taojaxx

For Asia to achieve a robust recovery in a soft-export new world, it will have to tackle two issues, IMF says on its blog: 1) Firms that hoard cash but don't invest. 2) Wealthy households that won't consume.

I agree with teh IMF conclusion about financial sector development (or lack thereof) being a reason for firms to save excessively. Much doubt about corporate governance. Households do not consume because they have no social security, no retirement benefits and a one child policy. Anybody would be crazy to consume in such a situation. Corporate governance has nothing to do with it.

The Good, Bad and the Ugly: Australian, U.S. and U.K. Economies

Australia is growing because China is growing and buys its commodities. RBA hiking rates is like the little kid waving his arms when the orchestra gets loud and thinking he's conducting it. All they'll get is more carry trades, AUD appreciation with little impact on growth as commodities are priced in USD ( and shortly in yuan?).

Heads You Win, Tails You Win!

It has already, it is over 60% owned by Cargill.


On Jul 21 10:55 AM Topgun wrote:

> True, and MOS is going to be taken over one way or the other.

Sovereign wealth fund China Investment Corp. agrees to buy a 40% stake in Chinese private-equity firm Citic Capital Holdings.

Why would a sovereign wealth fund buy domestic assets? In plain English this is nationalization. Maybe Citic indulged in some kind of subprime binge and the Chinese taxpayer is called on to help?

Vale May Bid for Mosaic: Let the Great Potash War Begin

Ryan,

Thanks for responding. My point is this argument about population growth is so general, I view it as useless for our purpose: it assumes similar oligopolistic supply structure and no extra discoveries whereas as we speak current pricing triggers development and Brazil for example announced one such discovery.
As to the link with the real estate bubble, POT from $45 to $226 back to $50 (so multiplied by 5 and subsequently divided by 5.5) seems to me to fit the definition of a bubble.
As you said, best of luck in your investment. After 30 years in this investing business, I have found that the major success factor was precisely that: luck. It oftentimes comes alongside hard work ("the harder I work, the luckier I get"), but not always.


On Jul 18 02:19 PM Ryan Barnes wrote:

> To Taojaxx: Yes, I read all the same reports that you have in the
> past 24 hours. Yes, Vale denied interest in MOS, just like every
> acquirer in the past 20 years has done when faced with a potential
> leak.
>
> And yes, inventories are up at Potash Corp, and Agrium has announced
> price cuts in the range of 20%; this is why share prices have been
> cut in half as I mentioned. As to the broader thesis of global demand
> for protein being higher...if you think that's comparable to real
> estate, that's your right...I just don't see any comparison.
>
> The increased demand for real estate was based on the increased access
> to cheap credit, making ever larger patches of the demograpic quilt
> feel that owning a home was their "right". That part of the fundamental
> equation has changed. The increased demand for proteins in a growing
> population has not changed to date, and I don't see anything stopping
> it.
>
> Best of luck to all in your investing efforts.

Vale May Bid for Mosaic: Let the Great Potash War Begin

In case you don't know, Vale denied they were interested in buying MOS.
Similarly, AGU just cut the listed potash price from $770 to $512 per short ton, and POT announced that North American potash inventories were uo 152000 tons in June, bringing them 115% hgher than the average level of the last 5 years.
As to the world needing proteins, this is the pump argument overused last year to justify ridiculous valuations for fert stocks which were subsequently cut in half, in 3 or in 4 from peak to trough.
Reminds me of the "they don't build real estate anymore" we've been satiated with during the bubble heydays.

Ben Stein, Predatory Bait-and-Switch Merchant

This Stein guy also has an agenda to push as well: Some might remember his creationist plea. What he was best at though was his ultra bullish stance right into the market crash.

T. Boone Pickens' Epic Wind Fail

You won't need your money by then, so better blow it into something worthwhile.


On Jul 11 01:06 PM ebworthen wrote:

> Hi commercials reminded me of Ross Perot.
>
> My take was that he was at the point where old men lose their edge
> and have over optimistic thoughts and plans because they have one
> foot in the grave.
>
> Warren Buffet is there too.
>
> I hope I die before I get to that point, or am sitting in a rocker
> looking wistfully into the distance instead of blowing my money.

'The Crash of 2008 and What It Means' by George Soros

So, the value of a theory lies in the possibility of expressing it in equations, right?
If that's your thinking, I wish you lots of luck in academia, as the markets might not be nice to you.
I agree with you though that reflexivity is simply another name for feedback loops.


