Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
What will be the best performing asset-class in 2008?
crude oil?
10%
[ 8 ]
natural gas?
5%
[ 4 ]
metals?
5%
[ 4 ]
precious metals?
28%
[ 21 ]
agricultural commodities?
40%
[ 30 ]
emerging market equity?
1%
[ 1 ]
bonds?
1%
[ 1 ]
other (please specify)?
8%
[ 6 ]
Total Votes : 75
Author
Message
ROCKMAN Intermediate Crude
Joined: May 27, 2008 Posts: 960 Location: TEXAS
Posted: Tue Jul 08, 2008 6:55 am Post subject: Re: Trader's Corner 2008
Wow....I knew it saved money but not to that degree. But then a life time ago, as a teeneage in New Orleans, I spent a summer carrying 50 lb stalks of bananas from the deck of a freighter down a gangplank and on to sorting tables. Now picture 30 or 40 of us doing the same thing. Then picture a container with 30,000 lbs of bananas being offloaded in a few minutes.
Yep...Longshore unions fought like hell to keep containers out. Go sit on the levee in the French Quarter now and you see almost no humna feet on the docks.
Posted: Tue Jul 08, 2008 7:07 am Post subject: Re: Trader's Corner 2008
One of my jobs as a kid was to unload railcars full of lumber when the pile turned over for some reason and they could not use the forklift. That and recycling used lumber from old grain elevators that had to be dismantled. My father was a big believer in 'sweat equity'. And sweat we did.
Those grain elevators were solid 2x6s and 2x8s stacked one upon another and then nailed together. Solid lumber. No wonder they switched to concrete and metal grain terminals later. Probably a tenth of the materials and labor to erect them.
UPDATE: Bullish – On the Bear! Truth and Beauty (… and Russian Finance) Crack of Doom
Quote:
The Little Bear Who Cried “Wolf”
T&B is amazed! The financial television channels – that adult equivalent of the Cartoons Network – are all abuzz with arguments about whether or not the United States is technically in a recession… Frankly, if a recession is the worst thing to hit the US, T&B shall heave a great sigh of relief. What we hope to avoid is the spectre of Depression…a mere Recession would be something of a reprieve.
T&B has long tried our reader’s patience with our tedious and reiterated warnings of the unsustainability of the entire US financial montage. More recently, we have suggested that rather than a US subprime crisis, we were witnessing a more thoroughgoing and systematic credit crisis; despite a series of deadcat bounces, it is still far from over. We continue to believe that the entire Western financial montage is under threat due to a decade or more of faith-based economic (mis-)management – monetary, fiscal and financial.
This crisis is certainly not confined to the US; thanks to the globalization of financial markets, and especially, to the criminal negligence of many global financial executives and regulators who wilfully chose to ignore the overwhelming evidence of impending disaster. This failure can be attributed to their inability to challenge their long-held and comfortable assumptions and mindset. Thus, US financial assets continued to be viewed as the ultimate store of value, long after any rational and diligent person should have taken steps to hedge his exposure. If our view seems somewhat harsh, we would invite the reader to ask himself how structured subprime securities issued by Russia, China or Brazil would have been rated, or how long any of the above countries could have run massive twin deficits before Mr. Market started to demand upfront payment.
What we may have missed was the impact the inevitable was going to have upon much of the rest of the world – not via the mechanism most usually cited - a mechanical transmission from the slowdown in US GDP to industrial activity of the CA-surplus countries (given the unsustainability of the trade flows, this shift was inevitable, and it should gradually be absorbed by the increasing domestic consumption in the CA surplus countries) but rather, due to the ongoing collapse of a dangerously maladaptive global financial system: the quasi dollar-block.
source: Eric Kraus, Nikitsky Russia/CIS Opportunities Fund 7 July 2008
UPDATE II: the S&P Oil Index (GSPE) is falling like a rock at the moment. It went from overbought to oversold territory on the technicals in just two days. Now it is down for a fourth day in a row. That is volatility!
Quote:
Crude oil fell for a second day as signs that the global economy may slow further prompted investors to sell commodities.
Oil in New York has dropped more than $8 since reaching a record $145.85 a barrel on July 3. Gold, silver, copper and corn also declined. Equities fell in Europe and Asia and U.S. index futures dropped on speculation that financial firms will need more capital to recover from credit-market losses.
``All the bad economic news is making people take a second look at commodities,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Commodities were purchased as a hedge against inflation. A global recession is looking more likely, and it's the greatest weapon in the fight against inflation.''
