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  • Considering Ayn Rand's philosophy holds that laissez-faire capitalism is "the only moral social system," it's not surprising that Ayn Rand Institute's Yaron Brook thinks the economy is sputtering because the U.S. government's response to the 2008 crisis was too heavy-handed. "We should have let banks fail, let auto companies fail [and] let housing prices tank to reach their true bottom."  [View news story]
    Ayn Rand must live in a castle with a moat and own lots and lots of guns. And eats iPads.
    May 9, 2011. 05:32 PM | 8 Likes Like |Link to Comment
  • Jeremy Grantham's latest essay, an apocalyptic description of a planet running out of resources, is either a wake-up call or the mother of all sell signals. One hundred years of commodity price declines have been wiped out since 2002, says Grantham, contending a similar length uptrend is now in place.  [View news story]
    I'll do it.

    The technologies to rapidly increase our food, water and energy production already exist but the cost and ROI is not in place to take advantage of them, i.e. as demand increases, and prices rise, competitive technologies will become price competitive and can then be adopted.

    I.e, Grantham is Malthus, 213 years late.
    Apr 25, 2011. 07:01 PM | 8 Likes Like |Link to Comment
  • Despite further deterioration in Egypt over the weekend - military jets buzzed the capital and opposition figure Mohamed ElBaradei claimed the departure of President Mubarak is "non-negotiable" - the Saudi stock market traded up 2% Sunday, perhaps portending a better than feared open for U.S. markets on Monday.  [View news story]
    I think its funny how the author absolutely trivializes the gain in oil like its completely insignificant because of the context that the move brought it back to where it was trading a short time ago.
    Jan 30, 2011. 12:19 PM | 8 Likes Like |Link to Comment
  • Obama's use of competitiveness as a theme for the State of the Union may be smart politics but is "a misdiagnosis of our problems [that] could lead to policies based on the false idea that what’s good for corporations is good for America," Paul Krugman writes. "We’re in a mess because we had a financial crisis, not because American companies have lost their ability to compete."  [View news story]
    Really? In a world where labor prices define competition and America is failing at bringing its innovations to market better than the competition, how is american competitveness not a problem....
    Jan 24, 2011. 06:30 PM | 8 Likes Like |Link to Comment
  • The U.S. tax code has slowly been turned into a temporary patchwork of provisions that must be tweaked every year or two, John McKinnon writes, depriving individuals and businesses the predictability needed for long-range planning. Now, the tax-cut deal could turn the whole income-tax system into something of a temporary structure.  [View news story]
    The tax code not only needs an entire rewrite but it's volume is so large and complex even the IRS can hardly keep up.

    Unfortunately, a rewrite is out of the question since it would take bi-partisan support. After witnessing "financial reform", and "healthcare" we can pretty be sure that any such endeavor would result in a cataclysmic failure.

    Simpler is better but we no longer understand that. More language, more specific, means more loopholes, more wiggle room. A simpler tax code will also make pretty damn clear what is supported and what is not.
    Dec 14, 2010. 07:18 PM | 8 Likes Like |Link to Comment
  • After a bruising week, Pres. Obama will hold a one-day summit on Wednesday for corporate CEOs, hoping to persuade some of the companies to start using their collective $1.9T of cash for expansion and new hires. Invitees include GOOG, CSCO, IBM, AXP, PEP and more.  [View news story]
    When Obama's stint as President was still just beginning I remember reading "The Great Depression Ahead" by Harry Dent which was a pretty interesting read and very close to spot on in many of its projections.

    I said to myself, "if this guy is right, then Obama is going to be President of a country entering a structural, qualitative, downturn that will not be resolvable with simple political and economic tricks", i.e. neither the Obama nor Bernanke would be able to stop and turn things around, no matter what they do.

