Archive for 2009

Iraq objects to Floating Tankers, May Cut Oil Output

Courtesy of Mish

Iraq objects to Floating Tankers, May Cut Oil Output

Floating takers are now the scourge of Iraq. I spoke of floating tankers on Friday in Wholesale Prices Post Largest 12-Month Decline Since 1950.

Here is the pertinent snip:

Crude Oil Daily Futures

Floating Storage

Because of the contango shown on the left, it may be cheaper to buy crude now, assuming one has storage, and storage costs are low enough.

Of course, whether it is wise to stock up now depends entirely on where prices head from here.

Regarding contango, a friend just pinged me with this comment:

"Nordic American estimates that up to 80 VLCC’s (Very Large Crude Carrier) are currently used as ‘floating storage’. I have heard from a shipping company in Hong Kong that they think it is even more, as China has apparently hired many of the old single hull ships to use as floating storage until it can build enough storage facilities on land. There’s a lot of oil ‘floating about’, literally."

 
All things considered, oil prices are due for a pullback and gasoline prices at the pump are likely to follow. Moreover, with the possible exception of food, consumer prices in general will remain under pressure, if not indeed negative on a year over year comparison basis for quite some time as well as falling producer prices pass up the chain.

Please see first link for more discussion of contango and oil prices.

Iraq Calls Floating Storage Unwise

Inquiring minds are now reading Iraq Says Storing Oil in Tankers ‘Unwise;’ OPEC May Cut Output.

Iraq, holder of the world’s third- largest oil reserves, said storing crude in floating tankers was “unwise” and OPEC nations may need to make further production cuts, assuming demand continues to drop this year.

“We don’t think it’s a wise economic decision” to produce oil from secure underground fields then pay to store it in floating tankers, Iraqi Oil Minister Hussain al-Shahristani said yesterday in an interview at the Dead Sea in Jordan at the World Economic Forum. “Future generations can benefit from it better than we can, if we don’t need it.”

Speculation that oil demand may fall further than expected because of the recession were “bad news,” he said. “OPEC will have to reconsider its production levels again,” assuming consumption does continue to


continue reading





Obama Budget Chief Promises Free Lunch, Says “Economy Almost Bottomed Out”.

Courtesy of Mish

Obama Budget Chief Promises Free Lunch, Says "Economy Almost Bottomed Out".

The White House’s budget director says the economy has almost bottomed out and the sense of economic free-fall is over.

Peter Orszag (OR-zag) says that as the economy improves in the months ahead, the nation’s budget will run lower deficits. He also says that the Obama administration’s financial assumptions are going to be updated because of higher-than-expected unemployment rates.

The budget director says President Barack Obama is committed to changes in the health care system this year. Orszag says the president’s plan to provide health care to millions of uninsured Americans would not add to the federal deficit in the short term, and actually reduce it in coming years.

Upfront Costs Complicate Obama’s Health Care Plan

Let’s take another look at Cost of Health Care Plan Soars; Obama might Renege on Campaign Promises.

Costs are emerging as the biggest obstacle to President Barack Obama’s ambitious plan to provide health insurance for everybody.

The upfront tab could reach $1.2 trillion to $1.5 trillion over 10 years, while expected savings from wringing waste and inefficiency from the health care system may take longer to show.

Details of the health legislation have not been written, but the broad outlines of the overhaul are known. Economists and other experts say the $634 billion that Obama’s budget sets aside for health care will pay perhaps half the cost.

I responded with …

So Obama has a plan, and that plan is an estimated 50%, $634 billion in the hole at the outset (the estimated amount over 10 years). However, government programs are always much more expensive implemented than proposed. Therefore, a more resaonable estimate of costs might be 2-5 times greater than proposed. And even if by some miracle the costs come in as expected, the world’s most expensive healthcare system is about to get much more expensive.

This is not a plan, it’s a nightmare.

Can I see the math?

I would like to see how providing health care to millions of uninsured Americans will not add to the federal deficit.

