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Andres Rueda

 
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  • A massive (9.2% and counting) rally in WTI crude has erased in one day the entirety of June's decline. Talk about due for a bounce - in the 8 weeks prior to today, oil had fallen in nearly a straight line from $106/barrel to $78. Brent crude's (BNO) a slacker, up just 7%. (see also)  [View news story]
    Wow. Somebody just lost A LOT of money today...
    Jun 30 01:46 AM | Likes Like |Link to Comment
  • Modern Fleets Win In Deepwater Drilling [View article]
    ORIG is probably the cheapest by far. Trades at a fraction of book. All new ships. Should start paying dividend soon. Loan agreements were recently amended to allow for dividend. DRYS needs the cash for its own capex, and will therefore force a generous dividend policy. ORIG has a $2.9 billion contract backlog that pays the company's market cap, and then some. Even if oil plummets, all its drill ships for this year and a large chunk of the next are contracted out, so bottom line should not be affected. Also has a $500 million share/debt repurchase program. Since both equity and debt trade at a discount, the repurchase program packs a double punch. In sum, a bargain.
    Jun 27 09:42 PM | 1 Like Like |Link to Comment
  • Treasury Sale: The Good And The Ugly [View article]
    I completely agree with the author. Why would you risk going out the yield curve into the 7-yrs, the 10-yrs, or God forbid the 30-yrs for a paltry 1%-2% in excess yield? The risks that you face are huge. There's interest rate risk, first and foremost. If interest rates spike, the market value of your "risk-free"/"safe haven" long-term bond will get absolutely creamed. Given the very low yields right now, interest rates don't have to spike by that much for you to already start feeling the pain.

    Then there's inflation risk and/or default risk, but let's assume that they don't exist. Interest rate risk is the biggie. However, with a debt burden approaching 103% of GDP, does anyone believe the US could handle its debts without monetizing? And debt monetization, doesn't it lead to inflation? And inflation, doesn't it lead to higher interest rates? But wait, could the US handle interest rates on its debt circa 7%, which clobbered Greece, Ireland, etc.? Probably not. These possibilities may seem remote to some right now. However, the 10-yrs, the 30-yrs... these are very long-term instruments. The above could easily happen before the bond matures.

    I know, the T-bond market is very liquid. Most people only hold these instruments for a short time, and there's always a "greater fool" to buy these instruments for a higher price... except when there isn't.
    Jun 24 07:52 PM | 2 Likes Like |Link to Comment
  • Official projections show the establishment (pro-bailout) parties - New Democracy and Pasok - with enough seats to form a government in Greece. New Democracy is projected at 30.1%, Syriza at 26.5%, Pasok at 12.6%. Pasok indicates it will provide the votes to create a majority but will not take part in the government, reports Dow Jones. The euro is buying $1.2705 vs a Friday close of $1.2638.  [View news story]
    Oh, gee. I guess global capitalism will live to see another day thanks to the election results in a country with an economy the size of Rhode Island.

    Meanwhile, in another dimension... the US federal debt reaches 103% of GDP, even as 10-yr T-bond yields drop to 1.57%. In some instances (and in ALL INSTANCES after accounting for inflation), fear-driven investors are PAYING "safe haven" governments (US & Germany) for the PRIVILEGE of lending to them on a long-term basis. I guess these investors want to protect their principal, except that... oooops, bond prices move inversely with yields and as yields revert to historical norms or at least catch up with inflation that principal will get crushed.

    Well, at least tomorrow the "euro crisis" fear trade gets cooked. About time, as it is getting annoying.
    Jun 17 06:36 PM | Likes Like |Link to Comment
  • Europe: Never So Cheap Since 1983 [View article]
    TEF and FTE are both dirt cheap because of the euro crisis panic.
    Jun 17 11:31 AM | Likes Like |Link to Comment
  • Europe: Never So Cheap Since 1983 [View article]
    It was funny that they recently changed their ticker symbol from STD to SAN. I wonder why they took up the STD ticker to begin with. Didn't they notice? Who was the genius? Tickers aside I am long SAN.
    Jun 16 11:44 PM | 1 Like Like |Link to Comment
  • Who Do You Believe - The VIX Or The Bond Market? [View article]
    10-yr. T-bonds just closed at 1.57%. For every 1.5% increase in yield on the T-bond, purchasers can expect a 23% loss on the mark-to-market value of their bonds. As the bonds revert to historical yields, the orgy of fear will lead to an orgy of losses as the fear trade unwinds. Talk about a "safe haven".

