tag:blogger.com,1999:blog-1258979445050968882.post5746245547351332862..comments2023-11-26T06:55:42.401-05:00Comments on [ The Financial Ninja ]: Commodities Unravel, Confidence CollapsesBen Bittrolffhttp://www.blogger.com/profile/12465978905157927856noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-1258979445050968882.post-34539181564833092402008-03-23T16:06:00.000-04:002008-03-23T16:06:00.000-04:00ben, i thought you might be interested in this blo...ben, i thought you might be interested in this blog. maybe<BR/><BR/>http://monkeyfister.blogspot.com/2008/03/derivatives-ticking-time-bombs.html<BR/><BR/>then again i try not to think too hard. peaceams5995https://www.blogger.com/profile/13458543642457698627noreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-37293994234443916202008-03-23T15:13:00.000-04:002008-03-23T15:13:00.000-04:00Some further clarification - Consumers are cutting...Some further clarification - <BR/><BR/>Consumers are cutting back from excessive levels of past years and banks are slashing HELOC available credit lines and limits on cards.<BR/><BR/>Given consumer pullbacks, businesses are slowing investment as capacity is not constrained domestically nor globally, and hence an attendant reduction in project finance, if there was available capital given the credit crisis.<BR/><BR/>The US economy is sliding first and fastest into recession, corporate earnings are decelerating at an increasing pace, especially on Wall St and the financial sector, making forward earnings or cashflow valuation extremely difficult.<BR/><BR/>Home prices are in free fall and the debt extended to finance them are increasingly of lower values, yet there is a huge supply of available housing and more coming as the home builders haven't stopped and foreclosures rates are increasing (the evicted will rent from another struggling real estate investor or in an apartment).<BR/><BR/>Real yields on short term treasuries have reached negative levels, given taxes and official inflation. You've seen the treasury yield curve, yes?<BR/><BR/>The Fed is entering a liquidity trap and new debt to expand the money supply is minimal, except for what the Fed is injecting into the banking and shadow banking system to keep their inherent leverage levels from imploding them.<BR/><BR/>So the repatriated cash is going to go where? Equities? Treasuries paying negative yields? Munis with increasing unbalanced local budgets, albeit these are safer than mortgage backed securities, except maybe GNMA's...<BR/><BR/>If the capital slosh comes back into equities, it will be sold into by currently trapped longs IMO.<BR/><BR/>The credit markets are in total disarray and even the Repo market is experiencing fails.<BR/><BR/>Actual commodities or other hard assets with supply demand imbalances (food, fuel, essentials) appear to me to be some of the few remaining stores of wealth...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-87130276596787896392008-03-23T14:32:00.000-04:002008-03-23T14:32:00.000-04:00Ben - I think a lot depends on whether the myth of...Ben - I think a lot depends on whether the myth of debt as sound money and a store of wealth unravels first or second.<BR/><BR/>Do you really want your investments and wealth in the currency of the largest global debtor ever, or not?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-9607083343261252352008-03-23T14:00:00.000-04:002008-03-23T14:00:00.000-04:00tdave23,I'm referring to investment fund flows rev...tdave23,<BR/><BR/>I'm referring to investment fund flows reversing course. Everybody and his momma went long any and every emerging market in a big way. Most of that capital came from North America. It will come back, voluntarily (as investment opportunities dim) or involuntarily (general de-leveraging especially as the margin clerks start working the phones in a big way).<BR/><BR/>Think about it. How many individual investors bought into the Chindia, the BRICK countries and the commodity stories via mutual funds and ETFs... especially if you subscribed to the Global De-coupling Myth. I know the hedgies did in a big way...<BR/><BR/>What do you think will happen when they start scrambling to get out (more than they are already I mean)?Ben Bittrolffhttps://www.blogger.com/profile/12465978905157927856noreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-75222007841437547952008-03-23T12:35:00.000-04:002008-03-23T12:35:00.000-04:00"The US dollar will gain significantly as huge qua..."The US dollar will gain significantly as huge quantities of capital are repatriated, especially from emerging economies."<BR/><BR/>Please clarify your jujitsu here, especially with regard to the nature of emerging economy repatriations...<BR/><BR/>Trading arbitrage w.r.t. interest rates & carry trades, yes I can see some of that in the flows of non-emerging market trading partners, but the emerging economy repatriations?<BR/><BR/>They have sold us stuff, we have paid with FRN's, they have reinvested the FRN's in physical plants and resource properties expansion and development. What is to repatriate?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-11719369464423648072008-03-23T10:45:00.000-04:002008-03-23T10:45:00.000-04:00A,Agreed. The ECB will most certainly hold out the...A,<BR/><BR/>Agreed. The ECB will most certainly hold out the longest on the rate cutting front.<BR/><BR/>You'll be surprised by how quickly 'inflation' pressures vaporize. You have to understand that commodities were bid up in a SPECULATIVE frenzy beyond any fundamentals. On top of that the record pace of credit destruction will absolutely suck the oxygen out of the entire global demand side of the equation.Ben Bittrolffhttps://www.blogger.com/profile/12465978905157927856noreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-15201278343332746072008-03-23T10:41:00.000-04:002008-03-23T10:41:00.000-04:00Goldman, Lehman Rating Outlook Cut to Negative by ...<A HREF="http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awvTfLGlyzws" REL="nofollow">Goldman, Lehman Rating Outlook Cut to Negative by S&P (Update3)</A><BR/><BR/>I think Thursday's action was dominated by short covering into a four day weekend. Therefore, I don't expect Monday to be pretty. The Goldman, Lehman Negative watch won't help.<BR/><BR/>Just you wait until more people begin to seriously question the valuations used for all the street's Level 3 Assets.Ben Bittrolffhttps://www.blogger.com/profile/12465978905157927856noreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-56588064601436583892008-03-23T03:02:00.000-04:002008-03-23T03:02:00.000-04:00I don't think the ECB will cut rates because of a ...I don't think the ECB will cut rates because of a softening economy. It will cut rates only because inflation is no longer a problem. That will mean that it will keep rates up longer than the Anglo-Saxons expect.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-52624007712956960232008-03-22T21:40:00.000-04:002008-03-22T21:40:00.000-04:00Ben- Do you think there will be another episode in...Ben- Do you think there will be another episode in the markets Monday beacause of the credit changes for LEH and GS. It seems like it would be like fresh blood in the water.Anonymoushttps://www.blogger.com/profile/01684466369196408995noreply@blogger.comtag:blogger.com,1999:blog-1258979445050968882.post-92062322379049037952008-03-22T21:37:00.000-04:002008-03-22T21:37:00.000-04:00Do you think there will be a stink on Monday over ...Do you think there will be a stink on Monday over the 'credit watch w/negative implications' for GS and LEH? It seems like just the thing to set off a fresh spiral.Anonymoushttps://www.blogger.com/profile/01684466369196408995noreply@blogger.com