An Exchange for Physical (EFP) is the simultaneous selling of a stock and buying of a Single Stock Future or the buying of a stock and the selling of a Single Stock Future. It allows the swap of a long or short stock position for a Single Stock Future (SSF)
1. You Are Long Stock On Margin And Would Like To Reduce Your Financing Rate
Interactive Brokers is extending a margin loan against your long position and charging you between 0.15% and 1.5% over the LIBOR benchmark rate (5.307% as of 06/14/07), depending on the size of your account. With an EFP transaction you can reduce this financing expense:
2. You Are Short Stock And Would Like To Increase Your Return
The situation is equally compelling if you are carrying a short stock position. On an ordinary short stock position, Interactive Brokers pays you a short rebate which represents interest on the proceeds of your short sale in excess of $100,000. These proceeds may not be withdrawn as they serve as collateral against your obligation to cover the short position, and in addition you must also post margin.
The short interest rebate paid by Interactive Brokers is 1.25% to 0.15% less than the LIBOR benchmark, provided that the stock is freely available to short (If the stock is difficult to borrow, the discount to the benchmark rate is greater and in some cases may exceed the benchmark so that the holder of the short position may have to pay the lender of the stock).
3. You Want to Receive a Greater Return on Excess Cash in Your Account
EFPs involving Single-Stock Futures can also help you simply receive a better return on unused cash sitting in your account.
If you have excess cash in your account, Interactive Brokers will pay you interest on the cash balance over $10,000, at a rate between 0.15% and 0.50% less than the benchmark rate. As of 06/14/07, that would be 5.157% to 4.807%. You could increase your return on this cash through an EFP -- offering to buy a stock and simultaneously selling it forward (using a Single Stock Futures contract) at say 5.21%.
-----------------------------
Liffe is the leading international derivatives business of the NYSE Euronext Group, the transatlantic exchange formed in 2007.
Liffe operates regulated, high-tech markets in Amsterdam, Brussels, Lisbon, London and Paris where every day approximately two trillion euros worth of derivatives business is traded by customers from around the world.
http://www.euronext.com/trader/priceslistsderivatives/derivativespriceslists-2721-EN.html
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Product Highlights
http://www.interactivebrokers.com/en/general/education/highlights.php?p=p
SINGLE STOCK FUTURES
Hong Kong Futures Exchange
STOCK FUTURES
USA * OneChicago
STOCK FUTURES
Germany United Kingdom
* EUREX (DTB)
* London International Futures & Options Exchange
* London International Futures & Options Exchange Universal Stock Futures
FUTURES
Australia Hong Kong
* Sydney Futures Exchange
* Hong Kong Futures Exchange
Japan Singapore
* Osaka Securities Exchange
* Tokyo Stock Exchange
* Singapore Exchange
South Korea
* Korea Stock Exchange
----------
The difference of $0.1303 at the prevailing dividend of 25 cents a share is more than wiped out by the eventual convergence of the basis to $0.00 on Aug. 14, 2008. The closing basis on July 14, 2008, was 23 cents a share. The net result was a realized basis gain almost 10 cents a share greater than the interest rate differential at no risk.
Some might say 10 cents a share is not worth the effort. Instead, they would rather engage in the old-fashioned macho trade of getting a hunch and betting a bunch. So be it.
But arbitrageurs can and do make money year in and year out by pocketing the small differences available on such trades, and they seldom make the headlines under the "Arbitrageur Loses Billions" category. If you have an opinion on a stock whose dividend is at risk -- may I suggest the entire financial sector in this regard -- trade it with the SSF.
----------
buy-write (covered equity call strategy)
Single Stock Futures can be easily substituted for stock when using equity options, such as with a buy-write (covered equity call strategy). Investors could be better served using SSFs in place of the stock. For example, an investor who buys stock and sells calls against the long stock position (buy-write) is exposed to both interest rate and dividend risk. Higher (lower) interest rates and lower (higher) dividends increase (decrease) carrying cost on the long stock and cause the price of the short option to rise (fall). SSF prices increase (decrease) with higher (lower) interest rates and lower (higher) dividends, and will therefore offset the negative (and positive) effect of a change in interest rate or dividends. Since SSFs are priced like option combos (long a call and short a put with the same strike price, or vice versa), interest rate and dividend risk can be mitigated using SSFs in place of stock in combined stock/option strategies.
-------------------
Trade Volume archieves
http://www.onechicago.com/?page_id=764
Chicago, IL – October 3, 2008 – OneChicago, LLC today reported that 286,709 security
futures contracts traded at the Exchange in September 2008. YTD volume stands at
3,353,373.
Open interest stood at 244,778 contracts in September 2008.
Each single stock futures (SSF) contract is equivalent to 100 shares of the underlying
stock. The top five SSF contracts by volume in September were:
Verizon Communications, Inc. VZ1C 10,035
Research In Motion Limited RIMM1C 9,363
Gilead Sciences Incorporated GILD1C 6,851
QUALCOMM, Inc. QCOM1C 6,383
Freeport-McMoRan
Copper and Gold FCX1C 5,775
About OneChicago:
The Exchange lists 989 futures on single stocks and 36 Exchange Traded Funds.
OneChicago is a joint venture of IB Exchange Corp., the Chicago Board Options Exchange
Incorporated® (CBOE®), and CME Group. All products are electronically traded on the
CBOEdirect® match engine and accessible through the CBOEdirect® and CME Globex®
platforms. Security futures can be traded out of either securities or futures accounts.
-------------
Sunday, November 30, 2008
Friday, November 28, 2008
structured products gold , oil
Quantum goes for gold and energy
Quantum Asset Management has released three plans linked to commodities including gold and oil, in the belief that long-term investors should be increasing their exposure to energy commodities and gold in particular. The five and a half-year Protected Gold Portfolio is 100% capital protected with 100% participation in the gold spot price, delivering a maximum return of 165%, including capital.
The Protected Energy Portfolio is a five and a half-year, 100% capital protected plan, providing 100% participation in a portfolio comprising Brent crude oil, WTI oil, natural gas, heating oil and gasoline. The plan delivers a maximum investment return of 180%, including initial capital.
Quantum has also released the five and a half-year Protected Energy Dynamo, which is 90% capital protected, with 100% participation in the same portfolio and a maximum investment return of 220% including initial capital. The three plans are backed by a double-A rated issuer.
“Our first Protected Commodities Accelerator will be maturing in November,” says Mark Mathias, chief executive of Quantum Asset Management. “The end-September valuation was over 185% of issue price. We believe that gold and energy offer similarly attractive returns potential
Tuesday, November 25, 2008
In the U.S., there’s a crisis of confidence
India, having fruitlessly pursued command economics, tried something new: It liberalized, privatized, globalized. The economy boomed, and hope began to course through towns and villages shackled by fatalism and low expectations.
America, meanwhile, floundered. In a blink of history came dotcom bust (asr add)9/11, outsourcing, Afghanistan, Iraq, Katrina, rising economies, rogue nuclear nations, climate change, dwindling oil, a financial crisis.
Pessimism crept into the sunniest nation. A vast majority saw America going astray. Books heralded a “Post-American World.” Even in the wake of a historic presidential election, culminating in a dramatic change in direction, it remained unclear whether the United States could be delivered from its woes any time soon.
In the U.S., there’s a crisis of confidence,” said Nandan Nilekani, co-chairman of Infosys Technologies, the Indian software giant. “In India,” he added, “for the first time after decades or centuries, there is a sense of optimism about the future, a sense that our children’s futures can be better than ours if we try hard enough.”
America, meanwhile, floundered. In a blink of history came dotcom bust (asr add)9/11, outsourcing, Afghanistan, Iraq, Katrina, rising economies, rogue nuclear nations, climate change, dwindling oil, a financial crisis.
Pessimism crept into the sunniest nation. A vast majority saw America going astray. Books heralded a “Post-American World.” Even in the wake of a historic presidential election, culminating in a dramatic change in direction, it remained unclear whether the United States could be delivered from its woes any time soon.
In the U.S., there’s a crisis of confidence,” said Nandan Nilekani, co-chairman of Infosys Technologies, the Indian software giant. “In India,” he added, “for the first time after decades or centuries, there is a sense of optimism about the future, a sense that our children’s futures can be better than ours if we try hard enough.”
Friday, November 21, 2008
FEARS of the unknown long-term effects from the global financial crisis have sparked a new gold rush.
With retail and wholesale clients around the world stocking up on the precious metal, the Perth Mint has been forced to suspend orders.
As the World Gold Council reported that the dollar demand for gold reached a quarterly record of $US32 billion ($50.73 billion) in the third quarter, industry insiders said the race to secure physical gold had reached an intensity that had never been witnessed before.
Perth Mint sales and marketing director Ron Currie said the unprecedented demand had forced the Mint to cease orders until January, with staff working seven days a week, 24-hour days, over three shifts to meet orders.
He said Europe was leading the demand, with Russia, Ukraine, Middle East and US all buying -- making up 80 per cent of its sales. One European client purchased 30,000 ounces for $33 million.
"We have never seen this before and are working right at capacity. And we are seeing it from clients in the shop buying one ounce, right up to 30,000 ounces from overseas clients," Mr Currie said.
Robert Jaggard, manager of bullion and rare coins dealer Jaggards, said business had picked up strongly and he expected it to increase further.
"All around the world there has been a heavy run on physical gold and there is a shortage of supply," he said.
Mr Jaggard, who has been dealing in gold for 40 years and is an agent for the Perth Mint, said some clients were buying up to $1million worth of gold, paying a premium above the spot price.
Late yesterday afternoon, spot gold in Sydney was trading at $US747.30 an ounce, up $US8.15 on Thursday's local close.
"Professional business people who have previously bought small amounts now want more gold because they are suffering in other markets," Mr Jaggard said.
At a conference this week in Munich, delegates were lined up 30-deep to purchase physical gold. And reports out of the Middle East suggested that there had been unprecedented gold buying in Saudi Arabia during the first half of November, with an estimated $US3.5 billion purchased in recent weeks.
The World Gold Council, releasing its global demand trends yesterday, said identifiable investment demand, which incorporates demand for gold through exchange-traded funds and bars and coins, was the biggest contributor to overall demand during the quarter. It was up to $US10.7 billion, double last year's levels.
The figures showed retail investment demand rose 121 per cent to 232 tonnes in the third quarter, with strong bar and coin buying reported in Swiss, German and US markets.
The quarter also witnessed widespread reports of gold shortages among bullion dealers across the globe, as investors searched for a haven. Overall, quarter three saw Europe reach an all-time record 51 tonnes of bar and coin buying. France became a net investor in gold for the first time since the early 1980s.
World Gold Council chief executive James Burton said gold's universal role as a store of value had shone through during the quarter, helping attract investors and consumers to all forms of gold ownership.
"The rise in demand for gold bars and coins has been impressive," he said.
Demand in India, the largest market for gold, recovered during the third quarter, encouraged by lower gold prices, a good monsoon and the onset of the festive season. At 250 tonnes, total consumer demand was 31 per cent higher than the same period last year. In value terms, demand hit the record quarterly sum of $US5 billion.
http://www.theaustralian.news.com.au...37-643,00.html
As the World Gold Council reported that the dollar demand for gold reached a quarterly record of $US32 billion ($50.73 billion) in the third quarter, industry insiders said the race to secure physical gold had reached an intensity that had never been witnessed before.
Perth Mint sales and marketing director Ron Currie said the unprecedented demand had forced the Mint to cease orders until January, with staff working seven days a week, 24-hour days, over three shifts to meet orders.
He said Europe was leading the demand, with Russia, Ukraine, Middle East and US all buying -- making up 80 per cent of its sales. One European client purchased 30,000 ounces for $33 million.
"We have never seen this before and are working right at capacity. And we are seeing it from clients in the shop buying one ounce, right up to 30,000 ounces from overseas clients," Mr Currie said.
Robert Jaggard, manager of bullion and rare coins dealer Jaggards, said business had picked up strongly and he expected it to increase further.
"All around the world there has been a heavy run on physical gold and there is a shortage of supply," he said.
Mr Jaggard, who has been dealing in gold for 40 years and is an agent for the Perth Mint, said some clients were buying up to $1million worth of gold, paying a premium above the spot price.
Late yesterday afternoon, spot gold in Sydney was trading at $US747.30 an ounce, up $US8.15 on Thursday's local close.
"Professional business people who have previously bought small amounts now want more gold because they are suffering in other markets," Mr Jaggard said.
At a conference this week in Munich, delegates were lined up 30-deep to purchase physical gold. And reports out of the Middle East suggested that there had been unprecedented gold buying in Saudi Arabia during the first half of November, with an estimated $US3.5 billion purchased in recent weeks.
The World Gold Council, releasing its global demand trends yesterday, said identifiable investment demand, which incorporates demand for gold through exchange-traded funds and bars and coins, was the biggest contributor to overall demand during the quarter. It was up to $US10.7 billion, double last year's levels.
The figures showed retail investment demand rose 121 per cent to 232 tonnes in the third quarter, with strong bar and coin buying reported in Swiss, German and US markets.
The quarter also witnessed widespread reports of gold shortages among bullion dealers across the globe, as investors searched for a haven. Overall, quarter three saw Europe reach an all-time record 51 tonnes of bar and coin buying. France became a net investor in gold for the first time since the early 1980s.
World Gold Council chief executive James Burton said gold's universal role as a store of value had shone through during the quarter, helping attract investors and consumers to all forms of gold ownership.
"The rise in demand for gold bars and coins has been impressive," he said.
Demand in India, the largest market for gold, recovered during the third quarter, encouraged by lower gold prices, a good monsoon and the onset of the festive season. At 250 tonnes, total consumer demand was 31 per cent higher than the same period last year. In value terms, demand hit the record quarterly sum of $US5 billion.
http://www.theaustralian.news.com.au...37-643,00.html
Wednesday, November 19, 2008
15+ Alternatives to Your Boring Blog Editor
Are you tired of your blog’s default post editor? So am I, and being the kind person that I am, I have put together a list of 15+ blog editor alternatives so you don’t have to put up with that jerk of a editor (excuse the pun). I especially love desktop-based blog editors because they let me write and edit posts offline and off-browser, which minimizes distractions and maximizes productivity. Online editors are also more feature-rich than boring ol’ default post editor in WordPress.
----
look at this review , discussed many
# MarkJuly 24th, 2008
UPDATE:
Blogdesk is the best of the bunch. However if you update posts multiple times and your posts are stored by date and time; BD hoses you badly. It automatically changes the date and time of your post, unless you remember to change the setting EVERY TIME YOU UPDATE. Maddening. Also it refuses to NOT spell check when you ask to not do so.
Found out today that Blogjet, does not have an auto-save feature. US$50 and no auto-save? Bad juju. It also seems to be lacking in features when compared to Blogdesk, and getting farther behind each version. It’s well written, and reliable. However like many apps that get a following it seems to be trying to out-cool the others.
w.bloggar still inserts line breaks that you don’t want.
Qumama has huge buttons and no way to change them. It’s like a kiddie app, still.
Post2Blog is done as an app. It’s no longer supported by the people who wrote it.
----
look at this review , discussed many
# MarkJuly 24th, 2008
UPDATE:
Blogdesk is the best of the bunch. However if you update posts multiple times and your posts are stored by date and time; BD hoses you badly. It automatically changes the date and time of your post, unless you remember to change the setting EVERY TIME YOU UPDATE. Maddening. Also it refuses to NOT spell check when you ask to not do so.
Found out today that Blogjet, does not have an auto-save feature. US$50 and no auto-save? Bad juju. It also seems to be lacking in features when compared to Blogdesk, and getting farther behind each version. It’s well written, and reliable. However like many apps that get a following it seems to be trying to out-cool the others.
w.bloggar still inserts line breaks that you don’t want.
Qumama has huge buttons and no way to change them. It’s like a kiddie app, still.
