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Showing posts from October, 2016

Pssst! -- the best trade in the world; an insider's track

First off the title is a bit of a lie (ok one huge lie).

Yesterday the oil market was at a flutter because draws against reserve where higher than anticipated.  Guess what happened today, oil prices crashed right back down to the $48.99 level -- when they had been as high as $50 yesterday.

You ask:  What's going on?
The answer:  No body knows!

The oil markets are nearly fungible; there is a bit of a spread between Brent and WTI but the difference in price is more cause by technical issues (when the spread is substantive) than anything else.  In fact, as reserves rise the cost of adding to reserves rises exponentially, hence the prices of crude drops (its a zero sum game).

Now look at the price of oil -- yesterday there was a panic because the draw from reserves was about 2MM bbl higher than anticipated.  Today, well today the market took stock and realized that it meant nothing.  Because it was the same issue that I mentioned above about Brent Vs. WTI -- oil was at the wrong plac…

November 9th: The state of America's democracy!

It seems increasingly clear that Clinton will be elected president on November 8th and as soon as the partying has stopped some hard questions will need to be asked by both parties.  The Republican will probably face the hardest review:  How can the GOP continue when its policy seem to be aimed at uneducated white males?  The rejection of all others and the spectacle that was DJT is certain to force the party to have another difficult review.
Another aspect of the review is the marriage that the GOP made with talk radio and groups such as Fox.  This has led the party to more and more extreme positions, not based on any specific drive but as a rating driver for talk radio and FOX.  On the other hand the shine seems to have come off FOX over this election cycle -- it may save the network!
We can already see some important changes:
The monolithic Christian rightis no longer a sure thing for the GOP.  Granted the the break could be temporary should Cruz come back in 2020 (or Paul Ryan) then …

Did he really say that?

This is priceless:

Clinton was discussing nuclear proliferation, and Trump interrupted to talk about Start-Up.  No one understood, apparently he was talking about the START negotiations on non proliferation of nuclear arms.

No wonder Clinton looked surprised:  Probably wondering why Trump was talking Start-Ups during a conversation on non-proliferation of nuclear weapons.

Truly priceless

ETFs the Future of investing? -- yes to a certain extent

EDIT:  The private comments I got from people is what's an ETF.  So from Wikipedia we have the following definition:
An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. In 2002 when I returned to Montreal from Asia, the ETF phenomenon was really only starting -- with a couple of hundred billion of assets that were invested in the product.

For years there was a huge dichotomy between the North American and the European version of ETFs. In America ETFs where effectively shares in an open ended fund -- in Europe they were an investment in a Financial institution that was then hedge in the market via derivatives.  After 2008 the distinction disappeared because investors were not willing to take the bank exposure risk (despite the slight fiscal …

What is Trump's End Game?

For the past three weeks Trump has been playing to his base, he's selling to people who already drink the cool aid.  It begs the question what his plan?  What is he doing?

Over the past few months (eg the Primary period) he was selling to the die hards of the party -- the party activists that voted in the primaries.  In many instances these voters are not very representative of the nation as a whole or for that mater of the GOP, although with the GOP's action over the past 20 years (if not more) the attractiveness of the party to non whites has been lets say less than strong. Bluntly, by speaking to the already converted he is not growing his base!

In fact, he's become even more aggressive; doubling down on "Clinton in jail" and adding a new twist -- if we don't win then the election has been stolen!  That the Jewish media/banking (no joke here) are taking over!  He's also been making promises that are impossible to fulfill.

Take coal -- Trump has gone an…

JP Morgan best 3rd quarter performance ever -- DB and Commerzbank cut 20% of staff

Banks are often the bellwether of an economy.  When the economy hums along the performance is great and when the economy is in trouble...well IB and DCM revenues are down and loan loss provisions are up.

The divergence between North American banks and European banks could not be starker.  I mentioned some weeks ago that Commerzbank (COBA) was cutting 20% of its labor force, turns out DB is doing the same.  I am relatively certain that the French banks will do the same, because they all work in the same pond.

First off, the North American economy, while not on fire, is humming along.  The big change in North America (read US here) is the shrinkage of the government portion of the pie.  The US government (Federal and state) have been slashing expenses right and left for the entire term of Obama's presidency.  Lets be clear the intent by the state legislators was to harm the Obama presidency, but also to cut cut and cut income tax for the the better off.  Some states have racked up …

Non American Republicans -- Why they love Trump!

Its twice now that I have had to face pro-Trump non Americans.  The first was a French philosopher who apparently has the ear of French power.  My reaction was completely over the top and unacceptable -- I told him that he peddled complete bullshit and not even worth discussing, because his premise were false and based on the Alt- right crazy narrative.  I cannot remember all the crazies he pulled but here are the highlights:

Chelsea Clinton is not Bill' daughterHillary Clinton is gayThat Clinton hid/destroyed 30,000 emailsClinton planned BenghaziClinton Foundation is a frontetc etc Now I came across the same crap just yesterday, my reaction was different.  I ignored it!  The second guy, also a French man by birth, but who lived most of his adult life in Texas, made some good points:  Hey if Trump was able to not pay taxes for 20 years  -- good for him, paying tax is not a right its an obligation and as such reducing your tax bill is a good thing.  I don't want to be bogged dow…

The big winner of Brexit: Probably not Frankfurt, rather New York

Since the UK announced that the Brexit vote will move ahead in early 2017 -- BTW we are still assuming that the vote will be for exit.  Popular support for Brexit was diminished considerably over the past few months, yes the world has not ended, but everyone can see the writing on the wall, little chance of getting trade agreements signed before the end of 2019 (if a country as insignificant as Canada has told the UK that they will not be ready to hold talks before 2020...).  Overall, the battle are for the high paying jobs of the city.

There is a strong feeling that something will have to be done, that several banks will move certain core operations within the Eurozone, but when thinking about it there are a number of issues that made the City attractive:  First they speak a form of English...not entirely understandable by the colonies, but we tend to get most of it, see the chart below

But you get the idea.  Second aspect that is very attractive: English law -- very similar to New Y…

Investors: What is better Democrats or Republicans

Off the top, you have to say that the past three administration are a case and point that a Democratic president are better than a republicans for investors; During Clinton's 8 years and during Obama's 8 years the S&P 500 has been a very very strong performer, no su much for both Bushs

In 2015 DILJ did a study, their conclusion was:

There really shouldn't be any debate; on a historical basis, Democratic presidents are better for the stock market. The saying that Republican Presidents are better than Democrats for investors continues to be one of the bigger misconceptions there is in the investment world. Yet, most investors (and a good portion of Wall Street) is for the Republican?  So there has to be something that the GOP offers that the Dems don't.  One thing for sure, GOP has been a big tax cutter for the richer parts of the electorate.  Again and again you see GOP elected at the state level lowering taxes on the wealthiest (often creating massive fiscal imbala…