Category Archives: Trading

Investors Plan to Go Overweight Commodities, Credit Suisse Says

Posted on by


[Skip to the end]

Turning into a stampede?

People want it.

They are scared of the fed ‘printing money’ even in the face of obvious excess capacity?

Watch for storage costs to go up/contangos where there is not a monopolist setting price?

Good market for producers who sell forward, getting paid by investors paying up for forwards/storage?

Investors Plan to Go Overweight Commodities, Credit Suisse Says

By Chanyaporn Chanjaroen

Oct. 7 (Bloomberg) — More than half of investors surveyed
by Credit Suisse Group AG said they plan to hold an overweight
position in commodities in the next 12 months, double the
proportion with such a weighting now.

Of the 180 investors surveyed last month, 51 percent said
they expected to hold an overweight position in the next year,
34 percent a neutral weighting and 13 percent underweight. That
compares with 25 percent overweight now, 38 percent neutral and
30 percent underweight.

The most popular route for commodity investment will likely
be active indexes or funds, followed by exchange-traded funds,
according to the survey, e-mailed by the bank yesterday. Of
those surveyed, 44 percent were from hedge funds and 22 percent
from institutional funds.

The Reuters/Jefferies CRB Index of 19 commodities posted a
record 36 percent decline last year and rebounded 13 percent
this year. Assets under management at commodity hedge funds
increased 6 percent this year to $60.61 billion as of the end of
August, according to Hedgefund.net.

Expectations that inflation will accelerate and the dollar
weaken contributed to investor demand for commodities this year,
Kamal Naqvi, head of global commodity investor sales at Credit
Suisse in London, said by phone today.

Thirty-nine percent said natural gas would be the best
performer among energy products over the following 12 months,
with 32 percent picking crude oil.

Among industrial metals, 59 percent expected aluminum to be
the worst performer over the period, while 51 percent thought
copper would advance the most.


[top]

Share

Strong Gain in Existing-Home Sales Maintains Uptrend

Posted on by


[Skip to the end]

I took that report as negative overall.

Actual homes in inventory went up.

Sales were up only because foreclosures were up, and they hit bids, which isn’t a sign of strength.

The rate of sales of foreclosures doesn’t tell me anything about the rate of sale of the inventory of non foreclosures.

If anything that rate might have gone down quite a bit.

The pricing data was mixed and didn’t have enough info to see how the ‘quality adjusted’ prices did.

Markets took the report as good news, so could be over done if next weeks news remains weak.

For trading purposes I remain on the sidelines.

Strong Gain in Existing-Home Sales Maintains Uptrend

August 21 (NAR) — Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.2 percent to a seasonally adjusted annual rate of 5.24 million units in July from a level of 4.89 million in June, and are 5.0 percent above the 4.99 million-unit pace in July 2008.

Total housing inventory at the end of July rose 7.3 percent to 4.09 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, which was unchanged from June because of the strong sales gain. The Bank of England’s monetary policy committee appears united in the conviction that its unconventional approach to boosting Britain’s economy has -further to run.


[top]

Share

TIPS 5 year 5 years fwd

Posted on by

This used to be one of the Fed’s major concerns as they are steeped in inflation expectations theory.

It could still signal a need to keep a modestly positive ‘real rate’ though the large ‘output gap’ is telling them otherwise.

History says they’ll put most of the weight on the output gap, though a negative real rate is problematic for most FOMC members.

Should core inflation measures go negative, they will be a lot more comfortable with the current zero rate policy.

Interesting that the employment cost was just reported up 1.8% which shows how little it went down even in the face of
a massive rise in unemployment.

Share

Trading adds nothing to the real economy

Posted on by


[Skip to the end]

Darn, you’re good!!!

Going on my blog.

Part of what it does is transfer funds from pension funds and the like to Goldman employees which adds some to aggregate demand.

What a way to run an economy!

:(

Mike Norman Economics

Goldman profit soars on strong trading gains

Who cares?

Trading adds nothing to the real economy. You have incredibly smart people working at Goldman who merely speculate for a living: buy something then flip it for a profit.

The economy would be better served if people like these worked in more productive sectors–science, industry, health care, alternative energy, etc.

Goldman might have failed if the Federal Government did not help it during the worst days of the financial crisis. Morgan Stanley certainly would have failed.

The fact that our leaders chose to sustain the non-bank intermediaries like Goldman is a testament Wall Street’s power and influence.

We don’t need them. They add too much volatility and risk to the financial system without any concomitant benefit.

All this country needs is a commercial banking system backed by the Gov’t. We had that in the past and it worked fine. Banks originated loans, serviced them and bankers made a little more than civil servants. People bought houses and cars and businesses were able to get money to expand and grow. Same as now, except without all the risk and speculation.

A nation’s power has nothing to do with having a vast, unregulated. financial sector, yet we continue to think so. President Obama is more under the spell of Wall Street than Bush ever was and for that matter, Obama is probably the most pro-Wall Street president in recent memory. Odd, when you think he ran on a platform of helping the working class.


