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GreenRiver

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  • Gold Market: Is That A Light At The End Of The Tunnel Or An Oncoming Train? [View article]
    Uh, the price action says there are very few buyers.

    Not even the gold bulls.

    The gold bugs don't have enough capital to support the entire market.
    Apr 15, 2013. 08:09 AM | 1 Like Like |Link to Comment
  • Gold Market: Is That A Light At The End Of The Tunnel Or An Oncoming Train? [View article]
    You poor sucker.
    Apr 15, 2013. 08:05 AM | Likes Like |Link to Comment
  • Rail Traffic Trends Are Starting To Slow [View article]
    OK, that's the "worm's eye view", looking at one blade of grass (my business). Looks like a "green shoot" to me.

    How does the landscape look from 30,000 feet?
    Apr 15, 2013. 07:59 AM | 1 Like Like |Link to Comment
  • Rail Traffic Trends Are Starting To Slow [View article]
    The racing business is very cyclical, every professional team operates on an annual cycle. Sponsorship contracts (or not) are renewed in late summer - along with driver contracts, etc. - this is what we refer to as "silly season." The season ends in mid-November; teams get their first funding for the new contract (the next season) around Dec 1 and they start preparing for Daytona. Obviously, the major teams such as Joe Gibbs Racing, Penske, etc. know they'll be fielding cars the following year, but until the driver, crew chief, and car are all signed up they don't start ordering the consumable items, so there is a great deal of new activity around Jan 1. For the sprint and Indycar, action doesn't really heat up until a little later. Fortunately, I have annualized purchasing agreements on a lot of part numbers, so we build inventory in Nov, Dec, and Jan; right now, I'm way behind and late on some deliveries.

    A few years back, there was a major consolidation among the NASCAR teams, so employment in the area dropped substantially, I'd say about by about 1/3. But even though there are few teams, they still consume about the same amount of parts.

    Among the non-racing customers, business is a lot less, but still somewhat, cyclical. One of the quirks of American industry, apparently, is that nothing of any real importance gets done between Thanksgiving and Christmas. Come Jan 1, though, everyone gets back to business and thinking about what they're doing now, and the orders start coming in.

    I've only lost one major customer over the last few years, a local go-kart wheel manufacturor. I was doing a lot of production turning (CNC lathe work), and at a dirt cheap price. It was pretty low precision stuff, and I was intentionally pricing the work lower than anyone would bid as a new order, so the only risk on that account was that they decided to take the process in-house. Which they did, about 2 years ago.

    One other major customer, the pharma mfgr, was in the past a division of Pfizer. When the crunch hit, they notified all vendors that terms were unilaterally changed from Net 10 to Net 45. Some bean counter somewhere looked at their accts payable and decided they could hold the money for an extra 35 days and get some yield on it. Of course, Net 10 gets you really good pricing (my usual terms with customers is Net 30); Net 45 gets you really crappy pricing. SO, they get to hold the money for 35 days and earn a fraction of a percent but pay 10-20% more for their orders. Everything I do for them is on a 'bid - order - make - deliver' sort of basis, one time orders for tooling, gages, etc that they need at the time.

    Also about that time, Pfizer decided to sell the division, and in order to dress up the financials pretty much put a stop to any new R&D at that plant and it became maintenance only, so my volume of work with them slowed to a trickle. The division was sold last year to (I believe) a private equity firm, who are pretty much 'hands off' owners, and now I'm starting to see some increase in request for quote.

    I've picked up a few new customers since 2009; the shock absorber sister companies the most notable, but my customer base is pretty stable, it's not a large number, and they keep me very busy.

    The most interesting new customer is the aerospace / defense contractor. It's really true that "if you build a better mousetrap, the world will beat a path to your door." I'm a very small (400K annual sales, me and 2 part time employees) business; but smebody who knew somebody knows me, and they had a need they couldn't meet from one of their existing vendors, so one of their engineers contacted me out of the blue. Obviously, due to confidentiallity agreements, I can't mention them by name, or any of the other customers.

    Not to bad, considering that I started as a sole proprietorship in 2005 and incorporated in 2007. I held my ground through the housing bust / recession, despite everything, my sales have increased Y-o-Y every year since I opened my doors.
    Apr 14, 2013. 08:01 AM | Likes Like |Link to Comment
  • Here's What Happened The Last Time The Fed Owned All Outstanding Treasuries [View article]
    In 1916 my grandfather worked in a cotton mill for $.05/hr.

