The Perfect Environment For Selling Options Premium [View article]
Hi Andrew, I'm wondering if you have researched the MF collapse and if you are worried about resolving option trades with any of the other players. The leverage that MF had was uncontrollable and one agent has suggested there are many more as leveraged.
China: Understanding The Nature Of The Bubble [View article]
Thanks Avery for that critical distinction between credit generating bubbles and Chinese cash investments. But I don't agree that you can compare an apparent cash buying spree with excess credit bubbles. Mainly, with credit, when the note comes due, either you have a profit to pay it off or you crash whereas, if you paid cash you simply wait.
But to RahulK: So is your contention that although rich Chinese are buying properties with cash, it's the real estate companies that are deep in debt and that's where the crash will occur? Can you substantiate that with some numbers e.g., how much of the real estate is burdened by how much debt?
Another thing that bothers me with the logic here is that the Chinese government is more of an active member in their economy than in a pure capitalistic economy (the government owns 30% of the economy): http://bit.ly/oO9K0z They control a lot of assets. So to make a comparison with our economy, if a very wealthy member of a capitalistic economy decides to invest his cash into say, raw land to hold for 5, 10 or 15 years until the timing is ripe for development, why don't we call that a bubble? He may not have a very nice return when considering the time value of his investment, but it's hardly a bubble.
I'm also curious about what the difference is in China between holding gold or real estate. Both seem to be serving the same purpose, viz., protection from inflation (and again, not leveraged). So if holding inert gold doesn't cause a bubble that will burst, why will empty apartments that will eventually get rented (or bought by foreigners)? I can't imagine the carrying costs are large and probably have been taken into consideration. The government has planned on supporting hundreds of millions of Chinese peasants migrating to the big cities. Eventually the units will be filled.
Finally during my last trip to China I came back with the overwhelming sense that if the Chinese government could not keep one step ahead of those teeming millions of people desiring middle class benefits, (a decent apartment, for example), that is a much bigger risk than non appreciating or empty properties. Look at the USA, is your cash appreciating as it sits there looking for a safe haven? So non-appreciation by itself is not a bubble.
I'm not being contrary, only trying to understand the logic.
Stocks: A Critical Showdown Begins On Monday [View article]
Thanks Eric, really nice job. As you can tell from the comments, a clear, well thought out and supported, non biased study is appreciated. I especially liked the lack of ranting about helicopters and other arcane tactics that really, few understand correctly.
I liked your closing point that we may get some form of interventioon that would carry the day, viz., QE. That really is the underpinning of the market strength these perilous days and you've brought it into the calculation nicely. I also think this is why we have such volatility; market fundamentals head down, QE heads us back up, a psychotic, push-pull market and really hard to invest in.
FedEx CEO: There Will Be No Recession [View article]
It's hard to have an objective take on all this but here's mine with a request:
In the USA we have weak growth but growth nonetheless, threatened by black swans on 2 major fronts, Europe and China. Buy value stocks at cheap prices that pay a dividend in case we end up stalled and in a trading range. And make sure you have a good hedge in place. Swing over to option trading if you want some action in the interim.
I'm using GLD as my hedge but I'd really like another, just to hedge my hedge. Any suggestions or is it, "No where to go, no where to hide?"
More Market Pain Before Huge Market Gains [View article]
IMHO BO will tear up the track during his second term. (I do think he will get reelected due to the lack of appealing candidates arrayed against him.) He inherited a horrid, longer than one term to solve problem, had campaign promises he thought were important to try and fill and then the tail chasing began.
So with a 2nd term, he'll go all out and I also think that is our best bet, not to change horses mid stream but bring him back and urge him forward. Just imagine changing leadership, changing all underlings, changing directions......all that will take any new President years to do. Instead, at the end of the election, BO will attack the problems with more experience and with no more elections to worry about. Give the guy a break and give us one too.
Recusant. I don't know about Peru but Mexico's GDP is growing by around 5% this year with inflation under control and is considered by many as the 5th BRIC.
If you are talking about the future, maybe we should be concerned but for now nationalization is not in the cards.