    With a federal debt at 103% of GDP, the US is more indebted than Spain. It could not service the yields that the market currently requires from Spain. But that is besides the point... The fear trade will get cooked simply from mean reversion. If yields climb back to inflation levels (as reported by the government), "safe haven" bond purchasers already get hit hard in the back of the head.
    Jun 16 01:03 PM | 3 Likes Like |Link to Comment
  • To Grexit Or Not To Grexit? [View article]
    This is the biggest who-cares, overhyped story of the decade. Sucks for the Greeks, if they leave the euro. In the long run, the Greeks will be ok as their devalued currency allows their economy to gain competitiveness. The rest of Europe will do just fine, either way. Greece is too small to matter. Detroit is probably a larger economy!
    The Central Banks will just print their way out of the current problems, so I don't understand all the hand wringing about the upcoming elections. Since the beginning of time, some country somewhere has had economic problems, so I do not get the obsessive focus, as if the fate of entire world hinged on how the Greeks decide the election. Let them vote in peace!
    Jun 16 12:51 PM | 1 Like Like |Link to Comment
  • Nokia's (NOK) massive job cuts and facility closings may help narrow its losses, but they risk further weakening the company's competitive position, by depriving it of the resources it needs to stage a comeback. That, in turn, could force Microsoft (MSFT) to explore new partnerships to further its Windows Phone ambitions. With Nokia's credit rating already downgraded to junk, the bond market is assuming the worst - CDS spreads now put the odds of a default at 54%.  [View news story]
    Nokia will do fine. The restructuring is necessary. The company needs to cut back on expenses as it introduces new products and its latest line-up gains momentum. The Lumia phones have been well-received. I am getting one myself! Ha, ha. The company has a large cash pile and is a proven innovator. Its problems simply come at a bad time. The market is panicking about everything so the company's entire capital structure is priced for bankruptcy. That's no different than many other companies right now, and that's what generally happens in a panic when in the orgy of fear everything gets priced for liquidation.
    Jun 16 12:42 PM | Likes Like |Link to Comment
  • "Europe has lit the fuse on an economic and financial bomb," writes Ambrose Evans-Pritchard of the Spanish bailout. Next up, Italy, which (it makes you laugh until you cry) is guarantor to 22% of the bailout funds. "The situation (in Italy) could rapidly become critical," warns Citigroup, expecting it too will have to request a rescue.  [View news story]
    Ambrose Evans-Pritchard is always writing about how there is disaster lurking in every corner. He needs to grow up. The world is always coming to an end the day before yesterday.
    Jun 10 09:54 PM | 2 Likes Like |Link to Comment
  • China May exports +15.3% Y/Y vs. +4.9% in April and consensus of +6.9%. Imports +12.7% vs. +0.3% and +3%. Trade surplus $18.7B vs. $18.4B and $17.8B. Sales to the EU rise for the first time in three months. However, economists remain cautious. "It is doubtful that growth in exports and imports can keep up such a fast pace," says one.  [View news story]
    Nobody cares what Moody has to say. The rating agencies are consistently wrong. They always arrive late to the party with their ratings.
    Jun 10 01:24 PM | 1 Like Like |Link to Comment
  • The Only Way DryShips Can Survive [View article]
    Everything has its price, and at $2 per share DRYS is dirt, dirt cheap. The company is priced for bankruptcy, and yet a bankruptcy is unlikely to happen. If it makes you feel better, you can think of yourself as a vulture picking Economou's bones at $2 a share.
    Jun 10 01:09 PM | Likes Like |Link to Comment
  • South Carolina's pension fund's push into alternative investments has done little for its returns, but has paid off well for for hedge and PE funds (not to mention its now-former investment chief). Desperate to make up shortfalls, state and local pension funds nationwide are doing the same, and Wall Street is happy to oblige.  [View news story]
    I agree. Managers of pension fund are better off just picking IBM, etc. and creating a diversified portfolio of blue chips or even just buying an index. It is very easy. Hedge funds and private equity funds should keep their greedy little fingers off pension moneys. It is just not right or fair to the guy who spends 30 years building up his pension.
    Jun 10 12:55 PM | 3 Likes Like |Link to Comment
  • South Carolina's pension fund's push into alternative investments has done little for its returns, but has paid off well for for hedge and PE funds (not to mention its now-former investment chief). Desperate to make up shortfalls, state and local pension funds nationwide are doing the same, and Wall Street is happy to oblige.  [View news story]
    Great. Now the hedge funds with their heads you lose/tails I win fee structure are happily capturing pension moneys. Pension funds belong to workers, not to some idiotic "I sit behind a desk all day" trader who can't even beat the market. Most hedge funds have a performance fee where the manager captures 20%-40% of the upside. The markets are volatile. Those fees can easily be triggered by normal market movements. That upside should not end up in the pocket of a Wall Street fat cat.
    Jun 10 12:03 PM | 3 Likes Like |Link to Comment
  • The Only Way DryShips Can Survive [View article]
    It matters in so far as depreciation is a non-cash expense and therefore will not normally send a company into bankruptcy, which is where you are convinced DRYS is heading. DRYS is cashflow positive, event at the pits of drybulk rates, so I don't understand why you are so convinced it will run out of cash and will have to file for bankruptcy. Your convictions don't make sense to me, that's all.
    Jun 10 12:12 AM | Likes Like |Link to Comment
COMMENTS STATS
174 Comments
287 Likes