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  • Is Greek Contagion Crushing Crude? [View article]
    Omid, your view of the middle east is clearly misguided if you can look me in the eye and tell me that any member of the UAE has money that has originated anywhere other than oil. It is THE natural resource of the region. Just because the state itself doesn't produce oil doesn't mean that the developer who builds a playground for a growing wealthy Arab class, thanks to oil exports, isn't effected by the price of the commodity. Furthermore, it's not about the price fixing of OPEC, it's about the quota cheating. OPEC announces quotas and then prices jump to a market efficient price, but when nations are found to be producing above/below quota it says something. OPEC members are producing above quota now.

    The sovereign default risk is directly relevant to a UAE bailed out Dubai world fund because it weakens the ability to refinance sovereign debt. So you think the Arab states are sitting pretty in the face of higher swap prices and financing costs? You think that cheating OPEC states who are producing above quota are doing so arbitrarily?

    It's great to see such hostility towards our stance, as more and more individuals cite cyclical normalities such as the driving season for crude fluctuations, but the EU CDS market is coming back to raise red flags as it did in the US banking sector, and still the systemic risk is unseen. The end-game worst case scenario for the systemic risk of sovereign default in Europe has catastrophic consequences on all nations, markets, and assets globally. Every nation has shifted debt from private to public balance sheets and it's brutally evident that this contagion fear has had a very real effect on the price of assets... including crude oil.
    May 9, 2010. 08:23 PM | Likes Like |Link to Comment
  • Is Greek Contagion Crushing Crude? [View article]
    F Banks - Thanks for your input. I would like to ask you to pull up a chart of Crude over the past 24 months and tell me that speculation of future prices in the oil market hasn't had anything to do with price swings ranging from nearly $150/brl down to $30 and now back to current levels. Oil has swung even more wildly than the S&P 500 over the past two years and is most definitely affected by speculation. In just one week we've seen the price dive from 87 down to 75 bucks. Sorry you don't agree, but our call is looking correct so far. All the best...
    May 9, 2010. 08:11 PM | 1 Like Like |Link to Comment
  • Roast the PIIGS and End the Euro Crisis [View article]
    The cynical tone inherent in this post exactly mimics the attitude of investors selling EU sovereigns as speculators add fuel to the fire and rush to buy CDS on the same paper.

    Take a look at the analysis we published over two months ago, and compare how well we pegged the developments of this crisis...
    May 3, 2010. 07:57 AM | Likes Like |Link to Comment
  • Greece, Goldman and Unemployment: Headline Risk May Dominate Week Ahead [View article]
    Your headline sums it up, but the issue has moved well beyond Greece and towards the rest of the EU states.

    For a comprehensive look at the capacity of the IMF to bail out Eurozone states, take a look at this free independent report...
    May 3, 2010. 07:55 AM | Likes Like |Link to Comment
  • Goldman's Abacus Lies [View article]
    With all due respect to the F man our analysis at DS paints a different picture, where Goldman fulfilled it's legal and ethical obligations to clients as a market maker. We should note significant distinctions between client broker relationship and client market maker relationship.

    According to the information we've recovered, the D, C, and B tranches were never invested, thus making it difficult to understand how the vehicle was rated AAA and AA for investors, but seeing where the sausage is made explained the nature of the beast. ABACUS was more than just a synthetic CDO.

    Check out our analysis of the issue for a crash course in the new type of security that is ABACUS, at
    May 3, 2010. 03:06 AM | Likes Like |Link to Comment
  • Gold Bullion Advances in All Currencies [View article]
    The question regarding the type of gold investment to add to your portfolio has a lot to do with your timeline and the percentage allocation you're wanting to put into gold. I'm hesitant to suggest gold exposure above 10% of your total portfolio just yet, because it's already seen a large run.

    That said, the GLD is a pretty good gold equity index tracking ETF to give you broad brush exposure to the Gold Producer space. This would be good for passive positions w/ a short or long term horizon. Check out for a list of some other Gold Funds.

    If you're interested in specific stocks, want to add some risk to your portfolio, and have the time to manage the position, check out Buenaventura Mining Corp. (BVN). I like this name a lot and have owned it over the past 6 mos. but currently do not. The firm has new mines coming online in a global market where supply is extremely limited, and the stock is located in Peru, where the currency is heavily tied to the copper and gold precious metals. This name has had a massive run early in the year, but is now calming down and ripe for some dollar cost averaging.

