Sean Maher

http://deadcatsbouncing.blogspot.com/

15 Comments

    • On a Return to Normalcy: Dow 8,500 [view article]
      Good analysis, which reflects John Hussman's cyclically adjusted earnings model, suggesting 900 as a valuation floor on the S&P with expected returns in high single digits from here. Stocks are cheap, and having been aggressively bearish, I'm buying into the climactic panic... Oct 10 08:57 AM
    • By Any Definition, a Crash [view article]
      I agree, and I called the commodity bubble right in the Spring, and have been aggressively short equities since August (see blog)...900 on the S&P is 10.4 (or the long time average) times cyclically adjusted peak earnings and was my floor target in this selling panic. Bombed out value opportunites abound, and on the first significant reversal in Libor/TED spread, stocks will have a record rally...we'll see how Lehman's CDS auction goes today. Oct 10 08:38 AM
    • CDS Market: It's Crunch Time [view article]
      Good point re Fannie and Feddie, see latest blog post re closing my short positions (the one above was actually posted on the blog on 5th October, SeekingAlpha are a bit slow these days!) Oct 07 09:07 AM
    • Have We Reached a Near-Term Bottom? [view article]
      Great blog, I posted a very similar analysis on Seeking Alpha today, this is the best second chance shorting opportunity since oil hit $147 twice in July; the short-selling rules will have the perverse effect of removing a key revenue stream for MS and GS and also reducing their available cash (hedge fund margin deposits)...the law of unintended consequences will mock the whims of politicians! Sep 19 02:11 PM
    • Hedge Funds Appear to Have Dodged a Bullet [view article]
      Good analysis, I posted on the wildly risky strategies many hedge funds are now employing on my markets blog last week, their is now serious deleveraging acrosss hedge funds caught long and wrong at the top of the commodity bubble; it proved a great contrary trade for me, but I fear we will Amaranth style blowups in coming weeks as the redemptions and margin calls kick in. Aug 19 10:23 AM
    • The Great Consumer Crash of 2009 [view article]
      Good summary of the deleveraging pain now facing US consumers; I've discussed a structural downshift in US consumption (and necessarily huge rise in infrastructure spend) on my blog many times; while attention is focused on the slumping subprime mortgage market, the biggest risk going forward is in superprime 'McMansion' loans, of $500k-$2m where default rates are climbing fast; the greatest overconsumption/debt accumulation in the boom years has been among the professional middle classes striving to maintain their 'deserved' lifestyle in the face of stagnating salaries and soaring service inflation. As white collar job losses rise, this may cause a whole new wave of foreclosures in upmarket suburbs nationwide. Aug 14 05:11 AM
    • China & Copper: Prepare for Crisis [view article]
      To address some of the points raised above:
      1. If you knew anything of the geography and economy of China, you would realise that the earthquake had minimal effect on manufactured exports or the relevant infrsstructure; it affected agriculture and coal production predominantly. Exports are slowing rapidly...
      2. Who cares what China is doing in the Congo, it's irrelevant; I'm describing an illegal speculative scheme that the authorities are unaware of, although some corrupt officials are undoubtedly involved.
      3. Try to keep emotion out of your investment decisions, my previous calls speak for themselves. It's flattering to think I could single handedly crash the copper market, but I'm simply taking an informed view of a clear anomaly. Everyone in the copper market suspects something is up, but won't talk publicly about it...       Jul 31 04:15 AM
    • What's Behind the Slide in Oil and Commodities? [view article]
      A nice summary of tumultuous events; both the decision to engage the Iranians and ban naked shorting in many financials (soon to be extended to the rest of the market I suspect) probably reflect the growing role of Hank Paulson in managing this crisis and were perfectly timed for maximum impact; the Fed is pretty much out of ammunition (just look at their balance sheet) and more muscular market intervention is now required. Goldman Sachs has taken over the US government, and it's no bad thing... Jul 25 07:24 AM
    • Crude Decline Bullish for Stocks: Rebalance & Buy on Weakness [view article]