More Free Lunch Keynesian Nonsense

Free lunch theories are coming out of the woodwork (or rather every corner of academia). Latest up to bat is Alan Blinder,


continue reading





The SP500 Really Has to Hold this Level

Courtesy of Corey at Afraid to Trade

The SP500 Really Has to Hold this Level

There’s an epic struggle (maybe not that intense) to hold the rising 20 day EMA on the S&P 500; the battle has already been lost on the NASDAQ.  Let’s take a very quick look at this level and what it might mean.

Just a quick, laser-focused intraday update to state that the 882.49 level ($88.41 in the SPY) MUST be held as support for the bulls for any hope of higher prices in the short term.  A failure here, particularly a close beneath this level should we get a push to new lows intraday, would be devastating and would set-up an almost certain test of the 50 day EMA just beneath 860.

One thing to note is that volume has been light on the retracement pullback which is slightly bullish, though volume has been steadily trailing off since it peaked in early March (a non-confirmation of bullish higher prices).

This is why intraday traders might have been confused as to why price seemed to hold a floor at the 882 level – it’s because the higher timeframe players are battling it out for supply/demand control of this level.  Intraday traders are best served by anticipating key levels like this on their intraday charts.

Watch this level very closely going into the weekend and beyond.

Corey Rosenbloom, CMT

 




Joseph Cassano: the man with the trillion-dollar price on his head

From The Sunday Times, Times Online – a fascinating look into the world of AIG and Joseph Cassano. 

Joseph Cassano: the man with the trillion-dollar price on his head

By Tim Rayment

Excerpt: This is Joseph Cassano. He is the multimillionaire trader accused of bringing down the insurance giant AIG — and with it the world’s economy. So is he a criminal, an incompetent or a scapegoat?

They were frightened for a long time, then suddenly they were angry. For millions of Americans, anxiety about a jobless, debt-laden future turned to disbelief when it emerged that AIG, the company at the centre of the world’s financial crisis, was handing out £300m in bonuses. It was the superpower’s Sir Fred moment. Just as Britain reacted with fury to the disclosure that Sir Fred Goodwin’s pension pot had been doubled as his bank neared collapse, so the US was shocked. The death threats came soon after. “I want them dead!” said one of a stream of messages that caused AIG staff to travel in pairs, park in well-lit areas, and dial 911 if followed. “I want their spouses dead! I want their children dead! I want their children’s children dead! I want the earth upon which they have walked salted so nothing will ever grow again!”…

Can one man in London really be to blame for the collapse of capitalism?

Until now, the economic crisis has been seen as a giant intellectual error, and AIG’s multimillionaire employees in England were simply the people who made the biggest mistakes. The first to own up to misjudgment was Gordon Brown’s friend Alan Greenspan — once so revered in his role as America’s central banker that to be photographed with him was as flattering as being seen now with President Obama. “I have found a flaw,” said Greenspan, referring to his free-market philosophy, after the banks started falling over. “I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Others have repeated this innocent-sounding explanation for the wrecking of so many lives…

There is, however, an alternative reading. This says that the furore over bonuses is a convenient distraction from the real causes of the crisis, which go to the heart of how the world is run. There is dishonesty


continue reading





Weekend Reading

Tyler Durden’s Weekend Reading

  • Egan-Jones takes dim view of Morgan Stanley’s health (Dealbook, hat tip Ubu)
  • Faith based economics (John Mauldin via Ritholtz)
  • So much for the Volkswagen- Porsche merger (Bloomberg) [next stop much wider CDS]
  • Another former NY Pension overseers in Cuomo’s probe (Bloomberg)
  • Joseph Cassano: the man with the trillion dollar bounty (Times Online)
  • Investor sentiment: Is more bulls a good thing? (Technical Take)
  • The long pain in Long Beach (WSJ)
  • The play (Finem Respice)
  • The ungovernable state (Economist)
  • Yet another amusing interview with Myron Scholes (NYT)
  • FHLB shortages papered over (OptionArmageddon)
  • Obama budget chief: signs economic free fall over… [You were expecting?] (Reuters)




