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  • Oil to Natural Gas Ratio [View article]
    Its interesting to see this ratio get a lot of attention lately. But one has to be extremely careful, as the author rightly mentions that it could still extend in favor of oil.

    Richard- this is not a screaming arb opportunity for the following reasons:
    1. The natural gas is fundamentally over supplied, a lot more than crude and with the recent shale discoveries and horizontal drilling advances the available gas supply has increased from 13 years to some 80 + years worth of supply.
    2. The NG producers benefit from selling gas above their marginal cost (which is estimated to be about ~ $2/MMBtu) hence they still produce an over supplied commodity as they make profit above $2 - 2.5 prices.
    3. The stock market rewards firms expanding production hence the production cuts have been not equivalent to the demand cuts.
    4. The rig counts have been going up in NG since summer 09 (see Baker Hughes data) again pointing to oversupply.

    And retail investors would try and play this with USO and UNG etfs. UNG is an ETF which suffers from a negative roll yield in a contango NG curve environment (google this or search this in seeking alpha) and hence is not a great investment.
    USO suffers from negative roll too but the contango in crude oil is much smaller and has been reducing.

    So be very cautious in playing this ratio.
    Mar 29, 2010. 09:43 PM | 5 Likes Like |Link to Comment
  • Mine Deeper to Understand Platinum and Palladium [View article]
    google "shorting finance" and click on the first wikipedia link.
    as Ashwin mentioned. its called Short selling.. the most basic part of a long short strategy.
    Mar 15, 2010. 03:49 PM | 2 Likes Like |Link to Comment
  • S&P 500 and All 10 Sectors Overbought [View article]
    A very insightful and valid analysis. I like your research and the interesting data points that you highlight. Taking a cue from a previous post of yours, I did some technical analysis too and would agree that the markets are seriously overbought: seekingalpha.com/insta...

    Looking at RSI (relative strength index) confirms the fact and so do Bollinger bands; for the uninitiated these are some technical indicators and googling them would get you the definition.

    But that takes us to the other maxim: the markets can remain irrational for a much longer time .. blah blah .. And this market has done exactly the same, not even stopped for a breather. I do understand things are getting better ;structural issues still remain but you have to acknowledge that many indicators are improving strongly.

    I just wonder what could make this market pause, some suspects:
    1. A fed discount rate hike ( wonder if it matters much)
    2. China being labelled as a currency manipulator (seems like thankfully this issue wouldn't come to the forefront for some time, )
    3. Greek bond auctions (debt rollover): I would say the most likely candidate

    Feel free to chip in..
    Apr 6, 2010. 02:55 PM | 1 Like Like |Link to Comment
  • Mine Deeper to Understand Platinum and Palladium [View article]
    Yellowhoard,
    Its always tough to put a number to it. But one way to look at Plat/palladium excluding the affect of investor demand is to try and track Rhodium prices; since Rh's demand is also primarily from autocats + Rh doesnt trade on any exchange hence its prices are not affected by investor demand. Maybe you can find the Rh price chart somewhere on the net, otherwise send me your email and I can send you a chart. But none the less, Rh is up about 48% ytd, pt is up about 37% and pd is up about 56%.


    On Sep 29 08:57 AM yellowhoard wrote:

    > North,
    >
    > How much of the crash in PGM's last fall do you attribute to bankrupt
    > automakers and parts supplliers dumping inventory to stay solvent?
    Sep 29, 2009. 09:40 AM | 1 Like Like |Link to Comment
  • EU Summit: Next Leg of the Greek Tragedy [View article]
    I agree that one cannot trust Greece until one sees the austerity measures in action (and trusting those numbers will be another issue). But economically it seems that going to IMF is a much cheaper option for Greece and if that happens, people are going to question EU's capability of handling their own problems and one could see another round of Euro bashing.
    Mar 25, 2010. 10:16 AM | Likes Like |Link to Comment
  • Michael Lewis on Wall Street's Delusion [View article]
    He is not a great journalist... he is a sensationalist writer who doesnt have sharp analysis:
    Here is some food for thought: www.bloomberg.com/apps...
    his piece in Bloomberg in 2007 beginning ridiculing those who were worried about the excesses..
    Mar 22, 2010. 12:00 AM | Likes Like |Link to Comment
  • Michael Lewis on Wall Street's Delusion [View article]
    Here is some food for thought: www.bloomberg.com/apps...
    his piece in Bloomberg in 2007 beginning ridiculing those who were worried about the excesses..
    Mar 21, 2010. 11:59 PM | Likes Like |Link to Comment
  • Michael Lewis on Wall Street's Delusion [View article]
    dspg: you sure about your statement about lewis being right about everything ?
    Here is some food for thought: www.bloomberg.com/apps...
    his piece in Bloomberg in 2007 beginning ridiculing those who were worried about the excesses..
    Mar 21, 2010. 11:59 PM | Likes Like |Link to Comment
  • Mine Deeper to Understand Platinum and Palladium [View article]
    Mark: I think my data source for Rhodium prices (bloomberg) didn't have the update prices when I had published the article. You are right Rh was up about 80% back then. I have posted a return analysis of the trade, do take a look and also your picks should have done pretty well since Sep 09.
    Mar 12, 2010. 02:38 PM | Likes Like |Link to Comment
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