change is the only constant

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  • Through The Looking Glass On Rates  [View article]
    "So will the dead horse we are beating suddenly get up if we beat it harder? Apparently so."

    I could not stop chuckling. The old Einstein quote is applicable: the definition of insanity is to keep doing the same thing over and over and each new time hope for a different result.
    Feb 11, 2016. 04:35 PM | Likes Like |Link to Comment
  • It Was Never About Oil Part 2; It Was Always Leverage And Volatility  [View article]

    You said:

    "The entire point of leveraged positions is the margin of safety. That is true on both sides of that equation - for the provider and the borrower/user"


    "Thus, the huge losses for Orange County were really produced because the fund could no longer fund itself"


    "I think that explains, somewhat, the trajectory of the eurodollar decay past the panic - that initially leverage restraint (including and especially collateral shortage) as compared to pre-crisis meant the downward baseline to begin with"

    And Finally:

    "It is, and was, never about oil; only now, that oil projects volatility into the dying days of eurodollar leverage"

    A lot of meat in one article. No money down lending, caused securitization to fail, caused dollars TO europe to dry up, and now we discover oil revenues (and recycling) are not self-sustaining.

    And the game of domino's falling begins and ends with bank lending, overlending and lack of over site. The original margin of safety has been eaten up by the fees, and now the system is looking for a bag-holder. Bank liquidity problems always lead to bank runs. Always. This time its a run on the dollar.
    Feb 11, 2016. 04:05 PM | 1 Like Like |Link to Comment
  • Midnight In The Garden Of Fallen Angels  [View article]

    You said:

    " In other words, uncontrolled feeding frenzies in the bond market can actually CAUSE recessions"


    "The closest readers get is in the 10th chapter of the Book of Luke: "And He said to them, "I was watching Satan fall from heaven like lightning.""


    "One has to wonder if the Fed is keen to test hell's capacity"


    The density and profundity of the words you have written can only be equated with biblical references. I sequenced and summarized your words above.

    As I wonder if you intended to say, we have (the global economy) all been thrown (like Satan) out of Heaven by (God?) the FED.

    I am speechless. Fallen Angels and rising stars; IG and junk rate credit risk discovery; and bonds with negative interest rates. Central banking and metaphors - Japan and hell.

    As in Genesis the book says: "You would be as one of us, knowing the difference between good and evil"

    Midnight indeed.
    Feb 11, 2016. 09:34 AM | Likes Like |Link to Comment
  • Fundamental About Oil  [View article]

    Your shifting WTI oil futures curve presentation, and its implications, is a work of art. The eurodollar futures presentation, clearly states the belief about the 'future' for the dollar.

    Putting them both in the same article? You have connected the dots. While not intuitively obvious, where does the new aggregate demand come (to take advantage of these lower prices) from when we (The US) are already at full employment?

    "The fundamental basics for oil were predicted by the liquidations rather than the plausibility of "transitory", as oil inventories have run now to another record high"

    Liquidations in Oil futures is the driver? EVERYTHING ELSE a passenger?

    If correct, you have picked the lock. Bravo. Outstanding article.
    Feb 11, 2016. 04:10 AM | 4 Likes Like |Link to Comment
  • The EIA's Magical Three Zeros In A Row Means U.S. Oil Production Is Going To Move Lower Soon  [View article]

    What you have discovered, if true, is what they call an edge. The key part is, if true. The SIZE of the (which means is it material) edge however, remains to be seen. Everything I have read about the quick depletion of shale runs in the direction of downward production. Your reasons for wanting it to be true, everyone on the same side of the trade (Oil's going down further) and asymmetric payoff, are valid.

    But those inventory numbers are awfully high. The size of the declines (supposed by your analysis) matter too. And Iran. If true, your discovery is an edge. But is it material to supply or just speculation? The lottery players logic is somebody's going to win and you have to buy a ticket to have a chance. A material edge? Indeed.
    Feb 9, 2016. 12:48 AM | 1 Like Like |Link to Comment
  • What Defines Life And Markets  [View article]

    FWIW I very much liked the article. I have a friend who wrote his dissertation with the topic Boundary analysis and non-linear decision making. He never got his Phd. Could not narrow down the focus. Got lost in his own uncertainty, I believe. But I loved the title and the topic. In my mind, again FWIW, its kind of like the old saying old people say: You often learn the reason for a rule the instant after you have broken it. All other things in the system no longer function the same way and old reliable relationships are less certain. I believe its moral hazard's profound implications. But that's an un-provable opinion.

    So what's the point? Knowing even in chaos there are rules helps determine what re-occurs. Chaos theory is deterministic, while (most) other forms of recurring relationships are probabilistic. Handling chaos, like life is often a heuristic, you make up the rules after the experience. And the (most) rules change. Many claim the rules in chaos are made up as you go along. But they do not know how to manage chaos. Machines can crunch numbers, but threading abstractions through the mind's eye to determine concrete moves requires critical thinking. And as important as that is, its secondary. Primarily, and I am managing this myself, its handling the emotions more than the equations. Focus, is the antithesis of diversification. And its how you know clearly right, from not (or lucky) wrong. And that matters, as correct can be reliably repeated. Lucky, cannot. Avoiding losses as a strategy is fundamentally sound. Its just not perfect.

    An appropriate Buffetism: If you cannot handle a 50% loss in your stock, you should probably not be in the market. LNKD holders do not like that message. I know one day that will be wisdom and not pain. Its just not today.
    Feb 8, 2016. 01:55 PM | 1 Like Like |Link to Comment
  • 20 Transportation Charts That Matter  [View article]
    "The new historic lows I believe is a realization of this reality as we now have both a supply and demand side issues in the sector"


    Your above quote is a Bingo!