Post2Blog is done as an app. It’s no longer supported by the people who wrote it.
Tuesday, November 18, 2008
Next crash? Sorry, you'll never hear it coming
asr: this is 2000 article ..
SUPERSTAR FUNDS
Next crash? Sorry, you'll never hear it coming
By Dr. Paul B. Farrell
Last update: 3:37 p.m. EDT March 20, 2000
LOS ANGELES (CBS.MW) -- Remember those disaster movies "Deep Impact" and "Armageddon"? In the movies, our planet's early-warning system works. You know the meteor's coming. But when Wall Street crashes, you won't know what hit you -- until it's too late.
No warning. A bear market, a recession dropped from a stealth bomber.
"In many respects, a culture of gamesmanship has taken root in the financial community, making it difficult to tell salesmanship from honest advice." Arthur Levitt SEC chairman Wall Street's 'conspiracy of silence'
Wall Street has an awful lot of securities analysts writing about markets, stocks, funds and miscellaneous other securities. Individual Investor magazine notes that, as of the end of 1998, there were 1,595 analysts employed by the top 25 brokerage houses.
These research analysts make a great living "selling" you securities. For example, several months ago, near the end of 1999, The Wall Street Journal speculated that Mary Meeker, Morgan Stanley Dean Witter's top Internet analyst, received a bonus in the range of $15 million.
Are they paid to offer you "objective" research? Analysis? Advice? No. You heard me right. Wall Street's securities analysts are employed to "sell" you securities -- not to offer you "objective" advice.
Only 1% 'sell' signals -- a conflict of interest
Oh, you really thought securities analysts were "objective?" Forget it. Of course, Wall Street still wants you to believe they are "objective." But that's part of the Eternal Bull Market conspiracy. Often deceptive. Often dishonest. Often unethical. And often illegal.Listen to the mounting criticism of this open conspiracy that's deluding and defrauding America's investing public:
"The news is always good. Roughly two-thirds of all analyst recommendations are 'buys' or 'strong buys' and less that 1% are 'sells.' " Money magazine No integrity -- and no defense
Greed has left America's Main Street investors vulnerable to attack in a way that we would never tolerate from NASA or the Strategic Air Command if we were dealing with threats from enemies on Earth or from outer space. Yet somehow we tolerate this conspiracy of Wall Street analysts that includes virtually every respected investment banker.
· Business Week.Quoting SEC Chairman Arthur Levitt: "In many respects, a culture of gamesmanship has taken root in the financial community, making it difficult to tell salesmanship from honest advice." And why the continued "buy" ratings of financial-services firms in spite of their poor performance? "Simple: 'I keep on the "buy" rating' to appease the company, said one credit-card analyst who spoke on condition of anonymity, 'but I told my favorite investors to sell' to maintain credibility." Get it? Insiders get the truth. Main Street is fed lies.
"Securities analysis is now show business, with analysts the circus dogs jumping through hoops of fire." Martin Sosnoff Wall Street, Hollywood, Vegas
In recent years, Forbes columnists have been particularly harsh on analysts. Asset manager Martin Sosnoff went so far as to say "the solid and necessary profession of security analysis has become a farce. It has moved investors' focus from long-term (reward) to instant gratification -- and done so amid the noise level of a busy crap table. Part of the problem these days is that too many analysts thirst for the instant stardom that an outrageous projection delivers. ... Securities analysis is now show business, with analysts the circus dogs jumping through hoops of fire."
Money manager and Forbes columnist David Dreman remarked that "The average analyst forecast was wrong by 40 percent between 1982 and 1990 (and) didn't get any better in the '90s -- in fact, they got worse. The average analysts' consensus forecast was off 48.7 percent. ... The inaccuracy of these forecasts shows how dangerous it is to buy or hold stocks on the basis of what analysts predict." Other journalists make the same point:
· Business Week. "Wall Street researchreports are more sales documents than disinterested analyses. Most professional investors understand this and treat research accordingly. But do newer investors, who arrive on Wall Street via cyberspace, grasp it?"
· Wall Street Journal. To the sophisticated investor, "it is no longer news that analysts' recommendations may lack 'objectivity. ... Here's what isn't as widely known: The pressure that negative analysts feel is often from their own clients, institutional investors, yes, the very people who would seem to benefit most from such objective market calls." And one analyst who did issue a "sell" signal and wound up in "the doghouse" said, "You make a lot of friends when you say buy a stock, but not when you put out a 'sell.' "
"By the time a story is making the cover of the national periodicals, the trend is probably near the end." Jack Schwager The New Market Wizards
· Forbes.Investment adviser Gary Shilling warns that "Wall Street analysts, often appearing on TV business shows, have spurred you to buy stocks for years, and correctly so in this long bull market. But what will their advice be worth if we head into a full-blown bear market? Less than zero; they're paid to be bulls 24 hours a day, 365 days a year."
· Newsweek. "How much research do Wall Street analysts actually do? You (should) not take Wall Street 'research' too seriously. ... (R)emember to laugh the next time someone tells you that the stock market is a rational place and that big-money investors know what they're doing."
A call to action
Unfortunately, this is no longer a laughing matter. We could be facing a catastrophe -- and not know it. Yet we do need a built-in defense system against another crash.
Wall Street's greed has dulled its ability to self-regulate here. It has become blind to the realities facing us. Nor can Wall Street defend itself by arguing that Main Street investors are just greedy, willing accomplices. On the contrary, Main Street is being subtly misled by this paradoxical Wall Street conspiracy that hypes the Eternal Bull Market, while at the same time rendering us totally defenseless against the bear.
Let's hope Alan and Arthur will get more serious about this problem soon. Otherwise, America's stock markets could wind up like the dinosaurs 65 million years ago, only a lot sooner than we think.
In fact, you could be caught off guard in 2001. Or even 2000. Instead of 2008. By the crash you'll never hear. Until it's too late! End of Story
SUPERSTAR FUNDS
Next crash? Sorry, you'll never hear it coming
By Dr. Paul B. Farrell
Last update: 3:37 p.m. EDT March 20, 2000
LOS ANGELES (CBS.MW) -- Remember those disaster movies "Deep Impact" and "Armageddon"? In the movies, our planet's early-warning system works. You know the meteor's coming. But when Wall Street crashes, you won't know what hit you -- until it's too late.
No warning. A bear market, a recession dropped from a stealth bomber.
"In many respects, a culture of gamesmanship has taken root in the financial community, making it difficult to tell salesmanship from honest advice." Arthur Levitt SEC chairman Wall Street's 'conspiracy of silence'
Wall Street has an awful lot of securities analysts writing about markets, stocks, funds and miscellaneous other securities. Individual Investor magazine notes that, as of the end of 1998, there were 1,595 analysts employed by the top 25 brokerage houses.
These research analysts make a great living "selling" you securities. For example, several months ago, near the end of 1999, The Wall Street Journal speculated that Mary Meeker, Morgan Stanley Dean Witter's top Internet analyst, received a bonus in the range of $15 million.
Are they paid to offer you "objective" research? Analysis? Advice? No. You heard me right. Wall Street's securities analysts are employed to "sell" you securities -- not to offer you "objective" advice.
Only 1% 'sell' signals -- a conflict of interest
Oh, you really thought securities analysts were "objective?" Forget it. Of course, Wall Street still wants you to believe they are "objective." But that's part of the Eternal Bull Market conspiracy. Often deceptive. Often dishonest. Often unethical. And often illegal.Listen to the mounting criticism of this open conspiracy that's deluding and defrauding America's investing public:
"The news is always good. Roughly two-thirds of all analyst recommendations are 'buys' or 'strong buys' and less that 1% are 'sells.' " Money magazine No integrity -- and no defense
Greed has left America's Main Street investors vulnerable to attack in a way that we would never tolerate from NASA or the Strategic Air Command if we were dealing with threats from enemies on Earth or from outer space. Yet somehow we tolerate this conspiracy of Wall Street analysts that includes virtually every respected investment banker.
· Business Week.Quoting SEC Chairman Arthur Levitt: "In many respects, a culture of gamesmanship has taken root in the financial community, making it difficult to tell salesmanship from honest advice." And why the continued "buy" ratings of financial-services firms in spite of their poor performance? "Simple: 'I keep on the "buy" rating' to appease the company, said one credit-card analyst who spoke on condition of anonymity, 'but I told my favorite investors to sell' to maintain credibility." Get it? Insiders get the truth. Main Street is fed lies.
"Securities analysis is now show business, with analysts the circus dogs jumping through hoops of fire." Martin Sosnoff Wall Street, Hollywood, Vegas
In recent years, Forbes columnists have been particularly harsh on analysts. Asset manager Martin Sosnoff went so far as to say "the solid and necessary profession of security analysis has become a farce. It has moved investors' focus from long-term (reward) to instant gratification -- and done so amid the noise level of a busy crap table. Part of the problem these days is that too many analysts thirst for the instant stardom that an outrageous projection delivers. ... Securities analysis is now show business, with analysts the circus dogs jumping through hoops of fire."
Money manager and Forbes columnist David Dreman remarked that "The average analyst forecast was wrong by 40 percent between 1982 and 1990 (and) didn't get any better in the '90s -- in fact, they got worse. The average analysts' consensus forecast was off 48.7 percent. ... The inaccuracy of these forecasts shows how dangerous it is to buy or hold stocks on the basis of what analysts predict." Other journalists make the same point:
· Business Week. "Wall Street researchreports are more sales documents than disinterested analyses. Most professional investors understand this and treat research accordingly. But do newer investors, who arrive on Wall Street via cyberspace, grasp it?"
· Wall Street Journal. To the sophisticated investor, "it is no longer news that analysts' recommendations may lack 'objectivity. ... Here's what isn't as widely known: The pressure that negative analysts feel is often from their own clients, institutional investors, yes, the very people who would seem to benefit most from such objective market calls." And one analyst who did issue a "sell" signal and wound up in "the doghouse" said, "You make a lot of friends when you say buy a stock, but not when you put out a 'sell.' "
"By the time a story is making the cover of the national periodicals, the trend is probably near the end." Jack Schwager The New Market Wizards
· Forbes.Investment adviser Gary Shilling warns that "Wall Street analysts, often appearing on TV business shows, have spurred you to buy stocks for years, and correctly so in this long bull market. But what will their advice be worth if we head into a full-blown bear market? Less than zero; they're paid to be bulls 24 hours a day, 365 days a year."
· Newsweek. "How much research do Wall Street analysts actually do? You (should) not take Wall Street 'research' too seriously. ... (R)emember to laugh the next time someone tells you that the stock market is a rational place and that big-money investors know what they're doing."
A call to action
Unfortunately, this is no longer a laughing matter. We could be facing a catastrophe -- and not know it. Yet we do need a built-in defense system against another crash.
Wall Street's greed has dulled its ability to self-regulate here. It has become blind to the realities facing us. Nor can Wall Street defend itself by arguing that Main Street investors are just greedy, willing accomplices. On the contrary, Main Street is being subtly misled by this paradoxical Wall Street conspiracy that hypes the Eternal Bull Market, while at the same time rendering us totally defenseless against the bear.
Let's hope Alan and Arthur will get more serious about this problem soon. Otherwise, America's stock markets could wind up like the dinosaurs 65 million years ago, only a lot sooner than we think.
In fact, you could be caught off guard in 2001. Or even 2000. Instead of 2008. By the crash you'll never hear. Until it's too late! End of Story
30 reasons for Great Depression 2 by 2011
PAUL B. FARRELL
New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster
By Paul B. Farrell, MarketWatch
Last update: 7:19 p.m. EST Nov. 17, 2008
Comments: 1016
ARROYO GRANDE, Calif. (MarketWatch) -- By 2011? No recovery? No new bull? "Hey Paul, why do you keep talking about a bigger crash coming by 2011?" Readers ask that often. So here's a sequel to my predictions of 2000 and 2004, with a look three years ahead:
First. Dot-com crash
We pinpointed the dot-com crash at its peak, in a March 20, 2000 column: "Next crash? Sorry, you won't see it coming." Bulls-eye: The dot-com bubble popped. The economy went into a 30-month recession. The stock market lost $8 trillion. And today, over eight years later, the market is still roughly 40% below its 2000 peak. See previous Paul B. Farrell.
Factor in inflation and the average stock has lost well over 50% of its value. Stocks have proven to be a very big loser, a bad investment for Americans, thanks to Wall Street's selfish greed, plus the complicity and naiveté of politicians, press and public.
Second. Subprime meltdown
We reported on warnings of another crash coming as early as 2004, wrote a sequel, also titled "Next crash? Sorry, you won't see it coming." Yes, we were early, but in good company. We wrote many more warning columns. Few listened.
Subsequent events, notably former Fed Chairman Alan Greenspan's admission of his failures in congressional testimony, prove that if he and other Reaganomic ideologues weren't so myopic and intransigent about proving their free-market deregulation theories, they could have acted earlier and prevented today's colossal mess. Instead, their ideology kept the bubble blowing, delayed the pop, making matters worse.
So once again, as history proves over and over, ideology trumps common sense, reality and the facts. Greed drives ideologues to blow bubbles. They pop. Crashes happen. The public is collateral damage.
Third. Megabubble cycles
We also detailed the broader, accelerating macroeconomic sweep of cycles last summer in columns like "20 reasons new megabubble pops in 2011." We summarized a long list of major warnings from financial periodicals -- Forbes, Fortune, the Wall Street Journal, Economist -- and from the voices of Warren Buffett, Bill Gross, a sitting Fed governor and a former Commerce secretary. Multiple warnings "hiding in plain sight," beginning with a Fed governor warning Greenspan in 2000 about subprime risk.
But the big shocker came from the new Treasury secretary two years before the meltdown: Bloomberg News reports that shortly after leaving Wall Street as Goldman Sachs' CEO, Henry Paulson was at Camp David warning the president and his staff of "over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street's face and affect the whole economy."
Yes, they knew. And still both Paulson, a Wall Street insider, and Greenspan's successor, Ben Bernanke, a Princeton scholar of the Great Depression, stayed trapped in denial and kept happy-talking the public for months after the meltdown began in mid-2007. Get it? While they could have put the brakes on this meltdown years ago, our leaders were prisoners of their distorted, inflexible views of conservative Reaganomics ideology.
As a result, once again the "best and the brightest" failed America and now they and their buddies in Washington and Corporate America are setting up the Crash of 2011.
Now it's time for my 2008 update, a look into the future where things will get far worse during the next presidential term. And given human behavior, especially in the deep recesses of Wall Street's "greed is good" DNA, it seems inevitable that no matter how well-intentioned the new president may be Wall Street and Washington's 41,000 special-interest lobbyists will drive America into the Great Depression 2.
30 'leading edge' indicators of the coming Great Depression 2
Every day there is more breaking news, proof Wall Street's greed is already back to "business as usual" and in denial, grabbing more and more from the new "Bailouts-R-Us" bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas -- anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble.
Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time's running out. We're already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:
1.
America's credit rating may soon be downgraded below AAA
2.
Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3.
Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4.
King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5.
Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year
6.
AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7.
American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8.
Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9.
State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10.
State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11.
Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12.
Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13.
Fed also plans to provide billions to $3.6 trillion money-market fund industry
14.
Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15.
Washington manipulating data: War not $600 billion but estimates actually $3 trillion
16.
Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
17.
Commodities down, resource exporters and currencies dropping, triggering a global meltdown
18.
Big three automakers near bankruptcy; unions, workers, retirees will suffer
19.
Corporate bond market, both junk and top-rated, slumps more than 25%
20.
Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21.
Unemployment heading toward 8% plus; more 1930's photos of soup lines
22.
Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23.
China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
24.
Despite global recession, U.S. trade deficit continues, now at $650 billion
25.
The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
26.
Now 46 million uninsured as medical, drug costs explode
27.
New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
28.
Outgoing leaders handicapping new administration with huge liabilities
29.
