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  • Is Crude Oil Headed Lower? [View article]
    The argument over the USD price of crude futures over the next year has little to do with Peak Oil theory, and more to do with macro trade relationships and individual nations' recoveries or lack thereof.

    The "Post War" era in the Western world has seen developed countries hold a great deal of control over the otherwise underdeveloped nations as their economies held the key to prosperity for so many poor economies who were willing to export inexpensive goods richer foreign consumers.

    Comments from new found stable nations' leaders accross the globe in the form of BRIC (Brazil, Russia, India, China) and BRIC-like countries suggest that the Old Guard is changing from a U.S. dictated market place to a truly free market. President Luis de Silva of Brazil is a perfect example of a developing nation leader who is peacefully vocal about his desires to lead South America to prosperity through allegiances and trade partnerships excluding those with America. Specifically, Brazil has found a premier trading partner with China, stabilized its domestic banking industry and pursued reserves in currencies other than the dollar.

    These sorts of actions will persist into the post-recession environment and we will find the U.S. Dollar in lesser demand. Government debt in the United States is no longer a 0% risk vehicle; instead it is quite riskier given the physical state of the public balance sheet.

    Commodities may go higher with equities as the USD falls, but it's the demand in developing nations which will drive oil consumption into the future.
    Nov 10, 2009. 12:31 AM | 1 Like Like |Link to Comment
  • Buffett's Burlington Buy Is Really a Bet on China [View article]
    Buffet's move here is indeed an "all in bet", perhaps on China, which may or may not instill lasting confidence. But it should be noted that his purchases of GS and GE during late fall of last year didn't have any major direction changing effects on the stock prices. In the end it's all about the fundamentals.

    The premium paid for BNI was particularly hefty and suggest that we're all missing something that the Oracle isn't. It's not a complex move, because Warren is a simple man, but the gamblin' rhetoric expressed was not particularly directed at any results within the next three or even five years.

    I don't suspect that the U.S. economy will wither away through the shroud of darkness, but I do expect for there to be particularly difficult times ahead for the rails and transports as a whole. Warren is a Value Guy to his death and sees a winner in Burlington, but we should all ask ourselves just how far back down the rabbit hole we'd be willing to follow him if/when this thing rolls over.
    Nov 9, 2009. 01:59 AM | 1 Like Like |Link to Comment
  • At the Bull-Bear Crossroads [View article]
    Let's get a few things straight. Firstly, there was a deceleration in the growing number of unemployed non-farm workers, which are more statistically significant, yet the household survey reported that the total number unemployed accelerated, adding .4% to total 10.2% unemployed.

    The number of weeks it takes an individual on average to find a new job continues to break records and now stands well over half a year. This report is not by any means a rosy picture and can only be saved by a strong holiday shopping season to put some red back in the bulls' cheeks.

    Notice how markets reacted to earnings season this time around. Prior to first and second quarter earnings markets sold off in anticipation and then rallied through the results. Third quarter earnings saw a pop accelerating into reporting and has staggered ever since. There is a sentiment shift arising.
    Nov 7, 2009. 07:47 AM | Likes Like |Link to Comment
  • Positioning for a Bond Rally [View article]
    There's going to be a Mexican Standoff between the industrial commodities, precious metals, Treasuries, U.S. equities and the Dollar. It would make perfect sense for the Dollar to pop higher as equities fall with industrial commodities, there by forcing money into the relative safety of Treasuries and Gold.

    However, there will be a time where the safety of U.S. debt at historically low yields no longer makes since and Gold becomes the only refuge.

    Watch for the diversion of Gold and long term Treasuries to be marked by a truly dismal confidence shift in equity markets.
    Nov 7, 2009. 07:06 AM | 2 Likes Like |Link to Comment
  • Obama's Plan A Failed, But Plan B Looks Promising [View article]
    Firstly, balances to trade between the United States and it's trading partners absolutely CAN NOT be changed by a simple few words from the Treasury Secretary. The trade deficit in the U.S. is not the result of tariffs, quotas or subsidies. It is the direct result of comparative advantages between countries. America has a comparative advantage in capital while our trade partners have comparative advantages in labor and natural resources, causing the over consuming U.S. economy to run a trade deficit.

    Second, it should be noted that the Doha round of the World Trade Organization, specifically aimed at reducing barriers to trade between developed western nations and their underdeveloped trading partners, has been in gridlock since 2001 because neither side of the negotiations are willing to level the playing field of trade. Western nations won't quit subsidies on their farmed goods while underdeveloped nations won't honor intellectual property.

    It seems that this article suggests that the answer to our problems is for China to reduce it's trade barriers, when it's been the Obama administration who started the feather fluffing early with the Chinese tire tariffs announced in past months. The idea that America is this free trade savior is an illusion and doesn't honor all the facts, since the U.S. has subsidized it's Airplane, Automobile, Agricultural and Financial industries.

