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Tom Guttenberger

 
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  • All Men Are Mortal: Lessons From Chavez's Passing [View article]
    Definitely an interesting and timely piece. These emerging economies seem to always make good case studies for monetary policy on a larger or more experimental scale.

    I think that there is an underlying infrastructure factor that allows emerging market inflation to stay stably high like this. If the people in the economy have a strong enough preference to spend as opposed to save/invest the purchase level is going to reflect this preference. Especially with petrodollars coming in, and if this money is used in the decedent sense that you would expect a corrupt leader to apply this purchasing power to. If this trickle down continues in this way as each subsequent person lives equally autarikically, you end up with a system where no incremental ability to produce goods/technology/services has been created. In other words the demand for g/t/s has increased faster than the economy's ability to produce them.

    A difference comes in through the way M2 grows in many cases. In these EMs you see central banks try to manage the money supply with reserve requirments aimed at controlling the rate trade inflows can be transitioned into the consumer economy.

    Whereas here the central banker seems to regulate credit on credit from the capital account surplus, while relying on a matured economy and infrastructure to keep these businesses capable of servicing the customers' (insatiable, I may add) needs. A bad inflation problem only would occur if this ability is crippled. Which sort of brings me around to the whole oil/energy point. Do we really want to cripple these companies? By turning our noses to commodities like coal and solar wafers and pulling forward oil like crazy, we increase our chances of a bad outcome in both the short and long run!

    (Edit): And on a spuriously related note -- pretty big move from PBR on what I didn't think was much of a news item yesterday. One has to question whether the intrinsic value of an oil major is even capable of changing THAT much over the matter of a few years. As a volatility guy, seems like that could remain an interesting long spec trade.
    Mar 7 09:51 AM | Likes Like |Link to Comment
  • Kabuki Theater: Analyzing Bernanke's Senate Testimony [View article]
    Good article, definitely thought provoking and worth noting.

    I may be wrong, but from my research I thought the Fed Funds Rate was listed on top of IoER. This whole concept of the artificial excess reserve is relatively new to everyone though, which is unsettling.

    I don't think that % of holding by the Fed chart is accurate. I think that gets closer to the ballpark for MBS. The real question is how much are rates really impacted by that unsterilized order book impact? Impossible to say, I think.
    Mar 7 08:40 AM | Likes Like |Link to Comment
  • China ETFs: Enter At Your Own Risk [View article]
    Well, I didn't like the title, but nice summary of the different options. Good reference.
    Mar 6 05:49 PM | Likes Like |Link to Comment
  • Italy Faces Ugly Future Without Reforms, Eurozone Exit [View article]
    Good analysis, and I also enjoyed your post on gross product gains over the last 30 years as well.

    I do think that the really poor performance in Italy's stats is more caused by the entrance into the euro currency regime, rather than an additional concern. I believe the results you displayed in you other analysis show largely that Europe in general has lost competitiveness over the time frame, and do not disagree. But I think that the other (my guess larger) significant relationship was the "robbing" through trade imbalances, with the benefactor being Germany on the flat currency. I expected Germany's GDP growth to be higher reducing other EU states in exchange.

    Why did this not show up on your scale? I believe the integration of East Germany would have disrupted the population flux factor you mentioned astutely, and makes a comparison there difficult.

    The other confounding factor is that of sampling bias. We are measuring from an arbitrary (albeit current) point in time to derive the comparisons. Italy has already imposed austerity measures to correct its fiscal issues, and their current account has made huge strides, as a result turning to surplus. The debt runs sapping business confidence and their ability to operate have had a large effect as well, I'm sure. All considered, I see no great reason to think that Italy will not be able to improve going forward and fill economic slack.
    Mar 6 01:57 PM | Likes Like |Link to Comment
  • National gasoline prices - up $0.50 just in the last month - have hit the $3.75-$4.00 zone known in the past for being "problematic" for stocks, says BTIG's Dan Greenhaus. The most worrisome part, he says, is the increase has come before the demand of spring driving season arrives. Instead of worrying, why not go with the flow and buy the refiners? [View news story]
    You missed my point. Crack spread HAVE BEEN strong, and refiners HAVE DONE well, yes. But they are historically very high right now, and to think that this will continue seems unrealistic.

    I am very bullish on energy and oil in general, and when the underlying price of oil rises, the crack spreads and therefore the refiners' margins will need to contract unless people continue to buy the same amount of $5, $6, $7, etc., gasoline.

    From here: I would take profits and pat yourself on the back for the successful refiner trade. I would still consider major E&P/integrateds, but am still iffy on them because of the increasing production cost and difficulty in extracting the oil. And I am most bullish on the commodity spot price, pure resource plays, and extraction technology companies.
    Feb 28 09:33 AM | Likes Like |Link to Comment
  • National gasoline prices - up $0.50 just in the last month - have hit the $3.75-$4.00 zone known in the past for being "problematic" for stocks, says BTIG's Dan Greenhaus. The most worrisome part, he says, is the increase has come before the demand of spring driving season arrives. Instead of worrying, why not go with the flow and buy the refiners? [View news story]
    Haven't crunched the numbers, but crack spreads do seem amazingly frothy right now, especially considering the season.

    I personally would avoid refiners at this juncture, looking for a contraction. Once WTI becomes a bit more attune to reality, refiners will be stuck between demand destruction and a hard place.
    Feb 27 08:58 PM | Likes Like |Link to Comment
  • Currency Positioning And Technical Outlook: High Noise To Signal Ratio [View article]
    Squeeze in the yen looks like a nice trade here IMO. Although, I said this a couple weeks ago too. The politics involved in their trade situation with China is probably the bigger driver of the weakness recently.