The "antitaxes" message is a new bubble, a new version of the American
dream offering a free lunch, no sacrifices, exposing us to more false promises
Will the next meltdown, the third of the 21st Century, trigger a second Great Depression? Or will the 2007-08 crisis simply morph into a painful extension of today's mess to 2011 and beyond, with no new bull market, no economic recovery as our new president hopes?
Perhaps some of the first 29 problems may be solved separately, but collectively, after building on a failed ideology, they spell disaster. So listen closely to "leading indicator" No. 30:
At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan's Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America's problems will take years and will burn trillions.
He sees "nothing but large increases in the deficit ... I think it would be worse than the depression. ... Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds." It'll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."
Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. 'I just want to get people thinking about this, and to realize this is a road to disaster,' said Whitehead. 'I've always been a positive person and optimistic, but I don't see a solution here.'"
We see the Great Depression 2. Why? Wall Street's self-interested greed. They are their own worst enemy ... and America's too. End of Story
New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster
By Paul B. Farrell, MarketWatch
Last update: 7:19 p.m. EST Nov. 17, 2008
Comments: 1016
ARROYO GRANDE, Calif. (MarketWatch) -- By 2011? No recovery? No new bull? "Hey Paul, why do you keep talking about a bigger crash coming by 2011?" Readers ask that often. So here's a sequel to my predictions of 2000 and 2004, with a look three years ahead:
First. Dot-com crash
We pinpointed the dot-com crash at its peak, in a March 20, 2000 column: "Next crash? Sorry, you won't see it coming." Bulls-eye: The dot-com bubble popped. The economy went into a 30-month recession. The stock market lost $8 trillion. And today, over eight years later, the market is still roughly 40% below its 2000 peak. See previous Paul B. Farrell.
Factor in inflation and the average stock has lost well over 50% of its value. Stocks have proven to be a very big loser, a bad investment for Americans, thanks to Wall Street's selfish greed, plus the complicity and naiveté of politicians, press and public.
Second. Subprime meltdown
We reported on warnings of another crash coming as early as 2004, wrote a sequel, also titled "Next crash? Sorry, you won't see it coming." Yes, we were early, but in good company. We wrote many more warning columns. Few listened.
Subsequent events, notably former Fed Chairman Alan Greenspan's admission of his failures in congressional testimony, prove that if he and other Reaganomic ideologues weren't so myopic and intransigent about proving their free-market deregulation theories, they could have acted earlier and prevented today's colossal mess. Instead, their ideology kept the bubble blowing, delayed the pop, making matters worse.
So once again, as history proves over and over, ideology trumps common sense, reality and the facts. Greed drives ideologues to blow bubbles. They pop. Crashes happen. The public is collateral damage.
Third. Megabubble cycles
We also detailed the broader, accelerating macroeconomic sweep of cycles last summer in columns like "20 reasons new megabubble pops in 2011." We summarized a long list of major warnings from financial periodicals -- Forbes, Fortune, the Wall Street Journal, Economist -- and from the voices of Warren Buffett, Bill Gross, a sitting Fed governor and a former Commerce secretary. Multiple warnings "hiding in plain sight," beginning with a Fed governor warning Greenspan in 2000 about subprime risk.
But the big shocker came from the new Treasury secretary two years before the meltdown: Bloomberg News reports that shortly after leaving Wall Street as Goldman Sachs' CEO, Henry Paulson was at Camp David warning the president and his staff of "over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street's face and affect the whole economy."
Yes, they knew. And still both Paulson, a Wall Street insider, and Greenspan's successor, Ben Bernanke, a Princeton scholar of the Great Depression, stayed trapped in denial and kept happy-talking the public for months after the meltdown began in mid-2007. Get it? While they could have put the brakes on this meltdown years ago, our leaders were prisoners of their distorted, inflexible views of conservative Reaganomics ideology.
As a result, once again the "best and the brightest" failed America and now they and their buddies in Washington and Corporate America are setting up the Crash of 2011.
Now it's time for my 2008 update, a look into the future where things will get far worse during the next presidential term. And given human behavior, especially in the deep recesses of Wall Street's "greed is good" DNA, it seems inevitable that no matter how well-intentioned the new president may be Wall Street and Washington's 41,000 special-interest lobbyists will drive America into the Great Depression 2.
30 'leading edge' indicators of the coming Great Depression 2
Every day there is more breaking news, proof Wall Street's greed is already back to "business as usual" and in denial, grabbing more and more from the new "Bailouts-R-Us" bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas -- anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble.
Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time's running out. We're already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:
1.
America's credit rating may soon be downgraded below AAA
2.
Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3.
Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4.
King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5.
Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year
6.
AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7.
American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8.
Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9.
State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10.
State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11.
Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12.
Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13.
Fed also plans to provide billions to $3.6 trillion money-market fund industry
14.
Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15.
Washington manipulating data: War not $600 billion but estimates actually $3 trillion
16.
Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
17.
Commodities down, resource exporters and currencies dropping, triggering a global meltdown
18.
Big three automakers near bankruptcy; unions, workers, retirees will suffer
19.
Corporate bond market, both junk and top-rated, slumps more than 25%
20.
Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21.
Unemployment heading toward 8% plus; more 1930's photos of soup lines
22.
Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23.
China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
24.
Despite global recession, U.S. trade deficit continues, now at $650 billion
25.
The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
26.
Now 46 million uninsured as medical, drug costs explode
27.
New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
28.
Outgoing leaders handicapping new administration with huge liabilities
29.
The "antitaxes" message is a new bubble, a new version of the American
dream offering a free lunch, no sacrifices, exposing us to more false promises
Will the next meltdown, the third of the 21st Century, trigger a second Great Depression? Or will the 2007-08 crisis simply morph into a painful extension of today's mess to 2011 and beyond, with no new bull market, no economic recovery as our new president hopes?
Perhaps some of the first 29 problems may be solved separately, but collectively, after building on a failed ideology, they spell disaster. So listen closely to "leading indicator" No. 30:
At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan's Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America's problems will take years and will burn trillions.
He sees "nothing but large increases in the deficit ... I think it would be worse than the depression. ... Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds." It'll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."
Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. 'I just want to get people thinking about this, and to realize this is a road to disaster,' said Whitehead. 'I've always been a positive person and optimistic, but I don't see a solution here.'"
We see the Great Depression 2. Why? Wall Street's self-interested greed. They are their own worst enemy ... and America's too. End of Story
COPPER PREFERRED BASE METAL : Goldman Sachs JBWere downgrades most commodities price forecasts
Despite a dire outlook for commodities prices, Goldman Sachs JBWere analysts say copper is their preferred base metal because of severe production constraints and the potential for Chinese restocking.
Author: Dorothy Kosich - Posted: Tuesday , 18 Nov 2008
RENO, NV -
Australian investing banking and securities group, Goldman Sachs JBWere, Monday made further downgrades to commodity price forecasts for 2008 and beyond, reflecting a deteriorating outlook for base metals, iron ore and some types of coal.
Nevertheless, analysts Malcolm Southwood, Paul Gray and Kirstine Veitch declared that "copper remains our preferred base metal because of severe production constraints, and the very real potential for Chinese restocking."
The analysts cut their copper global demand forecast for next year to 1.6%, including a 4.1% decline in the OECD and a 7% increase in emerging markets. "This latter includes our assumption of a 250kt restocking in China; without this assumption or ‘real' consumption growth forecast for the emerging markets falls to 4.3%."
"Our contacts in China believe that cash and credit constraints argue against an extensive industry restocking, but that a significant volume of buying by the government (i.e. the Strategic Reserve Bureau is very likely. Certainly such a move would be consistent with the SRB's historic behaviour, and we believe that the current price pull-back offers China a very attractive buying opportunity," the analysts said.
Copper
Goldman Sachs JBWere suggests that copper stands apart from other major base metals on the supply side. Five of the world's largest copper producers have told the analysts that they expect to produce less copper in 2009 than in 2008. "In our view it is by no means implausible that the copper supply could register zero growth in 2009."
The analysts forecast a modest copper deficit for 2010 and an essentially balanced market in 2011 and 2012. Their key messages: short-term price risk is for further downside due to recessionary demand conditions further impaired by the global financial situation; and a forecast that the copper price "should be significantly higher than it is today" in 12 months.
Nickel
Meanwhile, Goldman Sachs JBWere asserts that global stainless steel production will be flat this year, meaning nickel consumption will only grow by 1.1% with the market recording a 41kt surplus.
"We forecast a modest 3.1% increase in stainless steel production in 2009, weighted into the second half of the year, which should translate into a similar quantum of growth for global nickel consumption. But there is a considerable amount of nickel supply due on stream in 2009," the analysts said.
"Beyond 2009 our model shows an essentially balanced market and an improving stock-to-consumption ratio, but our concern is that the upside potential for price is capped by higher NPI [Nickel Pig Iron] production," they added.
Zinc
The analysts said they have been impressed with the speed of the announcements of zinc product cuts, "albeit mainly from mines that had been reopened during the period of high prices. Furthermore, there are signs that prices are now sufficiently low that a China's artisanal zinc mining sector is at last beginning to contract."
Goldman Sachs JBWere now suggests a zinc equilibrium price of 63-cents per pound in 2009 with a steady price improvement from 2010 as the market moves back into balance, then deficit.
Uranium
Consistent with their forecasts for lower annual average price in coal, oil and gas, the analysts lowered their average annual average price forecasts for uranium, from 2009 to 2011.
Iron Ore
The analysts further reduced their iron ore contract price forecast, which they expect to fall 30% in benchmark terms for Australian fines in JFY 2009/10, compared to their previous forecast for a 15% decline.
Coking Coal
Blast furnace steel production is declining globally, "not least in the major coking coal import markets of Europe and India," the analysts said. "Moreover, merchant coke prices are falling sharply and cancellations/deferrals of spot cargoes of coking coal are becoming increasingly frequent."
"Against this backdrop we believe contract prices for all grades of metallurgical coal will fall sharply from current elevated levels." Goldman Sachs JBWere predicted.
Thermal Coal
However, the analysts have taken a less aggressive approach to downgrading thermal coal price forecasts "as demand from coal-fired power generators should hold up slightly better than demand from steelmakers in a worsening economic environment. Moreover, recent settlements by major power utilities (notably the Japanese) demonstrate that key buyers are still prepared to pay a significant premium to ensure adequate supply of good quality coal on contract."
Nevertheless, the analysts reduced their JFY 2009/10 forecast to US$90/t, a 28% decline from the prevailing benchmark of US$125/t.
Author: Dorothy Kosich - Posted: Tuesday , 18 Nov 2008
RENO, NV -
Australian investing banking and securities group, Goldman Sachs JBWere, Monday made further downgrades to commodity price forecasts for 2008 and beyond, reflecting a deteriorating outlook for base metals, iron ore and some types of coal.
Nevertheless, analysts Malcolm Southwood, Paul Gray and Kirstine Veitch declared that "copper remains our preferred base metal because of severe production constraints, and the very real potential for Chinese restocking."
The analysts cut their copper global demand forecast for next year to 1.6%, including a 4.1% decline in the OECD and a 7% increase in emerging markets. "This latter includes our assumption of a 250kt restocking in China; without this assumption or ‘real' consumption growth forecast for the emerging markets falls to 4.3%."
"Our contacts in China believe that cash and credit constraints argue against an extensive industry restocking, but that a significant volume of buying by the government (i.e. the Strategic Reserve Bureau is very likely. Certainly such a move would be consistent with the SRB's historic behaviour, and we believe that the current price pull-back offers China a very attractive buying opportunity," the analysts said.
Copper
Goldman Sachs JBWere suggests that copper stands apart from other major base metals on the supply side. Five of the world's largest copper producers have told the analysts that they expect to produce less copper in 2009 than in 2008. "In our view it is by no means implausible that the copper supply could register zero growth in 2009."
The analysts forecast a modest copper deficit for 2010 and an essentially balanced market in 2011 and 2012. Their key messages: short-term price risk is for further downside due to recessionary demand conditions further impaired by the global financial situation; and a forecast that the copper price "should be significantly higher than it is today" in 12 months.
Nickel
Meanwhile, Goldman Sachs JBWere asserts that global stainless steel production will be flat this year, meaning nickel consumption will only grow by 1.1% with the market recording a 41kt surplus.
"We forecast a modest 3.1% increase in stainless steel production in 2009, weighted into the second half of the year, which should translate into a similar quantum of growth for global nickel consumption. But there is a considerable amount of nickel supply due on stream in 2009," the analysts said.
"Beyond 2009 our model shows an essentially balanced market and an improving stock-to-consumption ratio, but our concern is that the upside potential for price is capped by higher NPI [Nickel Pig Iron] production," they added.
Zinc
The analysts said they have been impressed with the speed of the announcements of zinc product cuts, "albeit mainly from mines that had been reopened during the period of high prices. Furthermore, there are signs that prices are now sufficiently low that a China's artisanal zinc mining sector is at last beginning to contract."
Goldman Sachs JBWere now suggests a zinc equilibrium price of 63-cents per pound in 2009 with a steady price improvement from 2010 as the market moves back into balance, then deficit.
Uranium
Consistent with their forecasts for lower annual average price in coal, oil and gas, the analysts lowered their average annual average price forecasts for uranium, from 2009 to 2011.
Iron Ore
The analysts further reduced their iron ore contract price forecast, which they expect to fall 30% in benchmark terms for Australian fines in JFY 2009/10, compared to their previous forecast for a 15% decline.
Coking Coal
Blast furnace steel production is declining globally, "not least in the major coking coal import markets of Europe and India," the analysts said. "Moreover, merchant coke prices are falling sharply and cancellations/deferrals of spot cargoes of coking coal are becoming increasingly frequent."
"Against this backdrop we believe contract prices for all grades of metallurgical coal will fall sharply from current elevated levels." Goldman Sachs JBWere predicted.
Thermal Coal
However, the analysts have taken a less aggressive approach to downgrading thermal coal price forecasts "as demand from coal-fired power generators should hold up slightly better than demand from steelmakers in a worsening economic environment. Moreover, recent settlements by major power utilities (notably the Japanese) demonstrate that key buyers are still prepared to pay a significant premium to ensure adequate supply of good quality coal on contract."
Nevertheless, the analysts reduced their JFY 2009/10 forecast to US$90/t, a 28% decline from the prevailing benchmark of US$125/t.
Crawlers / web data mining / news bots
HOw to get bloomberg investment news articles in archive ( for future reference and to extract data info. later )
we may start with simple PHP script
- to get page shown below
http://www.bloomberg.com/news/moreinvest.html
- then get each head line ( with in the table , our investment articles)
- compare heading with what we already have, if same as old one do not fetch , else fetch web page
- once you get web page, search it for 'printer frienly verison' string and grab the url
- then the resulted URL is the real web page we need with no Ads etc..
- save all heading in one file and actual page in a different file like
20081101-1 "goldman says crude oil avg. price is $65 for the year"
the actual html content is in file names 20081101-1.htm
It looks the following two softwares have some good features, but we do not need their crawling ( as we need custom php to get boomberg news) , we need only their "view and category" featrues, mail and ask if they can do that that is can they read from our local disk stored files for categorization .
http://www.newzcrawler.com/
http://software.korzh.com/newspiper/
Here is a sample system
http://www.phptoys.com/e107_plugins/content/content.php?content.74.2
--------------
http://shuetech.com/minetheweb/requirements.php - runs on PHP
http://shuetech.com/minetheweb/demo/docs/examples.php -
http://shuetech.com/minetheweb/demo/docs/bettingodds.html -- this gives good code programmable example
http://shuetech.com/minetheweb/news.php#10 -- good hisotry improving for 5 years ..
---------
http://www.qualityunit.com/unitminer/buy-web-data-extraction-software - $140
http://www.qualityunit.com/unitminer/data-extraction-live-demo-bbc - it is PHP based scripts ...
