The Big Picture |
- Media Appearance: CNBC Fast Money (3.29.11)
- Anthony Atala on growing new organs
- History of Money: Will Cell Phones Replace Wallets?
- Some Thoughts About the Oil Price?
- QOTD: As QE II Wraps Up . . .
- Science: Rising in China, Crashing in Russia
- Case Shiller: Dismal Start to Home Prices
- Fukushima Nuclear Accident Radiological Consequences (3.28.11)
- The End of QE2
- Economic data
| Media Appearance: CNBC Fast Money (3.29.11) Posted: 29 Mar 2011 01:45 PM PDT
> Special Rally Edition! Tonight I will be on Fast Money on CNBC at 5:15 pm discussing the market rally from the post Japan lows, and what to do if we a) breakout or 2) breakdown Key thoughts on the rally:
If the market breaks out over the Feb highs, we would use SPYs for exposure; Downside trade strategy: 1) tight stops on longs; 2) QID/SDS for the fast trade (but not for a long term hold); 3) Cash to redeploy at more attractive levels ~~~ Video posted here |
| Anthony Atala on growing new organs Posted: 29 Mar 2011 01:25 PM PDT Relative to our early conversation on the Half Life of favorite technologies: |
| History of Money: Will Cell Phones Replace Wallets? Posted: 29 Mar 2011 12:00 PM PDT |
| Some Thoughts About the Oil Price? Posted: 29 Mar 2011 10:00 AM PDT Some Thoughts About the Oil Price? http://www.cumber.com > The TV is crammed with industry folks and analysts calling for the oil price to fall $20 or $30 per barrel. They argue there is a geopolitical risk premium that is part of the current price. They may be right, BUT no one knows how to measure a "geopolitical" risk premium. We can only guess at it. Market forces set prices. We see them in the oil market for various types of oil and for various maturities in the futures markets. Those prices are all well above the $70-$80 range. As Dennis Gartman points out well in his daily letter, the futures market tells you the expected cost of holding an oil inventory in actual storage vs. using a financial instrument in place of the physical storage. If you go by the markets, the outlook for oil is well above $70-$80 and headed higher. Various estimates of global oil demand center on 88 million barrels a day for 2011. In some excellent research Barclays assembles the outlook for oil from four key sources. Barclays also runs longer-term supply/demand analysis on a global basis and then projects the oil price. Barclays estimates that the oil price can be about $185 by the end of this decade. It can be $135 within a couple of years. This is without a supply shock that may result from current violence in MENA. In addition, we add, it is without any supply shock originating in Nigeria or other Sub-Saharan African oil sources. We remain overweight oil and energy in our US exchange-traded fund portfolios. The current weight of the energy sector in the S&P 500 index is about 13.5%. We are about 20%, which is about as high as we would go with a sector this large. We remember that the energy sector reached nearly 25% of the total market weight when the Shah of Iran fell in 1980 and the oil price then spiked to $30 a barrel. We also remember that the sector weight fell to as low as 7% when oil plunged in price to as little as $10 per barrel a few years ago. The key to oil is to be nimble. You can buy it and hold it forever or you can change your weight, depending on richness or cheapness. When the energy sector is priced as a single-digit percentage of the US market, it is cheap. When it is above 20%, it is richly priced. Currently we are in the middle. Oil and energy is currently neither cheap nor dear. Therefore, the pricing of the stocks in this sector depends on the outlook. Here the information is available and the outlook for US companies remains positive. The US is dependent on imports of oil. We get it mostly from ten countries. Dennis Gartman reports the sources in his letter today. They are listed by size of imports: 1. Canada 1.972 million barrels per day, 2. Mexico 1.140 bpd, 3. Saudi Arabia 1.080 bpd, 4. Nigeria .986 bpd, 5. Venezuela .912 bpd, 6. Iraq .414 bpd, 7. Angola .380 bpd, 8. Colombia 338 bpd, 9. Algeria .325 bpd, 10. Brazil .254 bpd Since global oil is priced in US dollars and is likely to be priced that way for a long time, the issue for a US investor is the dollar price discovery and how that will unfold. MENA violence aside, it is clear that the US dollar price of oil is likely to go up. Some of that "up" will be due to weakening currency. Some of it will be due to rising global demand. Some of it will be due to the absolute failure of the US ENERGY POLICY WHICH MAKES US DEPENDENT ON FOREIGN-SOURCED OIL. And some of it will be due to the supply shocks from geopolitical risk in MENA and elsewhere. The total of these things suggests that the upward price bias estimated by Barclays is a correct thematic view for an investor. At Cumberland, we remain overweight the energy sector. As we have written several times: "This is nowhere near over." ~~~ David R. Kotok, Chairman and Chief Investment Officer |
