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Alex Cook
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Alex Cook is a graduate of the University of North Carolina, where he studied economics. In college he founded Tar Heel Business, a print and internet publication focused on business and economics. Alex now writes for, where you can read about macroeconomic trends and... More
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  • Very rewarding options arbitrage strategy

    I said that I was going to take this week off from the blog, but I found something really important that investors need to know. This is a trading strategy that I have developed that has been very, very profitable.

    It’s just a matter of time before the arbitrage specialists and quants at Renaissance Technologies and DE Shaw find this on their own and narrow the spreads, so I’ll just share it with you all anyways. It’s rather complicated, so I set up a a video of my computer screen with my narration as I explain it.


    For a more detailed explanation with the economic rationale behind it, I wrote up an essay here:

    Hope you enjoyed it!

    -Alex Cook

    Disclosure: None
    Tags: April Fools
    Apr 01 2:48 AM | Link | Comment!
  • Sunday Briefing on March 21

    Health care debates in the US, the FOMC decision, and housing starts. Here is a recap of last week, and a preview of the market moving events for next week.

    Market moving events next week:

    Monday March 22: Phillips-Van Heusen, Tiffany & Co., and Williams-Sonoma release earnings.
    Tuesday March 23: Existing home sales report released. 21st Century Holding, Darden Restaurants, Jabil Circuit, Rheinmetall AG, Sonic Corp, and Walgreen release earnings.
    Wednesday March 24: Durable goods report and new home sales report released. Lennar Corporation, Lukoil, Paychex, and Red Hat release earnings.
    Thursday March 25: Jobless claims report released. Accenture, ConAgra Foods, Michaels Stores, Oracle, and Wyeth release earnings.
    Friday March 26: GDP report and consumer sentiment report released.


    There is no specific date for this, but one of the most important events to watch this week will be the ongoing US health care reform saga. As I have written, even though the House voted tonight in favor of the proposed legislation, debate and new developments in this are still going to continue.

    A number of important macroeconomic indicators will also be coming out this week, including GDP, consumer sentiment, and the durable goods report. We will also learn more about the stability of the housing market with Lennar releasing earnings and some home sales reports. In my opinion, the new home sales report will be bearish, as was the housing starts report last week. We should not expect to see significant sales of new homes until the homes that already have been built during the subprime boom get sold.

    Recapping last week

    World events

    US-Israeli ties strained on settlement issues

    Thousands protest Russian economic policy

    Macro events

    The FOMC does not change its target rates

    US, UK move closer to losing AAA rating

    Maybe a bailout for Greece after all

    Housing starts fall (no surprise here)

    Micro events

    Caterpillar says health care bill would cost if $100 million in first year

    Must read commentary from last week

    Hedge funds fail when “rock stars” are in charge

    Why Canada avoided a mortgage meltdown

    Public Finance in China: The Lurking Costs of Growth (China in a bubble?)

    -Alex Cook

    Mar 21 11:16 PM | Link | Comment!
  • No idea how health care debate will end

    I am going to say something that a lot of business writers are probably thinking but just don’t want to admit: I have absolutely no clue how the health care reform saga is going to end. Don’t kid yourself; tonight’s events are not the end.

    As I am writing this, the floor debate is still going on, and whatever happens, the ongoing public opinion debate is going to continue. Here is what can still happen:

    • By some bizarre parliamentary maneuver that I am still trying to figure out, the bill ultimately does not reach the President’s desk.
    • The bill passes, but state governments opposed to the bill challenge it in federal court.
    • The Republican party wins seats in the November midterm elections, and while they cannot repeal the bill (presidential veto), they could theoretically just not fund it in the budget.
    • Or, ultimately the bill does pass, gets signed into law, and ends up being popular.

    There are still far too many unknowns at this point, and these will likely persist for months on end. Health care will be a major political topic in the November elections.


    I would not make investment decisions on health care companies based on this legislation right now. Expect significant volatility as the details are being sorted out–details that seem to be changing every 5 minutes or so.

    I would, however, keep close attention to the bond markets. Reportedly, the United States is at risk of losing AAA status on its sovereign debt. A bill that the market sees as increasing the amount of debt could be a catalyst for a ratings change. Consider buying funds like TBT or TMV which are short US Treasuries as a hedge in case a ratings change does occur. A more aggressive way to play a ratings change would be to buy out of the money puts (not too deep out of the money) on Treasuries.

    Disclosure: None.

    -Alex Cook

    Disclosure: None
    Tags: TBT, TMV, health care
    Mar 21 10:28 PM | Link | Comment!
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  • New blog post. The best news from last week: Positive CPI.
    Aug 15, 2010
  • just found out he passed the Level I CFA Exam!
    Jul 26, 2010
  • New blog post: A crisis wasted - Why the financial reform bill doesn't get the job done.
    Jul 19, 2010
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