Friday, January 3, 2014

2014-01-03 Friday - Markets Are Doomed


At the beginning of this new year, as I look back over the last few years of extraordinary growth in the markets...most startlingly represented by the chart of the SPDR S&P 500 (SPY)






2014-12-12 Friday Update ( 1 Year SPY Chart)


 
2014-12-12 Friday Update (10 Year SPY Chart)




...rather than finding myself elated, as seems the wont of every pundit and talking media figure head, I find myself becoming more and more bewildered, alarmed, and incredulous:

After trim to QE, Fed no less committed to stimulus: Bernanke


I stubbornly refuse to believe that the fundamental forces of a normally functioning, healthy, business cycle have been forever neutralized by the ongoing unnatural influence of the Fed's quantitative easing programs.



In this sense, I proudly proclaim myself to be a member of that seemingly most rare, nearly-extinct, group of...


"Last Bears Standing"


There is a scene at the beginning of the film adaptation of H.G. Wells story, "Things To Come" that echos the growing sense of dread and depression that I feel about the future prospects for continued peace and economic growth in the world:





As just one example of the apparently unfettered growth of some stocks in the market that I find so alarming, see the chart for Bank of the Ozarks, Inc. (OZRK)



How can anyone believe that this type of growth is natural...or sustainable?

To my senses, the world blunders on, caught up in a Quantitative-Easing-as-drug induced narcotic haze of euphoria that ignores the growing future liability, forward-promised, unpaid costs of these extravagant gains.

Somethings doesn't feel right. There's too much discounting of risk. There's a strong stench, in the metaphorical air, of "this time it is different".

The prolific printing & spending by governments to artificially support their economies - and the abysmally transparent machinations of market manipulation by the "unseen hand"...are nothing less than shocking.

This will not end well.

Tuesday, July 2, 2013

2013-07-02 Tuesday - Michael Burry

A recent WSJ article mentioned that Michael Burry (featured in the riveting book, "The Big Short", by Michael Lewis) is raising capital for a new fund.

"In 2004, Burry spotted problems in the subprime mortgage market and, like the hedge-fund titan John Paulson, figured out a way to bet against subprime mortgages by using credit-default swaps"

I found this to be noteworthy, given what I understood to be his previous distaste for the experience of managing other people's money.

I am intrigued by the question of what particular "problem" he may now be focusing his considerable analytical talents upon.

One $441 Trillion possibility?:
Global OTC derivatives market, Interest rate [Forwards and swaps + Options]


source: http://www.bis.org/publ/qtrpdf/r_qs1306.pdf

...or...

A $72.8 Trillion Possibility?



You may also be interested in this talk that he gave:

Dr. Michael J. Burry at UCLA Economics Commencement 2012

Sunday, April 1, 2012

2011-04-01 Sunday - Shipping

Observations:
  • Shippers have suffered substantially - and the 'apparent' economic activity/recovery of the markets since last October's low - and the steady rise in the DOW, NASDAQ, and S&P 500 has not been comparably reflected in the Baltic Dry Index prices.

Suppositions:
  • The 'apparent' economic activity/recovery is a head-fake?
  • The Baltic Dry Index reflects an un-naturally depressed shipping price condition?
  • The Baltic Dry Index accurately reflects shipping demand - and thus the 'apparent' economic activity/recovery will revert to the mean?


The Baltic Dry Index Index[BDIY] closed Friday at 934.00 (up 4.00, 0.43%)

The 52 week range was 647.00-2,173.00

One might ponder what forces would increase the demand for shipping:
  • Investment in transportation infrastructure.
    • Repairing roads, bridges, and railroads
  • New home construction
  • New office construction
  • Increased regional conflicts
  • Decreased oil prices

To balance these considerations, one should also consider what forces would further decrease the demand for shipping:

  • Increased austerity as nations struggle to gain control of their deficit spending
  • Reduced investment in transportation infrastructure in  India
  • Reduced investment in transportation infrastructure in China
  • Increased oil prices
A possible source for maritime news / trends / developements:
http://www.maritime-executive.com/

Some interesting discussion of various shipping company stocks:
http://seekingalpha.com/article/453911-genco-shipping-overvalued-relative-to-baltic-dry-index?source=yahoo

http://www.bloomberg.com/news/2012-03-13/ore-shipping-rates-seen-13-lower-as-china-cuts-target-freight.html?cmpid=yhoo


Tangential questions requiring further research:
  • What is the order trend for concrete?
  • What is the order trend for steel?
  • What is the order trend for aluminum?
  • What is the order trend for coal?

2012-05-07 Update:
Tycoon Fredriksen on ship buying spree
http://www.reuters.com/article/2012/05/08/us-fredriksen-idUSBRE84706620120508
  • "The good days we had are over for quite some time,"
  • "The market will return, but only in two or three years, and until then it's going to be pretty desperate."

  • "When the market goes to hell, it's more of an opportunity than a problem,"
  • "Most of the companies are just not going to make it. If this will last for another two years, and we think it will, a lot of companies will disappear"

2012-12-21 Update:

The BDIY closed Friday at 700
  
Seeking Alpha: 2 Bright Spots in The Wreckage That Is The Shipping Sector 

2013-07-02 Update:

The BDIY closed yesterday at 1,171 - a 67% increase since my previous update on 2012-12-21.
  

2013-12-16 Update:

The BDIY closed Friday at 2,330 - a 98% increase since my previous update on 2013-07-02, and a 149% gain since my original post on 2011-04-1.