The Fear Of God
The fear of God – or the perception of power – this is the primary tool of the Fed these days. It’s not credibility anymore, as this has been damaged to the same extent as its balance sheet. This is widely understood as a primary fundamental within the larger scheme of things in that the dollar ($) is the world’s primary reserve currency, where expectations associated with renewed Quantitative Easing (QE) is common place, and now talk of hyperinflation is growing amongst the more plugged in market observers. And it’s this that accounts for the growing and extreme bearishness amongst speculators concerning the $.
How the Lizard Brain Kills Projects
I ordered some custom photos from Kodak online this week.
They were gifts for a special occasion on Tuesday night. They absolutely needed to be done by earlier that afternoon.
When I ordered, the company assured me the snapshots would be done by early Tuesday. Just to make sure, I stopped by Monday at the electronics shop that functions as the pick-up location. Yes, they said, the order would be shipped Tuesday morning and should be in store by noon.
Of course, when I arrived Tuesday at 3:00 PM, the photos were nowhere to be found. “Late”, the disinterested clerks at customer service told me. Happens all the time, they said.
Choose Your Catastrophe Insurance
A precious metals note today, in honor of gold breaking $1,300/oz (briefly) this morning.
Some of the buying that’s propelled gold lately is from investors who want to hold metal as currency. Having something tangible in your pocket provides insurance if another financial catastrophe descends on the world.
JP Morgan recognizes this demand. On Wednesday, JPM announced it will open its first precious metals storage vault in Asia.
The facility will be located in Singapore, near Changi Airport (just in case you want to grab your gold and fly). The stated goal is to provide precious metals storage for “corporate, institutional and retail” clients.
The Natgas Squeeze
It’s hard to believe, but just ten years ago $2/mcf was a pretty good natural gas price.
North American gas sold for around that level throughout most of the 1980s and 1990s. And plenty of producers made money during those times.
The reason was costs. Back in those days, it cost a lot less to drill and service a well, build pipelines, and maintain a field.
Here’s some example data from the Petroleum Services Association of Canada. In 1981, a 2,000 meter gas well in central Alberta cost $450,000 to drill and complete. By 2005, the same well more than doubled in cost to over $1 million.
The Coal Rusheth Cometh
I’ve been talking a lot about coal lately.
Specifically, how India’s need for thermal coal imports is going to tighten this market, both in terms of prices, and bids for coal deposits within shipping distance of Asia.
India simply doesn’t have enough coal. As of yesterday, one-third of the nation’s coal-fired power plants were running at “critical” levels of coal stocks (meaning less than seven days of supply). And 10% are at “super-critical”, with less than four days of stock.
I’ve been on this theme for about six months. And finally some of the signs of India’s “dash for coal” are starting to appear.
The Market Continues The FOMC March Upward
With the election over and congress divided, it may be difficult for the president to get much done. None of this will take affect until the near year but traders are asking the big question… Will the government work together as a team or will it be a stalemate?
Today’s whipsaw action after the FOMC statement shook things up as it always does. We saw gold, silver, the dollar, SP500 and bond prices go haywire. It took about 30 minutes for the market to digest this news in that time a lot of people lost money because of the wide price swings. Trading around news, I find, is a net losing trade over the long run and I advise never to do it. Rather wait for a trend to form and trade any low risk setups that come your way.
Broad Market Reversal – Better Hold On To Your Hat!
This had been an exiting week for traders as the equities market was on a verge of a major sell off. Fortunately, we were watching the market very closely and saw the sentiment and market internals shift shortly after a new low was set last week. That was an early warning for us that a trend reversal to the upside could happen at any hour or day this week.
Wednesday and Thursday’s rallies were on solid volume and the market internal indicators along with market breadth were strong also. There has been a large surge of new highs across the board on the NYSE, NASDAQ and AMEX. These numbers tell me that it’s not just one sector moving the market; instead it’s a broad market advance (institutional buying).
Heres the Place for Natgas
Natural gas is a broken global market.
For oil, there’s enough import-export capacity worldwide that global prices tend to align closely. In natgas, global markets are fragmented. Leading to disparate pricing in different regions. Just look at the comparison below, from PFC Energy.
One of the implications being: if you’re going to produce natural gas (or ship it as LNG), find the regions with the top prices.
Increasingly, it’s looking like this will be Asia. And specifically, southeast Asia.
Battleground South America
Just returned from a week in Colombia and Panama (thus the radio silence the last few days). It was amazing and I had a great time and experienced many things. Sorry for the delay but here is some information that I gathered during my trip that you may find beneficial and informative. Let us begin:
There’s a lot afoot in Latin America. On the day I arrived in Panama, U.S. Treasury announced its new tax information exchange agreement allowing the U.S. government to access information on Americans with Panamanian bank accounts.
Is This the Next Financial Disaster?
I wrote last week about big changes coming to financial regulation in Europe.
Look for the sequel soon in the U.S. America is buckling down for a new era of financial rulemaking.
Case in point: on Friday, the newly-created Financial Stability Oversight Council met for the first time ever. This 11-person committee is made up of officials from the Department of Treasury, Federal Deposit Insurance Corp, the Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission (amongst others). Its mission is “identifying risks and responding to emerging threats to financial stability.”