You were a fan a while back, but I don't know if you've talked about it since.
I bought some today, in part because the dividend is appealing at the current price (4.6%) and I think GE will have a lot of growth opportunities as various techno-fixes work their way through the market.
I'm not crazy about its reliance upon financing of its products for such a significant part of its revenue, but on balance it looked like a good buy today. _________________
Posted: Wed Jul 09, 2008 1:35 am Post subject: Re: Trader's Corner 2008
My rationale a year ago for owning GE was that it was a big, well-run company that earns a significant portion of its revenue abroad, and therefore would be a good place to hide from the coming US-downturn and a weaker US dollar.
It is down some 25-percent from those levels now. My worst investment. But it has exposure to all the sectors that I like, and it is still a well-run company, so I am rue to sell it now. My approach is to buy a fixed amount of any one stock. If it goes to zero, it goes to zero. I am not proud of GE, but it is a small part of my portfolio. I may get out flat. I may make a small profit. But I would hate to sell at a loss now.
Citigroup is the same. I sold, but then I got back in too early. Their credit problems were much larger than I suspected. The wrong re-entry point. But luckily I bought back only half the amount I sold, so I can still add to that position (or another bank) if and when conditions improve. Maybe I will help Drew out and buy CIBC! ; - )
I have been very cautious with a large allocation to cash and money markets. Currency hedged. My exposure to stocks and bonds is significantly lower. Less than a third. I am surviving. I could of, or should of, made more money in the commodities and energy, but I was too cautious. To be honest I am planning to invest a large chunk of cash in Canada in the near future, so now is not the time to be making big bets. And I truly think that we will see better entry points, so there is no rush to get back in at even these levels. Now is the time to preserve capital. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Joined: Aug 03, 2006 Posts: 4337 Location: Graceland
Posted: Wed Jul 09, 2008 6:32 am Post subject: Re: Trader's Corner 2008
I just like the GE dividend right now. It may fall farther before it's done, but I'm a lot less anxious about a falling stock price if I am earning a good dividend in the process (and there isn't reason to believe that the dividend will be cut).
There is plenty of upside potential too, I think. If alternative energy and rails are two sectors that will do well in the future, GE is a great play for that. _________________
Posted: Wed Jul 09, 2008 7:44 am Post subject: Re: Trader's Corner 2008
pup55 wrote:
Quote:
criminal negligence of many global financial executives and regulators who wilfully chose to ignore the overwhelming evidence of impending disaster
I agree with this characterization, by the way. These people need to go to jail.
They should be joined by a whole lot of politicians. In a social-democracy with a market economy the ultimate power of regulation and oversight rests with the elected government. For the most part public companies can only act (safely) within the law. And regulators must also obey their task masters within strict guidelines. As many posters are wont to point out there were no complaints on the way up when everyone was getting rich on paper and using that wealth for consumption today.
Quote:
Investors are also pilling into call options at levels between $150 and $175 and a minority are buying so-called “lottery tickets” call options at $300 a barrel.
Nauman Barakat, of Macquarie in New York, said that investors were again buying call options at $300. “I assume on the presumption that some sort of a confrontation will take place between Iran,” he said. “But even without this premise I remain a bull and I think we will take $150 out sooner rather than later,” he added.
Some traders are dismissive about the significance of high price call options, but others noted that options that a year ago were also considered “lottery tickets” are now below today’s oil price.
There were 29,775 outstanding contracts for Nymex December 2008 call options at $200 a barrel on Thursday, up 87.5 per cent since June. Since the beginning of the year, the so-called ”open interest” in these contracts has jumped 600 per cent.
At the same time, oil companies are buying put options – contracts that give holders the right to sell crude oil at a predetermined price and date – to lock in record oil prices. Traders said there has been strong interest in put options for delivery later this year and through the next two years at levels around $110-$120 a barrel.
For my part I believe that crude oil prices have already peaked and will end substantially lower by year-end. $99.25 to be exact. There are just two unsolved variables. A shooting war with Iran. And the outcome of this year's hurricane season. If I strip out potential US dollar weakness, and a hawkish ECB, then I would hedge my bets by calling for oil to be at 62 euros by year-end. If I use the high of the US dollar against the euro at $0.8340 then that works out of a historic price of $82.77 versus a price of $114.50 today at the same exchange rate. But, of course, one cannot rule out problems in Iran or the weather, so there are very few speculative shorts at the moment. They all got burned earlier in the year.
Quote:
Europe’s divisions over inflation were highlighted on Friday when Jose Manuel Barroso, the European Commission president, defended the European Central Bank against political critics.
