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Rob Viglione

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  • Signs That the Credit Crunch May Be Over [View article]
    Let's also keep in mind that "normal" TED spread is between 20-50bp. What we have now is still multiples of that.

    Still, markets appear to be's either complacency before further collapse, or perhaps the collapse has run out of steam. I'm buying long VIX to hedge equity positions.
    Dec 29 09:46 AM | Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Is "hedge fund Paulson & Co" a joke for the Treasury?
    Dec 29 09:35 AM | Likes Like |Link to Comment
  • Get Ready for a Fed Induced Period of Inflation [View article]
    Everyone should take note at the increasing number of articles coming out in favor of an inflation thesis. For a time it looked like deflation was the hot quickly that has changed!
    Dec 28 11:29 AM | 3 Likes Like |Link to Comment
  • Prophet Bernanke Plans for Inflation [View article]
    The federal balance sheet is so far off equilibrium, with rampant budget deficits and a horizon of increased spending requiring either a lot more borrowing or a lot more money creation. Either option will debase our currency and herald inflation.

    Specific ways to hedge and exploit this eventuality:
    1) Short long-term U.S. Treasuries (either ZB futures or TLT ETF)
    2) Short USD (buy UDN, or any other currency ETF or futures contract)
    3) Buy gold and other precious metals

    Since the federal government seems intent on destroying our currency, we all need to take care of ourselves or jump ship with our assets to more prudently governed countries.
    Dec 28 11:27 AM | 2 Likes Like |Link to Comment
  • Economic Efficiency Cannot Be Calculated [View article]
    Paul's onto something with the notion that America has consistently adopted policies rendering us less competitive over the last 50+ years. We have lost our way as a bastion of free trade, and free enterprise.

    Still, we cannot escape the trade distorting protectionism found in nearly every country with which we interact. This certainly benefits American consumers, as they buy cheaper goods, but it can be devastating to our industry. This is one, BUT NOT THE ONLY, reason our industrial base has contracted over the last several decades.

    I can see the need for collective security in negotiation of truly fair trade agreements, in which the distortions of foreign protectionism are diminished. Yet to engage on this level we need to equalize our own trade distortions.

    In the end we all benefit from a free America and should look to ways in which we can reinvigorate our competitiveness by removing regulatory, trade, and tax barriers to prosperity. Only when America is free and interacting with the world on a system of free enterprise can we demand our trading partners do the same.

    On Dec 28 10:00 AM Paul Killinger wrote:

    > You can blame trade, Wall Street or anything else you like for our
    > economic malaise. But the fact is we're becoming more like Europe
    > (and just as globally uncompetitive) every day.
    > Our ONLY chance for a serious economic resurgence at this late date
    > is a return to our roots, to what made our country economically great.
    > And the answer to that, my friend, is CHEAP ENERGY.
    > The truth is we have MORE domestic energy resources than any other
    > nation in the world. But so long as our government gets to artificially
    > decide the energy winners and losers, we're destined to join the
    > many other formerly great nations of the world on the economic ash
    > heap.
    > It was a nice ride while it lasted.
    Dec 28 11:18 AM | 2 Likes Like |Link to Comment
  • Commercial Real Estate and the Herengracht Index [View article]
    Expect to see lots more pigs lining up at the federal trough. Commercial developers are just the newest batch, but they will not be the last. Sad that our economy is stooping to this does not bode well for long run health.

    Very good article. With your dissociation of real estate returns into equity versus debt holders, you've illustrated the political implications of how some interest groups benefit over others with public policy. Lobbying for political favors is a dirty business.

    I fully anticipate a commercial collapse in the near future. An interesting pair trade is long corporate debt, short commercial real estate.
    Dec 27 11:52 AM | 1 Like Like |Link to Comment
  • The Free-Markets Myth [View article]
    Mr. Banks, free markets help us all out by ensuring that the inefficient and poorly run "banks, automakers, insurers and airlines" fail. We live in a society that wants everyone to be equal, the sky to be perpetually blue, and for no one to fail, but reality has a way of catching up whether we like it or not. Encouraging and then enabling bad decision making and malinvestment weakens our society over time, particularly because the only way to enable such nonsense is to take resources from productive ventures.

    Yes, there will be lost jobs. Yes, there will be crying shareholders, but we must always conform to the constraints of reality and understand there are consequences for our actions. In the long run it is best to accept reality for what it is and align resources efficiently.

    On Dec 27 08:18 AM Ferdinand E. Banks wrote:

    > If free markets meant, at the present time, that banks, automakers,
    > insurers and airlines would fail, then I say to hell with free markets.
    > If the Bush government had concerned itself primarily with the US
    > and not what they call democracy and freedom in various stone-age
    > countries around the world, only a few academic cranks would be concerned
    > about the freedom of markets today.
    Dec 27 11:39 AM | 1 Like Like |Link to Comment
  • SPX Historical Volatility Lowest Since September [View article]
    For the first time in months I have switched back to going long VIX via index calls to hedge equity positions. Since September/October I've had to sell puts to get similar exposure, since calls were too expensively priced.

    I recommend looking at VIX calls to buy down equity risk. Markets, and our entire financial system, are still highly unstable. I would not become complacent just because the rest of the market has.
    Dec 27 11:30 AM | Likes Like |Link to Comment
  • The Economic Meltdown: Dismantling, Yes; Doom, No [View article]
    America is in a strange position being a Republic that maintains an empire. Maintaining military bases in 130 countries (70,000 troops in Germany still!) holding a standing army of 1.1 million, and subsidizing our allies defense budgets is a recipe for disaster. We spend far too much money on defense.