    I'm not completely pessimistic about the outcome of these discussions, however, since I don't believe the world is mathematically quantifiable and projectable and I believe with the right applications of pressure real change can be effected, O in this instance is just playing another one of his cards. Hopefully, his hand is a good one.
    Dec 11, 2010. 10:49 PM | 8 Likes Like |Link to Comment
  • While there are "dark warnings" that the U.S. is becoming like Japan, what's wrong with that? asks Zachary Karabell on Reuters. Sure, Japan has "chronic deflation, a sluggish job market, an aging population, an insular culture and (stagnant) growth." But its citizens are are prosperous and healthy, and have a high life expectancy, "democratic government is orderly and ordered," and the country has an efficient bureaucracy. [View news story]
    What's wrong is that our economy may enter a deflationary cycle like Japan's but in the end, we aren't Japan.

    Our healthcare, tax collection, monetary policy, defense budget, energy profile, natural resources, population density are very different and the end result of entering into a Japanese style malaise may not have us end up in Japan's shoes.
    Feb 24, 2013. 08:46 AM | 7 Likes Like |Link to Comment
  • The CME cuts the initial margin for gold (GLD) to $5,940 from $6,600 and silver (SLV) to $10,450 from $12,100. Maintenance margins are cut by a similar ratio for both metals as well. [View news story]
    This pertains to trading in Futures contracts. Futures contracts are a way of making bets directly on the underlying product, which in this case is gold.

    If we take the gold contract specifically, a single contract reflects "100 troy ounces" which, when you buy the Futures contract, you are making a commitment to purchase in its entirety on the expiration of the contract. Since the actual value of 100 troy ounces is rather significant, you can see how this may be a problem for most folks.

    However, in many cases, speculators trade the contracts without any intent of actually taking delivery. Because the contract reflects such a large amount of product, it provides rather a lot of trading leverage to help one make - or lose - money rather quickly.

    When you take a position on a futures contract, the CME requires you have a certain amount of cash set aside as insurance, since it is a risky, highly leveraged, trading vehicle. This cash is referred to as 'initial margin' for your initial opening of your position.

    In this case, the CME margin used to be $6,600 but was reduced to $5,940.

    Why this is important:

    Trading brokerages will often have their own margin requirements for traders, who tend to day trade futures, but the CME's margin requirement is important for anyone who wants to hold a contract after the market 'closes'. When markets 'close' , anyone with an open position in futures has to have enough margin money to cover each contract. In this case, for gold if you had 10 contracts you needed $66,000 worth of margin cash in your account to maintain the position on the 10 contracts. The total amount of 'open' contracts held after market close in a future is called 'open interest'.

    That's been changed to $5,940/contract, or $59,400 for ten. This effectively frees up $660 per contract, allowing you to invest it elsewhere, perhaps in taking a larger position.

    The CME claims it adjusts margin based on volatility in the futures market, reducing margin when volatility is low and increasing margin when volatility is high. You'll find rather more sinister opinions around the internet, but it seems to work that way for the most part.

    The end result of decreasing margin tends to be more trading in the product, more 'open interest', more fees collected for CME. It also seems that low volatility + reduced margin often results in the future getting bullish, which may happen here, but no one can predict market movements with perfect accuracy so be careful.
    Feb 8, 2013. 03:42 PM | 7 Likes Like |Link to Comment
  • Nokia (NOK +0.2%) will post a €0.25/share loss next year after losing €0.34/share this year, predicts BMO's Tim Long, who's downgrading shares to Underperform and valuing the company at just $2/share (purely on account of its cash and patents). Long predicts Nokia's Lumia phone sales will come in at a disappointing 20M in 2013, a figure that will fail to offset an expected 15% drop in industry feature phone sales. (prior downgrades[View news story]
    "a figure that will fail to offset an expected 15% drop in industry feature phone sales"

    Should we take him seriously when he doesn't state where this 15% drop is coming from? I suspect he is extrapolating prior share losses of featurephones to smartphones forward, but that number seems huge, and without any support to the comment, I'm inclined to write off his opinion as abject guessing.

