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schatzl

schatzl
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  • Could Italy Rekindle The Eurozone Crisis? [View article]
    I find it difficult to bet against - or in my case to hedge against the €, as I live in that zone.

    The $ has me worried. As soon as QE3 is on the table, or other US fundamentals become headline issues, we should see the $ suffer. Also the $ has a very poor long term track record.

    The AUS$ is tied into the Asian economy, pro cyclical and has a slight inverse relationship with the US$. (US$ down-> gold up -> AUS$ up). If Europe causes panic, the AUS$ should suffer too due to its pro cyclical nature, even though it has weak economic ties to Europe. Expensive to the €.

    The Canadian $ to closely linked to the US $ through their economies. Expensive to the €.

    Swiss Franc is locked down in parity and therefore pointless.

    The UK £ is not convincing. Poor fundamentals and a loose central bank . Economy largely tied into Europe with a financial industry overhang.

    Other safe haven currencies in Europe such as the Swedish and Norwegian Krona will suffer too in any major Euro upheaval, due to being economically linked. Expensive to the €.

    In the end I've split the currencies in AUS$, Norwegian and Swedish Krona, UK £ and €.

    Maybe not the best hedge against a Euro fallout, but at least better than only holding €.
    Mar 23 01:34 PM | Likes Like |Link to Comment
  • Could Italy Rekindle The Eurozone Crisis? [View article]
    Ah my mistake. Apologies. That's what happens when I fly read over an article. Next time I'll try to be more diligent.
    Mar 23 11:59 AM | Likes Like |Link to Comment
  • Could Italy Rekindle The Eurozone Crisis? [View article]
    "US wasn't too popular in most of 2008 - just the time to get in or lower your cost basis. Same applies for Europe now"

    No it doesn't.

    '08 US share prices were rock bottom. 1/2 of the Dow got wiped clean. In Europe we've had our bull run for 3 months now and the DAX in Germany is only 15% off its ATH (remember it is a performance index) and the European issues haven't been addressed in the least. Flooding the market with cheap credit has only deferred the finance industry liquidity issues. The €, public debt, unemployment, deflationary austerity, are all issues that still need to work through the system.

    Don't get me wrong, I'm waiting for an opportunity to go long on European stocks. There are great companies, such as BASF that I had recommended early December. They've added 25% since then, but right now I consider it too late to get in. Europe's issues are so fundamental, that any scare probably creates a downside overreaction. Therefore too much downside risk and I'll rather wait for a real dip before I go long.

    Currency hedges, gold, indices shorts and cash is where I'm at and will stay until a decent opportunity arises.
    Mar 23 10:59 AM | Likes Like |Link to Comment
  • Could Italy Rekindle The Eurozone Crisis? [View article]
    Heard it was gas in deep ocean off Southern Africa.

    Doesn't sound that great with gas prices this low and still dropping and shale gas so much cheaper and easier to drill. But I'm no expert and I haven't followed that news, so my comment is probably is misinformed.
    Mar 23 08:50 AM | Likes Like |Link to Comment
  • Could Italy Rekindle The Eurozone Crisis? [View article]
    thank you for your effort,

    but why even suggest car stocks?

    latest European data looks absolutely dire. Car sales by country in Feb:

    Greece: -45% (-87% from its high in 08: 33,6k -> 3,8k)
    Italy: -19%
    France: -20% (on top of -20% from January)
    Spain (form '06-'12): -50%
    Germany: flat, though private purchases are dropping drastically and only being compensated by company cars purchases.

    Currently German car maker stocks are losing some of their strong gains due to poor growth expectations in China and elsewhere. Opel/Vauxhall is planning on closing two European plants due to severe over-capacities etc etc.

    In the US retail inventory of cars is at record highs:

    "Channel Stuffing At GM Hits Record: 574,000 Cars In Dealer Inventory, Despite No Interest Loans, Highest Car Discounts"

    Honestly, I wouldn't touch any car makers with a 10 foot pole.

    Some of the other stocks, such as ENI have had their run and where a good buy 6 months ago. If I remember correctly, even Buffet bought some ENI back then at between 12-13€.

    Why even go long on Italian stocks when you talk of deflationary bias and a sombre outlook? Back in the summer of '11, yes there were killings to be made, but now the Italian stock market is fair value at best.