    There will always be trade imbalances throughout the world between developed consumer nations and developing producer counterparts, but the trick is for the consumer nations to pursue responsible government spending during good times while reinvesting their accumulated capital in new industry growth where there are still comparative advantages. This progression towards savings in good times to spend in bad combined with innovative paths to prosperity is the only viable solution for the United States.

    The only answer is to turn and face our fears rather than running from them. The true Obama plan B has been announced as extending benefits and tax cuts, while implementing further stimulus (e.g. spending more). This will only exacerbate our problems and should be discouraged by constituents and politicians who truly value the future of our country.
    Nov 6, 2009. 08:47 PM | 7 Likes Like |Link to Comment
  • Relative Strength of Countries [View article]
    Yes, the other developed nations you mention will also experience a great deal of pain ahead as their debt laden consumer bases handed the bill up, in the U.S. case to the "push over uncle" Sam. There are however other countries in the world who are either (a) saving nations with trade surpluses to finance the recessionary stimulus spending they have implemented or (b) who have commodity based economies which will endure a currency crash better than others.

    I agree that it makes since to be short USO at this level because the WTI contracts have gotten way ahead of themselves, but the dollar will weaken further after a short term bounce when the carry trade expires, at which time the short USO trade should be exited.

    There will however also be a time when production based economies split from precious metals and Gold and Silver find their way to levels far above current prices while Crude Oil, Copper, Steel all plateau and potentially fall.

    See more at www.diamondsliice.com
    Nov 6, 2009. 09:35 AM | Likes Like |Link to Comment
  • The Roots of the Coming Crash [View article]
    All the talk of bubbles in asset prices is very poetic and all, but the Fed will most likely leave the interest rate low for a long enough period of time to start the chain reaction of inflation which will only extend the current rise in the price of gold. The reference to the exchange of 6.7 billion USDs for 200 tonnes of gold as a "bubble" example really excludes a very real macro threat to the value of the USD, much deeper than the short term carry trade effects.

    True the dollar short selling stampede may reach the proverbial cliff in the form of Bernanke rhetoric, but the true threat to the Greenback is the unwillingness of our largest trading partners (i.e. China, India, etc.) converting their trade surplus dollars into Gold rather than U.S. Debt, which has been the trend for the past 50 years. U.S. Debt is not what it used to be and the asset bubble is nothing more than dollar destruction, which will continue for a truly "EXTENDED PERIOD", regardless of the imminent short term lift from the abandonment of USD short carry trades.

    The only real winners here are to go long foreign gold producers with commodity dependent currencies (i.e. BVN, Buenaventura Gold of Peru) or short long term U.S. Debt (i.e. TYO, Direxion 10-Yr Treasury Note 3X Bear ETF).

    Those calling for a pullback in the WTI spot have plenty of evidence to support them and do not contradict my views. Crude oil is a commodity tied physically and psychologically to the strength of the U.S. Economy and the respectable equity market. Shorting crude with an ETF (i.e. DTO, Powershares 2X Short Crude) may play as a good hedge to protect against the potential snap back when the carry trade unravels and to give some fresh powder to further short the U.S. 10-Yr Note and go long Gold

    For further analysis check out the articles on Diamond Slice:

    www.diamondslice.com/d...

    www.diamondslice.com/d...
    Nov 4, 2009. 11:42 PM | 1 Like Like |Link to Comment
  • 5 Reasons Why Oil May Rise [View article]
    No one is disputing the fact that Oil is a limited natural resource which will eventually be ousted as the primary energy source due to prices growing beyond levels economically feasible to it's conventional uses. The real question should be where is the price/barrel of Oil going right now. It's funny how the mob decides it's suddenly okay with a "long" strategy when the market is going up, but scrambles for short strategies when the market is in free fall. To all of those with a long outlook on any commodity, a history lesson in the cyclical nature of all natural resources wouldn't hurt. Oil has nowhere to go except down, especially once the Chinese stimulus has run it's course this fall and the country returns to global demand to float the top line. The consumer isn't coming back and apparently the refiners aren't upping production so the surplus inventories aren't effecting the price at the pump AT ALL. Crude will fall back to 50 once the S&P breaks 850. Don't buy the hype, do your homework and wakeup.
    Jun 24, 2009. 02:00 PM | Likes Like |Link to Comment
  • Insiders Selling Heavily: What's Up? [View article]
    Insiders are aggressively selling, the S&P 500 broke 50 and 200 day SMA's on the same day to close below them, and institutions' economic growth estimates are reflecting the true story told by econ data.

