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The Credit Crisis Financial Stocks Short Journal
- Thread starter Daal
- Start date
Quote from Debaser82:
Daal, I was wondering if you (or others reading this topic) might share your view on natural gas.
Cheers.
I dont know much about it. I try to view commodities more in the sense on whether the 'secular bull' theory has validity rather than studying all the individual ones. The only one I have studied more extensively was crude oil, and my conclusions was that I had no idea if supply was about to peak. Many oil experts with decades in the industry were wrong supply would peak in 05 so its not easy as it seems to understand fully the fundamental picture, so I end up putting the 'too difficult' buffett type category
But the commodity cycle theory is more easy to understand and speculate, the Rogers book show a study where there is a historical cycle where commodities beat stocks, at this point I'm trying to find out data that shows its about supply and demand and investor psychology
Hussman:
"Randall Forsyth offered the following nugget in Barron's last week, with which I can't disagree: According to Bespoke Investment Group, there have been 58 "corrections" of 10% or more in the Standard & Poor's 500 since 1927. In 33 cases, the corrections stopped short of the 20% bear market threshold and the market went on to higher highs, while 25 times they grew into a full-grown grizzly. But in the 32 instances when the market has dropped as much as this one has -- 14.4% from the April 23 peak through Monday -- the outcome has been heavily weighted to the losing side. Only seven times drops of that size stopped short of the 20% bear mark. In the 25 other times the decline extended to 20%, the average bear market decline was 35.5%.
As with our own work, we've observed fairly benign market outcomes from similar conditions about 20% of the time. The remaining 80% of the time has been characterized by more pointed losses. The probability mix is not good, particularly because that 80% group has several "fat tail" events featuring deep market plunges. Keep in mind that after a clear break of major support levels, markets often recover back to that previous support, which can create a feeling of "all clear" complacency. Be careful - as I've noted many times over the years, the steepest losses in a market downturn typically follow the "fast, furious, prone-to-failure" rallies that clear an oversold condition."
"Randall Forsyth offered the following nugget in Barron's last week, with which I can't disagree: According to Bespoke Investment Group, there have been 58 "corrections" of 10% or more in the Standard & Poor's 500 since 1927. In 33 cases, the corrections stopped short of the 20% bear market threshold and the market went on to higher highs, while 25 times they grew into a full-grown grizzly. But in the 32 instances when the market has dropped as much as this one has -- 14.4% from the April 23 peak through Monday -- the outcome has been heavily weighted to the losing side. Only seven times drops of that size stopped short of the 20% bear mark. In the 25 other times the decline extended to 20%, the average bear market decline was 35.5%.
As with our own work, we've observed fairly benign market outcomes from similar conditions about 20% of the time. The remaining 80% of the time has been characterized by more pointed losses. The probability mix is not good, particularly because that 80% group has several "fat tail" events featuring deep market plunges. Keep in mind that after a clear break of major support levels, markets often recover back to that previous support, which can create a feeling of "all clear" complacency. Be careful - as I've noted many times over the years, the steepest losses in a market downturn typically follow the "fast, furious, prone-to-failure" rallies that clear an oversold condition."
I believe both Tiger and Phil are 6-1 to win the Open. When was the last time Tiger wasn't the outright favorite? Its probably more likely that Tiger misses the cut than wins.
On the other hand, Tiger looked to be in top form prior to each of the 2009s majors (I believe he won his prep tourney before each one) and couldn't pull off a victory. Perhaps we read too much into how these guys look to be playing at the moment. They have immense talent - a quick swing thought that works, a couple of dropped putts, and all of a sudden they're in contention ...
I remember following Els during a practice round before the 97 Open at Congressional (I was literally the only person in his gallery). He had been in terrible form - missing cuts in his previous tournaments. He looked totally in control of his game during that practice round. He ended up winning. Its a fine line.