    Be that as it may, military expenditures are one element of the problem. Congress acts like a group of kids without conception of budget limitations, the Federal Reserve acts like a Soviet price control committee, the money supply constantly increases, and public policy consistently encourages malinvestment and other bad behaviors.

    50+ years of this kind of bad policy has done wonders to destabilize our society.
    Dec 27 11:22 AM | 8 Likes Like |Link to Comment
  • 2008 Commodity Performance [View article]
    Bottom line is that we have a serious fiat currency issue, particularly in the U.S. The purpose of a gold standard is to keep money creation in check; unfortunately, migrating from any such control mechanism has allowed the Fed to debase our currency by a factor of 25 since 1913, when we delegated our trust.

    Gold is one measure people use to counter inflationary growth of the money supply. There are others. Short currency futures, short government bonds, buy real property...and let's not forget to stock up on canned goods and bottled water!
    Dec 27 11:03 AM | 1 Like Like |Link to Comment
  • Are Preferreds Staging a Comeback? [View article]
    There's pros and cons to holding preferred shares. High yields, cash flow preferences, and special tax treatment. Downside can be somewhat substantial, however, since preferred shares do not participate in dividend or price growth of the common stock. If markets rally, preferred shares should lag.

    Still, in this tough financial climate, preferred shares do have additional allure:

    Dec 27 10:48 AM | Likes Like |Link to Comment
  • The Case for Higher Interest Rates and Lower Home Prices [View article]
    @Bob N, why the harsh words? No need for that kind of negativity. This article makes perfect sense. You don't have to be a real estate "expert" to understand that prices have meaning and markets have natural mechanisms for rewarding the prudent and levying consequences upon the imprudent.

    Prices have to fall as a natural cleansing process. Those who cannot afford property should not have been encouraged to buy in the first place. Reality always has a way of catching up. Playing God with interest rates only encourages further malinvestment; unfortunately, we're at a precipice where more dislocation from stability could mean disaster.

    I'd rather suffer asset price decline now instead of total financial system collapse later, with our currency rendered worthless and our government unable to meet debt service requirements.
    Dec 25 11:57 AM | 5 Likes Like |Link to Comment
  • Why I See Long-Term Deflation [View article]
    @Scott, best point made. Asset prices are undeniably falling, but at some point the crash will temper and we'll have to face incredible increases in money supply and unmanageable piles of debt. This will likely be the dominant factor in the long-term inflation-deflation battle.

    Best case in point is to learn from Zimbabwe/Rhodesia.

    On Dec 23 07:24 AM Scott1 wrote:

    > in real terms, true, demand is falling, so prices should fall under
    > a system of fixed money supply. But if the money supply increases
    > dramatically (acknowledging velocity of money issues, of course)
    > , prices can nonetheless rise. The authorities are intent on increasing
    > the money supply and thus creating inflation in order to bailout
    > the banks and the homeowners (this will make the banks profitable
    > allowing them to play the yield curve and lower the real debt load
    > on homeowners, because their salaries and eventually their house
    > values will rise relative to their debts, which are mainly fixed).
    > Most developing countries have probably spent half or more of the
    > last fifty years in inflationary periods, even when in real terms
    > their economies were often shrinking. Zimbabwe, anyone? If Zimbabwe
    > and many other developing economy know how to create perpetual inflation,
    > despite often shrinking economies, why should the US have a problem
    > doing so?
    > There is no trick to creating inflation, the myth that it is difficult
    > seems to be perpetuating through the memosphere because people don't
    > understand basic economics. There is no limit to the money supply
    > under a fiat monetary systems, if the authorities increase the money
    > supply by sending out checks or buying up assets (which amounts to
    > the same thing) using monetization (ie issuing new money out of thin
    > air) prices would eventually rise, and the changeover can happen
    > quite suddenly.
    > There really is no trick to this, yes demand is falling relative
    > to supply, so prices must fall in real terms, but if we double the
    > amount of money outstanding or triple it or more, then prices will
    > rise again, same laws of economics apply. If there are more units
    > of currency outstanding, then each good and service in the economy
    > is worth that much less in terms of currency outstanding.
    > The government can create an infinite supply of money, there is no
    > technical limit, if the government only has the will they can always
    > create inflation by sending out checks or buying up assets. See
    > Bernanke "Deflation, making sure it doesn't happen here"
    Dec 23 01:02 PM | 1 Like Like |Link to Comment
  • Profit Plays Offered by Obamanomics [View article]
    Obama will influence markets more than any previous president. His powers are enormous and he fully intends to use them. This will result in the continuation of this year's massive wealth redistribution program, which means to protect ourselves and potentially profit we should follow the money.

    The march towards universal health care will mean 45 million new customers for all sorts of products and services, with the least regulated ones profiting the most. It also means enormous boon for union-heavy industries that suffer from carrying expensive health care and pension liabilities that will soon be absorbed by taxpayers.

    Watch carbon efficient utilities who will benefit from carbon cap-and-trade, and alternative energy firms that will receive wind-fall cash flows from taxpayers. Finally, stay clear of defense and keep an eye on firms that cozy up to the federal government.

    Read "Obamanomics: How to Invest Over the Next Administration" ( for detailed recommendations.
    Dec 20 06:46 PM | Likes Like |Link to Comment
  • VIX Sliding Fast [View article]
    This is the perfect hedging opportunity for long equity long VIX. I've had to resort to selling VIX puts over the last few months to hedge long equity trades, since buying calls was too expensive. Now that VIX is down I'm switching back to buying calls.
    Dec 20 04:48 PM | Likes Like |Link to Comment