Discovered a really cool site via Paul Kedrosky (Twitter) … finviz.com. Market junkies, check it out! This is exactly the kind of site I’d create if I knew a damn about programming.
Shipbuilding Torpedoed by Subprime Causes Cost Surge, by Todd Zeranski
“Freight rates have risen as fewer vessels have been delivered. The Baltic Dry Index, a measure of rates, has risen 58 percent in the last year as an index tracking the number of cargo ships under construction has fallen 21 percent in that time.
A year ago, banks would finance as much as 80 percent of an order [to build a ship], with 12- to 15-year loan terms. Now, financing usually doesn’t exceed 65 percent, and terms are 10 years or less. Prices have doubled, with even high-quality credit clients paying about 1 percentage point over LIBOR.”
Here are the weekly charts for the Baltic Dry Index and DryShips (DRYS) … slightly correlated I’d say. Fascinating how everything inter-relates: Benny’s Bank Bailout, Crazy Commodities, Dollar Destruction, Dearth of DryShips, ok, I’ll stop at ‘E’.
Emperor Soros’s new clothes, by Matthew Lynn
“George Soros would like to be known as a thinker of stature. But is he actually saying anything worth hearing? In reality, Soros gets away with a lot on account of being very rich. He is, without question, a superbly incisive investor, one of the best of his generation in the world, but as a writer and thinker his work varies from the incomprehensible to the plain weird. Put his views under a microscope and it’s surprising anyone takes them seriously at all.
At the heart of his argument is the concept of ‘reflexivity’, which means that ‘our thinking actively influences the events in which we participate and about which we think,’ according to his own definition. He makes very grand claims for the theory, linking it to quantum mechanics (from which the Quantum Fund gets its name), and attempting to establish that it explains not just the markets but, well, pretty much everything. At the core is the notion that what we think about things changes according to the way events unfold. The trouble is, it’s a pretty mundane thought, dressed up in a lot of pseudo-philosophical language.
The convulsions in the global markets do need serious analysis, but Soros’s abstruse undergraduate twitterings add little to the debate. ‘I have been fortunate in making a lot of money and spending it well,’ Soros writes. ‘But I have always wanted to be a philosopher, and finally I may have become one.’ In a sense that’s true. Just not a very good one. And, as Soros himself appears to sense, if it weren’t for the money, no one would be very interested in the philosophy.”
Every intelligent person who has read any of Soros’s books knows this already. But Lynn is overly harsh on Soros — at least he’s trying to be a deep thinker, which you can’t say for most people, rich or poor. Soros will always have my respect for his early opposition to the war in Iraq.
– via controlledgreed.com –
Seems like whenever I give a freebie, like shorting WFMI, the idea tends to work out. The initial protective stop should be moved to breakeven now, making this trade a scratch at worst.
Here’s the thinking: folks are upside down on their McMansion, the Escalade they lease to outdo (not just keep up with) the Jones’s next door costs $100+ to fill with gas, and taxes are going up up up to bail out their profligate local government. There’s just no place in their lives for artisan bread these days. So many wannabes having to give up the life that TV has taught them to live (go ahead, you deserve it!).
Incidentally I still get emails of thanks for my August 10, 2006 post: The End of Whole Foods’ Fabulous Run, or, Pass the Mac & Cheese Please
Rice Gains for Fifth Day on Myanmar Cyclone, Increased Demand
“Cyclone Nargis struck the country’s main rice-growing area on May 3 … Myanmar had been expected to export 600,000 tons of rice this year … If Myanmar becomes a net importer it ‘will seriously affect the prices of rice globally’ … Myanmar’s government has declared a state of emergency in five low-lying provinces in the Irrawaddy delta. The five account for about two-thirds of the country’s rice production and half of its irrigated area.”
Folks were hoping that the weekly trend in rough rice would exhaust around the $20 mark, but since the cyclone hit Burma all bets are off.
Subscribers currently have a short in the KBW Regional Bank ETF (KRE) with a target zone of $32.41 to $31.81. That’s a really critical level for KRE since $32ish acted as key support during the dark days earlier this year.
On a side note, I’m limiting the number of subscribers to the Box to an even 100 people. This should help me keep things simple and a make it a little more exclusive (I can also toss any gripers out this way — let me say here that 99% of my current subscribers are beautiful, generous people).
Goldman’s Murti Says Oil `Likely’ to Reach $150-$200
“‘The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months,’ the Goldman analysts wrote in the report dated May 5. ‘The core of our super-spike view has been that a lack of adequate supply growth coupled with price-insulated non-OECD demand growth’ is leading to higher prices.”
Anyone can slap a regression channel on a chart, which is probably what the Goldman guys did to come up with this not-the-least-bit-bold forecast.
Can You Become a Creature of New Habits?
“When we consciously develop new habits, we create parallel synaptic paths, and even entirely new brain cells, that can jump our trains of thought onto new, innovative tracks … the more new things we try — the more we step outside our comfort zone — the more inherently creative we become … ‘you must break the major rule in the American belief system — that anyone can do anything. That’s a lie that we have perpetuated, and it fosters mediocrity. Knowing what you’re good at and doing even more of it creates excellence.’
There are three zones of existence: comfort, stretch and stress. Comfort is the realm of existing habit. Stress occurs when a challenge is so far beyond current experience as to be overwhelming. It’s that stretch zone in the middle — activities that feel a bit awkward and unfamiliar — where true change occurs.”
I think this is true and explains why working with markets is so valuable — you have to bend your mind around something new every day.
China’s competing nationalisms, by David Shambaugh
“The current hyper-nationalism is also fueled by the deep feelings of discontent and resentment currently gripping large sectors of Chinese society - wage arrears, stagnant incomes, unemployment, inflation, corruption, severe class disparities, environmental deterioration, moral vacuum and a deep sense of losing ground in China’s Hobbesian economy.”
True, and it’s remarkable that things are as stable as they are given the state of things.
One of the Box’s better ideas in early April was a short in SBUX (see spreadsheet here).
The problem is that following the ABC Stop Method would have gotten you out seven days before SBUX blew up — true, at a profit, but a much smaller profit than could have been had.
In future, I’m offering the ideas but won’t track them. I simply suggest managing all open positions in one of three ways:
I’ve been thinking of calling the newsletter, in honor of this new habit of not tracking anything, “The Unaccountable Trader.”
