Seeking Alpha


Send Message
View as an RSS Feed
View ralphrides' Comments BY TICKER:
Latest  |  Highest rated
  • More Scary Numbers [View article]
    its a hard call with cheap Fed interest rates. normally if rates were normal and assuming the rate curve was similar to what it is today, short term lower than mid and long higher than mid, the S&P should motor on up. What the low Fed rate does is make volatility spike on every word coming out of the board of governors. Looking at SKEW the 30 day market guess is continued lower VIX and that should kick up the S&P and probably the IWM as well. The problem I saw last week was VIX was dropping and the S&P had a pull back and the two were not in sync and that is pretty strange. bottom line, VIX insurance buying is down but the S&P has not responded back up much. could be investors are going to europe markets last few weeks.
    Apr 7, 2015. 10:30 AM | Likes Like |Link to Comment
  • If You Listen Carefully, The Bankers Are Actually Telling Us What Is Going To Happen Next [View article]
    there is no QE bubble in the US, the thing that caused economic chaos in the great depression was low money supply and failure of banks due to investor withdrawals. Such things are not the same today, the Fed has plenty of money it was 8 trillion and growing last time I looked and banks are now FDIC insured so a run will not be allowed too happen and deposits are as safe as the name of the USA is, nothing safer right now so why stress over it. QE is not printing money is control of the Fed lending rates between banks and is used to make lending money available for small business and for consumers to buy homes. Inflation is a concern but only so that new money is worth more than old money so paying back loans makes economic sense and that is being pushed in the positive direction by all this QE tool stuff.
    Feb 10, 2015. 11:27 AM | Likes Like |Link to Comment
  • If You Listen Carefully, The Bankers Are Actually Telling Us What Is Going To Happen Next [View article]
    there is no direct correlation with energy to equities, its only panic that is trashing equities as oil drops but this trend will detach soon. cheap oil is good for US equities and good for the Euro zone. this is just fear mongering. with cheap energy and low interest rates equities are the place to invest for the next decade. banks are doing fine, if all the US financed fracking went chapter 11 its only about 10% of the S&P index and only about 2.5% of the banks loans, so what that is a small fraction of equities. 75% of the US economy uses oil in one form or the other so cheap oil is good for the US markets.
    Feb 10, 2015. 11:16 AM | 3 Likes Like |Link to Comment
  • How UVXY And SVXY Would Have Reacted In 2008 And 2011 [View article]
    This article was published in Jun of 14, and regarding US equities the prediction was a bit off as it was more or less neutral for the year, some claim +19% in large caps but early Jan 15 took some of that off so lets say about +9% so far. Oil dropped from $65 to $55 a barrel and that spiked VIX along with Putin sections killing the Russian markets. It is interesting to note how backwardation occurred in Oct, mid Dec and just now. Its negative effect on SVXY has been diminishing though but the last 6 months SVXY is being held down by the market makers selling puts on SPY for more than calls holding the rollover gains flat for SVXY. Normally if the put to call ratio is neutral SVXY grows by at least 8% each month and that is holding it close to $60 but not letting it grow. I agree timing entry into SVXY now as a 3 month MACD on VIX peaks and starts turning down is the best strategy, one can also wait for a MACD bottom on VIX and sell short to expire covered calls on SVXY to at least make some premium if holding longer than expected. Even though oils decline has caused a drag on US Equities the longer term result will be positive on US Equities as 75% of the US economy uses energy for transportation, production and as raw material and this cost reduction will result in increased corporate revenue and more consumer spending regardless of wage growth.
    Jan 17, 2015. 01:29 PM | Likes Like |Link to Comment
  • Analyzing The Oil Patch: Dry Wells And Train Wrecks [View article]
    the market is not sure how to react to cheap oil. if all the equipment producers and the small fracking producers went out of business, so what, banks have built in default protections and already written off the loss. Look at Berkshire Hathaway fund investments, is all in banks and credit card companies, he is not concerned about another bank crisis. by last estimates only 10% of bank loans were for energy and if all went bankrupt that is already in the banks adjusted prices. the world industry runs on energy and 75% of the US economy uses energy. Cheap oil will just make that 75% of our economy have higher revenues. Fear Not the cheap oil tax rebate.
    Jan 12, 2015. 12:59 PM | Likes Like |Link to Comment
  • The Coming Bear Market In 2015: Why There Will Be No Happy New Year Before We See QE Reloaded [View article]
    you forgot cheap energy, i believe 75% of our economy runs on oil and gas and with it down over 60% now that is like at least a 0.4% kick up in our GDP estimates for each quarter. i calculated it would improve our GDP from 4.6% to 5% for the next quarter.