---
http://www.newzcrawler.com/
- this seems good to crate "whole web page "( entire page with ads. and adjacent web page sections ) as shown in the screens shots
we may start with simple PHP script
- to get page shown below
http://www.bloomberg.com/news/moreinvest.html
- then get each head line ( with in the table , our investment articles)
- compare heading with what we already have, if same as old one do not fetch , else fetch web page
- once you get web page, search it for 'printer frienly verison' string and grab the url
- then the resulted URL is the real web page we need with no Ads etc..
- save all heading in one file and actual page in a different file like
20081101-1 "goldman says crude oil avg. price is $65 for the year"
the actual html content is in file names 20081101-1.htm
It looks the following two softwares have some good features, but we do not need their crawling ( as we need custom php to get boomberg news) , we need only their "view and category" featrues, mail and ask if they can do that that is can they read from our local disk stored files for categorization .
http://www.newzcrawler.com/
http://software.korzh.com/newspiper/
Here is a sample system
http://www.phptoys.com/e107_plugins/content/content.php?content.74.2
--------------
http://shuetech.com/minetheweb/requirements.php - runs on PHP
http://shuetech.com/minetheweb/demo/docs/examples.php -
http://shuetech.com/minetheweb/demo/docs/bettingodds.html -- this gives good code programmable example
http://shuetech.com/minetheweb/news.php#10 -- good hisotry improving for 5 years ..
---------
http://www.qualityunit.com/unitminer/buy-web-data-extraction-software - $140
http://www.qualityunit.com/unitminer/data-extraction-live-demo-bbc - it is PHP based scripts ...
---
http://www.newzcrawler.com/
- this seems good to crate "whole web page "( entire page with ads. and adjacent web page sections ) as shown in the screens shots
Monday, November 17, 2008
Why Jim Rogers chooses silver over gold to beat inflation
Legendary investor Jim Rogers, whose conversion to commodities as an investment class back in 1999 preceded the end of the 20-year bear market by a couple of months, is backing silver over gold as an asset class to beat inflation.
He recently told journalists that if pushed to choose between the two precious metals he would choose silver. Rogers has moved to Singapore and is in the process of selling all his dollar holdings because he believes the resumption of the US dollar’s long term devaluation is imminent. He is even shorting US treasury bonds.
Buying precious metals is clearly linked to Rogers negative stance on the US dollar which has an inverse correlation to gold and silver which have indeed suffered from dollar recovery over the past couple of months. Gold is down around 12 per cent to silver’s one-third sell-off.
Silver No1
Rogers admits that silver has been particularly battered down, and perhaps that is why he likes this precious metal. Silver is leveraged to the gold price, so when gold goes down, silver goes down further. But equally when gold prices rise, silver will rise even higher.
Why then should the fortunes of gold change in the near future? Rogers is surely right that the dollar is the key. President-elect Obama is currently putting his new executive team together, and we will have to wait-and-see its policies but the omens are not good.
We have already seen how economic circumstances have forced a Republican administration into a multi-trillion dollar bank bail-out plan. The follow-through is a fiscal spending package, and state bail-outs for the US car manufacturers. All this is going to require funding at a time when rising unemployment and falling company profits mean tax revenues are falling.
A huge increase in borrowing is therefore inevitable and flooding global capital markets with new dollar paper will be inflationary and devalue the US currency. How to profit from US dollar devaluation? You buy an inversely correlated asset like gold or silver.
Rogers leads the pack
Now if Jim Rogers is right - and he was the first major investor to call the commodities boom - then he is unlikely to be alone for long. Others will hear his call and act on it. Actually, markets are going in that direction whatever he says or does.
And why is silver leveraged against the gold price? It is simple really. Both are precious metals but the available supply of silver is less than one-tenth the size of the gold market, and the dynamics of supply and demand in such a situation are obvious.
Rogers has never been a gold or silver bug himself - and ridiculed long-term holders of precious metals in his classic book ‘Hot Commodities’ - so his conversion to this asset class is all the more significant. Perhaps he has also noted the pressure growing in the silver futures market where a call for physical delivery could shortly break the spot price mechanism and lead to much higher prices.
Even one rich Arabian investor would be able to buy enough silver futures and break the market by demanding physical delivery, as is the right of any contract holder. It is a one-way bet that somebody is bound to make very soon.
Commodites News Letter / Gold News Letter
---------
GOLD 2009 outook from ScotiaMocatta
asr: what a great 360 view of GOLD involving , demand , supply, dollar, EURO and US and world stock markets, central banks ,
forecast in NOV 2008 said downside is minimum when price is around 780 , giving upside in 2009 to to 1300 with short lived downside 7000
--------------
main idea may be to have 3 technical and 3 fundamental sources
technical: VP , hightower report , gri2
fundamental: cpmgroup, scotiamocatta , http://www.virtualmetals.co.uk/ ( news summary ,not as good as cpmgroup forecast ...)
ScotiaMocatta, part of Scotia Capital and a division of The Bank of Nova Scotia, is a global leader in precious metals trading and finance, with roots dating back to 1671. We are a founding member of the London Gold Fixing, the Chairman of the London Silver Fixing, and a leading market maker with more than 150 professionals in offices around the world.
- see their nice daily, weekly, months letter ( on left menu)
- gave good 2009 forecast report gold/silver ( see mentioned indian office ph # at report bottom)
- talked to them, these letters are free.
http://www.scotiamocatta.com/interface.htm
-----------
asr: it seems this Lowry is major market timing ( big market bottom/tops once in few years) as mentioned in Praise section by Barron's etc..
Lowry Research - praise
Research Studies
- reference for Lowry came from this link
-------------
this site is referred by scotiamocatta.com links
Precious Metals Monthly , $1500 ( see old archieves , how good is forecast ?)
http://www.virtualmetals.co.uk/index.php?inc=products&id=cp6
All free 6 month publication free
http://www.virtualmetals.co.uk/index.php?inc=products&id=cp5
FORTIS ENERGY MONTHLY
It will be available on a complimentary basis from the middle of each month, or email us to be added to our direct mailing list.
---------
this site is referred by scotiamocatta.com links
http://www.platinum.matthey.com/publications/publications.html
Platinum Metals Review (PMR) is a quarterly survey of scientific research on the platinum group metals and of developments in their application in industry.
----------------
this is ref. from our main broker dormantrading ..
http://www.dormantrading.com/IBCenter/bankresearch/HelmsSample.pdf
Daily Technical Overview
The Overview features technical analysis compiled by human interpretation and research. Along with the Overview report, subscribers get the Short Term Outlook with trading ideas looking focused on a 2 day to 3 week time frame. The Long Term Technical Review is published once a month with general commentary guidelines on directions of major trends. The Overview has a preset structure of US traded markets and can be delivered by fax or email. The GRI Morning Update report will provide near term trading signals and highlight critical changes by overnight market action.
-----------
Hightower Report
Features:
* Published Twice Each Month
* Covers Both Futures and Options
* Direct & Concise
* Fundamental and Technical Analysis
* Specific Trade Strategies
Each Issue Includes:
* Commodity Outlook - Overall outlook for the economy and commodity markets.
* Top Fundamental Stories - 3-5 articles covering the markets We Feel Have The Most Potential over the next 2-6 weeks including specific trading samples.
* Techview - 2-4 Articles written from a Purely Technical Perspective including Specific Trading Strategies.
* Traders Toolbox - Strategies for using Undervalued Options, Overvalued Options, Options for Trend Reversal.
* Commitment of Traders Analysis
asr: good call on 10/20 for lower copper from this Hightower blog , decline verified in VP
Copper Headed Lower?
Another important thing to note is that Shanghai deliverable copper stocks also reached a peak back in 2002 of roughly 248,000 tonnes but as of October 10th they were at a paltry 25,600 tons. In short, world copper stocks remain very tight, and therefore the direction of the Chinese economy could become the most important force driving copper prices in the near term. In the near term traders should expect a temporary but sharp slide below the $2.00 level before the market reaches some form of solid value zone.
---------------------------
http://www.goldforecaster.com
It is our task in this letter to track these different features, giving you both the Technical Analysis and the Fundamental features impacting the gold price each week. It is our goal to help you to understand and profit from this market, wherever you are on this globe.
http://www.goldforecaster.com/authors.php
-------------------------------
http://www.jsmineset.com/index.php/about/
GOLD 2009 outook from ScotiaMocatta
asr: what a great 360 view of GOLD involving , demand , supply, dollar, EURO and US and world stock markets, central banks ,
forecast in NOV 2008 said downside is minimum when price is around 780 , giving upside in 2009 to to 1300 with short lived downside 7000
--------------
main idea may be to have 3 technical and 3 fundamental sources
technical: VP , hightower report , gri2
fundamental: cpmgroup, scotiamocatta , http://www.virtualmetals.co.uk/ ( news summary ,not as good as cpmgroup forecast ...)
ScotiaMocatta, part of Scotia Capital and a division of The Bank of Nova Scotia, is a global leader in precious metals trading and finance, with roots dating back to 1671. We are a founding member of the London Gold Fixing, the Chairman of the London Silver Fixing, and a leading market maker with more than 150 professionals in offices around the world.
- see their nice daily, weekly, months letter ( on left menu)
- gave good 2009 forecast report gold/silver ( see mentioned indian office ph # at report bottom)
- talked to them, these letters are free.
http://www.scotiamocatta.com/interface.htm
-----------
asr: it seems this Lowry is major market timing ( big market bottom/tops once in few years) as mentioned in Praise section by Barron's etc..
Lowry Research - praise
Research Studies
- reference for Lowry came from this link
-------------
this site is referred by scotiamocatta.com links
Precious Metals Monthly , $1500 ( see old archieves , how good is forecast ?)
http://www.virtualmetals.co.uk/index.php?inc=products&id=cp6
All free 6 month publication free
http://www.virtualmetals.co.uk/index.php?inc=products&id=cp5
FORTIS ENERGY MONTHLY
It will be available on a complimentary basis from the middle of each month, or email us to be added to our direct mailing list.
---------
this site is referred by scotiamocatta.com links
http://www.platinum.matthey.com/publications/publications.html
Platinum Metals Review (PMR) is a quarterly survey of scientific research on the platinum group metals and of developments in their application in industry.
----------------
this is ref. from our main broker dormantrading ..
http://www.dormantrading.com/IBCenter/bankresearch/HelmsSample.pdf
Daily Technical Overview
The Overview features technical analysis compiled by human interpretation and research. Along with the Overview report, subscribers get the Short Term Outlook with trading ideas looking focused on a 2 day to 3 week time frame. The Long Term Technical Review is published once a month with general commentary guidelines on directions of major trends. The Overview has a preset structure of US traded markets and can be delivered by fax or email. The GRI Morning Update report will provide near term trading signals and highlight critical changes by overnight market action.
-----------
Hightower Report
Features:
* Published Twice Each Month
* Covers Both Futures and Options
* Direct & Concise
* Fundamental and Technical Analysis
* Specific Trade Strategies
Each Issue Includes:
* Commodity Outlook - Overall outlook for the economy and commodity markets.
* Top Fundamental Stories - 3-5 articles covering the markets We Feel Have The Most Potential over the next 2-6 weeks including specific trading samples.
* Techview - 2-4 Articles written from a Purely Technical Perspective including Specific Trading Strategies.
* Traders Toolbox - Strategies for using Undervalued Options, Overvalued Options, Options for Trend Reversal.
* Commitment of Traders Analysis
asr: good call on 10/20 for lower copper from this Hightower blog , decline verified in VP
Copper Headed Lower?
Another important thing to note is that Shanghai deliverable copper stocks also reached a peak back in 2002 of roughly 248,000 tonnes but as of October 10th they were at a paltry 25,600 tons. In short, world copper stocks remain very tight, and therefore the direction of the Chinese economy could become the most important force driving copper prices in the near term. In the near term traders should expect a temporary but sharp slide below the $2.00 level before the market reaches some form of solid value zone.
---------------------------
http://www.goldforecaster.com
It is our task in this letter to track these different features, giving you both the Technical Analysis and the Fundamental features impacting the gold price each week. It is our goal to help you to understand and profit from this market, wherever you are on this globe.
http://www.goldforecaster.com/authors.php
-------------------------------
http://www.jsmineset.com/index.php/about/
Copper ( in USA) : mine production and scrap collection through end-use consumption
Statistics on copper supply and consumption in the USA trace the flow of copper from mine production and scrap collection through end-use consumption in five major markets. Consolidates data from many sources for 1987 through 2007.
asr: click on PDF to get actual report
Stats: form this site
Building construction accounts for more than 46% of all copper use ( seems applies to USA only?). Residential construction is about two-thirds of the building construction market.
The average single-family home is about 2,100 sq .ft.; a multifamily unit averages about 1,000 sq.ft.
An average single-family home uses 440 pounds of copper.
Copper is an indicator for the world economy and sets the pace for other industrial metals because
- an average 400 pounds (181 kilograms) are used in homes and
- 50 pounds in cars, according to the Copper Development Association.
Prices collapsed after rising as high as $8,940 a metric ton on the London Metal Exchange July 2 2008. to $3400 on Nov. 15 2008. due to mainly
-China drop to metals appetite due to their slowing china's ecomony
- coupled with US/Europe/Japan economic slump ( no new homes, fewer new cars ..)
asr: click on PDF to get actual report
Stats: form this site
Building construction accounts for more than 46% of all copper use ( seems applies to USA only?). Residential construction is about two-thirds of the building construction market.
The average single-family home is about 2,100 sq .ft.; a multifamily unit averages about 1,000 sq.ft.
An average single-family home uses 440 pounds of copper.
Copper is an indicator for the world economy and sets the pace for other industrial metals because
- an average 400 pounds (181 kilograms) are used in homes and
- 50 pounds in cars, according to the Copper Development Association.
Prices collapsed after rising as high as $8,940 a metric ton on the London Metal Exchange July 2 2008. to $3400 on Nov. 15 2008. due to mainly
-China drop to metals appetite due to their slowing china's ecomony
- coupled with US/Europe/Japan economic slump ( no new homes, fewer new cars ..)
Copper Drop Deepens as China Growth, Housing Falter (Update2)
Nov. 17 (Bloomberg) -- Not even $586 billion of emergency spending by China can slow the plunge in copper, the worst- performing metal since the commodities market crashed in July.
Global inventories more than doubled in the past four months as the economic slowdown spread. U.S. auto sales slumped 32 percent in October to the lowest level since January 1991. A report this week may show U.S. builders broke ground on the fewest houses in at least a half century, curbing demand for cables, wires and pipes. China, the world's biggest copper user, is heading for its slowest growth in almost two decades.
``The raw materials sector had come grinding to such a screeching halt that this plan doesn't turn the outlook around immediately,'' Chip Hanlon, who oversees $1.5 billion at Delta Global Advisors in Huntington Beach, California, said of China's stimulus program. ``I'm leery about global growth right now. At the moment, I would still not want to be in base metals.''
Copper is an indicator for the world economy and sets the pace for other industrial metals because an average 400 pounds (181 kilograms) are used in homes and 50 pounds in cars, according to the Copper Development Association. Prices collapsed after rising as high as $8,940 a metric ton on the London Metal Exchange July 2. The International Monetary Fund in Washington said the U.S., Europe and Japan will fall into a recession simultaneously for the first time since World War II.
China is the key to commodity prices because the country is the largest user of iron ore, aluminum, zinc and copper. The nation's economy may grow 7.5 percent or less next year, Morgan Stanley and Credit Suisse Group AG say. That would be the slowest pace since 1990, data compiled by Bloomberg data show.
Chinese Demand
Demand from China helped copper prices more than double in the past six years. Now, the price may fall 37 percent from the Nov. 14 close to $2,400 a metric ton next year, said Andrew Keen, an analyst at Sanford C. Bernstein & Co. in London, the second most-accurate forecaster in the weekly Bloomberg copper survey.