    I think Nokia is going to catch a lot of these 'analysts' by surprise. Yes, I'm long Nokia.
    Sep 25, 2012. 11:49 AM | 7 Likes Like |Link to Comment
  • The first reviews for the Tesla (TSLA) Model S start to pour in, largely on the positive side. The electric vehicle boasts impressive acceleration, a smooth ride, and a massive infotainment system chock full of delights, according to the writers. With demand for the model uncertain, and its success seen as an all-or-nothing watershed moment for the company, early buzz on the car is viewed as critical. (Reviews: Engadget, Motor Trend, Wired, CNET[View news story]
    The S has a range of 260 miles, well under the average US commute.

    Charging tech is far more advanced than you realize with 15min recharges to 80% capacity already available.

    Charging stations - and mobile phone 'apps' to find them - are popping up everywhere. It doesn't take much planning to perform long range trips on electric power anymore.

    Most of the free recharge stations in my area are always occupied, and the private sector is filling the need for more every day.
    Jun 23, 2012. 10:34 AM | 7 Likes Like |Link to Comment
  • The Reagan tax cuts, still controversial 30 years after being signed into law, were highly stimulative, but only because the economic circumstances of the time - high inflation, high tax rates - made it so, Bruce Bartlett writes. Reenacting some version of the tax cuts under today’s conditions - near-zero inflation, low tax rates - would not bring about similar results, he says.  [View news story]
    He means that that folks won't be spending more because of a tax cut since they don't pay any taxes now anyway since they don't make enough money to since the economy sucks.
    Aug 15, 2011. 06:29 PM | 7 Likes Like |Link to Comment
  • Geithner says "we're running out of time" to raise the debt ceiling. Bernanke says failure would be "calamitous." Pres. Obama says seniors might not get Social Security checks without a deal. But, Kurt Brouwer asks, isn't this the same gang who said TARP, the stimulus, Obamacare, QE1 and QE2 would fix things? Is it any wonder that Americans "just do not trust our leadership anymore?"  [View news story]
    Politics are so polarized in the US I got int'l friends and associates calling me up asking what is going on. Everyone wants to know if the US will default and what the repercussions will be on their own sphere.

    Basically, the rest of the world is already panicking, and we aren't anywhere closer to resolving the issue.
    Jul 14, 2011. 06:32 PM | 7 Likes Like |Link to Comment
  • Just wait for Q2 earnings, optimists said back in June - and after an ugly jobs report, bulls are doubling down on that hope. But estimates are down 4.3% from a May 13 peak, Dave Kansas notes, and financials could be especially disappointing; maybe too much pessimism has become too much sunshine. Still, won't it make earnings surprises more likely?  [View news story]
    With purchasing power and wages down while jobs are not being created, it's hard to be optimistic on many sectors of the economy.
    Jul 9, 2011. 08:50 AM | 7 Likes Like |Link to Comment
  • Inflation? Just look at the deflation all around you - cars, clothes, home energy, hotel stays, furniture and appliances, electronic gadgets of all kinds. "There's no grand conspiracy to keep the headline number down," Matt Busigin writes.  [View news story]
    my rents are going down - middle/working class tenants and seniors. I'm experiencing deflation but somehow all the numbers out there claim rents going up... housing costs are declining in every space in my opinion.
    May 20, 2011. 06:10 PM | 7 Likes Like |Link to Comment
  • House Speaker John Boehner raises the bar in talks over the U.S. debt ceiling, telling the Economic Club of New York that spending cuts must exceed any boost to the borrowing limit. Also, "raising taxes is off the table" because it would "have a devastating impact on our economy." The debt limit debate in Congress is now seen as stretching into July.  [View news story]
    Which part is political posturing and which part honest discourse...
    May 10, 2011. 10:06 AM | 7 Likes Like |Link to Comment