Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
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
sparky Tar Sands
Joined: Apr 09, 2007 Posts: 98
Posted: Tue Apr 15, 2008 7:43 am Post subject: Re: Trader's Corner 2008
.
For what it's worth , I believe that the drop in the greenback and the squeeze on my fellow Americans wages earners is going to be a boon for the manufacturing sector
excluding of course the car industry which is terminal .
The Germans machine-tools markets amongst other should be ripe for the picking , the steel industry , given up for dead for so long , could have a few good years .
the aircraft industry is getting some oxygen
pretty much anything with a good export established position .
by the 4th of july , the dust would have settled enough to discern the bottom of the curve ahead , save seriously bad news on the oil front
Look on the bright side , this had to happen ,
pity it didn't happen ten years ago , it would have been less of a waste .
Posted: Tue Apr 15, 2008 8:26 am Post subject: Re: Trader's Corner 2008
Quote:
Russian oil production has peaked and may never return to 2007 levels,
a vice president of Russia's second-biggest oil producer Lukoil, Leonid Fedun,
said in a Financial Times interview published Friday.
Fedun said he believed last year's production of about 10 million
barrels/day was the highest he would see "in his lifetime".
Fedun likened Russia to the North Sea and Mexico, where oil production
is declining sharply, saying that in its main oil-producing region of western
Siberia, "the period of intense oil production [growth] is over".
The comments reflect a recent downward trend in the country's crude
production, which has market analysts fretting about the possibility of a
year-on-year decline in production for the first time since 1998.
Russia produced 491.48 million mt (9.83 million b/d) of crude in 2007, up
2.3% from 2006, according to the country's industry and energy ministry.
But in the first two months of 2008, average crude output fell 0.7% to
around 9.75 million b/d, while in March it fell 1.2% to 9.72 million b/d.
A combination of high taxes and rising costs could lead to a further
decline as they prevent producers from increasing investments as existing
resource bases deplete, analysts said.
Posted: Tue Apr 15, 2008 8:48 am Post subject: Re: Trader's Corner 2008
Personally, I find Russia peaking very concerning for the next six years. This on top of recent Saudi statements that they will allow some new finds to go untapped to preserve the oil for future generations. So, with Russia peaked, Mexico in collapse, Saudi Arabia questionable, I don't think the new discoveries in Brazil or Bakken will do anything to help us over the next six years or so. I just believe with the credit crisis and the oil plateau this could be a difficult six years or so, and that assumes Brazil, the Bakken etc will come on line and reduce energy prices and fuel a transition.
I do think Brazil will be a good investment for the next five years or so. Simply buying their currency is probably as safe a bet as any.
Posted: Tue Apr 15, 2008 9:04 am Post subject: Re: Trader's Corner 2008
All bets are relative, but I would never describe the Brazilian real as a safe bet. Not based on their past performance in any case.
Quote:
But strains and anxieties are starting to emerge. Higher world prices for energy and food mean that inflation is edging up. That is testing the policy regime (of inflation targets and flexible exchange rates) that has underpinned the achievement of price stability in many countries over the past decade. Several central banks, including those of Chile and Colombia, have missed their inflation targets. Some have begun to tighten interest rates. Brazil's Central Bank is widely expected to raise rates on April 16th, ending three years of monetary easing. But this may cause currencies to strengthen further, causing difficulties for exporters just when the current-account surplus is narrowing; Brazil is expected to post a current-account deficit of perhaps 1% of GDP this year, for example.
So far so good for Brazil, but generating a surplus and not spending it on populist policies or ramping up inflation will be the real test for the Real.
_________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Tue Apr 15, 2008 9:51 am Post subject: Re: Trader's Corner 2008
Here's why I like the Brazilian real -
(1) I like it versus the American dollar for a host of reasons - the subprime crisis will be worse in the US, the US dollar is based on consumer spending, which is going to go down (I believe), we are energy dependent. The US is doing some really stupid stuff, like considering buying all these bad mortgages etc. So, even though Brazil can do stupid stuff to, at least their economy is growing (the US isn't); the world credit crisis will not hit Brazil as hard as the US; Brazil is energy independent and may become an energy exporter, good climate, the largest country in South America and thus a dominate economic power there, no nukes aimed at Brazil, etc. So, I like the Real versus the dollar.
