Sunday, November 22, 2009
SNL: Obama's China Visit
It looks like SNL's writers have a much better command of economics than our policy makers.
America's middle class also deserves a wet kiss, an expensive dinner, and a double feature.
link to video
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Thursday, November 19, 2009
No Inflation? Student in the UC System May Disagree
Of course, any one data point is irrelevant, and saying that California has the finances of a third-world country is insulting to many third-world countries. Still, a 32% hike in tuition? Consumer inflation is supposedly nil yet tuition is going up by 32%? I hope those kids don't need to eat or drive to class.
From the San Francisco Chronicle:
The UC regents are expected to put the final seal today on a hefty 32 percent tuition increase as students resume the protests that shut down their board meeting three times Wednesday and required campus police in riot gear to maintain calm.
link to video
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Pop-Up Book of Phobias
Maybe I need to get out more, but I found this very interesting and creative. The only thing missing was a fear of being left behind in the market.
The Pop-up Book of Phobias from donvanone on Vimeo.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Thursday, November 12, 2009
China: Government Planning At Its Worst
Nice work from Al Jazeera highlighting the lengths China has gone to in order to sustain its economic growth. China may have a very bright future, but investors ignore China's expensive stock market, urban real estate bubble, and manufactured economic statistics at their own peril.
The advantage to centralized decision-making is the speed with which decisions can be made. The downside is clear in the following video.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Monday, November 9, 2009
IEA Whistleblower Buoys Peak Oil Theory
There's a terrific piece in the Guardian today entitled "Key oil figures were distorted by US pressure, says whistleblower." The gist of the story is that the IEA has been intentionally overstating future oil supply estimates in order to prevent a panic. Some key passages:
"The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year," said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this."Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources," he added.
A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was "imperative not to anger the Americans" but the fact was that there was not as much oil in the world as had been admitted. "We have [already] entered the 'peak oil' zone. I think that the situation is really bad," he added.
The days of inexpensive and easily accessible oil are over. There is still plenty of oil buried very deep offshore West Africa, Brazil, and in the Gulf of Mexico. Other deep plays are sure to be discovered as well, and the Arctic region holds great promise. The tar sands also hold a great quantity of oil. None of these plays, however, are inexpensive. High oil prices will be required to justify the investment needed to explore and develop these reserves.
These high oil prices will also be the incentive the market needs to develop alternative energy sources. The higher the price of oil goes, the more competitive the alternatives become. Still, this shift will take decades. In the meantime, higher oil prices will be a boon to much of the traditional energy sector.
We are long a number of E&P and energy service stocks. There will be bumps along the way, but energy should be a winner in the coming decade.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Friday, November 6, 2009
Quote Of The Day: Michael Milken
Michael Milken on the usefulness of credit rating agencies:
So if you are relying on rating, then I am not sure why, as a money manager, you should be paid a fee because there isn’t too much value-added you are providing. Besides, people who provide ratings are just human beings. Maybe if they are the most talented in the world, you would have already hired them.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Wednesday, November 4, 2009
Dr. Doom vs. The Investment Biker
Roubini versus Rogers. Let's recap the match to date. First, Nouriel Roubini gets in the ring by himself and starts shadow boxing. He warns that a "wall of liquidity" and "the mother of all carry trades" (via the dollar) are sparking asset bubbles and could lead to another financial crisis.
Next, for some reason Jim Rogers decides to step into the ring, takes offense that Roubini is swinging, throws a quick jab that lands squarely on Mr. Roubini's feelings. More specifically, Rogers said that "Mr. Roubini hasn't done his homework." Rogers claims that there is no bubble in gold, equities, or commodities. Instead, Rogers asserts that they've all simply had a very good year. He then goes on to say that gold could reach $2,000 per ounce in the next decade.
Not to be outdone, Roubini throws a powerful hook intended to knock out Jim's gold fillings. He states that Jim's claim that gold will reach $2,000 is "utter nonsense."
And that brings us to the end of round three. Ultimately, these two publicity hounds both win from this spat given all of the...well...publicity. If their publicists are worth their salt, Rogers will next come out and claim that Roubini's accent is fake. Roubini then fires back that the only bike Jim could ride is a senior scooter. Someone leaks a sex tape...
Let's ignore the personal jabs for a moment and look at the content of what they're both saying. They both make some valid points. Equity markets and many commodities have indeed had very good years so far. Are they cheap? Not many. Are they in bubble territory today? There are a handful of asset classes in select countries that I would argue are in a bubble, but for the most part, most assets are simply overvalued. Jim is right that we don't have bubbles (for the most part) yet, but Roubini is right in warning that the excess liquidity and dollar carry trade will ultimately create bubbles and another financial crisis. See how easy that was.
As for gold, I have more sympathy for Rogers. I'd be curious to know what Roubini has been saying about gold since it bottomed near $260 per ounce in 2001. I may be wrong, but I doubt that he ever expected it to reach $1,080, a four-fold increase in 8 years. Rogers stated that he expected gold to double to $2,000 in the next decade. 7% per year for 10 years will get you there. Whether it happens or not, it strikes me as somewhat naive to call that "utter nonsense," particularly in light of the currency debasement and massive deficits we're experiencing. Actually, when I put it that way, $2,000 gold in the next decade seems practically assured unless Washington suddenly finds religion when it comes to fiscal restraint (no sign of it today with the extension of the ridiculous home-buying credit).
Bottom line: Whether or not we're yet in bubble territory and regardless of whether gold reaches $2,000 in the next decade, this little spat is probably pushing the speaking fees for Rogers and Roubini squarely into bubble territory.
Disclosure: Aspera Financial, LLC has been and remains overweight gold and gold equities.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
Sunday, November 1, 2009
Chart Of The Day: VIX
The VIX index (a measure of implied volatility) put in an amazing performance on Friday, rocketing 24% higher on the session. The index had been trending lower since peaking just north of 80 in late December of last year. On October 21st, it reached its lowest level since September of 2008. Not coincidentally, that was also the day of the stock market's most recent peak. The volatility of volatility was pretty dramatic in October.
Disclosure: Things had become a little too calm for our liking. We initiated a long volatility position on October 19th to increase our hedge position.
The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.
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