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Showing posts from March, 2014

Michael Lewis: Flash Boys

Michael Lewis is a contemporary of mine (no joke didn't know him but he did his MA in Economics at the LSE at the same time I did).  Granted he did much better than I, and is a man of conviction.  ML started in Salomon Brother's bond sales desk in the early 1980s -- Although the world believes that Salomon was a investment bank (it was in some small scale) where it dominated was in the bond market.  In fact, long after ML left the bank it was convicted of cornering the US gov't short term bond market -- it takes some massively large brass balls to try that (even in the 1980s).  Salomon Brothers was the biggest bond house on Wall Street.

Anyway, ML wrote his first book:  Liar's Poker that was a cautionary tail as to what banks actually did -- the amazing thing (and it shows the level of depravity of young bankers) was that future bankers used the book as a "how to get into banking manual".  ML wrote a number of other great books (Blind Side, Money Ball, The Ne…

Markets and OCLS musing

Today there are exactly two markets that are down:  China and Taiwan; the rest are all up! Today is an upday, why I don't know -- could it be that inflation in Portugal is higher than anticipated, could it be that...really my point is that I don't know (call your broker he doesn't know either).  There is no rhyme or  logic to short term capital market movements -- that's why momentum traders did so well (at least until the high frequency traders got into the action), because there's inertia in the short term market movements.

My March favorite trade was Oculus Innovative Sciences (NASDAQ:OCLS) that was up 40% on the 14th of March.  On the 21th of March Facebook announced the acquisition of Oculus 3D a private company. I am certain dear reader than you can do simple math -- 14 is before 21, so a small med tech co with a market cap of USD 30 million saw massive trades a week prior (and a price increase of 40%) to Mark's making  an acquisition announcement of Oculu…

Malaysia & bad information

In a prior life I had dealings with many Malaysian companies.  It started in the early 90s when Malaysian Airline was a potential customer as such I took a flight from Montreal to Kuala Lumpur to meet with the CEO and his team.  What followed was a comedy of error that could have cost me my life!  Bottom line the aircraft's thrust reverse opened on take-off from Taipei airport (it was ok since the aircraft  was a B747) if that aircraft had been a twin engine (like a B777) would would have been toast, trust reverser deploying on take-off is a major problem.

40 hours later than planned I arrived at my meeting with the airline's CEO who made jokes about my late arrival -- I was too polite to say anything about the fact that it was his aircraft's technical difficulty that cause the delay, but what was amazing is that he had no idea that one of his B747 came very close to disaster. This a reflection of Malaysian society.  Malaysia is the land of double management; on one hand …

Market update

So back to reality of the North American markets.

Last week I heard an interesting comment that Europe was keeping the Euro strong so that inflation not become an issue (Since June 2013 the Euro is up from 1.3 to the USD to 1.37).  Considering the self interest of the source as a major North American exporter to Europe (who is making a killing on the F/X) its not surprising, but the analysis looks flawed.  There is no doubt that a strong currency can impact the rate of inflation; but evidence does not support this assertion.  Few economies are as open as Canada, and the Lonnie has been on a one way elevator down (for about 12 months now) from above parity to the US Dollar to slightly below 0.90 to the USD today, a 12 % drop.  Yet there is little inflation here(the Consumer price index kind)!  Real estate price continue to defy gravity, the Canadian Stock market (S&P/TSX index) is up 6% for the year so far (that's 24% on an annualized basis), and here's Canada CPI chart up…

Knowroaming -- a week in

Ok so I am back (more or less) from Mexico, the Knowroaming experience has been excellent - at least until Friday 1 pm Mexico time when the phone got a NO SERVICE message.  Now that I am in Houston its back, but the last three days have been blacked out.

In a nutshell over the past week, I called Canada, called Europe, spoke to clients in Mexico and LatAM, sent email, used Google map to find restaurants and various destinations, the bill for the week $24.71.  Not bad really if you consider the number of foreign calls I made.  I didn't activate my "new voicemail" apparently its easy.  Before I forget, they use a call back system to reduce the cost of overseas' calls.  You dial the number you want and it calls you back within 15 seconds

My verdict is that the technology works fine, its somewhat complicated to set up but really worth the effort because the costs are just amazingly low.

Also the service from Knowroaming has been spectacular -- Saturday at 7 pm local time…

Knowroaming

Many months ago, a Canadian company announced that they had a gizmo that would cut your roaming charges (both voice and data) by between 80% and 90%.  Granted since then the big boys (Bell/Rogers etc) were forced to be more reasonable, mainly because they were concerned that ATT was about to come in and add real competition.

Anyway, the Knowroaming system rates are higher than owning a "local" phone, but then when you travel you don't want to have number of sim cards where you remembered to pay you monthly bill (it can add up).  Well the Knowroaming device arrived a few days ago, just in time for a week of finance conference in Mexico City, where being reached in real time is essential.  There's a physical part (which is a sticker you install on your sim card), and software that is installed on your phone.