On Jul 11 11:15 AM manya05 wrote:

> Reflexivity? most people would call it a positive feedback loop,
> and the concept is as old as control theory, which has been around
> for decades. Until you put some meat into it (a quantification that
> can be expressed in equations), it makes for nice cocktail conversation,
> but not much else.

Book Review: Hedge Funds (An Analytic Perspective)

Was that meant to e a review? Did you read more than a couple pages? Looks like the NJ seashore distracted your attention from the equations.

Book Review: The House of Dimon, by Patricia Crisafulli

Didn't read the book but if it is 200 and some pages of accolades to JD, then this article is another few lines of the same.
What strikes me is that this is the description of somebody whose entire career was devoted to the build up of C and JPM, which are at the root cause of the current crisis, one of he largest failures in financial history, Nevertheless, somebody found time to write a eulogy to the individual and SA devotes a whole article to praise the book...

Justin Fox on Regulatory Reform and Market Irrationality

Funny how the debate gets hijacked by pro/anti regulation ideologues.
Markets do not exist separately from market participants and reflect their rationality/irrationality of the moment. There is no market steady state of any sort: it is an ongoing process where supply/demand most of the time tends to rationally discount all known information and some of the time simply discounts the fad of the moment, hence the bubble with positive feedback trading (the higher it goes, the more I buy).
As to the dotcom being based on equity and real estate on debt hence the difference in impact, that's not true: dotcom was based on debt as well (ever heard of margin accounts?). The dotcom simply hit household as banks didn't own inflated stocks and only marginally financed stock speculators. Real estate hit banks' mortgage portfolios big time and their subprime holdings, crippling the financial sector and cutting off credit to the whole economy. It's like being hurt in the arm or leg (dotcom) and being hurt in the lungs or heart (subprime).

Fearmongering about the risk of looming hyperinflation is exactly what the Fed wants. "The major danger with a zero lower bound for the interest rate," Swedish policy-wonk Lars Svensson says (.pdf), "is that inflation expectations will be too low and even negative, and that the real interest rate will thus become too high."

More seriously if we want to keep the politics away for a moment: Svensson is right and the Fed's job is tough: buy government bonds to cap the nominal long term rate as it is the risk free rate from which other yields are derived through credit spreads. At the same time, ensure that the money injected puts a floor under inflation expectations (namely increasing them) for the reasons mentioned by Svensson, i.e. ensure that the expected real interest rate is low enough.
Japanese experience revisited, hopefully more successful.

Clues to the Next Market Move

I admire your certainties. Plus, based on ideas such as "the general complacency of traders as can be seen in the low price of the VIX". At 28. isn't the VIX at about 3 times its pre crisis level?
As to the natural gas play, the bounce after the EIA inventory statement lasted about 60 mn. NG contract ended the day at $3.65, about $.06 lower than the opening. Unfortunate illustration of the consistent failure of any bullish natural gas strategy. But maybe you use the ETFs rather than the futures contracts, in which case, I'd be interested in learning how you manage the added risk of the relative contangos.
Not disputing your bearish case. I'm just surprised how certain you are, especially as I'm not fazed by the arguments: the fact that home builders and regional lenders were early warnings in the recent past doesn't mean they're going to lead the market this time. They may, or may not. I too am skeptical about the green shoots theory, but for more fundamental reasons: Deleveraging doesn't stop in weeks as this is a structural shift. The US consumer retrenches for good and it's unclear to me who's going to pick up from them, certainly not the Chinese as they have no social security, no retirement benefits and no children to care for them in old age (one child policy) so they don't have a choice but to save like crazy, which is what they will keep doing.

Inflation Is Going to Be a Major Problem... But Not Today

The Fed has not inflated money supply, it has inflated the monetary base, namely reserves held by commercial banks. As long as these reserves sit on the Fed balance sheet as they do now, money supply is sterilized and creates no inflationary risk. When banks start lending again to earn more than the 25 bp the Fed is currently paying them, then money supply will rise and inflation will be a problem. At that time, the Fed will have plenty of time to mop up liquidity by selling Government bonds (or its own securities, if Congress allows the Fed to issue them).
So, no rush on commodities for inflationary reasons. You might wish to load up on them though, as most don't make the above distinction. As we know, in trading what's important is not what you think, but what the market thinks. Enjoy the commodity party, but stay close to the door as there will be money changing hands when people realize that Marc Faber's certainties ($ debased, buy commodities and a handgun, head for the hills or for China) might change overnight.