Catherine Virga, an analyst with CPM Group in New York, expects the metal to fall to $2,550 and Adam Rowley, an analyst at Macquarie Group Ltd., forecasts about $3,300. Three-month futures on the LME slumped as much as 3.3 percent today to $3,695, and traded at $3,710 at 2:30 p.m. in Singapore.
Zinc may drop as much as 18 percent to $985 a ton, lead may lose 12 percent to $1,185 and aluminum may slide 7 percent to $1,800, Virga says.
Commodity prices, measured by the Standard & Poor's GSCI Index of 24 raw materials, plunged by more than half from their record on July 3 as the global credit crisis threatened to push the world into a recession, reducing demand. Crude oil has slumped 57 percent in four months.
`A Bubble'
``It was a bubble,'' Stephen Roach, chairman of Morgan Stanley Asia Ltd., said in an interview Nov. 13. The last one was in the early 1970s when ``you had the same type of global growth boom that we've had in the last 4 1/2 years,'' he said. ``The boom has gone to bust. The global economy is growing at 2 to 2.5 percent, less than half the pace we've been running at.''
BHP Billiton Ltd., the world's biggest mining company, has dropped about half in Australian trading from its intraday peak of A$50 ($32) in May as commodity demand slowed and closed today at A$25.10. Rio Tinto Group has tumbled by 53 percent to A$73.44.
Leaders from the biggest developed and emerging nations agreed to further steps at the weekend to prop up the global economy. The Group of 20 cited the potential for more interest- rate cuts and fiscal stimulus. Federal Reserve Chairman Ben S. Bernanke said Nov. 14 central bankers are prepared to take additional action as needed to unfreeze credit markets.
Slowing Output
China faces a ``formidable challenge,'' Mu Hong, a top planning official, said Nov. 14. Export growth and inflation slowed in October. Industrial output grew at the slowest pace in seven years and money supply expanded by the least since 2005.
Steel output in China, producer of a third of world supply, dropped 9.1 in September, the Brussels-based World Steel Association said Oct. 22. Power production fell in October from a year earlier, the first decline since February 2005, the China Securities Journal said Nov. 7.
``We are in a period of very severe production cuts as mid- stream industries such as steel reduce both raw material and product stocks, with massive reverberations through raw material markets,'' Macquarie said Nov. 10.
China pledged ``fast and heavy-handed investment'' in housing and infrastructure through 2010 and a ``relatively loose'' monetary policy in a plan unveiled Nov. 9. The package offered funding for housing, infrastructure, railways, power grids, social welfare and rebuilding. The country plans thousands of kilometers of highways and railroads as it speeds development of the resource-rich western regions.
Seeking the Bottom
``The Chinese are very pragmatic,'' said Richard Elman, chief executive officer of Hong Kong-based Noble Group Ltd., a supplier of iron ore, coffee and grains. ``They will revitalize the economy. We've seen a leveling of steel prices internationally. We're encouraged that the bottom may be here,'' he said in an interview Nov. 11.
More money is being pumped into second-tier cities, Robert Theleen, chairman and co-founder of investment capital firm ChinaVest Ltd., said in a Bloomberg Television interview Oct. 29. As the economy slows, more factories will shut, unemployment will climb and people will return to the countryside.
``Those are the issues that are going to cause indigestion in Beijing,'' he said.
Home Slump
The U.S. housing recession at the heart of the economic decline shows no signs of letting up, signaling copper demand may stay depressed. New-home starts in October dropped to a 780,000 annual pace, the lowest since records began in 1959, economists said. The Commerce Department reports on Nov. 19.
Industrywide U.S. auto sales fell for the 12th straight month in October, extending the longest slide in 17 years and hurting demand for metals. October total sales dropped to 838,156 from 1.23 million, according to Autodata Corp.
General Motors Corp. said this month it may run short of funds before the end of the year and Chrysler LLC said survival would be difficult without aid.
Global inventories more than doubled in the past four months as the economic slowdown spread. U.S. auto sales slumped 32 percent in October to the lowest level since January 1991. A report this week may show U.S. builders broke ground on the fewest houses in at least a half century, curbing demand for cables, wires and pipes. China, the world's biggest copper user, is heading for its slowest growth in almost two decades.
``The raw materials sector had come grinding to such a screeching halt that this plan doesn't turn the outlook around immediately,'' Chip Hanlon, who oversees $1.5 billion at Delta Global Advisors in Huntington Beach, California, said of China's stimulus program. ``I'm leery about global growth right now. At the moment, I would still not want to be in base metals.''
Copper is an indicator for the world economy and sets the pace for other industrial metals because an average 400 pounds (181 kilograms) are used in homes and 50 pounds in cars, according to the Copper Development Association. Prices collapsed after rising as high as $8,940 a metric ton on the London Metal Exchange July 2. The International Monetary Fund in Washington said the U.S., Europe and Japan will fall into a recession simultaneously for the first time since World War II.
China is the key to commodity prices because the country is the largest user of iron ore, aluminum, zinc and copper. The nation's economy may grow 7.5 percent or less next year, Morgan Stanley and Credit Suisse Group AG say. That would be the slowest pace since 1990, data compiled by Bloomberg data show.
Chinese Demand
Demand from China helped copper prices more than double in the past six years. Now, the price may fall 37 percent from the Nov. 14 close to $2,400 a metric ton next year, said Andrew Keen, an analyst at Sanford C. Bernstein & Co. in London, the second most-accurate forecaster in the weekly Bloomberg copper survey.
Catherine Virga, an analyst with CPM Group in New York, expects the metal to fall to $2,550 and Adam Rowley, an analyst at Macquarie Group Ltd., forecasts about $3,300. Three-month futures on the LME slumped as much as 3.3 percent today to $3,695, and traded at $3,710 at 2:30 p.m. in Singapore.
Zinc may drop as much as 18 percent to $985 a ton, lead may lose 12 percent to $1,185 and aluminum may slide 7 percent to $1,800, Virga says.
Commodity prices, measured by the Standard & Poor's GSCI Index of 24 raw materials, plunged by more than half from their record on July 3 as the global credit crisis threatened to push the world into a recession, reducing demand. Crude oil has slumped 57 percent in four months.
`A Bubble'
``It was a bubble,'' Stephen Roach, chairman of Morgan Stanley Asia Ltd., said in an interview Nov. 13. The last one was in the early 1970s when ``you had the same type of global growth boom that we've had in the last 4 1/2 years,'' he said. ``The boom has gone to bust. The global economy is growing at 2 to 2.5 percent, less than half the pace we've been running at.''
BHP Billiton Ltd., the world's biggest mining company, has dropped about half in Australian trading from its intraday peak of A$50 ($32) in May as commodity demand slowed and closed today at A$25.10. Rio Tinto Group has tumbled by 53 percent to A$73.44.
Leaders from the biggest developed and emerging nations agreed to further steps at the weekend to prop up the global economy. The Group of 20 cited the potential for more interest- rate cuts and fiscal stimulus. Federal Reserve Chairman Ben S. Bernanke said Nov. 14 central bankers are prepared to take additional action as needed to unfreeze credit markets.
Slowing Output
China faces a ``formidable challenge,'' Mu Hong, a top planning official, said Nov. 14. Export growth and inflation slowed in October. Industrial output grew at the slowest pace in seven years and money supply expanded by the least since 2005.
Steel output in China, producer of a third of world supply, dropped 9.1 in September, the Brussels-based World Steel Association said Oct. 22. Power production fell in October from a year earlier, the first decline since February 2005, the China Securities Journal said Nov. 7.
``We are in a period of very severe production cuts as mid- stream industries such as steel reduce both raw material and product stocks, with massive reverberations through raw material markets,'' Macquarie said Nov. 10.
China pledged ``fast and heavy-handed investment'' in housing and infrastructure through 2010 and a ``relatively loose'' monetary policy in a plan unveiled Nov. 9. The package offered funding for housing, infrastructure, railways, power grids, social welfare and rebuilding. The country plans thousands of kilometers of highways and railroads as it speeds development of the resource-rich western regions.
Seeking the Bottom
``The Chinese are very pragmatic,'' said Richard Elman, chief executive officer of Hong Kong-based Noble Group Ltd., a supplier of iron ore, coffee and grains. ``They will revitalize the economy. We've seen a leveling of steel prices internationally. We're encouraged that the bottom may be here,'' he said in an interview Nov. 11.
More money is being pumped into second-tier cities, Robert Theleen, chairman and co-founder of investment capital firm ChinaVest Ltd., said in a Bloomberg Television interview Oct. 29. As the economy slows, more factories will shut, unemployment will climb and people will return to the countryside.
``Those are the issues that are going to cause indigestion in Beijing,'' he said.
Home Slump
The U.S. housing recession at the heart of the economic decline shows no signs of letting up, signaling copper demand may stay depressed. New-home starts in October dropped to a 780,000 annual pace, the lowest since records began in 1959, economists said. The Commerce Department reports on Nov. 19.
Industrywide U.S. auto sales fell for the 12th straight month in October, extending the longest slide in 17 years and hurting demand for metals. October total sales dropped to 838,156 from 1.23 million, according to Autodata Corp.
General Motors Corp. said this month it may run short of funds before the end of the year and Chrysler LLC said survival would be difficult without aid.
oil pricing pressure due to strong dollar
The strengthening dollar has certainly had something to do with the falling price of oil.
The US currency has been rising against the pound and the euro, not because everyone has suddenly decided that the US economy is very strong, but because the European economies may be in worse trouble than had been thought.
This means that oil prices can be depressed both by
1) the strong dollar and
2) the continuing concern about whether the US slowdown will hit demand for the commodity.
The US currency has been rising against the pound and the euro, not because everyone has suddenly decided that the US economy is very strong, but because the European economies may be in worse trouble than had been thought.
This means that oil prices can be depressed both by
1) the strong dollar and
2) the continuing concern about whether the US slowdown will hit demand for the commodity.
What is keeping oil prices so high?
published Monday, 23 June 2008
Fears of disruption to supplies is one factor behind the sky-high price
Despite an emerging global consensus that oil prices are dangerously high, there seems little chance of the cost of oil falling significantly in the near future.
Analysts say measures agreed at Sunday's crisis summit in Jeddah are unlikely to have a dramatic impact on market trends.
But what is keeping prices close to record levels of almost $140 a barrel?
WEAK US DOLLAR
The sharp jump in prices since 2005 has coincided with the plunge in the value of the dollar against other leading currencies
Dollar weakness encourages financial investors to look for other more lucrative investment opportunities, with oil top of their list
As oil is traded in dollars, it also makes it cheaper to buy
Signs the US economy may be on the brink of recession have undermined the dollar, boosting prices. Prices rose $11 on a single day last month when the unemployment rate rose
SUPPLY CONCERNS
Analysts say growth in global supplies is worryingly failing to keep pace with growth in demand
Supplies from countries such as Russia are thought to have peaked and finding new sources of oil is difficult and expensive
Increasing reliance on members of the Middle-East dominated oil producers group Opec, many of which are already pumping as much oil as they can
Saudi Arabia is one of few countries with spare capacity but it has been reluctant to boost output substantially
DEMAND GROWTH
Global thirst for oil is intense. Demand has risen by about 3 million barrels a day since 2005 and is expected to rise by 32 million barrels a day in the next two decades The US remains the world's largest oil consumer and high individual fuel usage continues to put pressure on crude stockpiles
Fast-growing China and India are forecast to account for 40% of the growth in oil demand by 2030, as industry grows and demand for travel increases
POLITICAL INSTABILITY
Much of the world's oil is concentrated in volatile regions, leading to fears of frequent and unpredictable disruptions to supplies
Despite oil output being at a six-year high, Iraq is still beset by violence while militant groups in Nigeria's main oil-producing region have recently impeded about a quarter of its output
Tensions over Iran's nuclear programme. There are fears that an Israeli attack on Iran's nuclear installations could trigger a wider conflict and threaten traffic through the strategically vital Strait of Hormuz, used to ship 40% of the world's oil.
MARKET SPECULATION
Oil exporters say the price surge cannot be explained by the fundamental ratio of supply to demand and point their fingers at market speculators
It is claimed that some traders are making huge amounts of money betting on the direction of prices, in turn forcing prices higher
Others maintain that traders are simply hedging their investments against future market developments to reduce risk
US regulators are looking for evidence of market manipulation while the IMF is examining the role of traders in the price spike
Fears of disruption to supplies is one factor behind the sky-high price
Despite an emerging global consensus that oil prices are dangerously high, there seems little chance of the cost of oil falling significantly in the near future.
Analysts say measures agreed at Sunday's crisis summit in Jeddah are unlikely to have a dramatic impact on market trends.
But what is keeping prices close to record levels of almost $140 a barrel?
WEAK US DOLLAR
The sharp jump in prices since 2005 has coincided with the plunge in the value of the dollar against other leading currencies
Dollar weakness encourages financial investors to look for other more lucrative investment opportunities, with oil top of their list
As oil is traded in dollars, it also makes it cheaper to buy
Signs the US economy may be on the brink of recession have undermined the dollar, boosting prices. Prices rose $11 on a single day last month when the unemployment rate rose
SUPPLY CONCERNS
Analysts say growth in global supplies is worryingly failing to keep pace with growth in demand
Supplies from countries such as Russia are thought to have peaked and finding new sources of oil is difficult and expensive
Increasing reliance on members of the Middle-East dominated oil producers group Opec, many of which are already pumping as much oil as they can
Saudi Arabia is one of few countries with spare capacity but it has been reluctant to boost output substantially
DEMAND GROWTH
Global thirst for oil is intense. Demand has risen by about 3 million barrels a day since 2005 and is expected to rise by 32 million barrels a day in the next two decades The US remains the world's largest oil consumer and high individual fuel usage continues to put pressure on crude stockpiles
Fast-growing China and India are forecast to account for 40% of the growth in oil demand by 2030, as industry grows and demand for travel increases
POLITICAL INSTABILITY
Much of the world's oil is concentrated in volatile regions, leading to fears of frequent and unpredictable disruptions to supplies
Despite oil output being at a six-year high, Iraq is still beset by violence while militant groups in Nigeria's main oil-producing region have recently impeded about a quarter of its output
Tensions over Iran's nuclear programme. There are fears that an Israeli attack on Iran's nuclear installations could trigger a wider conflict and threaten traffic through the strategically vital Strait of Hormuz, used to ship 40% of the world's oil.
MARKET SPECULATION
Oil exporters say the price surge cannot be explained by the fundamental ratio of supply to demand and point their fingers at market speculators
It is claimed that some traders are making huge amounts of money betting on the direction of prices, in turn forcing prices higher
Others maintain that traders are simply hedging their investments against future market developments to reduce risk
US regulators are looking for evidence of market manipulation while the IMF is examining the role of traders in the price spike
Oil Price History and Analysis
Introduction
Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply.
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $24.00 per barrel in response to war or conflict in the Middle East. With limited spare production capacity OPEC abandoned its price band in 2005 and was powerless to stem a surge in oil prices which was reminiscent of the late 1970s.
Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply.
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $24.00 per barrel in response to war or conflict in the Middle East. With limited spare production capacity OPEC abandoned its price band in 2005 and was powerless to stem a surge in oil prices which was reminiscent of the late 1970s.
U.S. Cuts Oil Price Forecast 43% on Demand Outlook
Last Updated: November 12, 2008 15:35 EST
By Mark Shenk and Reg Curren
asr: this govt. forecast caused crude price drop, not following our VP forecast which we took trade based on .
asr: how good is the US govt. energy report forecast fared in the past, can we get data and back test ?
asr: world oil consumption 80 million barrel/day , in that US is 20 m. barrels that is 25% of total world consumption.
- US stock markets value is 40% of total world stock market values
Nov. 12 (Bloomberg) -- The U.S. government reduced its forecast for oil prices next year by 43 percent as the economic slowdown cuts energy demand.