Among Emerging Markets, Avoid Turkey [View article]
KK Bulut; I agree, the remarks are not thoughtful, full of stereotypical labels that represent stereotypical thinking. It's way too easy to carry on like that but then, that's why most people do it, viz., a non-threatening chance to speak and get acceptance by pandering to the national ignorance. Politicians do it CONSTANTLY and so as leaders, you'll find the electorate doing the same. Muslims are no different than Christians or Jews. Let's keep the conversation in the realm of economics and in that realm, I'm on Turkey.
"An unnamed congressional aide put the odds of reaching a timely agreement at 50%." To me this means, "I don't know" said more sophisticatedly but other than that, from your lips to Lord Chaos' ears!
I don't understand the hesitancy of Silver. The auto industry in the world is getting ready to set records and I believe they are one of the largest users of silver so they must have been buying up supplies, yet the price languishes. Any comments on why silver has stalled in the around 40 range?
They Still Think This Is A Banking Crisis [View article]
Hi Cullen, Can you clarify a bit for me? Are you saying that late or no payments on mortgages was the first stone/ripple in the financial pond? That this is what caused Lehman etc?
Thanks and PS: this was not a rhetorical question, but rather I had not heard that before nor do I recall (with an admittedly bad memory) hearing about abnormal retail credit failures prior to the SHTF.
China Can't Save Anything - Neither Can The Fed [View article]
The thing is no one can afford to let Greece sink. It's more pain, not less for Germany and France and then you have also tipped over once and for all, the first domino.
I think the powers,( in the world), will do ANYTHING to not let that happen and since I do not know what else they are capable of, I sit this one out, cash in hand just in case. I have bought the EUO ETF that doubles down on the Euro 4 times, waiting for the inevitable that turned out to be evitable. Some kind of orderly resolution is somewhere on the horizon and we'll get there or bust. (you guys think bust and I think "there".)
Secondly, do you think we are going to have to change out BO in order to change out the negative mindset that is slowing down the recovery? Seems his actions are discounted and marginalized before he even speaks them or maybe I listen to too many of the far right news outlets.
Neutrinoman; You use the label "financial repression" which suggests that is the intent of policy makers. So is this the grand conspiracy scheme gone global, not just a bunch of smart humans doing stupid things? Isn't the intent of the policy makers to save the banking system which, without it and the cash inside we are doomed to buy and sell goods with guns? I"m not sure where your piece is leading but I doubt the policy makers have it in their heads to send capital from productive to non-productive locales, since that doesn't put any money in their pockets either.
And where did you get this theory from? "Currency issuers" really means, "possessing credible reserve currency status," Every bank in every country in the world possess credible reserve currency status or there wouldn't be any banking system.....it would all collapse.
You've confused me but then, that's not too hard to do.
I like the idea of suing the casinos. Go where the cash is! Well that's just what the lawyers are doing now, going where the money is. Somewhere in this discussion someone should mention that without the banks, the USA is no longer in business and so what's the surprise that they had to be propped up?
For more blame let's go after the religions of our country which have not been able to change human nature since that's why we are here now and saying what we are saying.
The Perfect Environment For Selling Options Premium [View article]
China: Understanding The Nature Of The Bubble [View article]
But I don't agree that you can compare an apparent cash buying spree with excess credit bubbles. Mainly, with credit, when the note comes due, either you have a profit to pay it off or you crash whereas, if you paid cash you simply wait.
But to RahulK: So is your contention that although rich Chinese are buying properties with cash, it's the real estate companies that are deep in debt and that's where the crash will occur? Can you substantiate that with some numbers e.g., how much of the real estate is burdened by how much debt?
Another thing that bothers me with the logic here is that the Chinese government is more of an active member in their economy than in a pure capitalistic economy (the government owns 30% of the economy):
http://bit.ly/oO9K0z
They control a lot of assets. So to make a comparison with our economy, if a very wealthy member of a capitalistic economy decides to invest his cash into say, raw land to hold for 5, 10 or 15 years until the timing is ripe for development, why don't we call that a bubble? He may not have a very nice return when considering the time value of his investment, but it's hardly a bubble.
I'm also curious about what the difference is in China between holding gold or real estate. Both seem to be serving the same purpose, viz., protection from inflation (and again, not leveraged). So if holding inert gold doesn't cause a bubble that will burst, why will empty apartments that will eventually get rented (or bought by foreigners)? I can't imagine the carrying costs are large and probably have been taken into consideration. The government has planned on supporting hundreds of millions of Chinese peasants migrating to the big cities. Eventually the units will be filled.
