Date: Thu Jun 23 2005 15:21
trotsky (@Buffett) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
Buffett today voiced disagreement with Greenspan on the likely fall-out from a bursting of the housing bubble...and he's of course right. this will become very problematic...financial intermediation will be in big trouble.
Date: Thu Jun 23 2005 15:07
trotsky (@Kudlow) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
good grief, i'm in agreement with him... ( on trade and protectionism, of course ) .
surely the end must be nigh...i agree with professor LK, has the world stopped rotating yet?
spank me, i need ta wake up...
Date: Thu Jun 23 2005 14:09
trotsky (Bizarro) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"Weird scenes in the zinc warehouse,100,000 tonnes of deep storage zinc suddenly shows up for work. "
this is bound to eventually happen in other base metals as well. a lot of inventory exists outside the exchange warehouses imo...hoarded for speculative purposes ( inter alia to goose futures prices on delivery notice days ) . this is btw. nothing new...it's a pattern that has repeatedly occurred in all base metal bull markets.
Date: Thu Jun 23 2005 13:37
trotsky (PoP-eye) ID#248269:
"A message from the IMF,,,, will any one pay attention?"
no.
Date: Thu Jun 23 2005 13:28
trotsky (ForkLift, 9:15) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
yep, we should definitely take everything neo-con central reports on Iraq very seriously. what could possibly be a more impartial source, aside of course from the administration itself? surely the fact that insurgent attacks have doubled over the past year to about 70 per day is a mark of success. the fact that the occupation forces can't even control the 6 mile stretch of road between Baghdad and the airport is probably a minor detail soon to be ironed out.
yes, it's an all-around 'strategic success'...where's the champaigne?
Date: Thu Jun 23 2005 13:10
trotsky (Bleuler) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
Keynes' 'paradox of thrift' is basically complete bullsh*t...there's no need to 'explain' it because it doesn't make sense anyway...
Date: Wed Jun 22 2005 17:56
trotsky (Jack) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i'm astonished that after all the evidence to the contrary, you apparently still consider the present government to represent 'conservatism' ( i'm inferring this from your repeated - and quite misplaced - references to 'liberals' which you suspect ot lurk here ) .
only if conservatism refers to expanding the state and curtailing individual liberty could this be true. is that what conservatism is? classic conservatives ( nowadays referred to as 'paleo' which denotes they're close to extinction ) would strongly dispute this notion.
Date: Wed Jun 22 2005 17:46
trotsky (frustrated) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i think open interest ratios are more important. this is because they reveal the willingness of option WRITERS to bet on a specific outcome, and the writers are the 'smart money' in options.
of course in the rare cases when they are wrong, large moves counter to their expectations tend to occur on account of delta hedging.
Date: Wed Jun 22 2005 17:42
trotsky (Donald,@yield) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i guess one should always specifically point out if one refers to bond prices or yields. the same two islands can of course be seen in reverse on a bond price chart.
so i meant that the FIRST island, which signaled a decline in bond prices was getting underway could be a bear trap that ensnared bond bears, as the second island seems to indicate bond prices have turned back up ( and the trend in yields back down ) .
that said, i'm actually agnostic on the short term outlook, although this is admittedly powerful technical evidence ( a technical formation that FAILS is usually more important in its implications than one that pans out as normally expected. thus the failure of island number one to produce the expected trend change could be seen as a very bullish signal ) . still, the market is overbought and the previous excess pessimism has unwound to a large degree ( see CoT charts and Rydex ratios to confirm this ) . it would be normal to see a bit of a correction at this point. if however the recent technical signals get confirmed by the rally continuing right away, one should probably assume that the REMAINING pessimist positions will be blown out of the water too and that the market will keep rising until it produces clear signs of optimism among market participants. i note that two prominent previous bond bears have recently thrown the towel: Bill Gross and Steven Roach. this could be seen as a short term negative, but otoh if one considers the large following they have, it could just as well contribute to extending the current trend, as more and more bears join in the towel-throwing exercise.
longer term i remain bullish on this market for a number of reasons...i think its recent strength is telling us that the 'reflation' episode of 2002-2005 is only a temporary respite from the bubble workout still to be consummated.
i also have a pet theory that the bond market is worrying about the US banking system's vast exposure to real estate lending - as soon as the housing bubble falters, the banks will change their asset mix by beginning to favor the most creditworthy borrowers rather than the least creditworthy as they are doing now. and the most creditworthy borrower remains the government. so here we have a huge potential untapped source of domestic demand for bonds. btw., if one considers that asset mixes of large investors such as insurance companies and pension funds also move in 'waves' over long periods of time, it is also reasonable to assume that the current asset mix of these investors, which is heavily weighted toward equities, will also return to a more balanced mix in the future , so there's yet another source of demand.
many think it 'makes no sense to accept a mere 4% on a bond with a 10-year maturity' , but as i have mentioned before, this is a matter of perspective. it makes a LOT of sense if this yield falls to 3% over the next year for example - the longer the maturity, the bigger the capital gains one garners ( price movements in bonds and notes are a function of both yield and maturity ) .
inflation expections remain very low - and have in fact been falling in recent months. outright DEflationremains a strong possibility, especially if/when the housing bubble falters. in a deflation, even buying bonds yielding 1% makes sense.