| Posted: 29 Mar 2011 09:15 AM PDT WJB Technical Analyst John Roque channels his inner imp to deliver these delightfully sarcastic bon mots:
Oy. |
| Science: Rising in China, Crashing in Russia Posted: 29 Mar 2011 08:30 AM PDT Walter Derzko of Smart Economy gives us the heads up on this interesting map, showing citations in Chemistry papers (below). Thanks to some clever programming, plus Google Maps, we can see the distribution of the cities that produce more excellent papers than expected. Similar figures are also available for physics and psychology. Note: Professors Loet Leydesdorff & Olle Persson describe the process of how to use “Google Earth, Google Maps and/or network visualization programs such as Pajek, one can overlay the network of relations among addresses in scientific publications on the geographic map.” (PDF) Green circles indicates frequent citations, red circles low citations and size of the circle indicates the number of publications: > Global Chemistry Papers
Europe Chemistry Papers
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| Case Shiller: Dismal Start to Home Prices Posted: 29 Mar 2011 07:12 AM PDT Excellent news: Despite the best efforts of misguided government policies (tax credits, mortgage mods, foreclosure abatements) and the Fed (ZIRP), Home prices are falling towards normalized levels. (Yeah!) That is the result of the latest Case Shiller data for January 2011: “The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels.” The chart below shows that we have now reverted back to price levels where housing markets launched into their vertical 3 year price rise. What we have yet to erase is the excess speculation from the 2002 to 07 mania. Until that gets wrung out of the market, I doubt you will see a healthy Real Estate sector. That will only take place through a combination of lower prices, better holders and the elapsing of time. The good news is that is happening. The bad news is its a slow painful slog . . . > > One of 20 areas (D.C.) rose last month, preventing another shutout (one of 20 rose in each of December (Cleveland) and November (San Diego); all 20 declined in October). Here's how far back each of the 20 areas (and the 10 and 20) have fallen:
> And all 20 metro regions on one chart:
> More charts after the jump
A summary of the monthly changes using the seasonally adjusted (SA) and non-seasonally adjusted (NSA) data can be found in the table below.
Source: Standard & Poor’s and Fiserv; Data through January 2011 |
| Fukushima Nuclear Accident Radiological Consequences (3.28.11) Posted: 29 Mar 2011 06:55 AM PDT Radiological Consequences of the Fukushima Nuclear Accident – 28 March 2011 View more presentations from IAEA |
| Posted: 29 Mar 2011 06:31 AM PDT Joshua Brown, author of “The Reformed Broker,” says he believes there will be no QE3 and that Bernanke deserves some credit for keeping the bottom from falling out. CNBC’s Melissa Lee and the Fast Money traders discuss how to trade the end of QE2 and stimulus.
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| Posted: 29 Mar 2011 06:26 AM PDT S&P/CaseShiller said home prices in Jan fell 3.06% y/o/y in the top 20 cities, a touch better than expectations of a fall of 3.2% but it does take the index right back to the lows. At 140.86, it is just 1.1% above the low reached on Apr ’09 and is 31.7% below the record high in July ’06. With the Federal Government the unfortunate growth leader for the economy, Washington DC saw a 3.6% y/o/y price gain. San Diego also saw a gain but the other 18 cities had price declines led by Phoenix and Detroit. Bottom line, prices are retesting the lows again with no reason to think they won’t break below. The question of course is to what degree and whether bank balance sheets are prepared. Most unfortunately do not assume a double dip in pricing. Reflecting the recent goings on, March Consumer Confidence fell to 63.4 from 72 in Feb and was 1.6 pts below expectations. It does match a 4 month low but the breakdown was mixed as the Present Situation rose 3 pts to the best since Nov ’08 while Expectations were down by 16.5 pts to the lowest since Nov ’10. The answers to the labor market questions weakened somewhat as those that said jobs were Plentiful fell and those that said jobs were Hard to Get rose. Those that plan to buy a home within 6 months fell to a 3 month low and those that plan to buy a car was down by almost 2 pts. Importantly and worrisome for the Fed, one yr inflation expectations jumped to 6.7% from 5.6% to the highest since Oct ’08 and compares unfavorably with the 20 yr average of 4.7%. |
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