He said: “When it comes to inflation, I have more confidence in the position of central bankers than in politicians...central bankers are not moved by short-term political pressures.”
Source: Barroso at odds with Sarkozy on ECB _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Wed Jul 09, 2008 9:04 am Post subject: Re: Trader's Corner 2008
The big picture...hot of the presses:
The Energy Information Administration (EIA) estimates that members of the Organization of the Petroleum Exporting Countries (OPEC) earned $671 billion in net oil export revenues in 2007, a 10% increase from 2006. Saudi Arabia earned the largest share of these earnings, $194 billion, representing 29% of total OPEC revenues. On a per-capita basis, OPEC net oil export earnings reached $1,137, an 8% increase from 2006.
Through June, OPEC had earned an estimated $645 billion in net oil export earnings in 2008. Based on projections from the EIA, July 2008 Short Term Energy Outlook (STEO), OPEC net oil export revenues could be $1,251 billion in 2008 and $1,322 billion in 2009.
Posted: Wed Jul 09, 2008 9:56 am Post subject: Re: Trader's Corner 2008
In the end, trading oil for US dollars may prove to be the worst trade in history. They should be using that money, those dollars, to buy assets with real value, like US coal companies or NG companies. For example, the Saudis and other Opec countries are building coal plants to generate electricity. So, why not use all those dollars to buy the coal companies? It has been suggested that companies like ACI have good takeover potential, so, if Opec is smart, they will "divest" or "invest" those dollars in something with real value and not paper. By investing in dollars or US bonds, their future is as economically bleak as ours. They've made their wealth off of fossil fuels, so, they should continue on that path by investing and buying fossil fuel companies. That's my .02 anyway.
Posted: Wed Jul 09, 2008 10:07 am Post subject: Re: Trader's Corner 2008
Buying coal is tricky right now. You're not the only one with that idea. There's been a huge run up in coal company stocks this year. Last week a lot of the speculation money fell out all at once. KOL (a coal company ETF) went from 58 down to 47.20 in two days. Might be a decent place to get back in now, but I'm still a bit skittish. _________________ "So while you sit and whistle Dixie with your money and your power.
I can hear the flowers a-growin in the rubble of the towers.
I hear leaders quit their lying
I hear babies quit their crying.
I hear soldiers quit their dying, one and all." - OCMS
Posted: Wed Jul 09, 2008 10:30 am Post subject: Re: Trader's Corner 2008
GE "never ever" cut dividends. Me think that a lot of support priced into this. Depending on upcoming report that should show extent of their problems GE would be either bellow $25 (if they would have to cut for "the first time ever" or above $30 (if GE is still a GE). On another hand if what we are having is a "slow mild recession" we should see another 10% drop between now and the end of the year, which also points out to roughly $25 per share as the bottom. Me think that GE bellow that level is "Mad Max"/"Great Depression" scenario... Thus right about now could be an opportunity of a lifetime when it comes to GE.
I wanted to wait after earning and/or another sharp correction a-la last August, but accidently entered at $27. I would double down twice bellow $25 or just double down above $30 in the fall.
Posted: Wed Jul 09, 2008 10:35 am Post subject: Re: Trader's Corner 2008
smallpoxgirl wrote:
Buying coal is tricky right now.
Regardless of the price of a ton there is just that much tons of coal that could be moved from producer to consumer. They are already running 3+ rail-lines and constantly unloading a railcar in less then a minute. PE 60 is not justified by any means.
Posted: Thu Jul 10, 2008 7:26 am Post subject: Re: Trader's Corner 2008
Quote:
Natural Gas Weekly
Higher US production has not eliminated the need for LNG
Despite the sell-off in NYMEX natural gas prices observed in the past three trading sessions, likely in sympathy to the weakness in the rest of the commodity complex, we believe US natural gas prices will remain supported in the $12.70-13.20/mmBtu range owing to the need for higher LNG imports.
US production revised up but balances largely unchanged
Despite our higher production forecasts, our end of October inventory estimate is largely unchanged given: warmer than average weather in June; lower than expected US LNG imports in June and so far in July and upward revisions in our industrial demand and pipeline export forecasts. Accordingly, we continue to expect US natural gas prices to stay in line with international levels through the end of injection season, as the need to increase US LNG imports to fill inventories remains. That said, we believe risks to our forecasts are now more balanced, as higher production through the winter months reduces the system's vulnerability to winter weather shocks.
source: Goldman Sachs Commodities Research
July 10, 2008 _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
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