    Did over-lending produce (this) over-expansion? And is it irrational to expect over-leveraged clients to re-produce (or create new?) demand in a slowing global economy? Was credit expansion the source of global expansion?

    If/when over capacity meets flat (or even falling demand); both supply and demand conspire to impact price. Deflation's source is (due to over-lending) oversupply. Those waiting on a PRICE bottom (and a return to the mean) are waiting for BOTH demand to grow; AND SUPPLY TO CONTRACT. Neither is co-operating with (any country's) central bank (low rate stimulus) policy.

    We cannot force China to buy more of the world's goods, and Saudi Arabia cannot force its customers to buy more (if they are already amply supplied) Oil. Both are impacted by falling PRICE. Globalization meets a profitability limit due to supplier and customer over-leverage and market saturation. Company growth is constrained by profitability. Deflation happens. Prices fall until excess supply disappears. Is credit contraction the source of economic contraction? While you can grow your way out of debt, you cannot shrink your way out of debt. Debt goes from a reason of profitability to the reason for losses if/when market growth is not enough.

    Well done. In my opinion your article goes well beyond transportation in its implications.
    Feb 8, 2016. 05:54 AM | Likes Like |Link to Comment
  • Oil Price Is Correlated To Production Not Inventory  [View article]

    Your article is possibly (along with the comments) the best, at least the best I have seen, example of you just (what will predict oil's future price) cannot get there from here . Everybody (and their brother) has an equally un-prove-able reason why YOUR thesis is wrong and THEIR opinion is correct. And NOBODY can prove one method works reliably. Kudo's for putting yourself out there!

    What separates me from all these other learned men? I only know I do not know.
    Feb 7, 2016. 06:44 AM | 1 Like Like |Link to Comment
  • Creative Indestruction  [View article]

    Creative article. How to keep alive things that should be dead. Title's brilliant.

    The subtle difference between charity and (in)solvency is (blood) cash flow or Central Bankers practicing transfusions with leeches. The blood has got to come from somewhere as zombies cannot make their own anymore.

    In the long run will we all be zombies? Nature does not work that way. The living eat the dead in natures world. Not the other way around. We have found creative ways to keep alive what was (should be?) dead. Mary Shelley wrote about that I think. It did not turn out well for the Doctor. I doubt Frankenstein would repeat his experiment.

    The believer's road to (zombie?) heaven (Or is it that other place?) is really paved with negative interest rate loans? And the things that should be alive are sacrificed at the alter of Mad Economists, who think they are really scientists, keeping inflation targets alive?

    Who said economics is a dead science? It can produce eternal life. It just works in reverse.

    Like the article. Love the title.
    Feb 5, 2016. 11:07 AM | Likes Like |Link to Comment
  • Reverse stock split at Frontline fired off  [View news story]
    Its a good and timely comment. It does seem overly skittish as that risk is part of these stocks. The market, however, seems to agree with you.

    Feb 5, 2016. 02:21 AM | 1 Like Like |Link to Comment
  • The Great Skyscraper Bubble Is Ready To Pop!  [View article]

    I agree with you. Timing matters, and declines are a part of the cycle. I am (almost) sure nobody thinks building skyscrapers cause depressions. And markets decline. So, correlation is not causation, and bias will just confirm what is already believed. A cause, however, being understood helps see the (the Wile E. Coyote running out of road moment) when. That's the relevant insight.

    And why I talk of bias is Harry seems a one note bear. That is the problem of timing. Cassandra just inspires panic. Ready to pop for a few years it seems.

    Early is definitely not wrong, however. Early is panic versus preparation. Unprepared is wrong. Late is wrong.
    Feb 4, 2016. 05:13 PM | Likes Like |Link to Comment
  • The Great Skyscraper Bubble Is Ready To Pop!  [View article]
    While not a overly religious man I see Harry sees and has crafted metaphorical datapoints pointing to over-reaching. As the lesson from story's: Pride goes before the fall.

    Its the tower of Babel with Proverbs: self-aggrandizement and errors of judgement.

    Which seems to be a repeating pattern in economic history. Harry's article is a unique long term view. And it makes sense for a man focused on demographics. Neither absurd nor without precedence, but one wonders of bias. If you have a hammer, is every problem a nail? Do you see (only) what you believe, or see what others do not? Are you early or wrong? Cassandra or Joseph?
    Feb 4, 2016. 01:01 PM | Likes Like |Link to Comment
  • Break Oil's Grip On The Market  [View article]
    We agree, one cannot value them (objectively). As more Frackers go under (because of cash flow) the survivors become more and more valuable. That, in my opinion is why this landing is going to be soft. The creditors and entrepreneurs both understand this.
    Feb 4, 2016. 09:41 AM | Likes Like |Link to Comment
  • Don't Be Tricked Into Buying The Oil Bounce  [View article]

    I agree with you. Do (you should) not play the bounce. Its a trap. Oil is headed lower based on fundamentals.

    However, the possibility we are wrong makes for a very lucrative payoff. Big and smart money is on our side. We have, however, a crowded trade problem.
    Feb 4, 2016. 09:37 AM | Likes Like |Link to Comment
  • Reverse stock split at Frontline fired off  [View news story]
    Then thanks for not sharing it. Good logic on the reason to remove it. Either way, the hand for FRO will play out like it plays out. And bluff's work.
    Feb 4, 2016. 09:29 AM | 1 Like Like |Link to Comment