Chasing The Shadow Of Money

Courtesy of Tyler at ZH

Chasing The Shadow Of Money

For readers who have the time and interest to follow up on the topic Zero Hedge commenced yesterday discussing money liquidity and the shadow banking system, the best place to start is with Friedrich Hayek’s seminal Prices and Production, published in the depression days of 1935. Curiously Hayek discerned the critical role of the shadow banking system long before the advent of securitization, derivatives and other products that today have caused the monetary supply problem to reach a screaming crescendo. A very salient sample is presented below:

"There can be no doubt that besides the regular types of the circulating medium, such as coin, notes and bank deposits, which are generally recognised to be money or currency, and the quantity of which is regulated by some central authority or can at least be imagined to be so regulated, there exist still other forms of media of exchange which occasionally or permanently do the service of money. Now while for certain practical purposes we are accustomed to distinguish these forms of media of exchange from money proper as being mere substitutes for money, it is clear that, other things equal, any increase or decrease of these money substitutes will have exactly the same effects as an increase or decrease of the quantity of money proper, and should therefore, for the purposes of theoretical analysis, be counted as money.

In particular, it is necessary to take account of certain forms of credit not connected with banks which help, as is commonly said, to economize money, or to do the work for which, if they did not exist, money in the narrower sense of the word would be required. The criterion by which we may distinguish these circulating credits from other forms of credit which do not act as substitutes for money is that they give to somebody the means of purchasing goods without at the same time diminishing the money-spending power of somebody else. This is most obviously the case when the creditor receives a bill of exchange which he may pass on in payment for other goods. It applies also to a number of other forms of commercial credit, as, for example, when book credit is simultaneously introduced in a number of successive stages


continue reading


Tags: , , , , ,




Report: Portugese Authorities Investigating $50 Billion Scam On JP Morgan Chase

Courtesy of John Carney at ClusterStock

Report: Portugese Authorities Investigating $50 Billion Scam On JP Morgan Chase

A Portuguese website reports that authorities are investigating an attempted transfer of 50 billion dollars (36.6 billion euros) from JP Morgan Chase in what might where result would be the biggest fraud ever, rivaling the Ponzi scheme of Bernard Madoff.

According to the webste, Publico, the scam transfer was attempted by an unidentified woman, who presented a bank in Lisbon with an interbank contract for the transfer of 36.4 million euros.

Here (via a Google translation) is the report from Publico:
 
The Financial Information Unit of the Judicial Police (PJ) is also aware of the process.Official source of the prosecutor told the Lusa that "the Central Department of Investigation and Penal Action (DCIAP) is to collect information on the matter."

The Bank of Canada is also investigating the case, according to official sources, which indicated that the process followed for the department of supervision "of the institution led by Vitor Constâncio, confirming also that the way the case is similar to other attempts at fraud detected by the authorities in Portugal.

Contacted by Lusa, PJ’s official source said, however, "is not considered appropriate to comment on specific situations," goes to disclose data on situations of the kind found in recent years in Portugal.

As the amount involved, 50 billion dollars (36.6 billion), is far superior to any other similar case ever found in Portugal, confirmed to the Lusa the supervisor of banks. 

Even if there is a limit to transfers of money from abroad to Ireland and vice versa, the amount is so high that it would do for five lines of high-speed train in Portugal or ten airports in Lisbon. 

If the operation was carried out, would be transferred to Portugal twice the value of the 20 largest Portuguese stock exchange.  "An amount ever seen, is in the Portuguese market or in any place of reference of the world," said a banking source to Lusa.  Indeed, it is not every day that are transferred 50 billion dollars from one country to another and, as another source of market, "seems to play. The value is completely abnormal."

The contract ‘Swift’ [direct exchange between banks] provide for the transfer of that amount between the North…
continue reading





Small Town Chrysler… Memories Served…

Courtesy of Travis at Zero Hedge

Small Town Chrysler… Memories Served…

Chrysler, as you all know, cut 789 of its dealers this Thursday past, roughly a quarter of all its stores nationwide. For me, the news is bitter sweet. Actually- I feel pretty good about it. But more on that a little later.

The next day, General Motors too served walking papers to about 20% of its existing network of dealers.