[top]

Share

U.S. Trade Gap Widens on Oil Imports

Posted on by


[Skip to the end]

(email exchange)

>   
>   On Tue, May 12, 2009 at 9:20 AM, wrote:
>   As you predicted….
>   

You mean as I feared!

Higher oil = dollars easier to get overseas = weak dollar all else equal (which it never is, of course)

Higher crude = higher headline CPI = higher government and private CPI adjusted payments

And I suspect higher fuel prices will mean higher government transfers to ‘help Americans afford to heat their homes etc.’ which is not a ‘bad thing’ but does serve to drive up prices that much further.

Creating more spending power does not create more fuel (at least in the medium term) – only higher prices.

The world’s newly forming higher income individuals are back to outbidding our lower income individuals for fuel. With food following close behind as biofuels continue to link the two.

WSJ NEWS ALERT: U.S. Trade Gap Widens to $27.58 Billion on Oil Imports

by Jeff Bater

May 12 (WSJ) — The U.S. trade deficit widened for the first time in eight months during March, as the price and use of imported oil both climbed. The U.S. deficit in international trade of goods and services increased to $27.58 billion from February’s revised $26.13 billion, the Commerce Department said Tuesday. Originally, the February deficit was estimated at $25.97 billion.

U.S. exports in March slipped by 2.4% to $123.62 billion from $126.63 billion as trading partners bought fewer consumer goods and cars from the U.S. Imports fell at a lower rate, dropping 1% to $151.20 billion from February’s $152.76 billion.


[top]

Share

700BB

Posted on by


[Skip to the end]

On Wed, Sep 24, 2008 at 4:51 AM, Sean asks:

Do u think treasury will manage their new mortgage portfolio like a conventional manager – hedging the negative convexity with swaps and swaptions?

Good question!

I wouldn’t; they might.

It wouldn’t serve public purpose to do that. It would add to volatility.

Just doing the exchange reduces volatility as the government absorbs it, which I see as serving public purpose.


[top]

Share

Why it matters how the 700 billion is accounted for

Posted on by


[Skip to the end]

It would be counter productive to add the $700 billion to the budget deficit calculation if the proposal goes through and is executed, since Congress is likely to take measures to somehow constrain spending or increase revenues to try to ‘pay for it’. This would be highly contractionary at precisely the wrong time.

Note that if the Fed buys mortgage securities it doesn’t add to the deficit, while the Treasury buying the same securities does? And in both cases treasury securities are sold to ‘offset operating factors’; either way, Fed or Treasury, the government exchanges treasury securities for mortgage securities.

When any agent of the government buys financial assets, that particularly spending per se doesn’t add to aggregate demand, or in any way or directly alter output and employment.

Yet here we are listening to the Fed Chairman, the Treasury Secretary, and members of Congress talking about $700 billion of ‘taxpayer money’ and a potential increase in the deficit of $700 billion.
And no one argues with statements like ‘it is even more than we spent in Iraq’ and ‘that much money could better spent elsewhere’. Unfortunately for the US economy, this supposed addition to the deficit is likely to negatively impact future spending, perhaps at the time when it’s needed most to support demand.

I recall something like this happened in 1937, when revenues collected for social security weren’t ‘counted’ as part of the Federal budget, and the millions collected to go into the new trust fund
were in fact simply a massive tax hike. Unemployment went from something like 12% to maybe 19% (and stayed about that high until WWII deficit spending brought unemployment down to near zero). After that happened much was written regarding public vs private accounting and the cash flow from social security and other programs was subsequently counted as part of the federal budget calculation, as it is today, and for the same reason.


[top]

Share

How bad off is Goldman?

Posted on by


[Skip to the end]

Selling a convertible preferred that cheap – a 10% coupon with a below market strike???- seems to mean things aren’t all that rosy at Goldman???:

Berkshire will buy $5 billion of perpetual preferred stock that carries a 10 percent dividend. It also will receive warrants to buy $5 billion of common stock at $115 per share, exercisable within five years.

The market seems to like it, for the moment.


[top]

Share

From Professor Mitchell

Posted on by


[Skip to the end]

The JG is job guarantee, and it’s identical to ELR which is simply offering a national service job to anyone willing and able to work.

Bill is based in Australia, and his book can be ordered from this website.

He is one of the few who is ‘in paradigm’.

Excerpts from Bill’s email to me:

>   
>   I have been in South Africa and now in Europe. Today I gave workshops to
>   senior policy managers at the ILO in Geneva on employment guarantees. I have
>   some further meetings tomorrow with managers of ILO programs in Nepal and
>   Mozambique and they are keen to map out an agenda to introduce JGs in those
>   countries.
>   

Well done!

>   
>   I will provide a full report about all the workshops and meetings I have had in
>   the last 3 weeks when I get back home on Tuesday.
>   
>   Hope all is getting back to normal. The financial markets certainly are going
>   crazy. No-one has really said that the US government cannot afford to pump 82
>   billion here and some more there etc into defending financial capital. That issue
>   - of financial solvency and capacity of the Govt hasn’t come up. interesting.
>   

There have those giving warnings about solvency, and that the US will get downgraded if it goes too far.

And there are those that say ‘pumping in all that money’ is inflationary.
 
 
All the best!,
Warren


[top]

Share