On the other hand, Tiger looked to be in top form prior to each of the 2009s majors (I believe he won his prep tourney before each one) and couldn't pull off a victory. Perhaps we read too much into how these guys look to be playing at the moment. They have immense talent - a quick swing thought that works, a couple of dropped putts, and all of a sudden they're in contention ...
I remember following Els during a practice round before the 97 Open at Congressional (I was literally the only person in his gallery). He had been in terrible form - missing cuts in his previous tournaments. He looked totally in control of his game during that practice round. He ended up winning. Its a fine line.
Quote from ralph00:
I believe both Tiger and Phil are 6-1 to win the Open. When was the last time Tiger wasn't the outright favorite?
Probably the result of the neck injury. Hewitt beat Federer yesterday, I should have bet on him. I would have lost many times in row over the years but people go insane on big names when they are on a streak, they just dont think they can lose and the odds get ridiculous
Apparently a breast implant company had to file for chap 11 after they faced lawsuits in order to decrease their liabilities, the speculation is that BP could do the same
http://www.cnbc.com/id/15840232?video=1519594509&play=1
Hard to have confidence one way or the other here
http://www.cnbc.com/id/15840232?video=1519594509&play=1
Hard to have confidence one way or the other here
http://www.hussmanfunds.com/wmc/wmc100614.htm
The hussman part on the double dip probabilities is striking. I wasnt aware how close the econometrics were to pointing out a possible recession. If there is a time that past data can surprise and models can fail is the current one but frankly it seems more likely the models will fail to the downside, that is they wont predict how bad things will get. There was upside surprise in 2009 but that was mainly market driven, when people put their risk hats on and saved all the corporate borrowers in the world from default as liquidity gushed back to the system. That game seems unlikely to come back as it seems the world is running out of idiots to buy risk assets at high levels yet the system remains highly levered
The hussman part on the double dip probabilities is striking. I wasnt aware how close the econometrics were to pointing out a possible recession. If there is a time that past data can surprise and models can fail is the current one but frankly it seems more likely the models will fail to the downside, that is they wont predict how bad things will get. There was upside surprise in 2009 but that was mainly market driven, when people put their risk hats on and saved all the corporate borrowers in the world from default as liquidity gushed back to the system. That game seems unlikely to come back as it seems the world is running out of idiots to buy risk assets at high levels yet the system remains highly levered
By Michael S. Derby
A DOW JONES NEWSWIRES COLUMN
NEW YORK (Dow Jones)--It is likely to be a long, long time before the Federal Reserve raises interest rates, new research from the San Francisco Fed argues.
In a note published Monday, bank economist Glenn Rudebusch weighs the task of unwinding the current course of monetary policy. He writes that the task before the Fed is likely to take "a significant period of time" given the projected environment of low inflation and slow-to-recover employment markets.
The cornerstone of the report is Rudebusch's road map for the federal- funds rate, which now rests at effectively zero percent. Given where the economy is, and where it is likely to be, the economist said it looks as if the central bank won't need to move the target rate from its current perch until late 2012. Indeed, while short-term rates can't go below zero, a rule-based monetary policy regime argues the funds rate should be at around negative 5% right now, only hitting zero by the end of 2012.
Rudebusch notes this fed funds rate outlook is highly driven by what policy makers have forecast for the economy. He said, "The benchmark policy rule would prescribe an earlier or later increase in the funds rate if unemployment or inflation rose or fell more rapidly than predicted in the forecasts."
The San Francisco Fed economist countered the fears of some, like Kansas City Fed President Thomas Hoenig, who worry maintaining the current state of monetary policy is setting the stage for future financial imbalances. "The linkage between the level of short-term interest rates and the extent of financial imbalances is quite erratic and poorly understood," the analyst wrote, noting Japan has had a very stimulative policy in place for a very long time "with no sign of building financial imbalances."
The San Francisco Fed report comes at a time when central bank officials have been trying to sort out how they will exit from the complicated array of programs and policies put in place over the course of the financial crisis. While officials largely agree no action is imminent, they are planning out a course of action to follow when the recovery is deemed mature enough.