(2) Very few countries can claim energy independence, and Brazil is one of them. Unlike the middle east, Brazil has lots of water, wood etc. everything they need for continued growth without imports.
(3) For an American looking for investments other than the dollar, Brazil seems to be as good a choice as any. I will consider any other options, though.
Well Ludi, I won't be investing in a century or two. I was thinking more along the next 5-10 years, and Brazil looks okay to me during that time period.
Actually I kinda like Brazil for inventing "Brazilian bikini waxing".
But......, I think there's an agreement that the USA is no longer the ultimate center of the universe when it comes to business, finance, and investing. During the 20th century, if you wanted to make your fortune it was a no brainer-->America is where the action is! Right now the safest investment a person can make in America would be taking a short position.
Either that or just don't invest at all. Granted you're not going to make a profit but at least you'll still have your principle 2 years from now. That's a lot better than what happened to 90% of the general public for the last couple years or maybe I'm just being a cynic? Where's the best place to put one's money right now? hmmm, yeah I'd like to know too!
Posted: Wed Apr 16, 2008 2:30 am Post subject: Re: Trader's Corner 2008
One can go back 188 years and find enthusiasm for foreign investment in Brazil. It has always been a country with boundless natural and economic potential.
But it has also suffered from bureaucracy, incompetence and corruption - BIC SyndromeTM - as well as high taxes and a bloated public service. Prone to bouts of high inflation and debt defaults.
Quote:
Fecundity and frustration sum up the state of Brazil these days. It is bursting with the commodities coveted by the rising economies of Asia, from soya to iron ore. No other country is better placed to cash in on the global craze for biofuels. Yet Brazil refuses to grow in line with the expectations of its 188m people. Since the end of the miracle years of the 1960s and 70s, when it was the worlds second fastest growing large economy, Brazil has lagged. In the past four years, whereas developing countries as a whole have grown at an average of 7.3 percent, Brazil has loped along at 3.3 percent.
So there may be a good case to buy the real, but that is a bet on the whole economy, and not just those sectors that are likely to outperform like commodities. As a US-based investor with exposure to a weak US dollar that may make sense.
I would like to buy Petrobras as a long-term investment. However, it is a high beta stock, so it will be sold-off in any general market correction. The Bovespa has more than tripled since 2003. Closer to four times higher. Petrobras is 15-percent of the index. If there is a wider economic slowdown - and I have argued that there will be - then the combination of deleveraging of financial markets, tighter credit and reduced demand will see commodity prices retrace and emerging markets sell-off.
Some 25 percent of current commodity demand is speculative. There are good reasons for that. Namely fear of inflation and a weaker US dollar. Brazil is not immune to external economic conditions. They run both a budget and a current account deficit despite running a trade surplus. A drop in export demand would exacerbate their already high official unemployment of 8 percent that understates under-employment that could trigger a political response to spend and borrow more to address acute social problems. Or as we say, big countries, big problems. Brazil is hardly homogenous.
Any weakness on the part of government would be immediately met by a flight of capital and an attack on the real given Brazils long history of inflation and debt default.
Brazil has done very well to bring the cost of its 10 year bonds down to near 6 percent, but short term rates are still 11 percent. That certainly supports the real. But investors will remember that in past crises that Brazil had nominal rates of up to 40 percent to attract foreign capital.
I am not negative on Brazil. I just see risks so I would be very selective in what I would invest in
given that it seems that Brazil has already benefited from all the good news so what is left to be priced in at this point in the global business cycle?
But I would love to go down there and snoop around. It is a country with boundless natural and economic potential.
UPDATE: Peak Oil as an accurate aggregator of information? Research shows that, yes, it is very possible.
Quote:
Prediction markets, which aggregate information dispersed across organizations, produce forecasts that are usually at least as accurate as those of experts.
In this roundtable, practitioners from Best Buy and Google, the author of a book about collective intelligence, and a professor of law discuss the potential of prediction markets and the main obstacles they must surmount to become a more widely used tool for making strategic decisions.
One obstacle is that prediction markets challenge basic assumptions about expertise, power, and the way organizations should work. The other is uncertainty about the impact of securities and gambling laws on these markets.