      Agree with your analysis that we are set for a tradable bear rally (10-15% on the S&P) as posted on my finance blog Dead Cats Bouncing, and leadership is already rotating away from commodity exposed sectors; airlines, refiners, and financials/housing are all high beta rally plays if we head toward $100 on crude as I expect. Good sell call on China last Autumn; after the subsequent crash it's now on 21x trailing earnings and will benefit from falling global energy and food prices. Jul 22 08:12 AM
    • Benefiting from the Oil Correction [view article]
      I agree with the target at either side of $100; given marginal production costs at the most expensive conventionar fields of $70-80, that leaves a significant geopolitical risk premium in the price. I have analysed the Peak Oil hysteria in depth in my finance blog, and absent a major hurricane, the path looks a one way bet after last week's technical carnage. Jul 21 09:55 AM
    • The Sun's Rising Over Japanese Stocks [view article]
      I wrote about the longer term prospects for Japan recently on my finance blog; economically destructive demographic and social trends (such as the 'freeter' phenomenon), plus a sclerotic political system undermine the undoubtedly positive short term technical picture.
      deadcatsbouncing.blogs...       Jun 25 03:31 AM
    • Will the Dollar Recovery Launch a Bank Rally? [view article]
      Thanks for the feedback, we have seen a dramatic bank rally in Europe in recent days as short selling has been restricted during rights issues in the UK and Barclays is looking at a £4bn placing with SWFs. We may have reached an important bottom for the sector in the face of an overwhelmingly bearish analyst consenus... Jun 17 05:36 AM
    • Vietnam and the New Frontier [view article]
      I agree that Vietnam is a great LT story; I have written about the Vietnamese (and indeed Chinese) stockmarket slump extensively on my investing blog deadcatsbouncing.blogs.../; both countries have negative real interest rates in an environment of spiralling inflation (25% in Vietnam and almost 9% in China) but both markets now look reasonable LT value, currency risk is the key unknowable, China might revalue 10-15% at any time to control inflation while the Dong looks ripe for a slump in value. Jun 11 02:19 PM
    • Is Oil a Bubble? Part One [view article]
      The recent Senate testimony of hedge fund manager Michael Masters says it all re the speculative bubble now ready to burst:
      "prices have increased the most dramatically in the first quarter of 2008. We calculate that Index Speculators flooded the markets with $55 billion in just the first 52 trading days of this year; that's an increase in the dollar value of outstanding futures contracts of more than $1 billion per trading day. There is a crucial distinction between Traditional Speculators and Index Speculators: Traditional Speculators provide liquidity by both buying and selling futures. Index Speculators buy futures and then roll their positions by buying calendar spreads. They never sell. Therefore, they consume liquidity and provide zero benefit to the futures markets... traditional policy measures will not work to correct the problem created by Index Speculators, whose allocation decisions are made with little regard for the supply and demand fundamentals in the physical commodity markets. If OPEC supplies the markets with more oil, it will have little affect on Index Speculator demand for oil futures. If Americans reduce their demand through conservation measures like carpooling and using public transportation, it will have little affect on Institutional Investor demand for commodities futures."

      Conclusion: OPEC are right; it's not fundamentals, but rampant speculation that has driven oil prices above $100 (marginal cost of the most expensive new fields/alternatives like tar sands is $70); time to either dump SPR crude on the market, or for the CFTC to suspend new index buying of oil futures before the US economy slumps into a nasty and intractable recession. As with the sub-prime debacle and the tech bust before that, weakly regulated financial capitalism is increasingly self destructive.

      May 24 07:23 AM
    • The White Elephant That Could Destroy Your Portfolio, Part I [view article]
      The looming inflation crunch is a theme I've addressed many times on my finance blog, and indeed the wise comments of Paul Volcker on the issue. The bizarre (and self serving) changes made to the CPI calculation methodology under Clinton (such as the highly imaginative hedonic pricing) are now coming home to roost and we could face a credibility crisis for US stats in the next few months, with dire implications for the dollar and US bonds. The emperor, if not quite naked, is wearing very tattered rags... May 24 07:06 AM
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