The Economies of Sale

Not to get too technical or political about it, it’s better for these manufacturers and what remaining dealers are left that there will be fewer stores selling the goods. Why? Less competition. In a struggling business that’s competitive enough with namely Japanese brands like Toyota and Honda out there; no need for other mom and pop domestic shops to whittle down the prices so Joe Blow can get the best deal he can on an American car, with his Edmunds.com invoice printed in hand. It’s just not profitable, for any business, uncompetitive product or not.

Which leads me to the other facet of the car sales equation- factory support. Truth be known, a lot of dealers live and die (well, obviously!) by the factory, the manufacturer itself. Incentives, programs, marketing, floor-plans (how most new cars are loaned and supplied to the dealer’s lots), are all dictated by the manufacturer. Dealers, in most cases, supply the brick and mortar, the staffing, the used cars, the insurance, the local marketing and stuff like that; most new cars you see on the lots are loaned to them- by the factory, in an agreement that largely favors the manufacturer. Every day the car sits, doesn’t sell, is costing the dealer money like an accruing debt. It’s taken into account when they sell the car. Ever wonder why they want to show you a car in the back, covered in dust? It’s to cut a lingering loss.

The manufacturers set the bar every month for each region, each sales district. Dealers large and small strive to meet the demands of the floor-plan, so that they can get their unit spins- bonus money put on each car sold, which can amount to a significant “P” to the monthly P/L report, often times this money makes their month. It’s a bonus, and they’ll give away the store, sometimes even at a loss so


continue reading


Tags: , , , ,




Faith-Based Economics

Courtesy of John Mauldin

Faith-Based Economics

In this issue:
Can I Have Some More of that Data, Please?
The Fault, Dear Brutus, is Not in Our Stars
Faith-Based Economics
Is Unemployment a Lagging or a Leading Indicator?
An Unsustainable Trend in Debt
Some Thoughts on the Health Care Problem

Why does government data need to be revised so often? Is it conspiracy, as some claim, or is it methodology? And if it is methodology that leads to faulty data, then why not change the methodology? Is unemployment a lagging indicator, as conventional wisdom suggests? We look again at the underlying assumptions to suggest that things are not always the same. And finally, we look at unsustainable trends, fiscal deficits, and health care — there is a connection.

Can I Have Some More of that Data, Please?

One of my regular reads is the blog The Big Picture. They featured a short piece by Michael Panzner this week. He put together some rather interesting data and then asked a question, which gives me an opportunity for discussing government data. Let’s see what he had to say, and then I will make my comments.

"Many market-watchers claim that U.S. economic statistics are increasingly being revised downward in subsequent periods, suggesting that the figures initially being reported by Washington are "puffed up," so to speak, most likely for political purposes.

"Well, I went back and had a look at the differences between the reported and revised data for various series, including monthly retail sales, nonfarm payrolls, industrial production, and durable goods orders, to try and figure out if the cynics are right.

"Using data from Bloomberg, I calculated whether the revised data for each month was lower than the first-cut estimate. Then I tabulated 12-month running totals for each series to see if there has been some sort of systematic bias (in other words, whether the pattern of monthly downward revisions was trending higher instead of undulating up and down).

"To make the comparisons easier, I subtracted the 12-month tally as of May 2002 (an arbitrarily chosen date) from the monthly totals for all four economic series so that the starting point for each would be the same — zero.

"Based on a quick read of a graph of the data (see below), it does seem as though the…
continue reading





Herds and rational behavior

Angry Bear’s Rdan cites an interesting article by Brett Steenbarger, Herding Behavior and One-Sided Market Days.  For a close up of Brett’s chart, click here.Ilene

Herds and rational behavior

Courtesy of rdan at Angry Bear

Brett Steenbarger at Trader Feed has an interesting take on rules of the market for the current decade of market of stocks.

In the chart, I’m looking at a moving window of 60 days and counting the number of days within that window that either have 2/3 or more of stocks traded as advances or 2/3 or more as declines (NYSE issues only). So we’re looking at relatively one-sided days in which advances lead declines (or vice versa) by a ratio of roughly 2:1 or better.