Date: Wed Jun 22 2005 17:15
trotsky (Dabchick@HMY, more) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
one more thing, just BEFORE the last leg down from 9 to 6 commenced, HMY's p/c OI ratio briefly plunged to what i believe was an all time low of 0.16. probably an aberration brought on by expiration , but still noteworthy as it marked the end of a TREND in p/c OI which was down until that point. if you apply trend line to the chart of p/c OI, you will notice that this trend has changed from down to up - just as the down trend in the share price was close to ending.
Date: Wed Jun 22 2005 17:05
trotsky (Dabchick@HMY) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
it's true that the ratio rose to present levels during the last leg of the previous decline; this indicator doesn't flip on a day-to-day basis, but evolves over time. if one looks back further, it also DECLINED to fresh annual lows during the last leg up of the previous rally. in short, it's a medium to long term trend indicator - and it has to be brought into context with the price action. the price action has turned positive, and yet the p/c ratio OI has remained high instead of declining as it has done in previous rallies over the past two years. this indicates that a larger move ( probably lasting several months ) is underway.
putting it in another way - you have to align price movement and p/c OI by moving one of them theoretically forward in time. when e.g. the p/c OI declined during the move down from $17 to $9 it was a sign that another down leg would be coming. it was this final leg down from the last interim high that produced the current pessimism on the part of options players. in short, the last leg down set the stage for the recovery now underway by inducing this pessimist positioning that remains in place in spite of the stock's recovery - this in turn signals that the recovery will continue until this pessimism unwinds.
furthermore, one must note that there is additional evidence that such pessimism is now firmly entrenched. for instance, the recovery of the Rand gold price from below R. 2500/oz. to above R. 2900/oz. has been greeted with many articles expressing doubt. recent headlines included 'SA gold guru still bearish' and 'SA gold mines not out of the woods' to name just two.
so we have a trend change supported by pessimistic sentiment, and it is this combination that is reliable.
Date: Wed Jun 22 2005 16:41
trotsky (Donald@30 year islands) ID#248269:
looks like the first one was a bear trap...
Date: Wed Jun 22 2005 16:00
trotsky (moa) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
this is certainly intriguing, but one thing mentioned in the article immediately triggers the 'polyanna BS' radar - the mention of the magical 'increase in Mid East oil reserves in spite of no new discoveries'.
this is easily explained - OPEC decided to distribute production quotas based on reserves in one year, and reserves in all OPEC countries magically increased by between 60 to 100% the very next year. in short, these are phantom reserves the only function of which was to grab market share according to OPEC's quota system. it has nothing whatsoever to do with magically refilling oil reservoirs ( on the contrary, all indications are that the biggest and most prolific fields like SA's Ghawar are beginning to suffer from exhaustion, as the sharply rising 'water cut' of the oil from these fields attests to ) .
IF the Eugene Island anomaly exists it sure IS an anomaly, since all the other oil reservoirs on the planet seem to slavishly follow the Hubbert production curve; it is also far from clear what the explanation for the phenomenon is , if it exists. i would refrain from automatically assuming 'abiotic oil' to be the culprit...
Date: Wed Jun 22 2005 15:45
trotsky (frustrated, 15:21) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
well, if there was such a big fall in production it's likely to be temporary. the general thrust of agricultural output in industrializing countries is that keeps rising over time. nevertheless there can be periods of falling output, on account of droughts for example.
still, don't want to minimize the looming water problems...water is a vulnerable resource all over the world apparently. i've noticed the frequency of reports pointing to this has increased markedly over recent years.
Date: Wed Jun 22 2005 15:18
trotsky (frustrated@water) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
certainly...one must note though that the migration of water use toward manufacturing is a natural progression to be expected in a developing capitalist economy. also, the alarm over arable land only representing such-or-such percentage of the available land is likely overblown. it doesn't take into account the fact that agricultural productivity has sharply increased and continues to do so. fewer and fewer Chinese will be employed in agriculture over time, and nevertheless agricultural output will keep rising ( even if the arable land acreage declines further ) .
Date: Wed Jun 22 2005 15:03
trotsky (frustrated) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"Farmers are facing a tough new reality: 1,000 tons of water used for irrigation yields crops worth about $200. But the same thousand tons of water used in manufacturing produces goods worth a total of $14,000."
i don't think this statistic can be taken at face value. this sounds as if all that were needed to produce $14,000 worth of manufactured goods is a big bucket of water. what about the other inputs and their cost?
also, the sentence itself is non-sensical. "water produces goods". water, by itself, produces nothing, except perhaps wetness.
Date: Wed Jun 22 2005 14:27
trotsky (Earl @ Crispin) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
'abiotic oil'...'ample evidence'....
ample evidence?? where is it? how come NO-ONE ( not one soul as far as i'm aware ) in the entire oil industry has come across this 'ample evidence', apparently?
there may be reasons to disbelieve and challenge the peak theory, but 'abiotic oil' ain't one of them, imo.
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