West Texas Intermediate crude oil, the U.S. benchmark, will average $63.50 in 2009, down from $112 estimated in October, the Energy Department said in its monthly Short-Term Energy Outlook, released today in Washington.
Crude oil in New York has tumbled 62 percent since touching a record $147.27 a barrel on July 11 as the economic slump deepened and spread to emerging markets. Falling stock markets and consumer spending last month contributed to the cut in price forecasts, said Tancred Lidderdale, a government economist in Washington who supervises the report.
``The grim economic news kind of snowballed in October,'' Lidderdale said. ``The changing forecast is all due to the economy.''
Oil will average $101.45 a barrel this year, down 9.1 percent from $111.57 a barrel estimated last month, the report from the department's Energy Information Administration showed. Prices have been falling amid reduced demand for fuels from slowing world economies.
Crude-oil for December delivery declined $3.17, or 5.3 percent, to $56.16 a barrel at 2:46 p.m. today on the New York Mercantile Exchange, the lowest settlement since Jan. 29, 2007.
U.S. oil demand will average 19.56 million barrels a day this year, down 1.12 million barrels a day from 2007. This year's demand forecast was reduced 290,000 barrels from last month. Consumption will drop 250,000 barrels a day to an average 19.31 million barrels a day in 2009, the report showed.
Oil demand in the U.S. peaked at 20.8 million barrels a day in 2005, Lidderdale said.
World Oil Demand
Global oil consumption will average 85.89 million barrels a day this year, up 80,000 barrels from 2007, according to the report. The estimate is down 250,000 barrels from the forecast a month ago. Demand will average 85.93 million barrels a day in 2009, down 990,000 barrels from last month's forecast.
Regular gasoline at the pump, averaged nationwide, will cost $2.37 a gallon in 2009, down 33 percent from $3.56 estimated in the October report. The fuel will average $3.29 a gallon this year, down 7.6 percent. Prices last week dropped to a 21-month low of $2.224 a gallon, the department said Nov. 10.
The government cut its estimate of winter fuel costs from last month as prices fell. The heating season runs from October through March.
Heating Costs
Heating oil users will spend an average $1,694 this winter, down 29 percent from $2,388 forecast last month and 13 percent lower than the average $1,953 spent by households last winter.
``The falling heating-oil prices are good news for all the homeowners that didn't lock in prices for this winter,'' Lidderdale said.
Homeowners using natural gas will see average heating costs for the season of $889, down 12 percent from $1,010 forecast in the October report. The estimate is up 3.6 percent from an average $858 last winter, the report showed.
U.S. natural gas consumption in 2009 will drop 0.2 percent as demand from industrial users slides 2.2 percent, the report showed. Fuel use this year will probably expand 1.1 percent.
``The weakness in global economic growth could limit U.S. exports of natural-gas-intensive products and further reduce consumption by industrial consumers,'' the department said.
Gas output will probably expand by 6 percent in 2008, driven by new production in Texas, Oklahoma and Wyoming, the department said. Production will increase by 2 percent in 2009.
Lower prices next year and ``poor economic conditions'' will limit expansion of supplies, according to the report. Gas will average about $6.82 per thousand cubic feet in 2009, down from $9.25 this year.
Natural gas for December delivery fell 30 cents, or 4.5 percent, to settle at $6.405 per million British thermal units today on the New York exchange. Gas is down 20 percent from a year ago. Prices per million Btu are roughly equivalent to prices per thousand cubic feet.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Reg Curren in Calgary at rcurren@bloomberg.net.
By Mark Shenk and Reg Curren
asr: this govt. forecast caused crude price drop, not following our VP forecast which we took trade based on .
asr: how good is the US govt. energy report forecast fared in the past, can we get data and back test ?
asr: world oil consumption 80 million barrel/day , in that US is 20 m. barrels that is 25% of total world consumption.
- US stock markets value is 40% of total world stock market values
Nov. 12 (Bloomberg) -- The U.S. government reduced its forecast for oil prices next year by 43 percent as the economic slowdown cuts energy demand.
West Texas Intermediate crude oil, the U.S. benchmark, will average $63.50 in 2009, down from $112 estimated in October, the Energy Department said in its monthly Short-Term Energy Outlook, released today in Washington.
Crude oil in New York has tumbled 62 percent since touching a record $147.27 a barrel on July 11 as the economic slump deepened and spread to emerging markets. Falling stock markets and consumer spending last month contributed to the cut in price forecasts, said Tancred Lidderdale, a government economist in Washington who supervises the report.
``The grim economic news kind of snowballed in October,'' Lidderdale said. ``The changing forecast is all due to the economy.''
Oil will average $101.45 a barrel this year, down 9.1 percent from $111.57 a barrel estimated last month, the report from the department's Energy Information Administration showed. Prices have been falling amid reduced demand for fuels from slowing world economies.
Crude-oil for December delivery declined $3.17, or 5.3 percent, to $56.16 a barrel at 2:46 p.m. today on the New York Mercantile Exchange, the lowest settlement since Jan. 29, 2007.
U.S. oil demand will average 19.56 million barrels a day this year, down 1.12 million barrels a day from 2007. This year's demand forecast was reduced 290,000 barrels from last month. Consumption will drop 250,000 barrels a day to an average 19.31 million barrels a day in 2009, the report showed.
Oil demand in the U.S. peaked at 20.8 million barrels a day in 2005, Lidderdale said.
World Oil Demand
Global oil consumption will average 85.89 million barrels a day this year, up 80,000 barrels from 2007, according to the report. The estimate is down 250,000 barrels from the forecast a month ago. Demand will average 85.93 million barrels a day in 2009, down 990,000 barrels from last month's forecast.
Regular gasoline at the pump, averaged nationwide, will cost $2.37 a gallon in 2009, down 33 percent from $3.56 estimated in the October report. The fuel will average $3.29 a gallon this year, down 7.6 percent. Prices last week dropped to a 21-month low of $2.224 a gallon, the department said Nov. 10.
The government cut its estimate of winter fuel costs from last month as prices fell. The heating season runs from October through March.
Heating Costs
Heating oil users will spend an average $1,694 this winter, down 29 percent from $2,388 forecast last month and 13 percent lower than the average $1,953 spent by households last winter.
``The falling heating-oil prices are good news for all the homeowners that didn't lock in prices for this winter,'' Lidderdale said.
Homeowners using natural gas will see average heating costs for the season of $889, down 12 percent from $1,010 forecast in the October report. The estimate is up 3.6 percent from an average $858 last winter, the report showed.
U.S. natural gas consumption in 2009 will drop 0.2 percent as demand from industrial users slides 2.2 percent, the report showed. Fuel use this year will probably expand 1.1 percent.
``The weakness in global economic growth could limit U.S. exports of natural-gas-intensive products and further reduce consumption by industrial consumers,'' the department said.
Gas output will probably expand by 6 percent in 2008, driven by new production in Texas, Oklahoma and Wyoming, the department said. Production will increase by 2 percent in 2009.
Lower prices next year and ``poor economic conditions'' will limit expansion of supplies, according to the report. Gas will average about $6.82 per thousand cubic feet in 2009, down from $9.25 this year.
Natural gas for December delivery fell 30 cents, or 4.5 percent, to settle at $6.405 per million British thermal units today on the New York exchange. Gas is down 20 percent from a year ago. Prices per million Btu are roughly equivalent to prices per thousand cubic feet.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Reg Curren in Calgary at rcurren@bloomberg.net.
Friday, November 14, 2008
Market Close Data
11/14/08 Friday: S&P 870 down 40
1) Hedge fund selling in advance of a Saturday deadline contributed to the market's gyrations, which set back the Dow Jones industrials almost 340 points and helped the major indexes fall sharply for the second straight week.
2) Analysts believe the market is still searching for a bottom after last month's huge losses, and that the pattern of volatility will continue for some time -- selling, even on technical reasons like looming deadlines for cashing out hedge fund holdings, is still coming against a backdrop of an extremely weak economy.
"Clearly, the trading crowd like hedge funds can take this market in any direction they want to. Anybody looking to build a position is just not confident," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
3)
Many investors are still trying to assimilate to the idea that the economy's downturn would be protracted, lasting well into next year and perhaps longer.
"The economic news continues to be very negative," said Ben Halliburton, chief investment officer of Tradition Capital Management. "The realization that '09 is going to be a very bad year for economic activity is starting to dawn on people and they are starting to digest how bad it's going to be."
1) Hedge fund selling in advance of a Saturday deadline contributed to the market's gyrations, which set back the Dow Jones industrials almost 340 points and helped the major indexes fall sharply for the second straight week.
2) Analysts believe the market is still searching for a bottom after last month's huge losses, and that the pattern of volatility will continue for some time -- selling, even on technical reasons like looming deadlines for cashing out hedge fund holdings, is still coming against a backdrop of an extremely weak economy.
"Clearly, the trading crowd like hedge funds can take this market in any direction they want to. Anybody looking to build a position is just not confident," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
3)
Many investors are still trying to assimilate to the idea that the economy's downturn would be protracted, lasting well into next year and perhaps longer.
"The economic news continues to be very negative," said Ben Halliburton, chief investment officer of Tradition Capital Management. "The realization that '09 is going to be a very bad year for economic activity is starting to dawn on people and they are starting to digest how bad it's going to be."
S&P Index historic chart
asr: S&P is trading around 900 for many days, so target is 1100 , All you need is 200 points which is say 65 points/day , 3 days can fetch required 200 points. The point is if it push that 200 in next 2 weeks it won't with stand , so it trades between 850 and 1050 till last week of december and finally it may close at that point 1100.
so you have 6 weeks to go for 200 points , that is 33 points gain per week on avarge . I think this is achievable with 2 to 3 100 point sswings days ( up & down ).
1) Analyst Avarage for S&P By 12/31/2008
The average Wall Street forecast calls for the S&P 500 to break out of a bear market and surge 20 percent to 1,118 by Dec. 31 -- more than twice as much as the biggest-ever advance to close out a year, according to data compiled by Bloomberg. Strategists were even more bullish at the beginning of the year, predicting that the S&P 500 would end 2008 at a record 1,632.
http://21cvision.blogspot.com/2008/11/believing-in-estimates-means-20-advance.html
----------------------------
2) schaeffersresearch
One could argue that a 25-year bull market ended in early-2000, even considering the bottom in 2002-2003 at the 160-month moving average (blue) and the subsequent move to marginal new highs in 2007. The S&P was basically cut in half from 2000-2003, doubled from 2003-2007 and has now effectively been cut in half again. This is not long-term bull market behavior, and it is further accentuated by the slice this month through the 160-month and then the 195-month moving average.
But what might be of greatest concern is the fact that 10-month historical volatility for the S&P at 35% (in blue in its own pane) is only matching that which occurred in 2002-2003, and is shy of what occurred in 1987. This is due to the fact that the current volatility explosion was preceded by three years of very low volatility. Low volatility doesn't always have to be unwound as a negative for the market, as you can see from how the low volatility of the early-1990's resolved itself into a major bull market replete with rising volatility (a sign of speculation, which of course ultimately killed it).
But this time, the low volatility was created in large part by mean reversion-based activity (premium selling and quant trading) by the dominant players in the market – the hedge funds – and it is the massive unwinding of this "dimes in front of a steamroller" trade that is creating a mirror image of high volatility as well as death and destruction in its path. To this I will add the unwinding of a bubble they created in commodities stocks that in retrospect put the tech bubble of the 1990's to shame.
"Now or when?" is a good question, and the answer is that nobody knows because so much depends on how much further the hedge-fund unwind has to go. A related question is whether the full extent of the toxic credit derivatives situation (also created by the existence of big hedge fund money looking for easy returns) has been played out. The current situation is also different from past big declines in that there are no natural buyers to support the market. The public has been out of US stocks for years and is getting decimated by their huge emerging markets exposure and is scared (but not scared enough).
1) Mutual fund managers and financial advisors can talk it up on CNBC and cite all the examples in history where pullbacks were a great time to buy, but they've got no new money to invest.
2) In addition, corporations cannot and/or will not buy back their stock as liquidity is being hoarded.
And all this is occurring while the market is in its worst technical condition in three decades, so I feel calls for a bottom are premature in both time and in price and the best you can say about this market is that it's very oversold and that any bounces should be viewed in this context.
-----------------------------------------
3) Fore cast 3 : from a daily commentary
For now, the only all-clear sign that risk-averse private investors should accept would be a close of the S&P 500 Index ($INX) above its 12-month average for at least one month, and preferably two straight months. That's currently 1,260, but it's moving lower all the time. If you want to take more risk and try to jump the gun at some point, wait for a one or two weekly closes above 1,010.
Thus the crisis will end only when private fund managers replace the government as the market's top credit buyers. Don't hold your breath, though, as that will require a large appetite for risk, which is painfully missing on Wall Street today at a time of shrinking balance sheets.
This new economic paradigm has already slaughtered many hedge fund and mutual fund pros who have gotten it wrong, so it's going to take unusual foresight and patience for individual investors to survive. My recommendation is to avoid getting sucked into rallies in seemingly cheap stocks and high-yielding bonds except for brief trades, and just guard your cash patiently while awaiting the next bull market that's bound eventually to emerge after a lot more sideways action, or worse.
so you have 6 weeks to go for 200 points , that is 33 points gain per week on avarge . I think this is achievable with 2 to 3 100 point sswings days ( up & down ).
1) Analyst Avarage for S&P By 12/31/2008
The average Wall Street forecast calls for the S&P 500 to break out of a bear market and surge 20 percent to 1,118 by Dec. 31 -- more than twice as much as the biggest-ever advance to close out a year, according to data compiled by Bloomberg. Strategists were even more bullish at the beginning of the year, predicting that the S&P 500 would end 2008 at a record 1,632.
http://21cvision.blogspot.com/2008/11/believing-in-estimates-means-20-advance.html
----------------------------
2) schaeffersresearch
One could argue that a 25-year bull market ended in early-2000, even considering the bottom in 2002-2003 at the 160-month moving average (blue) and the subsequent move to marginal new highs in 2007. The S&P was basically cut in half from 2000-2003, doubled from 2003-2007 and has now effectively been cut in half again. This is not long-term bull market behavior, and it is further accentuated by the slice this month through the 160-month and then the 195-month moving average.
But what might be of greatest concern is the fact that 10-month historical volatility for the S&P at 35% (in blue in its own pane) is only matching that which occurred in 2002-2003, and is shy of what occurred in 1987. This is due to the fact that the current volatility explosion was preceded by three years of very low volatility. Low volatility doesn't always have to be unwound as a negative for the market, as you can see from how the low volatility of the early-1990's resolved itself into a major bull market replete with rising volatility (a sign of speculation, which of course ultimately killed it).
But this time, the low volatility was created in large part by mean reversion-based activity (premium selling and quant trading) by the dominant players in the market – the hedge funds – and it is the massive unwinding of this "dimes in front of a steamroller" trade that is creating a mirror image of high volatility as well as death and destruction in its path. To this I will add the unwinding of a bubble they created in commodities stocks that in retrospect put the tech bubble of the 1990's to shame.
"Now or when?" is a good question, and the answer is that nobody knows because so much depends on how much further the hedge-fund unwind has to go. A related question is whether the full extent of the toxic credit derivatives situation (also created by the existence of big hedge fund money looking for easy returns) has been played out. The current situation is also different from past big declines in that there are no natural buyers to support the market. The public has been out of US stocks for years and is getting decimated by their huge emerging markets exposure and is scared (but not scared enough).
1) Mutual fund managers and financial advisors can talk it up on CNBC and cite all the examples in history where pullbacks were a great time to buy, but they've got no new money to invest.
2) In addition, corporations cannot and/or will not buy back their stock as liquidity is being hoarded.
And all this is occurring while the market is in its worst technical condition in three decades, so I feel calls for a bottom are premature in both time and in price and the best you can say about this market is that it's very oversold and that any bounces should be viewed in this context.
