Skip to main content

Here we go!


First off, after a glorious summer, Labour Day weekend was mostly miserable, so it was three wasted days, which means lots of reading.  Certain themes resonated for Canada:

  • Swiss national bank pegs the Swiss Franc – they’ve had enough of the wild ride.  Not sure how it will work, because commentaries from the ECB seem to indicate that this was all news to them.  This means that many countries that are perceived to be sound (Canada, Switzerland, Sweden, Norway and Australia) may resort to the same process.  We know that the Bank of Canada is very concerned about all they “hot” money flowing into Canada (about 7% of GDP).  How do such economies protect their industry and citizen from global market fears?
  • Europe decided that a good old fashion panic was on the cards for Monday – while America celebrated “something” – but certainly not labour. Spider futures were wild on Monday, but Tuesday morning things cooled down.  BTW as of 6 am Tuesday AM (EST) the yield on 1 year Greek debt was 81% -- the two year paper is around 57%.  Greek default is priced in, haircut is around 80% (that’s the new 21%).  Ackermann of DB gave a terrific speech on Monday – he said that if Europe’s bank had to take provisions for their Sovereign bonds they would be nearly insolvent…lovely!
  • Confusion in the media:  Zero Hedge reported that protesters were in front of the Italian stock exchange on “labour day” as a significant protest… except Labour Day in Europe is May 1st, not September 1st (or 5th for the matter), our American cousins once again confuse ‘merica, for the rest of the world.
  • New research on Canadians’ attitude vis-à-vis Americans; five years ago Canadians envied Americans, today we feel sorry for them, truth be told we never wanted to be them.  How many of my Canadian friends living and working in the US were asked when they were getting their US passport – their answer that they would never give up their Canadian citizenship was met with surprise and disbelief (Americans have been brainwashed into believing that everyone in the world wants to be them!).  Today any conversation about America ends with a head nod – we wish them well, we like them, but we really don’t want to be them.
So that's the highlight of the weekend read.  I'm also looking at the whole story behind the "Etat Généraux" for the soveregnist movement in Quebec -- It's like a headless chicken, dead but keeps on running around.  

Comments

Popular posts from this blog

Trucker shortage? No a plan to allow driverless rigs

There are still articles on how America is running out of truckers -- and that its a huge problem, except its not a problem, if it was a problem salaries would rise to so that demand would clear. Trucking is one of those industry where the vast majority of participants are owner/operators and therefore free agents.

Salaries and cost are extremely well know, "industry" complains that there are not enough truckers, yet wages continue to fall... Therefore there are still too many truckers around, for if there was a shortage of supply prices would rise, and they don't.

What there is though is something different; there is a push to allow automatic rigs to "operate across the US", so to encourage the various authorities to allow self driving rigs you talk shortage and hope that politicians decided that "Well if people don't want to work, lets get robots to do the work" or words to that effect.

This has nothing to do with shortage of drivers, but every…

Every punter says oil prices are on the rise: Oil hits $48/bbl -- lowest since September 2016

What the hell?

How could this be, punters, advisors, investment bankers all agreed commodity prices  in general and oil prices in particular are on the rise...its a brave new era for producers and exporters -- finally the world is back and demand is going through the roof, except not so much!

What happened?  Well energy is complicated, the world operates in a balance -- 30 days of physical reserves is about all we've got (seriously) this is a just in time business.  So the long term trend always gets hit by short term variations.

Global production over the past 12 months has risen by somewhat less than 1.5% per annum.  As the world market changes production becomes less energy intensive (maybe), but the reality is that the world is growing more slowly -- America Q4 GDP growth was around 1.9% (annualized) Europe is going nowhere fast (the GDP growth in Germany is overshadowed by the lack of growth in France, Italy, Spain (lets say 27 Euro members generated a total GDP growth of 1.2…

Paying for research

This morning I was reading that CLSA -- since 2013 proudly owned by CITIC -- was shutting down its American equity research department -- 90 people will be affected!

Now the value of a lot of research is limited, that is not to say that all research is bad. In fact, I remember that GS's Asia Aerospace research was considered the bible for the sector.  Granted, there was little you could do with the research since the "buy" was for Chinese airlines...that were state owned.  Still it was a vey valuable tool in understanding the local dynamics.  It seems that the US has introduced new legislation that forces brokers to "sell" their research services!  Figures of $10,000 an hour have been mentioned...

Now, research can be sold many times; if GS has 5000/6000 clients they may sell the same research 300x or 400x (I exaggerate) but this is the key -- Those who buy the research are, I presume, prohibited from giving it away or selling it, at the same time the same rese…