Finally during my last trip to China I came back with the overwhelming sense that if the Chinese government could not keep one step ahead of those teeming millions of people desiring middle class benefits, (a decent apartment, for example), that is a much bigger risk than non appreciating or empty properties. Look at the USA, is your cash appreciating as it sits there looking for a safe haven? So non-appreciation by itself is not a bubble.
I'm not being contrary, only trying to understand the logic.
Stocks: A Critical Showdown Begins On Monday [View article]
I liked your closing point that we may get some form of interventioon that would carry the day, viz., QE. That really is the underpinning of the market strength these perilous days and you've brought it into the calculation nicely. I also think this is why we have such volatility; market fundamentals head down, QE heads us back up, a psychotic, push-pull market and really hard to invest in.
FedEx CEO: There Will Be No Recession [View article]
In the USA we have weak growth but growth nonetheless, threatened by black swans on 2 major fronts, Europe and China. Buy value stocks at cheap prices that pay a dividend in case we end up stalled and in a trading range. And make sure you have a good hedge in place. Swing over to option trading if you want some action in the interim.
I'm using GLD as my hedge but I'd really like another, just to hedge my hedge. Any suggestions or is it, "No where to go, no where to hide?"
More Market Pain Before Huge Market Gains [View article]
So with a 2nd term, he'll go all out and I also think that is our best bet, not to change horses mid stream but bring him back and urge him forward. Just imagine changing leadership, changing all underlings, changing directions......all that will take any new President years to do. Instead, at the end of the election, BO will attack the problems with more experience and with no more elections to worry about. Give the guy a break and give us one too.
Gold: Watching For Opportunity Under Heavy Fire [View article]
Nice and I like that advice. Doubling down!
Just kidding but if it does get to it's 150 MA, I will buy more options.
2 Stocks For Rising Silver Prices [View article]
If you are talking about the future, maybe we should be concerned but for now nationalization is not in the cards.
Among Emerging Markets, Avoid Turkey [View article]
Gold Looks Ready To Break Out [View article]
Gold Looks Ready To Break Out [View article]
Nice input as usual and thanks.
"An unnamed congressional aide put the odds of reaching a timely agreement at 50%." To me this means, "I don't know" said more sophisticatedly but other than that, from your lips to Lord Chaos' ears!
I don't understand the hesitancy of Silver. The auto industry in the world is getting ready to set records and I believe they are one of the largest users of silver so they must have been buying up supplies, yet the price languishes. Any comments on why silver has stalled in the around 40 range?
They Still Think This Is A Banking Crisis [View article]
Can you clarify a bit for me? Are you saying that late or no payments on mortgages was the first stone/ripple in the financial pond? That this is what caused Lehman etc?
Thanks and PS: this was not a rhetorical question, but rather I had not heard that before nor do I recall (with an admittedly bad memory) hearing about abnormal retail credit failures prior to the SHTF.
China Can't Save Anything - Neither Can The Fed [View article]
I think the powers,( in the world), will do ANYTHING to not let that happen and since I do not know what else they are capable of, I sit this one out, cash in hand just in case. I have bought the EUO ETF that doubles down on the Euro 4 times, waiting for the inevitable that turned out to be evitable. Some kind of orderly resolution is somewhere on the horizon and we'll get there or bust. (you guys think bust and I think "there".)
Understanding The Jobs Debate [View article]
Now on to how we get that up and down 5%.
Secondly, do you think we are going to have to change out BO in order to change out the negative mindset that is slowing down the recovery? Seems his actions are discounted and marginalized before he even speaks them or maybe I listen to too many of the far right news outlets.
Bonds: 'Something Looks Broken' [View article]
And where did you get this theory from? "Currency issuers" really means, "possessing credible reserve currency status," Every bank in every country in the world possess credible reserve currency status or there wouldn't be any banking system.....it would all collapse.
You've confused me but then, that's not too hard to do.
FHFA Friday: Potential Lawsuit Tanks Banks [View article]
I like the idea of suing the casinos. Go where the cash is! Well that's just what the lawyers are doing now, going where the money is. Somewhere in this discussion someone should mention that without the banks, the USA is no longer in business and so what's the surprise that they had to be propped up?
For more blame let's go after the religions of our country which have not been able to change human nature since that's why we are here now and saying what we are saying.