    The current BEA states: Real gross domestic product (GDP) increased at an annual rate of 4.6 percent in the second quarter of 2014
    Dec 31, 2014. 02:54 AM | 1 Like Like |Link to Comment
  • The Coming Bear Market In 2015: Why There Will Be No Happy New Year Before We See QE Reloaded [View article]
    Economies are driven by bank credit like it or not. a balanced budget is actually bad for an economy you want some deficits to keep the engine running. the more important factor is money supply and that is quite high. the Fed can control interest rates without buying treasuries and they intend to do so for some time.
    Dec 31, 2014. 02:38 AM | Likes Like |Link to Comment
  • The Coming Bear Market In 2015: Why There Will Be No Happy New Year Before We See QE Reloaded [View article]
    I agree, have to look at all conditions, read my postings here under ralphrides for your answers.
    Dec 31, 2014. 02:31 AM | Likes Like |Link to Comment
  • The Coming Bear Market In 2015: Why There Will Be No Happy New Year Before We See QE Reloaded [View article]
    no read my posts under ralphrides, if you bet bear you will loose your shirt and all your investment money too.
    Dec 31, 2014. 02:27 AM | Likes Like |Link to Comment
  • The Coming Bear Market In 2015: Why There Will Be No Happy New Year Before We See QE Reloaded [View article]
    yes good to read both sides, take a look at my posts under ralphrides for some more perspective.
    Dec 31, 2014. 02:26 AM | Likes Like |Link to Comment
  • The Coming Bear Market In 2015: Why There Will Be No Happy New Year Before We See QE Reloaded [View article]
    Looking at the charts on VIX and the S&P for 22 Mar - 22 Jun 2010 the end of QE1 and 01 Jul - 01 Oct 2011 the end of QE2 and looking at 01 Sep - 01 Dec 2014 seems to me the spike in VIX is decreasing in length each time QE is ended, first spike was about 6 months second was about 3 months and the most recent was about 1 month. So is the VIX spike for the end of QE3 already over? If you look at each 3 month chart and compare the Bollinger bands and MACD looks to me its over for now. If one looks at the S&P for the same periods after QE1 and 2 ended there was a very weak recovery over those months following but this current chart already showed a bottom with a very strong uptrend. Will it take another pull back, probably but there is nothing economically that will slow it like last two times. According to a recent article by McClellan "What Hindenburg Omens and an Oil Crash Mean" there is a decade lag before historic patterns of cheap energy will shadow on the S&P so that also supports an uptrend in the S&P for 10 more years. Will volatility pop up now and than by the bear sayers, sure but it makes for great trading.
    Dec 31, 2014. 02:15 AM | Likes Like |Link to Comment
  • The Coming Bear Market In 2015: Why There Will Be No Happy New Year Before We See QE Reloaded [View article]
    Thanks for all the data, here is a note I put together for my e-mail news letter about the fears for another recession or depression based on recent economic conditions.

    There is a lot of street chatter about deflation and rising interest rates and the Fed and is there a problem in the US economy with high PEs on the S&P.

    The Fed QE worked by buying Treasuries from banks which raise the share price and lowers the interest rates. This lowers interest rates for all commercial borrowing and the reason was so banks would loan this money out to commercial business at a higher rate than they could get from internal Fed to Central banks to spur investment and create new jobs. As the unemployment rate decreased it was time to stop this QE. So the Fed has all these Treasuries to sell now to generate even more revenue when they so choose.

