BrotherMaynard

China as Scapegoat, Again

points well taken.

just to add:

feldstein in today's FT: www.ft.com/cms/s/0/fd4...

krugman in last weeks nyt: www.nytimes.com/2009/1...

China as Scapegoat, Again

look, you're implying that there is some sort of "virtue" associated with saving and that consumption is a "vice."

The only vice in economics is disequilibrium and the only virtue is equilibrium. the more disequilibrium, the bigger the problem. chinese consumption as a % of GDP hit 30% with the recent gov't stimulus program...that is an all-time low for any country at any point in time. that is disequilibrium at an extreme...get your gaussian model out and assign a x-sigma to that event.

obviously, the US is at the opposite end of that balance. but to suggest that there is some sort of inherent benefit to infinite savings, falls in line with a socioeconomic heuristic that does little towards solving the current dilemma, and in fact, falls into the category of disinformation.

China as Scapegoat, Again

first of all, a $2tr+ reserve build across any period of time shorter than a millenium should always ring a collective alarm bell. the aggregate demand that has been displaced by this black hole is scores larger than the other countries mentioned. when those other countries build reserves as large as china has, on both relative and absolute basis, then they should get chastised. but china is by no means a scapegoat with $2tr+. it takes a very deliberate effort to rack up that number and a very indifferent trading partner.

Bernanke Calls For Balance; Asia Could Care Less

"oil is priced in dollars so when dollar is cheap rest of world gets an energy discount"

That is circular logic.

Quoting Martin Feldstein:

"the currency in which oil is priced has no significant or
sustained effect on the price of oil when translated into dollars, euros, yen, or any other currency. The market is now in equilibrium with the price of oil at $80. That translates into $53 euros at the current exchange rate of around $1.50 per euro.

If it were agreed that oil would instead be priced in euros, the quoted market-equilibrating price would still be $53 euros and therefore $80. Any lower price in euros would cause excess global demand for oil, while a price above $53 euros would not create enough demand to absorb all of the oil that producers wanted to sell at that price."

The forex markets take care of the dollar delta. Markets buying or selling oil b/c of the forex market would be double counting, and would in fact turn into a reinforcing cycle that has no fundamental underpinning.

Bernanke Calls For Balance; Asia Could Care Less

"market expressions" tend to embed a lot of crazy assumptions.

so is it wrong to say that you think long-term low US interest rates and a falling dollar means that the current expectations about the intersection between supply and demand for commodities in the future should go higher?

AKA refineries in, say, 2011 in the UK will need to purchase more oil to sate diesel and gasoline demand, since the dollar has fallen and US interest rates are still low? help me out here, because i just don't see how the former has (ever had) anything to do with the latter.

Bernanke Calls For Balance; Asia Could Care Less

"Commodities are still cheap"

are you talking about the prompt or the future? Maybe you're talking about intrinsic value...or maybe you are confused because commodities don't produce future cash flows?

United States Natural Gas Fund: Back in Business

-35% roll yield is considered "back in business?"

yikes

Plenty of Natural Gas: Exploration and Production Companies Keep Increasing Oversupply

excellent point about shut-in storage -- it should be considered inventory. the future supply problem b/c of lower rig counts is overblown. that's why curve flattening should be the next stage of this cycle.

just to expand on the EOG comment, stephen schork today:

"several Northeast pipelines started issuing operational flow orders (OFOs) in an apparent attempt to limit shippers exceeding their contractual limits...In addition to the Labor Day holiday, last week’s report also comprised the ratchet clause rollover. Injection ratchet clauses in the East require shippers to inject working gas through scheduled stages in order to preserve operational integrity. By September 01st no more than 80% of storage can be filled....According to the latest estimate from the EIA, maximum storage capacity in the East is 2.178 Tcf. As of two reports ago, week ended August 28th, estimated storage was 1.78 Tcf. That calculation was already 81½% of capacity or 1½ points above the ratchet. In other words, storage in the East over the last two reports was at operational capacity. Thus, the OFOs were a likely means to hold storage below the 80% threshold...What’s so bullish about that? Absolutely nothing."


here's the rest of schorks note: www.cnbc.com/id/327973...

Index Funds Don't Drive Oil Prices

this argument has been rehashed so many times i lost track. same stats. same charts. no new insight. whatever info this guy has is no better than anyone else's given the awful state of disclosure in the futures markets.

read Chris Cook...he actually links the physical markets to the paper markets and shows how easy it is to manipulate the physical.

"The ABCs of Oil Manipulation"
seekingalpha.com/artic...

Boone Pickens Puts His Money Where His Mouth Is on Energy

i don't see how you can divine any information from tbp's picks given that he has so many ulterior motives...who knows if the fund is just another marketing scheme? After all, a 98% loss is roughly the return most advertising companies get on their marketing dollars...

Oil Refiners as Proxy for Demand

refining is a brutal biz right now...end demand for refined products is in the tank (historically speaking) yet input costs have doubled over the past 6 months. can't think of a sound economic reason for this to happen. i suspect financialization has something to do with driving up prices, despite demand being historically low, and supplies being historically high. in addition, it doesn't take much to corner the brent/wti physical markets as there aren't but a few hundred thousands bbls per day being pumped of each.

T. Boone Pickens' Hedge Fund Concentrates on Energy, Drops Basic Materials

how'd that energy fund work out for pickens in 2008?

whats that, you say...-95%?

amazing that warren buffett gets routinely thrown under the bus for his financials yet t boone pickens is praised as if he's some sort of luminary when it comes to investing in anything. way to go on that -95% return, t boone. oh yeah...and well done on prop 10.

Not Bullish on Natural Gas Just Yet

fyi...go out two months on the curve and that ratio drops in half

i think the "blow-out" spread of natgas/crude is indicative of the rampant paper demand inherent to commodity markets in the current environment...similar to credit spreads last year, these "dislocations" are almost always caused by out of control money flows rather than physical fundamentals.

Natural Gas: Could This Be the First Bullish Chart?

"Guy Adami of fast money who is very savvy said UNG is aplay here"

in all of his savviness did he bother to mention that ung is trading at a 15% premium to NAV?

That's in addition to the fact that ung owners are already are paying a negative roll yield (fyi...12 month nat futures spread is almost a 1 bagger...finance.yahoo.com/q/fc...).

ung is a mess - it almost reminds me of that guy at the end of robocop 1 that crawls out of the cesspool only to be made instant road kill by that speeding paddy wagon.

see more here: ftalphaville.ft.com/bl.../

Asset Class Review: Crude, Gold and the Dollar

all of these correlations go to 1 when you most need them to be at zero.

furthermore, "crude oil" is not an asset class. even goldman sachs knows not to refer to it as such. crude oil is a commodity - which in my opinion is as a much an "asset class" as insulin. but that's another debate.