    I've been shorting some European indices since last week and have had a good run so far and am staying short. Huge downside risk potential with Spain and even though Portugal is worse off, they are too small to cause major panic but damage nontheless. Spain on the other hand is "too big to bail".
    Mar 23 06:45 AM | 1 Like Like |Link to Comment
  • The Goldman Sachs Equity Call [View article]
    G.S. also made a call on oil to be at 200$. Shortly afterwards oil was at 40$.

    And as the poster above, Steven Ravine says: try to figure out how G.S. can profit from muppets like us. They're probably busy piling up on shorts.
    Mar 22 12:30 PM | 3 Likes Like |Link to Comment
  • New Unemployment Claims Drop To A New 4-Year Low [View article]
    Thank you for that great link.

    Scary and sobering and I don't like where we are heading to.

    "Labor force participation rates" is something every cautious investor should be aware of.
    Mar 22 11:26 AM | Likes Like |Link to Comment
  • Markit flash eurozone PMI comes in at 48.7 vs. 49.2 expected and 49.3 prior, suggesting the eurozone has slipped back into a technical recession. Following the weak numbers, EU's Barroso says the sovereign-debt crisis is far from over. Euro -0.45% to $1.315.  [View news story]
    what a surprise! ....not.

    Europe's troubles are just at the beginning. Underlying data (excluding Germany) have been very poor for months. All this talk of recovery was disingenuous. Rough months ahead.

    Not the market is always correct, but the underlying economic data.

    Been short the European indices since end last week, short €, long gold (so have mixed results to show so far).
    Mar 22 05:29 AM | 1 Like Like |Link to Comment
  • World Trade And Output Set New Records In January [View article]
    To deduce an "underlying strength in America's manufacturing sector" from world trade volume growth is tenuous at best.

    I fail to see how trade deficits close to pre 07 all-time-highs is a good thing for the US. Debt fuelled consumption invariably leads to higher trade, but as long as exports (and in particular merchandise export) lags, there can be no talk of a strong manufacturing sector.

    Q4/2011 -186,345 billion $ in US merchandise trade deficit tells me consumption of industrial goods is much higher than production.

    The only saving grace is 45 billion $ US surplus in services, mostly from the finance industry. If anything, it is the services industry outperforming the manufacturing industry.
    Mar 21 06:07 PM | Likes Like |Link to Comment
  • Spain - The Next Domino Is Getting Ready To Tumble [View article]
    Yep, the way things are heading, I cannot see this path to be politically viable.

    France - simply no way they will accept higher austerity to save bank balance sheets - even if it might bite them in their backside at some later stage. The French have a history of political resistance. Hollande is most probably on his way in as new president. He has totally different plans to Sarkozy. Higher social security expenditure and millionaire's tax. He is very wary of Merkel, who is openly supporting Sarkozy. A highly short-sighted and damaging move by her. This will hardly be classifiable working relationship.

    Spain - so far very large protests, but hardly any violence, the protests have been huge last summer, they won't be getting smaller. With more than 50% of the youth unemployed, I expect record breaking protests this summer. No revolution though, but massive political pressure from the streets.

    Germany - politically fairly docile, their economy is the only one doing well - though for how long? Their European export markets are collapsing. Any further bail-out packages are highly unlikely to find majorities - or if they do, the tax-paying voter will punish them at the next elections, and the politicians know that.

    Italy - so far they seem relieved to have been rid of that horny, geriatric clown. Expect protests, but less aimed at Monti who enjoys some respect, though he was only ever nominated and not voted for. Rumblings between the south and north - though I measure little significance to that.

    Greece -it will get very messy and fiery in Athens

    Expect little trouble on the streets of Lisbon, Helsinki, Vienna, Brussels or Amsterdam.

    Then you have the ECB showing a growing rift between the Keynesian QE believers around Draghi and the German "hardliner" Weidmann. Target2 ECB balance sheets creating nervousness in Germany. +500 billion € imbalances, on the national central bank of Germany is not chump change.