Source: www. mckinseyquarterly.com _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
I don't know how anyone, in all good conscience, could invest in Brazil and then decry the destruction of the Amazonian rain forest. People truly are retarded when it comes to following through on the logical consequences of their investing decisions.
I don't know how anyone, in all good conscience, could invest in Brazil and then decry the destruction of the Amazonian rain forest. People truly are retarded when it comes to following through on the logical consequences of their investing decisions.
Another ridiculous stereotype. You make these silly statements that are probably based on a program you saw on PBS last week. There are many legitamate industries in Brazil and the rain forest is largely being depleted by pirates selling hardwood to foreign buyers.
Posted: Fri Apr 18, 2008 3:21 am Post subject: Re: Trader's Corner 2008
.
Brazil is O.K. but essentially is a kleptocracy ,
don't go there unless you have what the Russians call a strong roof (I.E. someone powerful looking for you ) or else you will be strangled , plucked and roasted
and if you go to the courts , the bitter laughter will be your only reward .
Posted: Fri Apr 18, 2008 10:50 am Post subject: Re: Trader's Corner 2008
sparky wrote:
.
Brazil is O.K. but essentially is a kleptocracy ,
don't go there unless you have what the Russians call a strong roof (I.E. someone powerful looking for you ) or else you will be strangled , plucked and roasted
and if you go to the courts , the bitter laughter will be your only reward .
.
Sounds like how most 3rd world countries work, of course there are varying degrees. On one extreme end, whoever is "in charge" is whoever has the greatest supply of RPG (rocket propelled grenade) launchers at his disposal. This person probably goes by the name of Mohammad and he controls an area the size of a city. Once you leave his "fiefdom" you're stepping into another warlord's domain and have to pay tribute again. Certain parts of central Asia and Africa are good examples.
///
And on the other hand. There's rule of law by centralized government however for a small fee. You don't have to worry about RPG's but once you step off the airplane the customs agent will give you a pamphlet with some paper work to fill out. Just put $5 dollar inside and give the pamphlet back to the customs agent to "expedite" your paperwork. *cough* Southeast Asia is a good example of this last time I heard
///
Getting back to trading or at least economic theory. I've always wondered why so many oil rich nations have a "shortage" of oil refineries.
That's because this is where they "invested" their money http://youtube.com/watch?v=6W1bSKw0SkE
Brazil is O.K. but essentially is a kleptocracy ,
don't go there unless you have what the Russians call a strong roof (I.E. someone powerful looking for you ) or else you will be strangled , plucked and roasted
and if you go to the courts , the bitter laughter will be your only reward .
.
Sounds like how most 3rd world countries work, of course there are varying degrees. On one extreme end, whoever is "in charge" is whoever has the greatest supply of RPG (rocket propelled grenade) launchers at his disposal. This person probably goes by the name of Mohammad and he controls an area the size of a city. Once you leave his "fiefdom" you're stepping into another warlord's domain and have to pay tribute again. Certain parts of central Asia and Africa are good examples.
///
And on the other hand. There's rule of law by centralized government however for a small fee. You don't have to worry about RPG's but once you step off the airplane the customs agent will give you a pamphlet with some paper work to fill out. Just put $5 dollar inside and give the pamphlet back to the customs agent to "expedite" your paperwork. *cough* Southeast Asia is a good example of this last time I heard
///
Getting back to trading or at least economic theory. I've always wondered why so many oil rich nations have a "shortage" of oil refineries.
That's because this is where they "invested" their money http://youtube.com/watch?v=6W1bSKw0SkE
It sounds a little like Mexico to me. The scary thing about a lot of third world countries like that is not so much how corrupt they are from top to bottom, but how little notice the natives take of the fact that they live in a kleptocracy.
But then again, most people in countries like that are so poor that they don't have that much that could be stolen from them in the first place.
"Someone call the federales, quick!!! Someone just stole my pack of Chiclets!" _________________
If you try the 5$ trick the chances are that you will be arrested for attempted bribery ,
don't even think to try this if you haven't been there before and got to know the local " do and don't "
Beside , I have some sad news for you .. those days in south east - Asia 5 $ would be consider either as a joke or an insult
.
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