    The Fed learned a lot from the 1930s there was a Hugh negative inflation taking place called deflation and at the same time a drop of interest rates to near zero. On the surface it sounds good but what happens is the real interest rates make paying off loans with current money way more expensive than the old money borrowed sort of like paying off a high interest balloon loan where your payment never pays any principal and the interest due increases the loan total due. This is why the Fed is so concerned about too low inflation, you want new money to be worth more than old money.

    The street fear is these conditions exist today. Read the link below to get some feel for why the great depression occurred.

    The conditions for such a depression do not exist and the controls to prevent this are actively in place now.

    The Fed is controlling inflation by controlling Federal bank interest rates. The fear is the money supply could go too low and the reserve banks run out of money and cause a default on accounts held. But the Fed is not restricting the money supply like it did in the 1930s so it has plenty of reserve left and it has been going up last three years to about 4 trillion dollars paid mostly by the banks in fees to borrow its money and has all those Treasury bonds it can sell as well.

    So another fear is that low oil and energy prices will crash something. So with the money supply very easy and inflation being carefully watched by the Fed, and cheap interest, the US equities have incentive to increase investment and create even more jobs. This is a great bull market situation. The other fear is the US dollar value is going up and exports will go down decreasing our GDP. During the 1930s the same thing occurred but remember the money supply also ran out and this caused the banks to fail not import export issues. As long as the money supply is positive and energy and interest is low its a very very bull market condition that can last for a decade.

    sjsu dot edu/faculty
    /watkins/dep1929 dot htm
    Dec 31, 2014. 01:50 AM | Likes Like |Link to Comment
  • The Coming Bear Market In 2015: Why There Will Be No Happy New Year Before We See QE Reloaded [View article]
    Here are your data links, have to put the www in front and replace dot with a . to get them to work, this site blocks all web links.

    Monetary Base (MB) is the commercial banks reserves in the central bank plus the total public currency circulating
    estimated at $4 trillion
    research dot stlouisfed dot org/fred2/series/BASE

    M1 is public checking deposits
    M2 is M1 plus public savings accounts
    M3 is M2 plus institutional CDs and euro dollar deposits

    The Money Stock (M2) is about $11.6 trillion
    research dot stlouisfed dot org/fred2/series/M2

    M3 no longer calculated by the Fed here is why and use M2 instead
    ny dot frb dot org/aboutthefed/
    /fedpoint/fed49 dot html
    Dec 31, 2014. 01:30 AM | 1 Like Like |Link to Comment
  • VIX creator unloads on VXX [View news story]
    you nailed it, what the long S&P index holders such as SPY are doing is rather than set stop loss limit sell orders and risk loosing shares as at a loss or have to take tax gains they are buying VIX ETFs either the futures or VXX or similar as downtrend insurance. The other way is to buying puts on SVXY the inverse. What this is doing is holding up the S&P and also holding up VIX. Generally buying VIX is a looser so if you try to trade it time is against you. The investors long on the S&P just buy insurance by buying VIX. Institutions are just algo trading so that swings the market in addition making things look screwy.
    Dec 28, 2014. 01:30 PM | Likes Like |Link to Comment
  • True Contango: The Real Reason To Short VXX Long Term [View article]
    the loss of inverse VIX ETFs is limited to 80% according to its white paper and at that point trading is suspended. recovery could occur but at a return to contango it could take 8% a month compounded so it could take 22 months of contango to recover that high a loss. I have been trying to model it and trading it and watching factors that effect VIX for over a year now. From what I can see, even going back 20 years VIX always goes down and therefore SVXY should never terminate. It would take an Lle (extinction level event) to make VIX go up and stay up and at that point who cares. the worst decline in SVXY's history was Oct of this year when VIX spiked from 12.5 to 31 but only stayed that high for 2 days which was 148% increase, SVXY went from about 85 down to 48 but only stayed that low for two days which was a 43% drop. The reason was looking at the VIX futures they went in backwardation for about 4 days. Upon VIX futures going back to contango SVXY went from a low of 48 to about 74 in 17 days which was a 54% gain. So that 8% a month is overly conservative in how SVXY would recover, its more like 18 to 20% a month as VIX goes back to contango so recovery from an 80% drop at 18% a month would probably take only 11 months to recover.
    Dec 4, 2014. 11:42 AM | 1 Like Like |Link to Comment