Can the U.S. Become a Net Exporter Again? [View article]
I'm curious where you get your numbers related to corporate profitability not being "outsized" or being transitory as SP500 profits are at record high.
Can the U.S. Become a Net Exporter Again? [View article]
Interesting perspective but I think one aspect that should be considered is that corporate America has enjoyed outsized profits by enjoying an artificially induced labor arbitrage. It would be extremely painful in the short term for US corporations to try to shift the production of real goods back to the USA. They will fight this at all costs even though it is obviously not sustainable to be a country that runs endless trade deficits.
This has an obvious mid term impact when one considers the stock prices of companies that rely on an unsustainable dynamic.
Just as an aside, the longer the country waits to move back to a sustainable dynamic the more painful it will be. People in this country rightfully are not getting trained in the complex skills required to make real things such as toolmaking, welding, machining, etc. These and many others are difficult trades that requires many years of experience to get proficient in. The average age in these in the USA is now over 55. If there were a currency crisis down the road (if no corrective action is taken) when our manipulators decided they had no further gains from propping our currency up we would find it most difficult to suddenly train baristas and clerks into technical trades. We would find out that making real things is ever so complex and not to be taken lightly.
Can the U.S. Become a Net Exporter Again? [View article]
One of the effects of manipulating another countries currency upward is creating artificial demand for the target's sovereign debt which drives the price of debt higher and leads to lower interest rates over extended periods of time. What Greenspan called "the great conundrum" of interest rates seemingly going lower no matter policy. Low interest rates and easy money encourage speculation. Exactly to Mr. Kramer's point.
The U.S. Should Limit the Global Free Trade System [View article]
This is something I wrote a year or so ago that I think will add to this discussion;
Last week was the 20th anniversary of the Chinese government slaughtering it’s own people in Tiananmen Square. For those who have forgotten, all around the world were massive peaceful protests for democracy in countries all across the former Communist bloc where the leaders peacefully and for the most part gracefully (think Boris Yeltsin, Mayor of Moscow leading the citizens against the briefly attempted crackdown and shaming the soldiers off the streets) accepted the inevitability of the will of the people for the things we take for granted such as democracy, freedom of speech and free markets. Even the Berlin Wall, long a symbol of tyranny crumbled. In the wake of these successful and peaceful revolutions the Chinese people took to the streets to demand the same from their government. For weeks protests went on culminating in over 1,000,000 Chinese citizens peacefully gathered in Tiananmen Square in their capital city of Beijing.
Unlike the Soviet Union and elsewhere in Eastern Europe the Chinese government responded by sending in their 4th Army complete with tanks and machine guns to slaughter over 2000 of their own citizens in the streets of their nation’s capital. In the aftermath, whatever small freedoms that Chinese people had been allowed were withdrawn, there were massive arrests, imprisonment and executions. To this day, there has been no further political reform and China remains one of the most authoritarian countries on Earth. Interestingly, to this day the USA and EU maintain an arms embargo on the People’s Republic of China in response to this massacre.
While we maintain an arms embargo, it is an interesting contrast that the USA has deemed this very same, unreformed and unrepentant authoritarian China sufficiently trustworthy and sharing of our values to transfer our manufacturing base to them and become reliant on their goodwill to loan us money to operate our government. American businesses and businessman think it routine to move production and technology to China, inevitable really. We as citizens have become used to most things we buy to read “made in China” and nobody bats an eye when the Secretary of the Treasury goes to China to kow tow to their leadership and beg them to keep buying our bonds.
I don’t normally send emails of this type but thought it right to honor the Chinese martyrs who gave their lives for freedom in Tiananmen Square by giving a little thought to how we in the Land of the Free, Home of the Brave have become the economic subjects of this very same government that would slaughter it’s own citizens in the streets. A very wise and very wealthy man by the name of Warren Buffet saw this day of our economic servitude coming and all the way back in 2003 published an article warning his countrymen and giving his own, what I think eminently sensible approach, to ensuring our economic wellbeing and freedom. I’ve attached a link to his article and hope everyone takes a minute to read and think about this subject that not only affects us but will impact the next generations as well.