-----------------------------------------
3) Fore cast 3 : from a daily commentary
For now, the only all-clear sign that risk-averse private investors should accept would be a close of the S&P 500 Index ($INX) above its 12-month average for at least one month, and preferably two straight months. That's currently 1,260, but it's moving lower all the time. If you want to take more risk and try to jump the gun at some point, wait for a one or two weekly closes above 1,010.
Thus the crisis will end only when private fund managers replace the government as the market's top credit buyers. Don't hold your breath, though, as that will require a large appetite for risk, which is painfully missing on Wall Street today at a time of shrinking balance sheets.
This new economic paradigm has already slaughtered many hedge fund and mutual fund pros who have gotten it wrong, so it's going to take unusual foresight and patience for individual investors to survive. My recommendation is to avoid getting sucked into rallies in seemingly cheap stocks and high-yielding bonds except for brief trades, and just guard your cash patiently while awaiting the next bull market that's bound eventually to emerge after a lot more sideways action, or worse.
Thursday, November 13, 2008
Gold May Top $1,000 in 3 Years, Morgan Stanley Says
By Glenys Sim and Liza Lin
To contact the reporters for this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Liza Lin in Singapore at llin15@bloomberg.net
Nov. 13 (Bloomberg) -- Gold may climb above $1,000 an ounce in 2011 as global mine output drops, mining costs rise and demand increases, Morgan Stanley said.
``Mining production actually peaked in 2001 and has since been declining,'' the bank's commodity analyst Hussein Allidina said in an interview with Bloomberg television in Singapore. ``When I look at the demand side, as income growth accelerates, the consumption of gold for jewelry purposes increases.''
Gold more than doubled in the past six years and reached a record $1,032.70 an ounce March 17 as
1) the dollar slumped and
2) oil advanced,
3) increasing concern inflation would accelerated.
In the past eight months, the precious metal plunged 31 percent as
1) the dollar rallied,
2) oil collapsed and
3) the global credit crisis pushed the world toward a recession.
``The issue moving forward'' now is deflation, said Allidina. ``If you've got concerns about deflation you've lost that luster that gold has.'' Gold for immediate delivery traded at $714.45 an ounce at 3:22 p.m. Singapore time today.
Agriculture commodities will be the least affected by slowing global growth compared with industrial metals and energy, and corn and soybeans are ``oversold by far,'' he said.
``When you think about it from a layman's perspective, if your income is curtailed maybe you forego the purchase of a condominium or a car, you don't really change your food consumption,'' Allidina said. ``You still have population growth and that always works in the favor of corn and soybeans.''
Price Spikes
Corn has plunged 54 percent from a record $7.9925 June 27, and traded at $3.6675 a bushel at 3:23.
Soybeans have tumbled 46 percent from their peak July 3 and traded at $8.8725 a bushel.
Allidina said while he is cautious on base metals, ``you don't necessarily want to short any of these'' as supply disruptions would probably cause a rally in prices.
``Inventory levels with the exception of aluminum are relatively tight,'' he said. ``They've improved over the last six to 12 months but if you pull back 10 years, inventories are much lower today than they were in other cycles.''
China announced a 4 trillion yuan ($586 billion) stimulus package Nov. 9 for spending on low-rent housing, infrastructure in rural areas, as well as roads, railways and airports.
``The plan is net positive but I don't know if it'll necessarily prevent a slowdown,'' said Allidina. ``Granted a lot of the copper used in China is in government-sponsored infrastructure, so that should continue, but the rest of the space is such a mess -- auto sales, housing, it's all down.''
Cash Costs
Most metals have fallen below their marginal cost of production and some are trading near their cash cost, which should limit the downside.
``If you look back historically for a full year you never average below the cash cost of production,'' he said. ``This time we'll probably spend even less time below the cash cost because who's going to loan you money if you're cash negative.''
``Definitely capital expenditure for the future is being reduced,'' he said. ``That's why I'm very concerned about what happens three years from now, because the same time that growth starts to recover is the time you don't have the supply that we should be investing in today.''
Oil is different from other commodities because of the issue of depletion.
``Next year it's going to be a weaker scenario,'' Allidina said. ``I don't believe we will go down to $30 or $40. You could see prices fall below $50 in the short term on a day to day basis, but I don't think you will average in that range.''
To contact the reporters for this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Liza Lin in Singapore at llin15@bloomberg.net
Nov. 13 (Bloomberg) -- Gold may climb above $1,000 an ounce in 2011 as global mine output drops, mining costs rise and demand increases, Morgan Stanley said.
``Mining production actually peaked in 2001 and has since been declining,'' the bank's commodity analyst Hussein Allidina said in an interview with Bloomberg television in Singapore. ``When I look at the demand side, as income growth accelerates, the consumption of gold for jewelry purposes increases.''
Gold more than doubled in the past six years and reached a record $1,032.70 an ounce March 17 as
1) the dollar slumped and
2) oil advanced,
3) increasing concern inflation would accelerated.
In the past eight months, the precious metal plunged 31 percent as
1) the dollar rallied,
2) oil collapsed and
3) the global credit crisis pushed the world toward a recession.
``The issue moving forward'' now is deflation, said Allidina. ``If you've got concerns about deflation you've lost that luster that gold has.'' Gold for immediate delivery traded at $714.45 an ounce at 3:22 p.m. Singapore time today.
Agriculture commodities will be the least affected by slowing global growth compared with industrial metals and energy, and corn and soybeans are ``oversold by far,'' he said.
``When you think about it from a layman's perspective, if your income is curtailed maybe you forego the purchase of a condominium or a car, you don't really change your food consumption,'' Allidina said. ``You still have population growth and that always works in the favor of corn and soybeans.''
Price Spikes
Corn has plunged 54 percent from a record $7.9925 June 27, and traded at $3.6675 a bushel at 3:23.
Soybeans have tumbled 46 percent from their peak July 3 and traded at $8.8725 a bushel.
Allidina said while he is cautious on base metals, ``you don't necessarily want to short any of these'' as supply disruptions would probably cause a rally in prices.
``Inventory levels with the exception of aluminum are relatively tight,'' he said. ``They've improved over the last six to 12 months but if you pull back 10 years, inventories are much lower today than they were in other cycles.''
China announced a 4 trillion yuan ($586 billion) stimulus package Nov. 9 for spending on low-rent housing, infrastructure in rural areas, as well as roads, railways and airports.
``The plan is net positive but I don't know if it'll necessarily prevent a slowdown,'' said Allidina. ``Granted a lot of the copper used in China is in government-sponsored infrastructure, so that should continue, but the rest of the space is such a mess -- auto sales, housing, it's all down.''
Cash Costs
Most metals have fallen below their marginal cost of production and some are trading near their cash cost, which should limit the downside.
``If you look back historically for a full year you never average below the cash cost of production,'' he said. ``This time we'll probably spend even less time below the cash cost because who's going to loan you money if you're cash negative.''
``Definitely capital expenditure for the future is being reduced,'' he said. ``That's why I'm very concerned about what happens three years from now, because the same time that growth starts to recover is the time you don't have the supply that we should be investing in today.''
Oil is different from other commodities because of the issue of depletion.
``Next year it's going to be a weaker scenario,'' Allidina said. ``I don't believe we will go down to $30 or $40. You could see prices fall below $50 in the short term on a day to day basis, but I don't think you will average in that range.''
Leverage of distressed commodities:
Leverage of distressed commodities:
- In case of gold at 650-700 , can this theory is applied to hold for long term like a year or two.
- same with crude , crude at 50 , is it safe to hold for a year/two with sufficient funds in account for down turn up to 40 ( need 10k extra funds for return of 10 k )
Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization
in Chapter 5, Janet Tavakoli describes "The Leverage Paradox" whereby levering up equity (or even commodity) positions that are deeply distressed can make sense as a systematic strategy since the dramatic returns for correct bets can compensate for the inevitable downturns from such a strategy. But when leverage is applied to non-distressed debt securities, as was the fashion during the credit boom, disastrous results can (and did) happen with any air-pocket in the market, whether it is because of isolated cases of fraud or temporarily difficult liquidity conditions.
- In case of gold at 650-700 , can this theory is applied to hold for long term like a year or two.
- same with crude , crude at 50 , is it safe to hold for a year/two with sufficient funds in account for down turn up to 40 ( need 10k extra funds for return of 10 k )
Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization
in Chapter 5, Janet Tavakoli describes "The Leverage Paradox" whereby levering up equity (or even commodity) positions that are deeply distressed can make sense as a systematic strategy since the dramatic returns for correct bets can compensate for the inevitable downturns from such a strategy. But when leverage is applied to non-distressed debt securities, as was the fashion during the credit boom, disastrous results can (and did) happen with any air-pocket in the market, whether it is because of isolated cases of fraud or temporarily difficult liquidity conditions.
Crude Oil Rises After Smaller-Than-Forecast U.S. Inventory Gain
asr: is it a weekly report? where can you get inventories/stockpiles weekly increase/decrease ?
- crude fell to $54 lowest in the world markets before US open? On a day before Govt. stockpiles report is it normal to rise before report release? can we see historic report of invetories?
- if so can it be used for buying at $54 assuming , it will rise before report release irrespective of report outcome. ?
Nov. 13 (Bloomberg) -- Crude oil rose after a U.S. government report showed a smaller-than-expected supply increase and refiners cut operating rates.
Stockpiles rose 22,000 barrels to 311.9 million barrels last week, the Energy Department said today. Inventories were forecast to rise 1 million barrels, according to a Bloomberg News survey. Refineries operated at 72.3 percent of capacity last week, down 0.7 percentage point from the previous week, the report showed.
Crude oil for December delivery rose 56 cents, or 1 percent, to $56.72 a barrel at 1:35 p.m. on the New York Mercantile Exchange. Futures touched $54.67, the lowest since Jan. 30, 2007. Prices have tumbled 61 percent since reaching a record $147.27 on July 11.
Oil traded at $57.19 a barrel before the release of the report at 11 a.m. in Washington. The report was delayed by a day because of the Veterans Day holiday on Nov. 11.
------------------
The Energy Department said crude stocks remained unchanged last week, while gasoline stockpiles rose by 2 million barrels, and supplies of distillates, which are used to make diesel fuel and home heating oil, rose by 600,000 barrels.
Analysts surveyed by industry tracking firm Platts expected a 1.1 million barrel increase in crude supplies, an 850,000 barrel rise in gasoline stockpiles, and a 1 million barrel gain in distillates.
The inventory report was delayed a day due to the U.S. Veterans Day holiday on Tuesday.
"The way demand is falling, it doesn't matter even if you cut back production," said Phil Flynn, senior market analyst with Alaron Trading in Chicago.
The slide has sent many oil producers scrambling to reinforce prices and keep their energy industries afloat.
Other reports said a meeting was possible on Nov. 29. The Organization of Arab Petroleum Exporting Countries, many of whose members also belong to OPEC, was already scheduled to meet in Cairo on that date.
Should OPEC cut production again, "short-term it's bullish, but long-term it's just another reminder to the market just how bad demand is," said Flynn.
"People are still fearful whenever OPEC jawbones about cutting production," added James Cordier, founder of commodities brokerage OptionSellers.com
Slowing demand: In order for a second OPEC cut to have a lasting effect on oil prices, both the equity markets the outlook for the global economy would need to show improvement as well, said Cordier.
Commodity investors are looking to stocks to get a long-term view on the health of the economy, he said.
- crude fell to $54 lowest in the world markets before US open? On a day before Govt. stockpiles report is it normal to rise before report release? can we see historic report of invetories?
- if so can it be used for buying at $54 assuming , it will rise before report release irrespective of report outcome. ?
Nov. 13 (Bloomberg) -- Crude oil rose after a U.S. government report showed a smaller-than-expected supply increase and refiners cut operating rates.
Stockpiles rose 22,000 barrels to 311.9 million barrels last week, the Energy Department said today. Inventories were forecast to rise 1 million barrels, according to a Bloomberg News survey. Refineries operated at 72.3 percent of capacity last week, down 0.7 percentage point from the previous week, the report showed.
Crude oil for December delivery rose 56 cents, or 1 percent, to $56.72 a barrel at 1:35 p.m. on the New York Mercantile Exchange. Futures touched $54.67, the lowest since Jan. 30, 2007. Prices have tumbled 61 percent since reaching a record $147.27 on July 11.
Oil traded at $57.19 a barrel before the release of the report at 11 a.m. in Washington. The report was delayed by a day because of the Veterans Day holiday on Nov. 11.
------------------
The Energy Department said crude stocks remained unchanged last week, while gasoline stockpiles rose by 2 million barrels, and supplies of distillates, which are used to make diesel fuel and home heating oil, rose by 600,000 barrels.
Analysts surveyed by industry tracking firm Platts expected a 1.1 million barrel increase in crude supplies, an 850,000 barrel rise in gasoline stockpiles, and a 1 million barrel gain in distillates.
The inventory report was delayed a day due to the U.S. Veterans Day holiday on Tuesday.
"The way demand is falling, it doesn't matter even if you cut back production," said Phil Flynn, senior market analyst with Alaron Trading in Chicago.
The slide has sent many oil producers scrambling to reinforce prices and keep their energy industries afloat.
Other reports said a meeting was possible on Nov. 29. The Organization of Arab Petroleum Exporting Countries, many of whose members also belong to OPEC, was already scheduled to meet in Cairo on that date.
Should OPEC cut production again, "short-term it's bullish, but long-term it's just another reminder to the market just how bad demand is," said Flynn.
"People are still fearful whenever OPEC jawbones about cutting production," added James Cordier, founder of commodities brokerage OptionSellers.com
Slowing demand: In order for a second OPEC cut to have a lasting effect on oil prices, both the equity markets the outlook for the global economy would need to show improvement as well, said Cordier.
Commodity investors are looking to stocks to get a long-term view on the health of the economy, he said.
Hedge funds lost an average of 15.5 percent this year through Oct. 31, 2008
Main Street Impact
He said there are as many as 8,000 funds managing as much as $1.5 trillion and could account for up to 30 percent of trading volume in U.S. stocks.
``This isn't just about sophisticated, high-stakes investors anymore,'' Davis said. ``Institutional funds and public pensions now have a huge stake in hedge funds' promises of steady, above-market returns. That means public employees and middle-income senior citizens, not just Tom Wolfe's Masters of the Universe, lose money when hedge funds decline or collapse.''
Soros, 78, is the chairman of $19 billion Soros Fund Management. He has called credit-default swaps the next crisis area because the market is unregulated, and he has recommended the creation of an exchange where these contracts could be traded.
Paulson, 52, runs a New York-based fund that manages about $36 billion. His Credit Opportunities Fund soared almost sixfold in 2007, primarily on wagers that subprime mortgages would tumble. Paulson's Advantage Plus fund has climbed 29 percent this year through October while many managers are enduring the worst year of their careers.
Griffin Struggles
Hedge funds lost an average of 15.5 percent this year through Oct. 31, according to data compiled by Chicago-based Hedge Fund Research Inc.
ASR: 11% LOSS FOR YEAR , IT IS STILL MUCH BETTER THAN 40% OF INDICES THIS YEAR
Falcone, 46, also profited from a drop in subprime mortgages last year, when his fund, now about $20 billion, doubled. This year the fund was up 42 percent at the end of June and has since tumbled to a loss of about 13 percent.
Simons, 70, runs his $29 billion fund out of East Setauket, New York. The former academic makes money by using computer models to trade. His Medallion Fund, made up of his own money and that of his employees, is up more than 50 percent this year.
Griffin, 40, runs the $16 billion Citadel Investment Group LLC in Chicago, and has faced the toughest year out of the five billionaire managers. His funds dropped 38 percent this year through Nov. 4.
He said there are as many as 8,000 funds managing as much as $1.5 trillion and could account for up to 30 percent of trading volume in U.S. stocks.