    Do you want to go back to $.10 cokes and $.05/hr jobs?
    Apr 13, 2013. 05:10 PM | 3 Likes Like |Link to Comment
  • Rail Traffic Trends Are Starting To Slow [View article]
    I was thinking about the comparisons between this year and last, the week of Easter this year and the week of Easter last year. A couple of other factors may be playing into this, it would be hard to suss out all of the details.

    One is that these are the last week of Q1 and the first week of Q2. Not sure how that would play into this.

    The other is that the weather, both in the Continental US and in the Eastern Pacific can also have an effect on week-to-week intermodal volume. Heavy snow in the mountain west or northern tier would slow shipments; storms that delay ships arriving in port could too.
    Apr 13, 2013. 05:02 PM | Likes Like |Link to Comment
  • Rail Traffic Trends Are Starting To Slow [View article]
    LT-

    There is a lot of racing industry related work, which finds you no matter what you do, and a lot of industrial demand as well. Among my customers are:

    a pharamceutical manufacturing plant (tooling)

    a local shock absorber manufacturor (product components) and the sister company, a defense contractor that provides shock absorbers for military and special purpose vehicles (prototypes and product components)

    a racing cam manufacturor (we provide cores - blanks ready for final grinding). Through this customer, I provide cam cores for R&D projects for a major OEM in the transportation sector.

    a major aerospace and defense / engineering company (prototypes)

    two regional manufacturing engineering companies (the design the machines and assemble them, we provide machined components)

    several local race teams

    And whatever else walks in the door.

    I do need help, but the quality of the local workforce is pathetic, and I've tried out several "experienced machinists" but found them lacking. "Experienced machinist" is a euphemism for someone who's been in the trade for 20 years, but hasn't kept their skills and training up to date with current technology. My best bet would be to hire some kid right out of high school as an apprentice, which works for about 4 or 5 years, then the take their experience and training to one of the large local manufacturors, such as Freightliner Trucks, Siemens, Ingersol Rand, etc.

    When people see low wage manufacturing going off shore, they don't really seem to care but they are only seeing the tip of the iceberg. What is also going off shore are all the high wage supporting jobs, engineering, techinical, precision manufacturing, tooling, heat treating, etc. Because when a manufacturing plant is built in China, all the manufacturing tooling and equipment are sourced in China. This is why China wants low wage manufacturing - they could care less about $2/hr factory jobs - but those $2/hr factory jobs foster the development of engineering, machining, metallurgy, and all the rest of the technical infrastructure that support the manufacturing sector.
    Apr 13, 2013. 04:19 PM | Likes Like |Link to Comment
  • Hatzius: The Deficit Will Decline Substantially In Coming Years [View article]
    > "How does government spending create jobs"

    Chris-

    Government spending is merely a choice by the citizens to make some purchases collectively rather than individually. We choose to fund roads as a "group buy" rather than each of us purchasing a mile or two for our own use.

    It would make no more sense to ask "How does private spending create jobs."

    Spending doesn't create jobs. Production to fulfill demand creates jobs, this the supply-siders had right, and it doesn't matter if that demand is from an individual to purchase a car, or from all of us acting collectively to send a man to the moon. Jobs are created either way. Ask an aluminum mill worker in Tennessee whether or not the money the TVA spent in the 1930's is or isn't still creating jobs today.

    Regarding your analogy, economic activity is like the flow of water in a river, not water standing in a pool. It is the FLOW of the water that improves the lives of the fish in the river (us). If all of the water in the ecosystem had flowed to the lowest point and stayed there (the pockets of the wealthy), that is stagnation.. We could sit around and wait for time, the weather, evaporation and rainfall to move the water back to the top of the hill, but by that time all the fish in the river might well have suffocated or starved to death.

    Wouldn't it be better to pump the water back to the top of the mountain, artificially for a while if necessary (until the drought passes), and let it flow back down through the watershed (and end up right back where it started anyway), than to let the entire river's ecosystem (our economy) collapse?
    Apr 13, 2013. 08:09 AM | 11 Likes Like |Link to Comment
  • Rail Traffic Trends Are Starting To Slow [View article]
    How does the weather in the northern tier and off the west coast of the US compare for the weeks in question?