    It's interesting to watch the sentiment of SA comments as they have become less and less bearish as we've climbed higher onto more unstable ground. While the arguments all suggest that we're in some sort of rally that will last for a while then putter out, the bulls have gained steam the higher we've moved. This is very fitting of "toppy" territory for the equity market.
    Jun 23, 2009. 12:16 AM | 1 Like Like |Link to Comment
  • Quad Witching Week: Beware [View article]
    There's definitely going to be some fireworks coming out of econ data this week if the trend seen in Empire State and Housing Index continues. Not to mention how investors receive Obama's "Wall Street regulatory reform speech" this week. Inflationary pressures witnessed recently may cause for more hardship as consumers struggle. Check out a fresh slice on the issue of inflation and commentary from PIMCO's Bill Gross at:

    www.diamondslice.com/d...
    Jun 16, 2009. 01:22 AM | Likes Like |Link to Comment
  • Industry Observers: Shouldn't Something Finally Change at Citigroup? [View article]
    Smaller would be better... broken up and sold off completely would be best. Without one of the TARP banks failing, the shell game played by passing REO's (real estate owned property post foreclosure auction held by banks at unrealistic valuations due to FASB accounting revisions) between banks will tread on and maintain the price floor in real-estate which is above the fair market value for those properties. If the consumer doesn't bite and start buying homes, the bulge of assets will bloat banks and cause the weakest to fail or raise more money due to lower than necessary capital requirements failing to hold up.


    On Jun 15 10:38 AM ldavis wrote:

    > the former ceo of USBank was added to citi's board. He is no nosense
    > and will simplify and deleverage citi. He will sell all non core
    > businesses and perhaps sell their non US branches. Cut, cut, cut.
    > In the world of banking, a smaller citi will be a potentially profitable
    > citi
    Jun 15, 2009. 03:05 PM | Likes Like |Link to Comment
  • Contract Manufacturers' Foray Into Solar Market [View article]
    The solar arena is becoming increasingly competitive, allowing consumers the luxury of lower prices for the alternative energy source. Take a look at some small cap companies that have incredible potential for growth in the future such as Canadian Solar (CSIQ). This company is based in Canada yet operates out of China and is in the process of vertically integrated it's business model to include the entire manufacturing process to include silicon, wafer, module and panel production. The core market for this firm is based in Europe and China at the moment, yet the company has announced plans to compete in America. Their products are priced below many competitors and can offer the solar energy alternative for any scale project.

    Don't get too antsy just yet, because this one will sink like a stone if interest rates rise around the globe and the recessions fears resume equity markets. Keep it on your watch list and learn a little about the industry through articles just like this one. This industry is going to be a gold mine over the next 10 years.
    Jun 9, 2009. 12:43 PM | Likes Like |Link to Comment
  • Tuesday Outlook: A Predictable, Entertaining Market [View article]
    The US Dollar is in the hands of Treasury yields and Fed buying policy in the short term. The Dollar has felt pain due to long term yields popping, but will really take a hit if the recovery story turns sour. Foreign investment in U.S. equities has maintained demand for the currency. We'll have to wait and see how the economic side of the commodity equation ends up once the speculative plays fade. Perhaps crude at 70 bucks isn't so bullish after all???
    Jun 9, 2009. 11:35 AM | 1 Like Like |Link to Comment
  • Monday's Closing Update [View article]
    -yup..this bull cant be stopped. keep buying the dips. I,m a bear but DONT short this market yet.

    What are you waiting for if you claim that you're waiting to get short this market? There are no real catalysts on the horizon that are going to break the back of this one. It's going to be the tenuous move of those on the margin into long positions that signals the top. Watch the 10yr and 30 yr as well as the 2yr Treasuries as they will manipulate mortgage rates and Fed Funds respectively. Things are working in reverse since the Fed is in grid lock... the bond market has the wheel and Bernanke's in the back seat. Watch for a Fed Funds rate hike some time during the rest of the year if this Yield curve continues to steepen.
    Jun 8, 2009. 11:50 PM | Likes Like |Link to Comment
  • Are ETFs Signaling a Bottom for the Economy? [View article]
    The reason that China has been calling for a world currency isn't tough to deduce. When China holds their U.S. trade surplus in Treasury debt and the value of that investment is rapidly declining, due to the $3 billion+ of new debt to be issued over the course of 2009, it's reasonable for them to begin exploring alternatives.

    All of this "seat at the table" talk and mud throwing at other countries because of what they've "stolen" doesn't have anything to do with the economics of the dilemma. Anti-American ETF's as you so Bush-esquely coin them are the direct result of an overwhelming demand to short certain parts of the U.S. economy.
    Jun 7, 2009. 11:56 PM | 1 Like Like |Link to Comment
COMMENTS STATS
222 Comments
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