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Michael McDonough

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  • Vessel Glut Makes BDI Irrelevant as Economic Indicator [View article]
    So you are arguing that the massive buildup of new vessels has had no impact on shipping prices? So the shipping sector is somehow exempt from that same supply (the amount of ships) and demand (the number of cargoes) dynamics that effect every other sector in the economy...?

    And since the supply of ships didn't start jumping significantly until the end of 2009, it makes complete sense that were small jumps in the BDI in both of those years providing shippers with a false sense of confidence preventing them from canceling or delaying some of the new vessels orders they are now taking delivery of.
    Jan 24, 2011. 10:14 AM | Likes Like |Link to Comment
  • BDI Decline Doesn’t Mean Much [View article]
    Newships are slowly coming online; they don't all get delivered on Jan.1. China has had almost full control over shipping rates over the past 1.5 years lets not forget, so well surgining rates at the start of 2010 may bode well for the 'success' of Chinese stimulus it does little toward indicating the health toward the rest of the global economy. And if you want to argue a slowdown in China's demand for raw materials will throw the global economy into another double dip recession, then we have bigger problems than falling shipping rates...
    Jun 16, 2010. 02:30 PM | 1 Like Like |Link to Comment
  • Big Boost in Chinese Exports Could Lead to Rapid Tightening [View article]

    The data is from a subscription service. I have not yet found a good free source online for Chinese data (at least that can compete with the databases I currently have).
    Jan 13, 2010. 03:47 PM | Likes Like |Link to Comment
  • Japanese Finance Minister Wants a Weak Yen [View article]
    Still a good time to short the Yen.
    Jan 8, 2010. 09:49 AM | Likes Like |Link to Comment
  • Payrolls Fall Hard for December, But Revised to Positive in November [View article]
    The labor force fell by roughly 661K I believe, however, an even broader measurement of unemployment, which includes people who are under-employed and the such, rose to 17.3% from 17.2%. I believe this release gives us a more realistic picture of the current situation.

    As for the labor force number; I always felt its calculation was somewhat questionable, but so long as they use the same process each month--whether right or wrong--it is at least consistent.
    Jan 8, 2010. 09:30 AM | Likes Like |Link to Comment
  • Obama to Speak on the Economy Tomorrow [View instapost]
    Prior to this announcement I wouldn't have been surprised if the number was positive, but now I would be surprised if it wasn't. Unfortunately, I purchased some volatility hedges for my portfolio today; now I wish I had waited until tomorrow.
    Jan 7, 2010. 10:18 PM | Likes Like |Link to Comment
  • This New Decade: Era of Coal 2.0? [View article]
    I agree that coal is an attractive sector. People sometimes fail to realize is that coal is a fungible asset. In large part, coal's fungibility provides a hedge for the industry against potential anti-coal policies, meaning, barring a ban in the international transport of coal--or heavy taxation--what is not used domestically can easily be sold to foreign entities. Take for example, the government's campaign to stem the use of cigarettes. Domestically, this worked quite well significantly reducing the percentage of the population who were smokers. However, these policies did nothing to reduce the international demand for U.S. tobacco products, or prevent domestic manufactures from benefiting from growing foreign demand. I went long on the coal sector on November 13th with buy recommendations on Walter Energy (WLT), Peabody Energy (BTU), and the coal ETF (KOL), and my view remains bullish today.

    Global Macro Based Trading Ideas for Retail Investors:

    Coal Article (subscription required):
    Jan 6, 2010. 09:42 PM | 1 Like Like |Link to Comment
  • Global Battery Equity Index [View article]
    Jack, for whatever reason JCI isn't listed under BBergs Batteries/Battery Systems classification. It could be because of their diversified product base and would probably fall under the auto parts classification.
    Jul 3, 2008. 09:28 AM | Likes Like |Link to Comment
  • Short Interest at Record Levels [View article]
    Howard, I agree, so I calculated the SIR for the top 100 NYSE stocks, you can see it here:
    Mar 28, 2008. 01:42 AM | Likes Like |Link to Comment
  • Invest Globally, Not Just Locally [View article]
    Richard, I agree. I have been speaking with a lot of different investment banks and all of them seem to be significantly enlarging their presence in India. I wish there was some type of forward looking indicator to track the significance of that, but I have a feeling it is pretty high. Essentially, you are going to have a bunch of banks introducing Indian equities to .a lot of clients who would have otherwise not have had a means to invest in the country. It is definitely something to keep an eye on. I have been looking at IFN and EPI
    Mar 27, 2008. 11:20 AM | Likes Like |Link to Comment
  • How Will the Housing Crisis End? [View article]
    Steven, I agree a lot of loans were given out that never should have been. However, right now a lot of people who should be getting loans can't... And that is a problem... Of course lower housing prices will help, but only if qualified people can borrow money to buy them, which they haven't been able to do.
    Mar 26, 2008. 11:13 AM | Likes Like |Link to Comment
  • Why U.S Gas Prices Will Continue to Rise Rapidly [View article]
    User 168113, You are correct the ratio we used for oil barrels/gallons was 31 not 42. As you mentioned not all 42 gallons in a barrel are used to produce oil, so we calculated on average what percent of a barrel was used for fuel (this included diesel and may have been a mistake) However, if you did use 42 as the benchmark, the magnitude of the spread would be slightly less, and imply a gas price of around $3.50 vs $3.96 over the next couple of months, but since the entire barrel isn't used for gas production we did not feel this would be accurate. Important to note is that in either case there would be no change to the shape of the XOM price to GAS/WTI spread chart. Hope this helps!
    Mar 26, 2008. 03:33 AM | Likes Like |Link to Comment
  • The Case Against Ethanol [View article]
    Ethanol production will continue putting upward pricing pressure on the world's food supply as global demand rises. On top of that, it seems it is not the most efficient means of alternative energy. There is some potential in switch grass, but it doesn't seem like it will be immediate.

    I recently did a piece on food energy prices:
    Mar 25, 2008. 09:34 AM | Likes Like |Link to Comment
  • Taking Stock of Oil [View article]
    I think it is also interesting look at the lag of the some of crack spreads and this sectors stock price. I believe the spread of gasoline to crude prices as the lowest it has been in at least 15 years, imagine that could cut into margins.

    Further explained here: fiateconomics.blogspot.../
    Mar 25, 2008. 05:40 AM | Likes Like |Link to Comment
  • The Fed: On the Cusp of Moral Hazard [View article]
    A good old fashion moral hazard slippery slope
    Mar 24, 2008. 12:07 PM | Likes Like |Link to Comment