The U.S. Should Limit the Global Free Trade System [View article]
Excellent article. I have felt from the beginning of the financial crisis that the white elephant in the room that neither party really wishes to address is the persistent and huge trade deficits and find it unlikely that there will be a significant change in the economic dynamics until it is rectified (unless another asset bubble could be created).
What I find most fascinating is the almost religious type of faith that many have in the value of "free trade" with mercantilist regimes with very different ideas on things such as human rights, form of government, etc.
If you read El-Erian and Bill Gross regularly you would know they are politically agnostic and the policies they have been recommending are probably more slightly in line with Democrat rather than Republican rhetoric.
Mixing personal political emotions into this type of discussion I don't think is beneficial.
Seven Reasons Doug Kass Is Wrong About the Economy [View article]
I think one of the areas that is very different in this case is the massive de-industrialization and massively widening trade deficit. Now the case could be made that these "have always" been happeneing. But in the 2000's these trends accelerated exponentially. There is quite a case that could be made that the housing boom and crisis across banking that followed was really precipitated by the need for Asian central banks to buy dollars/treasuries to keep their own currency low versus the dollar to maintain their "value proposition" to USA manuafcturing to move all value added activity to Asia. This kept USA interest rates and inflation absurdly low and everything beautiful in the great moderation. But only if one could overlook the ever burgeoning trade deficit and ever growing dependence on Asian loans to finance the ever more consumer spending dependent economy. Where I think the El Erian premise is correct is that what could a booming USA economy look like? I mean really, a booming economy here could only at this juncture in time be a return to the same. That would be further trip down the lane of asset bubbles, massive Asian lending to us, further outsourcing and de-industrialization and then even bigger crisis and collapse when finally USA just collapses when Asians have no further reason to buy dollars and let currency collapse. Is this the type of "same as always" you see? What type of economic boom do you envision considering that the USA has managed to remove real value added capacity from these shores? Real economic boom and growth will be hard, it will involve making real things and adding real value in the world. Things that have become foreign to USA way of thinking.
UNG arbitrage important rule reminder - by Matt H. [View instapost]
This is in regards to proper ratios on the arbitrage. I was of the same mindset as well that one should only short the NAV. On further consideration though I think thats flawed. It works well when gas goes down but when it goes up you lose out. The better way to do it is to have it balanced then reduce the short or long position dependent on how gas moves and the premium closes. otherwise, if gas were to go up in value and the premium shrinks at the same or smaller proportion that you are offset you can have it shrinking without makign a profit. i have meant to do spreadsheet comparing the two strategies but haven't had time yet.
Danny. Is surprising but perhaps we are over estimating the common sense of the average investor in UNG. I think the dynamic remains that when nat gas goes down sharply there is new influx of people who buy UNG thinking they will catch enormous bounce. probably do not understand that there is large premium, CFTC issues, CIO saying that possibility fund may close and questionable how well this vehicle even tracks nat gas at this juncture. No telling whether would move up on sharp spike upward in futures or not.
UNG premium down over 4%, nice gain we are all in profit now [View instapost]
Danny. He is CIO of UNG. Heard in car while I was driving, he spoke of possibility of shutting down the fund. If I were long UNG I would be running for exit while premium still exists. By the way, I prefer Bloomberg myself. CNBC gets too political. I am thinking that today should be big sell off again. Biggest problem for me is that whole posiition, long and short, is shrinking so fast! Good thing short is shrinking much faster!
Soon will be time for good soldiers to find new cause!
don't you think would go straight to NAV? I would think mad rush for exit as soon as closing announced. if I were running UNG or any of these other funds I think I would be getting very nervous. website says it is designed to track natural gas futures when it isn't at all at this point. many naive investors have no idea of these changes. For Deutsche Bank it is small potatos compared to the liability. For UNG they have to be really wrestling between greed and liability/consequences. When I opened this position I really thought current situation was unsustainable and I still feel that way.
Can the U.S. Become a Net Exporter Again? [View article]
Can the U.S. Become a Net Exporter Again? [View article]
This has an obvious mid term impact when one considers the stock prices of companies that rely on an unsustainable dynamic.