    The defining statement I heard from the G7 and G20 was that "domestic interests need to be considered primary". I thought that the meeting in general threw water on the currency war jargon, and was only supportive to physical assets. A little surprised that the dollar rallied in the face of this sentiment. I like the approach of euro, yen, and else as more emerging reserves are still based in dollars.

    Germany's low but volatile yield makes sense to me too as the policy risk is going to portend a wider distribution of outcomes, especially compared to the admirably consistent, but heavy-footed Fed and BOJ actions.
    Feb 18 09:57 AM | Likes Like |Link to Comment
  • The cause of the partial blackout that stopped the Super Bowl still isn’t known, but Peabody Energy (BTU) thinks it has not an answer but a prediction: The event offered a glimpse of what life would be like without coal-fired power plants. WSJ's Liam Denning says the juxtaposition is "somewhat strained," but it's a measure of the pressure the coal industry is under in the U.S. [View news story]
    Its true! Ask India.
    Feb 5 12:54 PM | 1 Like Like |Link to Comment
  • S&P 2162: Understanding The 'Fed Model' [View article]
    No doubt about it. But I do think that the demand for assets denominated in that currency, in this case the USD, is most important to the stationarity of the series. If the money flow for both measured classes combined is great enough, the pros will be able to re-distribute the flows at higher expected return. This is where I stand on QE money getting into equities as well -- the Fed purchases are a demand offset with a targeted aim (mortgage rates), but some of the displaced (private) demand will inevitably be thrown at equities.
    Feb 5 09:19 AM | Likes Like |Link to Comment
  • S&P 2162: Understanding The 'Fed Model' [View article]
    This Timmer approach seems sound. I unwittingly did something pretty similar here: http://seekingalpha.co...
    Feb 4 11:13 PM | Likes Like |Link to Comment
  • Delta Airlines' Oil Refinery: The Math Doesn't Work [View article]
    I agree about the tough macroeconomics for airliners. I was however quite impressed with the way Delta executed and filled both of my flights. Operating an airline by continuously filling seats, pleasing customers, not disrupting the takeoff queues, and most importantly selling tickets at the right price points seems like the world's most intimidating business task. Adding a refinery to the moving pieces could work well in the right set of circumstances, but will not be a success regardless of their efforts if crack spreads tighten due to rising crude costs. This seems like a classic situation to me where the expectation of the earnings from the refinery purchase may be positive (in their minds) given their great recent ability to execute their own business, but it just adds another earnings variance factor to the fundamental equation.

    I cannot speak to crack spread dynamics, but do generally know that correlated risks should be diversified. Their step-on-a-limb acquisition was made while distant crude futures were in extreme backwardation. It almost seems like these actions reflect on the structure of execution compensation. In other words "get in, get your bonus, and get out."

    Ironically, I think the joke is on them -- just look at the P/E ratio of airlines. Maximizing earnings doesn't maximize stock price if the market is still cognizant of the risk of a 0 price. For this reason, I don't think valuing airlines against normal valuation metrics is at all appropriate and these will probably languish in the absence of a large oil price run, and otherwise trade lower.
    Feb 3 11:31 AM | 1 Like Like |Link to Comment
  • Dan Loeb's Third Point LLC sold 11M Yahoo (YHOO) shares on Thursday and Friday, supposedly to keep the firm's stake in the Internet media giant from growing on account of its $5B buyback plan. That leaves Third Point, which supported the buyback plan as well as the hiring of Marissa Mayer, with 62M shares, or a 5.3% stake based on Yahoo's diluted share count at the end of Q4. Yahoo spent $1.5B to repurchase ~80M shares in the quarter - did its 2H12 run-up influence Loeb's move? (previous[View news story]
    YHOO has plenty of room on the upside still.
    Feb 2 10:47 PM | 2 Likes Like |Link to Comment
  • Seeking Alpha Trading Survivor Contest [View instapost]
    If I'm still alive tomorrow, I choose BTU for the month of February.
    Jan 31 01:23 PM | Likes Like |Link to Comment
  • 2012 Review: Why Stocks Rose, Where I Was Wrong And What I Would Do Different [View article]
    I will second Alan's first statement and offer my own considerations. Dealing with mistakes is probably most difficult for those who are unaccustomed to making them - I say this being mindful of my own recent personal failures.

    The trade imbalances in Europe have improved nicely over the past year. Italy actually has shifted to a current account surplus. After seasonally correcting the data, their trade balance trend is showing nice improvements, Spain's as well. I do not doubt that the political actions have had a large impact on these bond markets, but so to have the underlying fundamentals. The rescue negotiations were smoothed by some signs of trade improvement visible by mid-2012, and the worst outcomes in Europe have probably been averted. Markets affecting policy affecting markets, the peripheral debt runs are (hopefully) a thing of the past, although it would be assuring to see unemployment tick down somewhere in the periphery..

    In terms of market direction and capital flows, it does seem a body in motion stays in motion. The world's largest imbalance still revolves around China and the U.S., and it seems like politically and even in the market people are perfectly content skirting it. How long until this changes? Who knows. Personally, I think that was the primary reason your SPY directional call did not pan out last year. Altruism doesn't make 'money', maybe the EU actually did earn the nobel prize it gave itself last year.
    Jan 31 09:09 AM | Likes Like |Link to Comment
  • Home Price Increases: Not An Illusion [View article]
    Lol, reasonable hypothesis.
    Jan 30 02:50 PM | 1 Like Like |Link to Comment
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