``This isn't just about sophisticated, high-stakes investors anymore,'' Davis said. ``Institutional funds and public pensions now have a huge stake in hedge funds' promises of steady, above-market returns. That means public employees and middle-income senior citizens, not just Tom Wolfe's Masters of the Universe, lose money when hedge funds decline or collapse.''
Soros, 78, is the chairman of $19 billion Soros Fund Management. He has called credit-default swaps the next crisis area because the market is unregulated, and he has recommended the creation of an exchange where these contracts could be traded.
Paulson, 52, runs a New York-based fund that manages about $36 billion. His Credit Opportunities Fund soared almost sixfold in 2007, primarily on wagers that subprime mortgages would tumble. Paulson's Advantage Plus fund has climbed 29 percent this year through October while many managers are enduring the worst year of their careers.
Griffin Struggles
Hedge funds lost an average of 15.5 percent this year through Oct. 31, according to data compiled by Chicago-based Hedge Fund Research Inc.
ASR: 11% LOSS FOR YEAR , IT IS STILL MUCH BETTER THAN 40% OF INDICES THIS YEAR
Falcone, 46, also profited from a drop in subprime mortgages last year, when his fund, now about $20 billion, doubled. This year the fund was up 42 percent at the end of June and has since tumbled to a loss of about 13 percent.
Simons, 70, runs his $29 billion fund out of East Setauket, New York. The former academic makes money by using computer models to trade. His Medallion Fund, made up of his own money and that of his employees, is up more than 50 percent this year.
Griffin, 40, runs the $16 billion Citadel Investment Group LLC in Chicago, and has faced the toughest year out of the five billionaire managers. His funds dropped 38 percent this year through Nov. 4.
U.S. Economy: Jobless Rolls Reach 25-Year High, Exports Slump
`We are in a world economic downturn, there is no question about it, and it's shaping up to be pretty significant,'' said David Resler, chief economist at Nomura Securities International in New York. In the U.S., ``it will be a very serious recession, rivaling the worst in the postwar period.''
1) The worst German recession in at least 12 years and
2) shrinking economies in other parts of Europe and in Japan will hurt U.S. exports,
3) while a lack of credit and rising unemployment will cause American consumers and businesses to keep retrenching.
Even a second round of government stimulus will not promote a quick rebound, Resler said.
1) The worst German recession in at least 12 years and
2) shrinking economies in other parts of Europe and in Japan will hurt U.S. exports,
3) while a lack of credit and rising unemployment will cause American consumers and businesses to keep retrenching.
Even a second round of government stimulus will not promote a quick rebound, Resler said.
Wednesday, November 12, 2008
50% in CA Who Sold Homes in Past Year Lost Money, Zillow Saysin
what is causing deepening the housing recession ( keep house prices falling )
1) Stricter mortgage standards and ( 25% downpayment and 6% interest rate for 5 year ARM)
2) record foreclosures ( there are so many foreclousure home on sale at lower prices, genuine non-foreclousure seller is forced to lower his price to match 'foreclosure' price in-order to sell )
3) amid climbing unemployment. ( 6.3% , causing 'more sellers' and 'fewer buyers' even employed propspective buyer with decreasing confidence delays/postpones buying decision )
California had 14 of the 17 markets( like San jose, SF , LA ) where more than half of homes sold were sold at a loss, according to Zillow.
asr: meaning 50% sold are people who bought houses from 2005 to 2007 which resulted in loss in todays prices , other may be houses bought earlier that is prior to 2004 ..
U.S. payrolls fell for a 10th straight month in October and have dropped by 1.2 million so far this year, the Labor Department said last week. The jobless rate is at a five-year high of 6.3 percent.
The 30.2 percent of homeowners who sold at a loss at the end of the third quarter compared with 23.7 percent at the end of the second quarter, Zillow said. Almost one in five transactions were foreclosure sales.
California had 14 of the 17 markets where more than half of homes sold were sold at a loss, according to Zillow.
1) Stricter mortgage standards and ( 25% downpayment and 6% interest rate for 5 year ARM)
2) record foreclosures ( there are so many foreclousure home on sale at lower prices, genuine non-foreclousure seller is forced to lower his price to match 'foreclosure' price in-order to sell )
3) amid climbing unemployment. ( 6.3% , causing 'more sellers' and 'fewer buyers' even employed propspective buyer with decreasing confidence delays/postpones buying decision )
California had 14 of the 17 markets( like San jose, SF , LA ) where more than half of homes sold were sold at a loss, according to Zillow.
asr: meaning 50% sold are people who bought houses from 2005 to 2007 which resulted in loss in todays prices , other may be houses bought earlier that is prior to 2004 ..
U.S. payrolls fell for a 10th straight month in October and have dropped by 1.2 million so far this year, the Labor Department said last week. The jobless rate is at a five-year high of 6.3 percent.
The 30.2 percent of homeowners who sold at a loss at the end of the third quarter compared with 23.7 percent at the end of the second quarter, Zillow said. Almost one in five transactions were foreclosure sales.
California had 14 of the 17 markets where more than half of homes sold were sold at a loss, according to Zillow.
Oil slips below $59 on global growth pessimism
Trader and analyst Stephen Schork noted that the reaction to Beijing's planned economic stimulus package earlier this week -- and the subsequent oil price fluctuations -- were symptomatic of the jittery state the market finds itself in.
"It is important to remember that price is a function of the crowd's emotional input to a given fundamental event." he said in a research note. "Thus, those traders who thought it was a good idea to pay $65 Sunday night were probably the same traders who had to sell (at) $59 yesterday afternoon."
Investors have brushed off two recent production cuts by the Organization of Petroleum Exporting Countries, and prices have continued to fall amid talk of a third quota output reduction next month.
Qatar's prime minister, Sheikh Hamad Bin Jassim Bin Jabr Al-Thani, said Tuesday that "fair" oil prices of between $70 to $90 per barrel would ensure that expensive oil exploration could continue and help to avert price spikes in the future.
"The market has become so demand focused that obvious support mechanisms, like OPEC cutting supply, don't have the same impact," said Pervan, who expects prices to fall to $45 a barrel during the first quarter of next year.
asr: how come OPEC minister said $45 a barrel ? , usually middle east govt. won't say lower prices ?
Investors will be watching for signs of slowing U.S. demand in the weekly oil inventories report to be released by the U.S. Energy Department's Energy Information Administration. The petroleum supply report was expected to show that oil stocks rose 1.1 million barrels last week, according to the average of estimates in a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The Platts survey also showed that analysts projected gasoline inventories rose 850,000 million barrels and distillates increased 1 million barrels last week.
"It is important to remember that price is a function of the crowd's emotional input to a given fundamental event." he said in a research note. "Thus, those traders who thought it was a good idea to pay $65 Sunday night were probably the same traders who had to sell (at) $59 yesterday afternoon."
Investors have brushed off two recent production cuts by the Organization of Petroleum Exporting Countries, and prices have continued to fall amid talk of a third quota output reduction next month.
Qatar's prime minister, Sheikh Hamad Bin Jassim Bin Jabr Al-Thani, said Tuesday that "fair" oil prices of between $70 to $90 per barrel would ensure that expensive oil exploration could continue and help to avert price spikes in the future.
"The market has become so demand focused that obvious support mechanisms, like OPEC cutting supply, don't have the same impact," said Pervan, who expects prices to fall to $45 a barrel during the first quarter of next year.
asr: how come OPEC minister said $45 a barrel ? , usually middle east govt. won't say lower prices ?
Investors will be watching for signs of slowing U.S. demand in the weekly oil inventories report to be released by the U.S. Energy Department's Energy Information Administration. The petroleum supply report was expected to show that oil stocks rose 1.1 million barrels last week, according to the average of estimates in a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The Platts survey also showed that analysts projected gasoline inventories rose 850,000 million barrels and distillates increased 1 million barrels last week.
Tuesday, November 11, 2008
commodity Contract Specifications
CL - crude Light
QM - crude-mini , 1/2 of CL
Options - Crude Options have x 1000 , so do (optionPrice x 1000 )
GC - Gold Contract
YG - Gold mini , 1/3 of GC
Options - Gold Options have x 100 so do (optionPrice x 100 )
----
asr: notice December 2009 (year from now) gold contract has premium only $1000 compared to current month future contract price
- where as for crude 'one year future contract' premium is $10000
- notice it, why is this ? is it this way always i.e crude commands big 1 year premium vs. 1 year gold future contract?
- or is it because no economy worldwide outlook is bleak next one year, market thinks people do not buy gold ?
--
Gold Futures and Options
Trading Hours
Futures and Options: Open outcry trading is conducted from 8:20 A.M. until 1:30 P.M. Eastern Time
Electronic trading is conducted via the CME Globex® trading platform from 6:00 PM Sundays through 5:15 PM Fridays, Eastern Time, with a 45-minute break each day between 5:15 PM and 6:00 PM.
Last Trading Day
Futures: Trading terminates at the close of business on the third to last business day of the maturing delivery month.
Options: Beginning with the expiration of the December 2002 contract, options will expire on the fourth business day prior to the end of the month preceding the options contract month. If the expiration day falls on a Friday or immediately prior to an Exchange holiday, expiration will occur on the previous business day.
asr: so December Options expires 3 days before 'calender month end of November' , that is why you do not see 'November options ' in the month of ' November'
- above options expiration is for Gold, it seems Crude CL follows same as gold.
QM - crude-mini , 1/2 of CL
Options - Crude Options have x 1000 , so do (optionPrice x 1000 )
GC - Gold Contract
YG - Gold mini , 1/3 of GC
Options - Gold Options have x 100 so do (optionPrice x 100 )
----
asr: notice December 2009 (year from now) gold contract has premium only $1000 compared to current month future contract price
- where as for crude 'one year future contract' premium is $10000
- notice it, why is this ? is it this way always i.e crude commands big 1 year premium vs. 1 year gold future contract?
- or is it because no economy worldwide outlook is bleak next one year, market thinks people do not buy gold ?
--
Gold Futures and Options
Trading Hours
Futures and Options: Open outcry trading is conducted from 8:20 A.M. until 1:30 P.M. Eastern Time
Electronic trading is conducted via the CME Globex® trading platform from 6:00 PM Sundays through 5:15 PM Fridays, Eastern Time, with a 45-minute break each day between 5:15 PM and 6:00 PM.
Last Trading Day
Futures: Trading terminates at the close of business on the third to last business day of the maturing delivery month.
Options: Beginning with the expiration of the December 2002 contract, options will expire on the fourth business day prior to the end of the month preceding the options contract month. If the expiration day falls on a Friday or immediately prior to an Exchange holiday, expiration will occur on the previous business day.
asr: so December Options expires 3 days before 'calender month end of November' , that is why you do not see 'November options ' in the month of ' November'
- above options expiration is for Gold, it seems Crude CL follows same as gold.
Gov't launches new loan aid effort
A record 1.6 million homes will be lost to foreclosure this year and
1.9 million more next year,
according to Celia Chen, an economist for Moody's Economy.com.
With home values plunging as much as 20% from their peaks, more than 12 million homeowners now owe more on their home than it is worth,
according to estimates by Moody's Economy.com.
Although history suggests that the vast majority of those homeowners will continue to make their payments, they are at increased risk of losing their home through foreclosure.
he program will start by Dec. 15.
Flawed plan, critics say
Critics said the plan had flaws.
The modification could leave some borrowers worse off than if they lost their homes now. Because the lender won't write down any of the principal and because home prices in some areas could keep falling for years, borrowers who accept a modification now could end up owing lots of money when the house is finally sold, said Dean Baker, co-director of the Center for Economic and Policy Research. "Unless you have serious writedowns you are probably aren't doing those people any favors," he said.
Sen. Charles Schumer, D-N.Y., said the plan ignores the elephant in the room: Most of the troublesome mortgages are owned by large pools of investors, or have been securitized in a way that makes a modification impossible. "The only viable solution, and it is one we will take up under President-elect Obama, is to modify the bankruptcy code" he said.
-----------------
The government and the mortgage industry are launching the most sweeping effort yet to help troubled homeowners by speeding up the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.
The Federal Housing Finance Agency, which seized control of the two mortgage finance companies in September, announced the plan Tuesday along with other government and industry officials, including Hope Now, an alliance of mortgage companies organized by the Bush administration last year.
"Foreclosures hurt families, their neighbors, whole communities and the overall housing market," said James Lockhart, the housing finance agency's director. "We need to stop this downward spiral."
The plan could have tremendous importance because Fannie Mae and Freddie Mac own or guarantee nearly 31 million U.S. mortgages, or nearly six of every 10 outstanding. Still, government officials did not have an estimate of how many people would qualify for the new program.
Officials hope the new approach, which goes into effect Dec. 15., will become a model for loan servicing companies, which collect mortgage companies and distribute them to investors. These companies have been roundly criticized for being slow to respond to a surge in defaults.
To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90 percent or more than the home is currently worth. Investors who do not occupy their homes would be excluded, as would borrowers who have filed for bankruptcy.
Borrowers would get help in several ways: The interest rate would be reduced so that borrowers would not pay more than 38 percent of their income on housing expenses. Another option is for loans to be extended from 30 years to 40 years, and for some of the principal amount to be deferred interest-free.
More than 4 million American homeowners, or 9 percent of borrowers with a mortgage were either behind on their payments or in foreclosure at the end of June, according to the most recent data from the Mortgage Bankers Association.
1.9 million more next year,
according to Celia Chen, an economist for Moody's Economy.com.
With home values plunging as much as 20% from their peaks, more than 12 million homeowners now owe more on their home than it is worth,
according to estimates by Moody's Economy.com.
Although history suggests that the vast majority of those homeowners will continue to make their payments, they are at increased risk of losing their home through foreclosure.
he program will start by Dec. 15.
Flawed plan, critics say
Critics said the plan had flaws.
The modification could leave some borrowers worse off than if they lost their homes now. Because the lender won't write down any of the principal and because home prices in some areas could keep falling for years, borrowers who accept a modification now could end up owing lots of money when the house is finally sold, said Dean Baker, co-director of the Center for Economic and Policy Research. "Unless you have serious writedowns you are probably aren't doing those people any favors," he said.
Sen. Charles Schumer, D-N.Y., said the plan ignores the elephant in the room: Most of the troublesome mortgages are owned by large pools of investors, or have been securitized in a way that makes a modification impossible. "The only viable solution, and it is one we will take up under President-elect Obama, is to modify the bankruptcy code" he said.
-----------------
The government and the mortgage industry are launching the most sweeping effort yet to help troubled homeowners by speeding up the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.
The Federal Housing Finance Agency, which seized control of the two mortgage finance companies in September, announced the plan Tuesday along with other government and industry officials, including Hope Now, an alliance of mortgage companies organized by the Bush administration last year.
"Foreclosures hurt families, their neighbors, whole communities and the overall housing market," said James Lockhart, the housing finance agency's director. "We need to stop this downward spiral."
The plan could have tremendous importance because Fannie Mae and Freddie Mac own or guarantee nearly 31 million U.S. mortgages, or nearly six of every 10 outstanding. Still, government officials did not have an estimate of how many people would qualify for the new program.
Officials hope the new approach, which goes into effect Dec. 15., will become a model for loan servicing companies, which collect mortgage companies and distribute them to investors. These companies have been roundly criticized for being slow to respond to a surge in defaults.
To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90 percent or more than the home is currently worth. Investors who do not occupy their homes would be excluded, as would borrowers who have filed for bankruptcy.
Borrowers would get help in several ways: The interest rate would be reduced so that borrowers would not pay more than 38 percent of their income on housing expenses. Another option is for loans to be extended from 30 years to 40 years, and for some of the principal amount to be deferred interest-free.
More than 4 million American homeowners, or 9 percent of borrowers with a mortgage were either behind on their payments or in foreclosure at the end of June, according to the most recent data from the Mortgage Bankers Association.
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