MaoXian.com -- Archive > December 13, 2004

Fingers Like a Nintendo Player

Banking's soldiers of fortune: Foreign exchange traders on front line of currency war, by Tom Abate:

"This is the global currency market, where money, options and futures worth an estimated $1.9 trillion are traded every day between specialists whose only interaction is the mouse click that accepts an electronic trade. It's a market that has exploded in recent years, thanks to surging trade and ever-greater globalization of financial markets. The stakes are high. A few seconds of hesitation or a bit of over-eagerness can mean hundreds of thousands of dollars, or even millions, won or lost. Currency trading volume these days is roughly triple average daily activity in 1989, according to the Bank for International Settlements in Switzerland. At Wells, the action doesn't stop. Three shifts of traders gaze into screens 24 hours a day."

Note that Eric Blanc, head of dollar-euro trading, is almost as bald as the Chairman.

Posted on December 13, 2004 at 16:45, GMT

Stocks to Watch -- Monday, December 13

Posted on December 13, 2004 at 14:15, GMT

Out of the Inchoate Chatter of the Web

The Alpha Bloggers, by Steven Levy:

"'If you're into blogs to make money, you're into it for the wrong reasons,' says [Doc] Searls. 'Do you ask your back porch what its business plan is?'"

Huh? Come again, Doc?

Posted on December 13, 2004 at 12:55, GMT

Chat Room Open from 8AM-9AM, Eastern Time

This morning's session of the pre-open chat promises to be one of the most informative and entertaining yet. Come join us!

Posted on December 13, 2004 at 8:25, GMT

Roundup of China Aviation Oil News IV

China Aviation Oil Owes Group of 12 Banks $152 Mln

"China Aviation Oil (Singapore) Corp., which last month revealed a $550 million loss from derivatives trading, owes $152 million to a group of 12 banks led by Societe Generale ... China Aviation Oil signed an agreement to borrow $160 million from a group of 10 banks including China Everbright Bank, China Merchant Bank and Societe Generale Asia."

Chen Jiulin: China's Nick Leeson. This article has quite a bit of detail, but the numbers are a mess, and I don't know how the author knows these things. It doesn't help that it's written in Chinglish:

"Like Nick Leeson, [Chen] bucked the market trend in the belief that oil prices would fall. Therefore he offered a price-put option, with which investors could buy from China Aviation Oil at a given price when prevailing market prices rise.

Chen took on huge risk because at high price ranges he would have to buy from the market sell to option holders at lower prices. Yet Chen believed that the market would go his way.

At the same time, international investment banks and futures dealers also noticed Chen's move. These dealers became opponents of Chen's and they had deeper pocket and more experience in futures dealings.

Chen priced his price-put option at US$3 a barrel or US$22 a ton. He expected the oil price to be below US$400 a ton when the future contracts matured. However when contract transaction had to be executed, the market oil prices hit US$450. China Aviation Oil stood to lose US$30 for any ton of oil it sold out. As Chen did not hedge the risk by reverse contracting, the company's loss was huge in a split of a second.

Seeing potential losses, Chen did not stay his hands. Hoping to recoup his losses, he bought futures contract betting the oil prices to continue to rise. However when he had to deliver on his futures contract, oil prices dropped from US$56 to US$42. Again he incurred huge losses."

The bottom line is: Chen could not stay his hands for a split of a second. ;-)

Posted on December 13, 2004 at 8:15, GMT

Evil Genius? No. Pathetic Creep? Absolutely!

Frankel Gets 16 Years for Insurance Fraud

No word on whether Frankelstein gets to bring his 2-foot long riding crop to prison.

Posted on December 13, 2004 at 7:55, GMT

Chart of the Day -- Toll Brothers, Monthly Chart

Toll Brothers, Inc. designs, builds, markets and arranges financing for single-family detached and attached homes in middle-income and high-income residential communities. The Company caters to move-up, empty-nester and active-adult age-qualified home buyers in 21 states in six regions of the United States. Its communities are generally located on land the Company has either developed or acquired fully approved and, in some cases, improved.

TOL hit a new all-time high last Friday. Toll Brothers make sure there's always a loaf of bread baking in all of their model homes... one of the "secrets" of their success.

TOL, Monthly Chart

Posted on December 13, 2004 at 7:35, GMT

Best and Worst Performing Large-Cap Stocks (last 12 weeks)

Best:

Delta Air Lines Inc (DAL)
Up ~95% {airline}
Apple Computer Inc (AAPL)
Up ~75% {personal computers and peripherals}
Advanced Micro Devices Inc (AMD)
Up ~72% {semiconductor manufacturer}
NVIDIA Corp (NVDA)
Up ~59% {graphic processing units}
Ciena Corp (CIEN)
Up ~50% {networking products}

Worst:

Merck & Co Inc (MRK)
Down ~36% {pharmaceutical products}
Marsh & McLennan Companies Inc (MMC)
Down ~33% {risk and insurance services}
Chiron Corp (CHIR)
Down ~31% {pharmaceuticals}
Aon Corp (AOC)
Down ~18% {risk and insurance brokerage services}
Eli Lilly and Co (LLY)
Down ~17% {pharmaceutical products}

Posted on December 13, 2004 at 7:25, GMT

Update on Crude Position

Still short, with 785 cents of profit since December 1st.

Light Sweet Crude, 30-minute Chart

Posted on December 13, 2004 at 7:15, GMT

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