Just as an aside, the longer the country waits to move back to a sustainable dynamic the more painful it will be. People in this country rightfully are not getting trained in the complex skills required to make real things such as toolmaking, welding, machining, etc. These and many others are difficult trades that requires many years of experience to get proficient in. The average age in these in the USA is now over 55. If there were a currency crisis down the road (if no corrective action is taken) when our manipulators decided they had no further gains from propping our currency up we would find it most difficult to suddenly train baristas and clerks into technical trades. We would find out that making real things is ever so complex and not to be taken lightly.
Can the U.S. Become a Net Exporter Again? [View article]
The U.S. Should Limit the Global Free Trade System [View article]
Last week was the 20th anniversary of the Chinese government slaughtering it’s own people in Tiananmen Square. For those who have forgotten, all around the world were massive peaceful protests for democracy in countries all across the former Communist bloc where the leaders peacefully and for the most part gracefully (think Boris Yeltsin, Mayor of Moscow leading the citizens against the briefly attempted crackdown and shaming the soldiers off the streets) accepted the inevitability of the will of the people for the things we take for granted such as democracy, freedom of speech and free markets. Even the Berlin Wall, long a symbol of tyranny crumbled. In the wake of these successful and peaceful revolutions the Chinese people took to the streets to demand the same from their government. For weeks protests went on culminating in over 1,000,000 Chinese citizens peacefully gathered in Tiananmen Square in their capital city of Beijing.
Unlike the Soviet Union and elsewhere in Eastern Europe the Chinese government responded by sending in their 4th Army complete with tanks and machine guns to slaughter over 2000 of their own citizens in the streets of their nation’s capital. In the aftermath, whatever small freedoms that Chinese people had been allowed were withdrawn, there were massive arrests, imprisonment and executions. To this day, there has been no further political reform and China remains one of the most authoritarian countries on Earth. Interestingly, to this day the USA and EU maintain an arms embargo on the People’s Republic of China in response to this massacre.
While we maintain an arms embargo, it is an interesting contrast that the USA has deemed this very same, unreformed and unrepentant authoritarian China sufficiently trustworthy and sharing of our values to transfer our manufacturing base to them and become reliant on their goodwill to loan us money to operate our government. American businesses and businessman think it routine to move production and technology to China, inevitable really. We as citizens have become used to most things we buy to read “made in China” and nobody bats an eye when the Secretary of the Treasury goes to China to kow tow to their leadership and beg them to keep buying our bonds.
I don’t normally send emails of this type but thought it right to honor the Chinese martyrs who gave their lives for freedom in Tiananmen Square by giving a little thought to how we in the Land of the Free, Home of the Brave have become the economic subjects of this very same government that would slaughter it’s own citizens in the streets. A very wise and very wealthy man by the name of Warren Buffet saw this day of our economic servitude coming and all the way back in 2003 published an article warning his countrymen and giving his own, what I think eminently sensible approach, to ensuring our economic wellbeing and freedom. I’ve attached a link to his article and hope everyone takes a minute to read and think about this subject that not only affects us but will impact the next generations as well.
www.pbs.org/wsw/news/f...
The U.S. Should Limit the Global Free Trade System [View article]
What I find most fascinating is the almost religious type of faith that many have in the value of "free trade" with mercantilist regimes with very different ideas on things such as human rights, form of government, etc.
Should We Listen to El-Erian? [View article]
Mixing personal political emotions into this type of discussion I don't think is beneficial.
Seven Reasons Doug Kass Is Wrong About the Economy [View article]
UNG arbitrage important rule reminder - by Matt H. [View instapost]
I strike today. [View instapost]
UNG premium today took around 3,5% [View instapost]
UNG premium @ 12,9% [View instapost]
Link to John Hyland interview,
UNG premium down over 4%, nice gain we are all in profit now [View instapost]
Soon will be time for good soldiers to find new cause!
Rick
UNG premium down over 4%, nice gain we are all in profit now [View instapost]
UNG premium and arbitrage chart [View instapost]
UNG premium and arbitrage chart [View instapost]
Deutsche Bank is shutting down their commodity ETN and redeeming the shares.