasingly fragmented in terms of investment.
Source: Goldman Sachs Commodities Research
February 20, 2008 _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Fri Feb 22, 2008 2:50 pm Post subject: Re: The Last Days of the Dollar?
MrBill,
I copied my post-question below from the Housing Collapse thread, thinking it may fit better here.
QUOTE:
"Armageddon,
What does the M3 tell us? I ask because I've read a lot of conflicting ideas about it, regarding the relative impacts of M3 as it is measured not including the effect of "shadow banking credit".
The credit, or loan-created-money, is said to overwhelm the M3 in size, and thus makes M3 less useful as an currency valuing tool.
So, what can I infer from M3 going up? I SEE prices going up on about everything I buy, but I'm told that the ongoing credit contraction is deflationary, in re: overall money supply, of cash + credit.
I'm just trying to figure out indicators for what to expect next. Am I seeing govt attempts to reinflate the bubble, and that effort being deflated away, thus housing can't be fixed that way--and at the same time, supply/demand issues cause other goods to go up in price? The Dollar Index is still hovering around 76. WTH?"
Posted: Fri Feb 22, 2008 9:28 pm Post subject: Re: The Last Days of the Dollar?
Housing was deflationary in the past, taking money out of foreign economies & putting it in mortgages. Then foreigners stopped lending us money because dollars were falling too fast. Now the money supply is being increased to make up for the loss of foreign investment. _________________ People first, then things, then dollars.
There will be enslavement, cannibalism, & zombie invasions.
Posted: Sat Feb 23, 2008 8:29 am Post subject: Re: The Last Days of the Dollar?
Setag,
Yep. I see that the FED has begun to contract money supply.
http//www.garynorth.com/public/3118.cfm
And, we have huge credit contraction, with all the IB mess, failing CDO's, bank failures beginning, credit cards and HELOCs being capped, et al.
At the same time I see my retail costs high, and business costs for imports (machine shop tools) going up. Is this overshoot of inflationary pressures past? Commodities are running up, at least grain is, and the steel I buy is still high--up 30% wholesale compared to last Fall. Commodities are fickle, and probably headed for a bust. I think.
So, how to hedge the future? Depends on your thesis. I'm trying to figure out business decisions, to stock up now, or wait for a drop. Home building material prices are flat to down a bit, I've read, and retail is dead for me at the moment, so won't steel and hardware follow it all down shortly? They don't, always, but if this is a major bust, they will.
All leading indicators for retail seem to be headed for the drain, if you look at J69 and available credit. Am I missing something that says inflation/expansion to come? M3 isn't enough to tell me that, right?
Posted: Sat Feb 23, 2008 9:47 am Post subject: Re: The Last Days of the Dollar?
What do you manufacture?
I would suggest adding another perspective to your decision making. How local is your client base? I would say you should start looking at shrinking it.
What kind of service work do you do?
How about considering relying on re-cycled metals for a part of your work?
Consider your areas of expertise and compare that to what your community may need. As conditions get worse and the ability to buy new is reduced, there is going to be a rapidly growing need to maintain and repair everything. As supply lines shorten, where are you going to get your supplies? Can you maintain your own equipment? Are you in a position to take over other local shops that fail?
This would be a prudent way to gather an inventory of equipment, plus add additional expertise to your staff.
patience wrote:
Setag,
Yep. I see that the FED has begun to contract money supply.
http//www.garynorth.com/public/3118.cfm
And, we have huge credit contraction, with all the IB mess, failing CDO's, bank failures beginning, credit cards and HELOCs being capped, et al.
At the same time I see my retail costs high, and business costs for imports (machine shop tools) going up. Is this overshoot of inflationary pressures past? Commodities are running up, at least grain is, and the steel I buy is still high--up 30% wholesale compared to last Fall. Commodities are fickle, and probably headed for a bust. I think.
So, how to hedge the future? Depends on your thesis. I'm trying to figure out business decisions, to stock up now, or wait for a drop. Home building material prices are flat to down a bit, I've read, and retail is dead for me at the moment, so won't steel and hardware follow it all down shortly? They don't, always, but if this is a major bust, they will.
All leading indicators for retail seem to be headed for the drain, if you look at J69 and available credit. Am I missing something that says inflation/expansion to come? M3 isn't enough to tell me that, right?
_________________ Gravity is not a force, it is a boundary layer.
Everything is coincident.
Love: the state of suspended anticipation.
To get any appreciable distance from the Earth in
a sensible amount of time, you must lie.
Posted: Sat Feb 23, 2008 10:36 am Post subject: Re: The Last Days of the Dollar?
RdSnt,
Right on! We are going exactly that direction!
We have a small farm repair shop, 100% solvent, and strictly a family business, 3 of us. We don't manufacture anything in the traditional sense. We use all the recycled materials possible, and indeed we are in the business of "recycling" farm equipment that without repairs, be destined for scrap.
We do welding, machining, light sheet metal work, and a small amount of mechanics and electrical. About half of our steel comes from the scrap yard, or pre-scrap yard. We keep about a year's worth of supplies and materials on hand. More than that in steel and some consumables, but are limited to about 4 to 6 mo's. supply of welding gases.