Now my potential Mexican clients have a local number to call, all my current client can call me on my usual number and I have relatively inexpensive data in Mexico…

Malaysian Airline and how to manage a crisis

Ok

More than 4 days ago a B777-200 aircraft in route to Shanghai was lost from the radar screens and since then a search for the missing aircraft and presumed dead crew and passenger has been in full swing.

Several years ago a Singapore Airline aircraft, Silkair 189 was lost in similar circumstances; the aircraft suddenly lost contact with it the ground -- it was found in several very small parts in the jungle of Indonesia.  The reason for the aircraft loss was never fully explained -- pilot depression was suggested but bottom line there were no aircraft piece larger than 2 feet across, the aircraft slammed into a boggy terrain in Indonesia, none of the black boxes were ever found


Aside from Science fiction stories the odds that the crew and passengers survived is virtually impossible.  There are several things (unlike the Singapore airline incident) were it is evident that those in charge are incompetent.First off, aircraft are not followed by radar, civilian radars do not resemble mi…

Markets are on fire! No really ...

So on January 3rd 2014 the S&P was trading at 1,831 on Friday it closed up at 1,878 so a massive increase of less then 1% since the beginning of the year.  The VIX at 14 is low, in fact as an indication of volatility when the markets are quiet its an indication that not much is going on.

The 5 and 10 year treasury are mucking around 1.6% and 2.8% -- and they've been there for a while.  Every day one hears that the Feds are about to shut down the money machine; but there's not much of a movement around.

Up hear in Canada (land of the "frozen ones") mot much is going on -- both Quebec and Ontario are in election mode and the Federal government is changing electoral system where the supervising authority for election shenanigans will no longer able to take action.  Still cannot believe I used to support the conservative -- must have been some kind of brain craziness.

Anyway, things are quiet, the Loonie (Canadian dollar) is well off its high of a few years ago, and…

So I was listening to the radio this morning

As I was preparing breakfast this morning I was listening to CBC radio where the host was talking to the Quebec Consumer Protection Agency's spokesperson on a 1 year investigation on price rigging in Montreal chain stores.  In this case the target was "The Bay" or better know wold-wide as the Hudson bay Company -- one of the world's oldest company (really its founding charter dates back to the 17th century).

Anyway, this  spokesperson said that after a year they had uncovered a scheme  whereby stores where inflating the price of goods to make the sales price more appealing.  The specific example here was a $800 dollar mattress priced down from its "regular" price, of lets say $2,800 (that me saying the number by the way!), but in fact the real retail price was  around $2,000 (spokesman didn't know that price either)

In this story there are three important fact:

(1)  The retail price indicated by the store
(2)  The "real" retail price that the …

Oh and by the way I am way too gloomy

Despite my predictions of:

(1) European banks going bust -- that didn't work out
(2) Euro ceasing to exist -- that too didn't work out
(3) China restructuring -- Still waiting on that one too
(4) Canada doing well (ok so 2012 was a good year -- 2013 more difficult)
(5) Canada's conservative government is against democracy -- Actually got that one on the money
(6) Canadian dollar will stay at or above parity to the US dollar for ever (never said that) still not gona happen
(7) If you print money inflation will come (turns out not so much in consumption) I was partly wrong (but asset prices continue their rise)
(8) The stock market has peaked (boy did I get that one wrong!)

So take my thoughts with a large grain of salt.... i am very gloomy indeed.

Ukraine & Canada

In last last few hours tensions in the world have abated as Putin announced the "early" end of the war games on the Ukrainian frontier.  That means that stock markets are up (in Europe and American futures) as they are in Russia.  God only knows who the players were here that got the tension to abate. What did the German promise, what did the Americans?  What made Putin confident that ethnic Russians in the Ukraine would be protected (that, by the way, is the real issue) from fervent nationalist (and by the way united) Ukrainian leaders (or maybe only talking heads).

Anyway back to Canada.  First off for those who don't know Ukrainian is a very important minority in Canada, in the wheat belt (Manitoba and Saskatchewan) after English it is the most spoken language. Brian Mulroney, one of Canada's ex-Prime Minister spoke it!

The crisis (again in the Balkan region) had the potential of becoming something very ugly -- not that the American military would intervene (that…

After nearly a year I am back!

Its early March 2014 and I've decided to post again.  Obviously my interests have shifted since 2013.  In fact, the posts were there for my non-North American clients, who were looking for quick update on the Canadian economy.  Surprisingly in a world of 6 billion, there are not many economic articles on Canada that make it into the foreign press... granted of late with the maire of Toronto.

Just one thought, we in Montreal are thankful for Mr Ford, the current maire of Toronto, he has completely shifted attention away from Montreal's own corruption enquiry (its deep) and away from the Quebec elections (one party is running on a platform of separation -- kind of).

Those who know me wanted me to start writing again --- they also wanted me to reveal my identity.  Frankly, the mystery is more interesting than the reality!

The other reason I'm posting again is that in the last few days I've had something in the order of 500 views of my last (April 2013 post) and tons of co…