In 2000 and 2001, such one-sided days were the exception; because stocks traded in quarter point increments, many issues remained unchanged. The ratio of unchanged stocks to advancers and decliners has steadily fallen over the years. Now, out of over 3000 issues traded, it’s unusual to have 100 unchanged stocks; in 2000, over 500 unchanged issues were the norm.

Interestingly, the ratio of unchanged issues to total issues traded has fallen significantly since July, 2007, so it’s not just decimalization that has led to the shift. Program trading and the inclusion of more stocks in baskets that are traded--not to mention the inclusion of more stocks in ETFs (including leveraged ETFs)--may well account for this phenomenon. Small cap issues are no longer a market backwater.

The average number of issues traded daily since 2000 has actually fallen. Nevertheless, there is far more money--and far more money managers--chasing the same returns. It does, indeed, appear that they are chasing returns in part by chasing each other. Incredibly, we’re getting close to the point where nearly half of all trading days are relatively one-sided…

Continue here: Herding Behavior and One-Sided Market Days

 





 
 
 

Phil's Favorites

The guts of an Apple iPhone show exactly what Trump gets wrong about trade

 

The guts of an Apple iPhone show exactly what Trump gets wrong about trade

The components of an iPhone add up to a different cost than the phone itself. Poravute Siriphiroon/Shutterstock.com

Courtesy of Jason Dedrick, Syracuse University; Greg Linden, University of California, Berkeley, and Kenneth L. Kraemer...



more from Ilene

Zero Hedge

Bonds, Bitcoin, & Bullion Jump; Stocks Dump On Powell-Pullback, Trade-Talk

Courtesy of ZeroHedge. View original post here.

A stunned equity market could not believe that Batman Powell and Doveboy Bullard dared to talk down the odds of a 50bps rate-cut in July...

Ugly day in China overnight after Monday's snoozefest...

Mixed bag in Europe with a weak open but France and Spain rallying into the close (still red on week)...

Ugly ...



more from Tyler

ValueWalk

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

 

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

Courtesy of Vikas Shukla, ValueWalk

Pexels / Pixabay

The trend of vegan food has been gathering momentum in the last few years as people become more health conscious. They have also begun to realize the environmental impact of raising meat for human consumption. According to PETA, it takes an estimated 1...



more from ValueWalk

Insider Scoop

Wedbush Steps To The Shopify Sidelines

Courtesy of Benzinga.

Shopify Inc (NYSE: SHOP) ha introduced multiple new initiatives to spur growth, but the stock's valuation is already full at current levels, according to Wedbush.

The Analyst

Wedbush's Ygal Arounian downgraded Shopify from Outperform to Neutral with a 12-month price target lifted from $270 to $305.

The Thesis

Shopif...



http://www.insidercow.com/ more from Insider

Kimble Charting Solutions

Wilshire 5000 Creating A Triple Top? An Important Breakout Test Is In Play!

Courtesy of Chris Kimble.

The stock market has been on fire of late, rallying up to the edge of price resistance on several indexes. Today, we look at one of those stock market indexes: the Wilshire 5000.

The Wilshire 5000 tracks all of the stocks in the US market, so it is a broad-based index that carries significant importance when gauging the health of the overall US stock market.

Looking at the long-term “weekly” chart above, it is pretty clear that the index is at an important price juncture.

The Wilshire 5000 spent the last 25 years trading within a rising price channel (1)...



more from Kimble C.S.

Chart School

Formula for when the Great Stock Market Rally ends

Courtesy of Read the Ticker.

When valuations for the boring water company or the boring electric company is trading like your Facebook, Apple, Amazon or Netflix or Google (ie FANG) you know something is wrong.

This is when a seriously over valued market is screaming at you.

Of course the reader must understand in a world where money printing goes super nuts (Zimbabwe style) the stock market may go hyper inflationary and picking a time frame for a top is never a good idea, but we are not there yet. There is no Ben Bernanke helicopter money to the masses yet (ie MMT). 

To see when water company's (and such like) are nearing the crazy FANG like valuations a review of the Dow Jones Utility Index channel shows us how history can repeat. The c...

more from Chart School

Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



more from Bitcoin

Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



more from Biotech

Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



more from Our Members

Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



more from M.T.M.

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>