Toward future problems, we have a complete blacksmith shop of the traditional kind, and about 3 to 5 years worth of coal for the forge on hand. If I can't get conventional welding supplies, I can do it in the forge, with more labor, but I CAN do it. This is a heavily forested area, and I can also use wood charcoal in the forge. We have crank operated drill press, grinder, forge blower, foot powered sheet metal shear, lever shear, hand operated 20 and 50 ton presses. Enough hand tools to make most anything small of wood (used to restore antique furniture) and plastics. Have enough solar electric that some could be diverted for small machine work. We make our own machine repair parts, gears and all. Crucial cutting tools are stored in great depth, and in worst case, can be forged of salvage materials.
Our client base is all local, farmers, loggers, sawmills, individuals, and some for the city (county seat of 5,000). Most other local machine shops are auto industry based, and going bankrupt. We attend their auctions and buy tools and supplies for 10% to 20% of new price. Most of their equipment we don't need, but it goes cheaper as time goes on. The CNC stuff often doesn't get a bid.
We don't plan to expand at all. That decision is based on the outrageous red tape and high cost of employees. The market isn't that big anyway.
We recently did some restoration parts for a local historic grist mill, and quoted a centrifuge for recycling used motor oil. Everyday business is often buidling farm stuff to replace the crappy commercial stuff--feeders, gates, hay equipment, etc.
I've done aluminum casting, and made replacements for rare parts, but cast iron is not feasible for us, without changes in environmental laws. Brass/bronze, lead, zinc and Babbitt we can do.
What we do is whatever the "conventional " shops say can't be done, or isn't feasible. Not a lot of money in it, but it's a living, and more sustainable than many things.
My background is in auto plants, production machining and automation design and build, with some electrical, machine controls, etc. Been thinking about a sustainable life since the first OPEC oil embargo, and working toward it. We have farmed and logged with horses, and now have a lot of Amish customers.
Posted: Sat Feb 23, 2008 11:49 pm Post subject: Re: The Last Days of the Dollar?
Wow, you very much sound on the same track as myself, although I don't have a shop meant for customers. I'm very much an old fashioned, bailing wire type of machinist/fabricator/welder/.......etc.
The avatar is a Listeriod, but I should switch it for the one I actually have. A Lister/Blackstone mid 50's, 1800lbs of pure diesel. I love it and it's hooked to a 10kw generator. It's the last internal combustion engine I'm willing to buy. I'm after a stationary steam engine next. External combustion is the way to go and I have experience with the engines and boilers. I just haven't found the right engine yet, somewhere in the 5-8 hp range for my shop. Smaller stationary engines just weren't all that plentiful here in Ontario.
patience wrote:
RdSnt,
Your avatar is a Lister, right? Or "Listeroid?
Jerry
_________________ Gravity is not a force, it is a boundary layer.
Everything is coincident.
Love: the state of suspended anticipation.
To get any appreciable distance from the Earth in
a sensible amount of time, you must lie.
Posted: Mon Feb 25, 2008 4:45 pm Post subject: Re: The Last Days of the Dollar?
Now Russia starting to move its oil trading out of dollars to the ruble. Slow process, but the trickle has started.
I found this quote from Greenspan interesting:
Quote:
Greenspan comments on oil
Alan Greenspan, the former Federal Reserve chairman, said Monday that high inflation in Gulf states would fall "significantly" if the oil producers drop their dollar pegs, Reuters reported from Jeddah, Saudi Arabia.
As we all know here, Opec, due to rising inflation, has been considering unpegging its currency from the devaluing dollar (which is what Greenspan discussed above). Here's an article on Middle East inflation right now, to get a better idea as to how higher inflation is impacting the ME.
Posted: Mon Feb 25, 2008 9:43 pm Post subject: Re: The Last Days of the Dollar?
The dollar has already become rediculously cheap. We know this because imports are slowing and exports are booming, so further substantially devaluation is unlikely regardless of whatever russia or the gulf states do.
Joined: Dec 07, 2005 Posts: 1828 Location: Australia
Posted: Mon Feb 25, 2008 9:51 pm Post subject: Re: The Last Days of the Dollar?
Quote:
The dollar has already become rediculously cheap. We know this because imports are slowing and exports are booming, so further substantially devaluation is unlikely regardless of whatever russia or the gulf states do.
Say what????
US doesn't fix it's currency against other currencies, so any appreciation or devaluation is set by the market according to supply/demand.
Some fundamental reasons why US$ may continue to sink is
1) deteriorating economy 2) increasing inflation 3) less interest by foreigners to invest in US bonds 4) less interest globally as using US$ for sales transactions
The fact that exports have increased a bit could very well be a sign that foreigners are trading in their US paper for real goods. _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
Joined: Dec 07, 2005 Posts: 1828 Location: Australia
Posted: Mon Feb 25, 2008 9:59 pm Post subject: Re: The Last Days of the Dollar?
Let's re-visit the CIA page again.
I love this one.
Rank Country Current account balance
1 China $ 363,300,000,000
4 Saudi Arabia $ 88,890,000,000
5 Russia $ 74,000,000,000
47 Gabon $ 1,626,000,000
63 Tuvalu $ 2,323,000
80 Burundi $ -137,300,000
87 Haiti $ -184,800,000
114 Senegal $ -1,034,000,000
127 Ethiopia $ -1,851,000,000
159 Australia $ -50,960,000,000
161 UK $ -111,000,000,000
162 Spain $ -126,300,000,000
163 United States $ -747,100,000,000
Total list: 163 nations
CIA rankorder _________________ Lets take a ride, and run with the dogs tonight
In suburbia
You cant hide, run with the dogs tonight
In suburbia
- Pet Shop Boys
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