    In summary: it will vary widely between countries, but there is enough potential for unrest and pressure to guide Europe's politicians towards a potential exit sign.
    Mar 18 09:13 PM | 5 Likes Like |Link to Comment
  • Spain - The Next Domino Is Getting Ready To Tumble [View article]
    I'm sitting here in Europe and Spain scares me most. Tomorrow I'm selling the remaining Euros I have and buying expensive safe haven currencies. The Spanish banks are in deep deep trouble and they are huge in comparison to their national GDP. Their economy is falling to pieces. The austerity pact was thrown out of the window before the ink was dry. In my opinion 2012 is the beginning of the Euro endgame with massive political and economic fallout. If Spain defaults, it will be the death knell for the Euro as we know it.
    Mar 18 06:59 PM | 9 Likes Like |Link to Comment
  • The Fed In A Tightening Box [View article]
    "We are in a bull market, and you're missing it"

    You are missing the point. This isn't a look at current market sentiment, this is about estimating the economic future, which is sadly dictated by the Fed and government and therefore the exercise is to judge their future behaviour given their political and economic constraints.

    I am astounded that you believe the "bullish" US economy can survive right now without QE and deficit spending. Both are so massive and intrusive as to falsify any free market process ranging from interest rate determination to basic supply and demand.

    "you're missing the idea that emerging markets are now the economic growth engine of the world"

    No, you are missing the fact that these engines are cooling down quite markedly. Have a closer look at China, India and Brasil. In the meantime Europe (the largest economic entity) is falling apart at its seams.

    You are also missing the fact, that the US economy still relies to large parts on domestic consumption. Imagine aggregate demand without the massive debt fuelled fiscal stimulus.

    Also have a look at money velocity, which is creeping along at historic lows. Without QE there'd be gigantic deflationary pressures.

    The Fed really is in a tight spot, take away QE and we have serious deflation, leave it in with deficit spending and we have serious inflationary pressures. There is little - or no room to wiggle and the longer this deficit is maintained, the less wiggle room the Fed has.
    Mar 18 06:07 PM | 7 Likes Like |Link to Comment
  • The Fed In A Tightening Box [View article]
    Latest data on Spain is truly scary. Not just unemployment, GDP and consumption, but also the precarious situation of Spanish banks that have a disproportionate size in Europe. I'm betting on 2012 to be worse than 2011. I'm expecting Spain to start the avalanche.
    Mar 18 01:38 PM | 4 Likes Like |Link to Comment
  • The Fed In A Tightening Box [View article]
    Thank you for your insight.

    "this week's reaction was curious to say the least."

    The market reaction to the Fed announcement was that either:

    1. they don't believe the Fed and expect further QE or.
    2. the bull run has reached the uncritical euphoria stage

    Anyone who believes stocks will continue to improve once the QE plug is pulled, is deluded. The US economy is propped up by the two pillars of QE and massive fiscal deficits.

    Rising debt levels means however that debt service becomes more sensitive to interest rates, so the longer the deficits are maintained at current levels, the less likely QE will end. The Fed will need to do everything to keep rates low - even at the cost of inflation.

    A combination of QE and deficit spending cannot be sustainable for long periods of time. I fail to see how the Chinese or the mom & pop bond holders will hold onto low interest rate bonds with a continuously depreciating currency and higher inflation. Either one of these props will need to be taken out of the picture at some time, but I assume the Fed & govt. will hold on to both as long as they can.

    QE is far more sustainable than the current massive fiscal deficits, so expect at least in the medium-long term to see some change on the deficit front. What remains is QE and a locking in of low interest rates which indicate muted inflation risks at least up to a medium term without deficits and high inflation risks with deficits and QE.

    Inflation remains the politically easiest way to reduce real debt and is a small price to pay for providing economic stimulus (at least for the politically short sighted - which all politicians are) and inflation data can be manipulated to be biased to some degree.

    Because I expect the Fed & govt. to maintain QE and deficit spending for as long as possible, I'm long on Gold, but as of yet avoided shorting the stock indices, but am planning on doing so if there are real signs that one of the props gets dismantled.

    Difficult to see it happening before the elections though.
    Mar 18 06:50 AM | 17 Likes Like |Link to Comment
  • Apple: A Small Dose Of Reality [View article]
    Funny, because I was an Apple user/owner more than 10 years before you were and guess what? They dominated the PC market at the time of the Apple II & IIe. Then the competition woke up and comps like the Commodore took over. I even had a Mac that had weaker specs and cost a multiple more than better competition in a time when Apple played a very small role in the PC market. It all happened very quickly, from dominance to marginal player. You think it can't happen with smart phones or tablets? Dream on.

    & "ecosystem they occupy" ...what utter nonsense.
    Mar 17 12:55 PM | 1 Like Like |Link to Comment
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