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  • Russia plans first bond issuance since sanctions  [View news story]
    Two words. Currency and Putin.
    Feb 9, 2016. 10:41 AM | Likes Like |Link to Comment
  • Commodity crisis may get worse before it gets better, Anglo CEO says  [View news story]
    Is he talking mid 1980's type of commodity trading? If so then we aren't yet close to the bottom on either commodities or mining shares.
    Feb 8, 2016. 12:30 PM | Likes Like |Link to Comment
  • Suncor wins 73% of Canadian Oil Sands shares, says takeover a done deal  [View news story]
    Canadian Oilsands shareholders have dodged the bullet. They got taken out before they had to deal with the problem that their heavy oil facility is very old and needs major upgrading. That is now Suncor's problem.
    Feb 8, 2016. 11:17 AM | 4 Likes Like |Link to Comment
  • Revisit #4 To 'The Stock Market Correction Is Underway'  [View article]
    Interesting article. My only observation is that you call the current downturn a correction. Does that mean when the market goes up it is a mistake?
    Feb 8, 2016. 11:12 AM | Likes Like |Link to Comment
  • Revisit #4 To 'The Stock Market Correction Is Underway'  [View article]
    You would be wrong about that. Most big fund managers read seeking alpha for entertainment.
    Feb 8, 2016. 11:11 AM | Likes Like |Link to Comment
  • Stocks begin the week with sharp losses  [View news story]
    In case no one's noticed over the past couple of months Monday's have usually been pretty bad for the market. The reason: People read over the weekend and think about the problems and push the sell button Monday morning. The market tries to rally the rest of the week only to be whacked again the next Monday. This is not the stuff of a bull market.
    Feb 8, 2016. 10:36 AM | 1 Like Like |Link to Comment
  • Stocks begin the week with sharp losses  [View news story]
    China's foreign currency reserves are what differentiates it from Russia. Which is to say that China is not at any risk of default as a country. It does not mean that they can't have a major financial crisis. The situation is similar to Japan in 1990. It has been 25 years since that crisis and Japan's stock market is still nowhere near its peak valuation.
    Feb 8, 2016. 10:15 AM | 1 Like Like |Link to Comment
  • Stocks begin the week with sharp losses  [View news story]
    Nicely put apt10. I fear however that the Fed has become like the BOJ. A eunuch in a harem.
    Feb 8, 2016. 10:05 AM | 1 Like Like |Link to Comment
  • Russia plans first bond issuance since sanctions  [View news story]
    China is the only buyer of Russian debt and it is really just payment for gas and oil delivered. The bond issue itself is just scenery to make it look like Russia still has access to credit markets. Anybody who thinks someone other than the Chinese are going to be repaid is naïve.
    Feb 8, 2016. 09:56 AM | Likes Like |Link to Comment
  • North Korea faces fresh sanctions, defense buildup  [View news story]
    No reason to fuss. Kim Jong Un just needs a satellite feed for Disney Channel. He has pulled the plug on his cable.
    Feb 8, 2016. 09:50 AM | Likes Like |Link to Comment
  • Smelling The Recession  [View article]
    It is possible that a recession will be avoided but there is little doubt that job growth is slow. Thus a burst of growth towards 4% is unlikely.

    What has been talked about but not adequately analyzed is the fact that financials everywhere in the world are underperforming the market by a wide margin -i.e. most financials are down around 25% from their highs. On the surface loan losses, although they have stopped falling, are not yet rising. The market action suggests that loan losses are about to surge. Oil loans are the logical starting point but oil loans are not a big part of bank loan portfolios. Source two is collateral damage from bad oil loans (for example mortgage loans in oil regions or commercial loans in oil regions). Perhaps these two sources are enough to explain the poor performance of financials.

    But maybe there is something bigger going on. Perhaps China is on the verge of its own 2007-8 financial crisis. We know that China is overbuilt and that this could back up into their financial system. What we don't know is whether this can be contained in China or will it encompass the global financial system. My guess is that China will not go down alone.

    Could a financial crisis trigger a global recession. Absolutely.
    Feb 6, 2016. 11:59 AM | 3 Likes Like |Link to Comment
  • Why Dip Buyers Will Get Clobbered: The U.S. Economy Isn't Doing 'Just Fine'  [View article]
    The elephant in the room this time is student loans. I will say it here. There are big losses hidden in the student loan bubble.
    Jan 27, 2016. 10:24 AM | 7 Likes Like |Link to Comment
  • Why Dip Buyers Will Get Clobbered: The U.S. Economy Isn't Doing 'Just Fine'  [View article]
    That is a good point. The auto loan market is a drop in the bucket compared to housing.
    Jan 27, 2016. 10:22 AM | 3 Likes Like |Link to Comment
  • Why Dip Buyers Will Get Clobbered: The U.S. Economy Isn't Doing 'Just Fine'  [View article]
    I don't care about Stockman's predictions on the market. I care about his analysis. He points out risks it is up to everyone else to decide what to do about it.
    Jan 27, 2016. 10:20 AM | 7 Likes Like |Link to Comment
  • Why Dip Buyers Will Get Clobbered: The U.S. Economy Isn't Doing 'Just Fine'  [View article]
    Everything is correlated. If banks say that 2% of their loans are oil related it is safe to assume that an additional 6% of their loan book will experience well above average losses. So in round numbers 8% of bank loans are going to show losses.

    And what does this mean? Banks earn about 1% on assets so if they right off 1% of their loan book it is like they make no money that year. Thus the market will immediately drop bank share prices by the amount of this loss. If bank A is trading at $50 and earns $4/share the amount of the loss would be $4 or 8% of the value of the stock.

    So where are we now? Bank share prices are down about 20% from their highs which suggests the market is expecting the banks to experience loan losses something like 2.5% of assets.

    Will this kill the banks? No but it means they need about 2.5 years of earnings to get back to where they were.

    In the grand scheme of things there is a reason banks trade at low multiples. Their earnings are always overstated.
    Jan 27, 2016. 10:16 AM | 7 Likes Like |Link to Comment
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