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Latest Comments16 Comments
Would a Trade War Help Solve the Problem of Excess Capacity?
Thanks for another excellent article.
A question. Suppose China actually did dramatically stimulate its domestic consumption and imports. How would that affect the value of the dollar?
One might argue that taking a trillion dollars out of the Chinese mattress and restoring them to circulation would increase the world supply of dollars and would be inflationary.
Or one might argue that it would choke the gusher of uneconomic dollar debt at the source (the US current account deficit), and shift US lending away from consumption and toward investment in real productive assets, stabilizing the dollar.
I can't see an argument that it would be outright deflationary, but maybe I lack imagination.
Any opinions?
Thanks
Microsoft Online Store May Drive Another Nail in Retail Coffin
Well... no, you probably won't ALWAYS have that option.
As soon as the ESD model is established and customers have no remaining alternatives, it is in the interests of vendors to take that option away, which they can easily do. Just make the installer a bootstrap program that interacts with their download server. This is already widely done, even where the software is free, for convenience' sake (java.sun.com for example). But then you can't re-install without their server, where they can establish their toll booth if desired.
Europe's Bank Nationalization Fever
Glad you showed up on Seeking Alpha. Keep writing.
Two questions.
1)
"While I personally think the dangers of derivatives are seriously overstated, ..." That could be a subject for another post.
2)
If you can write about the investment perspective in Russia, please do so. I have always wondered how some investors, who appear to be sane in other respects, can send their money to Russia.
/jwg
The Bear Market Ain't Over Till It's Over
"That today's cheap dollar funding in Europe ... hasn't prevented European equities is another ominous sign ..."
"Prevent European equities"?? One hopes this is a typo ...
/jg
Why Bubbles Can't Be Stopped
ocw.mit.edu/NR/rdonlyr...
We're seeing an inflection point where the foxes overreached, got into trouble, and must now surrender initiative for a time to the lions. Holes in the regs will be plugged, life will resume, the public will go back to sleep, and very quietly the innovation by the foxes will begin again and slowly begin to accelerate...
None of which means that efforts at reform are pointless. It would be really stupid not to plug the holes that have been uncovered ("fool me twice...").
JWG
24 Fundamentals of Market Bottoms
Don't Bet Against Chinese Demand Growth Just Yet
I'm a Jane Jacobs fan too, and I think your application of her logic is correct, at least if you view things on a sufficiently long time scale.
However, IMHO you sound a bit too much as if you believe that there is no business cycle in China. There surely is. I expect that, like usual, it will feature financial busts -- more than usually spectacular, given the scale of everything in China -- followed by huge and ham-handed government interventions, which imply slow and long drawn out recoveries. Michael Pettis offers some reasons to believe that the Chinese financial system is in more than the usual amount of trouble right now.
Also, just as happened repeatedly in the US in the 1800's, foreign investors will frequently get thoroughly screwed. When things get messy, the government has to step in, and that means allocating pain and bail-out money. That's inherently political, and you don't want to be a fully invested foreigner just then.
Investing is never easy. Everything you say about China could have been said about the US in September 1929. But one would have waited a long time to break even if one bought just then -- forever, in the case of many individual issues.
Jim G
FCC Slaps Comcast's Wrist, Sets Net Neutrality Precedent
Do I understand this correctly: The FCC has said that Comcast and other internet service providers
(A) cannot charge more or less for bandwidth on the basis of which protocol or application is using it; but
(B) may still charge more for bandwidth at certain times of the day, or for bandwidth in excess of the quota one subscribed for, or for different QOS (quality of service) levels?
And I also wonder if they can offer VOIP as part of a bundle in such a way that they effectively subsidize it (to compete unfairly with "parasitic" VOIP vendors like Vonage). For instance, that your monthly subscription fee covers X amount of bandwidth but bandwidth used by *their* VOIP doesn't count toward quota? (Whereas it must be so counted if it is a third party VOIP provider).
I'm betting some of these questions are still gray zone open issues, but anything you can tell us about this would be welcome.
Thanks
Jim G.
Interactive Brokers: There's Still Money in Financials
I use IBKR as my online broker. I'm a software engineer with a lot of experience in writing apps like their trading platform, TWS.
It's just not a quality job. It is buggy, quirky, defies normal conventions for UI design, and doesn't agree with its documentation. Many of these defects are quite typical of a bunch of enthusiastic coders with no professional IT management to establish proper processes for Q/A, priorites, standards, and so on.
Checking their careers page it became clear that their software staff are mostly russians (i.e. cheap) and living all over the place. Again, it doesn't look like a professional IT organization.
Overall I think their software is only just useable. It may be, of course, that they don't care, because TWS is not central to their business model. Perhaps they mainly expect people to use third-party add-ons like Ninja Trader. Or perhaps, as other posters suggest, executing trades for the commission revenue is not where they make their money. So if you are an investor, you might argue that the quality of TWS does not matter. Nevertheless, it sure doesn't look like relentless pursuit of excellence to me.
So I'd like to ask Charlie Bottle why he wrote that.
Thanks
New PowerShares Nasdaq BuyWrite ETF Is at Odds with Itself
10 Notes on the Crude Oil Fixation
You meant "not quite redundant" of course...
Politicians, even those still encumbered by the odd scruple, may be morons but they are not oxymorons.
Playing the Agriculture Game
You wrote that "All instruments tracking a futures index, ETFs and ETNs alike, must contend with the effects of contango and backwardation". <p>
I don't see why that would be so for ETN's. As you say, they don't own the asset, so they don't have to roll anything forward, so why would they be losing/gaining any roll yield?
<P>
Thanks
Why Gold is Likely to Keep Moving Higher
Great article. Two questions.
First, why do you regard the producers as "forced" to buy out their forward hedges? If they deliver their production to satisfy their short positions over time, they are not losing money; they are not even making less money than they expected when they planned out their hedges. At most they have a case of seller's remorse, no? So why are they "forced" to buy out the hedges?
But perhaps the producers aren't "forced" to buy at all. Perhaps, after years of selling forward into a market they regarded as overpiced, they are simply capitulating at last to the general bullishness. In other words, they are buying in their hedges simply to participate fuly in the generally-expected further price appreciation from here. If so, then what we are seeing is the commercials, traditionally the most skeptical players, capitulating to the general buying frenzy. You may call it new demand, but once they're in too, who's left to buy?
Which brings us to my second point and question. One simply cannot translate fundamental analysis to a justification of a price level without considering the amount of speculative money in the game. With enough hot money, the price departs from any rational relationship to fundamentals. You can argue that fundamentals will reassert themselves eventually, and that is true, but as Keynes said, the market can remain irrational longer than you can remain solvent.
So what I miss in your article is any analysis of how much of all this "demand" is speculative. If the Chinese central bank switched some reserves from dollars into gold, I would guess that they are likely to lock the gold up and forget about it. That is real demand. But producers buying in their hedges is a trading activity, which reverses the moment they perceive that the upward trend is broken. And what about that mountain of money (including a lot of mine!) in ETF's like GLD? I'd bet that most of that money is in pretty weak hands (like mine!).
So if you post for us again, I'd like to see some more effort to understand how much gold is being bought for speculation, compared to normal trading volumes, real consumption, changes in bank reserves, etc.
Thanks
GC
Gold and the Dollar: Value is in the Eye of the Beholder
Metal Price Suggests It's a Good Time to Be in Gold Stocks
AC