    Check out our analysis of the firm at :
    May 3, 2010. 12:45 AM | Likes Like |Link to Comment
  • Gold Bullion Advances in All Currencies [View article]
    Actually I think you might not get it... If the market crashes, chances are the prices of Gold are going to skyrocket. Therefore the crash would work in the favor of gold etfs who are long the metal. There would be a scramble for futures contracts and investors would benefit from the scarcity of the metal itself. Sure physical gold may outperform marginally, but GLD and GLX will both do swimmingly.
    May 2, 2010. 10:15 PM | Likes Like |Link to Comment
  • Gold Bullion Advances in All Currencies [View article]
    Greg, most ETF's tied to commodities actually hold the majority of their assets in safe cash flow producing assets (i.e. short term treasuries) where the market is highly liquid. They then use a small percentage of the capital to invest in futures and option contracts to track the spot price of commodities. This is very normal to all commodity ETF's and should be understood by all investors. Further, whether or not your ETF holds the physical commodity or not has less to do with the safety of your investment than you'd think, barring the off chance of total failure of the government where your ETF fund is incorperated. For an ETF to actually hold the commodity they would most likely perform worse due to high storage costs of a material, which is not the specialty of financial firms. If you want a physical investment, then you're better off buying and storing the material yourself.
    May 2, 2010. 08:19 PM | Likes Like |Link to Comment
  • Insiders Still Not Buying the Recovery Talk [View article]
    Agreed, it's not going to take very long for individuals and governments around the world to find a new brand of hurt when China's real estate exuberance ends in flames and the west's stimulus expires mid year. Unemployment will be the gauge. Without the jobs we won't be anywhere. Look for some direction later this week as FOMC, Jobs, and GDP give guidance at overbought levels.

    I see this week as a good chance to get short.
    Apr 26, 2010. 08:07 AM | 3 Likes Like |Link to Comment
  • Insiders Still Not Buying the Recovery Talk [View article]
    Well if I were you and I were truly retired, as your name insinuates, I'd be very concerned about the music stopping.
    Apr 26, 2010. 08:03 AM | 6 Likes Like |Link to Comment
  • Differentiating an Inflation Induced Rally From a Normal Retracement [View article]
    I'll take the under if I can buy a few points.

    I don't really like this Chairman Ben guy... he talks too much
    Apr 26, 2010. 07:58 AM | 1 Like Like |Link to Comment
  • Oil: API Is This Week's Party of 'No' [View article]
    Definitely a bearish report Wednesday just as the last month's contract expired...

    There's a great deal of froth built into prices at these levels. Stimulus peaking in July and housing support ending before that will put a dark cloud over production commodities, especially the psychologically erratic crude spot.
    Apr 21, 2010. 10:30 PM | 2 Likes Like |Link to Comment
  • Good Earnings: Can Apple Maintain the Craze? [View article]
    Hah wow, it's always fun to see a bunch of Apple fans bashing the occasional pundit, but it doesn't really add much insight to the discussion here. Ok, so ipad sales weren't included in Q1... we got it.

    The point is that Apple addicts are nearly the opposite of rational, and while you may not like the "craze" terminology, Apple products are very much the fashionable trend in consumer electronics. Apple makes extremely "usable" products from an interface perspective, and the user experience is so high, that the loss of otherwise crucial features (usb ports, flash media, and a working keyboard, who needs that crap?) is rationalized just like a crackhead rationalizes paying per night for a hotel room under the bridge to keep up the habbit. "Sure I have a blackberry for work and an iPhone for life... you don't expect me to use archaic hardware like a trackball to scroll through my photos do you???"

    What saves apple is their ability to make life in the apple world work fluently, causing users to become more entrenched within the brand and it's high barbed wire electric fence borders. Drink the coolade if you want, but just remember as an investor that most people already are.

    The author was right when he said we shouldn't short a trend this powerful, but it doesn't mean we should invest in the stock at all time highs above $250/shr with a p/e of 25 either.
    Apr 21, 2010. 10:04 PM | Likes Like |Link to Comment
  • Inflation, Deflation or Some of Each? [View article]
    The raging deflationists have morphed into a dying cult of market society outcasts, only whispering to themselves in dark corners where no one will trade from their lunacies.

    However, the reality which will spit in the face of the inflationists, who are nearly indistinguishable from the multi-national free government money funded speculating banks, is the global deleveraging story which has only just begun.

    Sure deleveraging is the opposite of quantitative easing, as far as the effects of money velocity in the economy are concerned. But it is more likely in my opinion that asset prices are high, not due to higher velocity of money in the economy, but a bulging of cheap money which has been trapped within the ivory towers of the Global Financial Industry.

    When the music stops and the trend of prices reverts to the mean of fundamental data, speculative commodity prices will be found grossly too high.

    If you don't believe me take it from Bill Gross in his April 2010 Investment Outlook:
    Apr 20, 2010. 09:17 PM | Likes Like |Link to Comment
  • Differentiating an Inflation Induced Rally From a Normal Retracement [View article]
    Bill Gross has said that the PIMCO strategy has been "be a friend of the governement", but 3% is extremely strong given the fact that he has recently spoken out against equities, the U.S. dollar, and even some bonds, on the long term view that risk premiums will rise dramatically and markets will remain extremely volatile as the true value of assets is finally priced in. Don't count on the 6% normal recovery strength to even apply here, when unemployment is much higher than average recessions and wealth destruction has taken a toll at a magnitude of 40%. There is a new normal which has already begun to show it's fangs... get used to it.
    Apr 20, 2010. 09:51 AM | 1 Like Like |Link to Comment