    Spring came much earlier last year in much of the US too.

    It's just not possible to read much, if anything, into any individual weeks' numbers.
    Apr 12, 2013. 11:07 AM | Likes Like |Link to Comment
  • Rail Traffic Trends Are Starting To Slow [View article]
    Strong week, followed by a weak week. Sounds like noise to me. Trying to find significance in a week-to-week data set seems futile.

    I own a machine shop, I'm absolutely buried with work. To the point that I am refusing requests, or submitting sky high BS quotes if I'm required to price the work, ridiculously long lead times. All the shops in my local area are similarly busy, I can't even find anyone to sub out the extra volume too. All my vendors are running flat out too.

    We might be shipping less intermodal freight, which implies slower imports, but domestic manufacturing seems to be (at least in my local area) strong.
    Apr 12, 2013. 10:30 AM | Likes Like |Link to Comment
  • Rail Traffic Trends Are Starting To Slow [View article]
    And Easter fell on March 31 this year - was last week's reading particularly weak compared to this weeks? If you want to back out the effect of those two holidays, compare this two weeks containing easter to each other, and the two weeks not containing easter.

    Do Chinese shipping companies observe the Easter Holiday?

    I suspect that container ships, ports, and railroads move goods on Good Friday. Easter too, July 4, Thanksgiving, and maybe even on Chismas Day.
    Apr 12, 2013. 08:46 AM | Likes Like |Link to Comment
  • Cyprus Gold Sale Misinformation - Is Everyone Out To Get Gold? [View article]
    DESIRE for physical Gold is still growing.

    Demand is a whole different ball game. For the rest of the commodities complex - agricultural, energy, and industrial metals, even including silver, platinum, and paladium - demand is driven by consumption. Without the continued extraction or production of these materials economic activity would be reduced or halted.

    "Demand" implies true need and true consumption.

    Not so with gold. Very little gold - less than 10% of annual production - is required for industrial use, mostly in the electronics industry. The rest is purchased, and sits, gathering dust, in a vault somewhere or is hanging around a bride's neck in India. This is not DEMAND. There is certainly a desire, on the part of investors, speculators, survivalists, young women and old men, to own gold. But it is NOT a necessity. It's a luxury, either in the portfolio or around the neck of those who have spare wealth to invest.

    But that's not demand. It's desire. And the only reason for the gold price to go higher is for people's desire for it relative to other purchasing choices.
    Apr 12, 2013. 07:34 AM | Likes Like |Link to Comment
  • Cyprus Gold Sale Misinformation - Is Everyone Out To Get Gold? [View article]
    Demand and desire aren't the same thing.
    Apr 11, 2013. 02:38 PM | 2 Likes Like |Link to Comment
  • Here's What Happened The Last Time The Fed Owned All Outstanding Treasuries [View article]
    It's kind of hard to have faith in any conclusions based on an analysis of US Treasury Bond debt in this period that does not even mention WAR BONDS.

    "Over the course of the war 85 million Americans purchased bonds totalling approximately $185.7 billion."

    US Treasury debt outstanding at the end of 1945 was about $240B by comparison.

    The effect of a wartime economy, rationing, issuance of immense amounts of non-Treasury debt, etc. make the comparison between the period the author discusses and this one meaningless. Not to mention that by the end of the war, the industrial capacity of the rest of the world was zilch. Or that the US had the ONLY functioning monetary system on the planet.

    I could go on, but why bother.
    Apr 5, 2013. 12:48 PM | 4 Likes Like |Link to Comment
  • Sell Your Gold And Silver Now [View article]
    > "In the West, we print more paper money and sell gold while, in the East, they continue to trade in this same paper money for dumb 'ol gold that just sits there and provides no return."

    That's not the whole story, the rest of the story is what they did in order to GET the same paper money in the first place. They exchanged blood, sweat, and tears for it, in the form of trade goods sold to the West.

    So what the East is trading to the West for "dumb ol' gold" isn't worthless paper, but work and resources that could be put to other use, like not living in a dirt floored shack and spending your days staring at the south end of a northbound waterbuffalo. But instead, they'll dig a hole in the floor of the shack to bury the gold in.

    Not the best use of valuable resources.
    Apr 4, 2013. 01:36 PM | 2 Likes Like |Link to Comment
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