Over the course of the recession, the Fed launched a serious of complex and controversial emergency lending programs. Meanwhile, it bought more than $1 trillion worth of mortgage securities and slashed interest rates to zero percent.
The emergency lending programs have now largely left the stage, mostly because financial firms no longer needed them and could get the liquidity they need via private markets. But the rest of what lies head of the Fed is complicated, and the task before it has never been tested, and thus is risky.
The comments of key officials, along with other documents from the Fed, have increasingly settled on an exit path that suggests the Fed will enter into some sort of temporary reserve draining around the time short-term interest rates are pushed higher. While some officials like Philadelphia Fed President Charles Plosser want to start selling assets sooner rather than later, most central bankers appear to favor putting this action late in a tightening cycle, given that these sales have the potential to be disruptive to financial markets and push borrowing costs higher.
When it comes to asset sales, Rudebusch said, "there is little historical experience to help predict the timing and magnitude of the effects of selling securities." He added: "This uncertainty suggests that balance sheet renormalization should proceed cautiously and that short-term interest rates should remain the key tool of monetary policy."
A DOW JONES NEWSWIRES COLUMN
NEW YORK (Dow Jones)--It is likely to be a long, long time before the Federal Reserve raises interest rates, new research from the San Francisco Fed argues.
In a note published Monday, bank economist Glenn Rudebusch weighs the task of unwinding the current course of monetary policy. He writes that the task before the Fed is likely to take "a significant period of time" given the projected environment of low inflation and slow-to-recover employment markets.
The cornerstone of the report is Rudebusch's road map for the federal- funds rate, which now rests at effectively zero percent. Given where the economy is, and where it is likely to be, the economist said it looks as if the central bank won't need to move the target rate from its current perch until late 2012. Indeed, while short-term rates can't go below zero, a rule-based monetary policy regime argues the funds rate should be at around negative 5% right now, only hitting zero by the end of 2012.
Rudebusch notes this fed funds rate outlook is highly driven by what policy makers have forecast for the economy. He said, "The benchmark policy rule would prescribe an earlier or later increase in the funds rate if unemployment or inflation rose or fell more rapidly than predicted in the forecasts."
The San Francisco Fed economist countered the fears of some, like Kansas City Fed President Thomas Hoenig, who worry maintaining the current state of monetary policy is setting the stage for future financial imbalances. "The linkage between the level of short-term interest rates and the extent of financial imbalances is quite erratic and poorly understood," the analyst wrote, noting Japan has had a very stimulative policy in place for a very long time "with no sign of building financial imbalances."
The San Francisco Fed report comes at a time when central bank officials have been trying to sort out how they will exit from the complicated array of programs and policies put in place over the course of the financial crisis. While officials largely agree no action is imminent, they are planning out a course of action to follow when the recovery is deemed mature enough.
Over the course of the recession, the Fed launched a serious of complex and controversial emergency lending programs. Meanwhile, it bought more than $1 trillion worth of mortgage securities and slashed interest rates to zero percent.
The emergency lending programs have now largely left the stage, mostly because financial firms no longer needed them and could get the liquidity they need via private markets. But the rest of what lies head of the Fed is complicated, and the task before it has never been tested, and thus is risky.
The comments of key officials, along with other documents from the Fed, have increasingly settled on an exit path that suggests the Fed will enter into some sort of temporary reserve draining around the time short-term interest rates are pushed higher. While some officials like Philadelphia Fed President Charles Plosser want to start selling assets sooner rather than later, most central bankers appear to favor putting this action late in a tightening cycle, given that these sales have the potential to be disruptive to financial markets and push borrowing costs higher.
When it comes to asset sales, Rudebusch said, "there is little historical experience to help predict the timing and magnitude of the effects of selling securities." He added: "This uncertainty suggests that balance sheet renormalization should proceed cautiously and that short-term interest rates should remain the key tool of monetary policy."