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Trader's Corner 2007

Discussions about the economic and financial ramifications of PEAK OIL
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Where will WTI crude be on DEC 31st 2007?

Poll ended at Thu 19 Apr 2007, 04:20:21

under $50 per barrel
5
No votes
around $55
0
0%
around $60
5
No votes
around $65
12
No votes
around $70
11
No votes
around $75
28
No votes
 
Total votes : 61

Re: Trader's Corner 2007

Postby sparky » Thu 13 Dec 2007, 08:41:35

.

From Martin Wolf economic columnist of the financial times

The helicopters start to drop money
$this->bbcode_second_pass_quote('', '
')
Published: December 12 2007

The central bank helicopters are planning a co-ordinated drop of liquidity on troubled market waters. The money to be dropped now is not that large. But if this does not work, more will surely follow. The helicopters will fly again and again and again.

One point is clear: central banks must be pretty worried to take such a joint action. For what is remarkable about Wednesday’s statement is that five central banks – the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve and the Swiss National Bank – are co-ordinating their (different) interventions. Their hope must be that this action will trigger not panic (”what do the central banks know that I do not?”) but confidence (”now that the central banks are prepared to intervene in this way, I can at last stop worrying”). "




I'm getting the picture of a TV clip of some disaster with food drop to desperate and starving people on the verge of cannibalism , :roll:

This is pure capitalism , nationalize the losses and privatize the profits
.
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Re: Trader's Corner 2007

Postby MrBill » Thu 13 Dec 2007, 09:52:53

The authorities are damned if they do, and damned if they do not react to systemic problems in the capital markets.

Like banks not lending to one another because they are worried about their own exposure, and they do not know what problems are on the balance sheets of the banks they are supposed to be lending to.

What do you expect them to do? Nothing? The Bank of England has already been criticized for taking the high moral ground, being behind the curve and out of touch with Main Street.

I may not agree with their actions, but the powers that be may sooner take the heat for bailing out the bankers in The City rather than be responsible for a recession that puts workers on the street and homeowners out in the cold.

Moral hazard? You bet! But there are a lot of voters that would sooner bitch about the unholy troika of big business, big banks and big government while working and having a house to come home to at night than sleeping rough and looking for work in a recession.

Or as they say, a recession is when someone else loses their job. A depression is when you lose your job!
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Re: Trader's Corner 2007

Postby NTBKtrader » Thu 13 Dec 2007, 23:12:10

well stated Mr. Bill re: response to seahorse
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Re: Trader's Corner 2007

Postby seahorse » Fri 14 Dec 2007, 00:02:15

Well, I think Mr. Bill and I said the same thing, which is, we don't have free market capitalism. Its an unattainable idea screwed up by people.
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Re: Trader's Corner 2007

Postby MrBill » Fri 14 Dec 2007, 12:45:37

I cannot be bothered to post anymore today. Have a nice weekend. Cheers.

gloom....
$this->bbcode_second_pass_quote('', 'T')he Federal Reserve-led plan to drive down borrowing costs by holding extra money-market auctions is akin to putting ``lipstick on a pig,'' according to William O'Donnell at UBS Securities LLC.

Policy makers in the U.S., euro area, U.K., Canada and Switzerland said yesterday they will channel additional funds to commercial banks by lending money for longer and accepting a wider range of securities as collateral.

``What the program will not do is cure the cancer that got us here in the first place -- the housing bust, the collapse in credit conditions, etc.'' O'Donnell, who heads U.S. government bond strategy at UBS in Stamford, Connecticut, wrote in a research note today. ``We view this new program as palliative, and not a cure. Much more time is needed and much more pain is up ahead.''

Source: Dec. 13 (Bloomberg)

....more gloom

$this->bbcode_second_pass_quote('', 'T')he cost of borrowing euros for two weeks soared to the highest since at least October 2001, evidence that a combined effort by central banks to ease a year- end credit squeeze is failing.

The euro interbank offered rate banks charge each other for such loans rose 80 basis points to 4.95 percent, the European Banking Federation said today. That's 95 basis points more than the European Central Bank's benchmark interest rate. The three- month borrowing rate stayed near a seven-year high for a second day, falling 1 basis point to 4.94 percent.

Central banks in the U.S., U.K., Canada, Switzerland and the euro region agreed two days ago on a coordinated drive to promote lending into 2008, after financial institutions this year announced more than $66 billion of losses linked to subprime mortgages. Citigroup Inc., the biggest U.S. bank, said yesterday it will take over seven investment funds and assume $58 billion of debt to avoid forced asset sales.

``The market clearly doesn't believe that central banks can do anything about this crisis,'' said Nathalie Fillet, senior interest-rate strategist at BNP Paribas SA in London. ``This is not going to be a magical solution to the problem.''

source: Dec. 14 (Bloomberg)
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Re: Trader's Corner 2007

Postby Mechler » Fri 14 Dec 2007, 20:30:28

Just a quick question for whoever:

Are US Money Market funds a safe place to park money for the short term? Long term? Is there any chance I could wake up one day and the assets I have in a money market fund would be significantly decreased?

I've always considered these funds to be zero risk (or close to it). Am I wrong?
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Re: Trader's Corner 2007

Postby MrBill » Sat 15 Dec 2007, 04:51:30

$this->bbcode_second_pass_quote('Mechler', 'J')ust a quick question for whoever:

Are US Money Market funds a safe place to park money for the short term? Long term? Is there any chance I could wake up one day and the assets I have in a money market fund would be significantly decreased?

I've always considered these funds to be zero risk (or close to it). Am I wrong?


You need to check on a case by case basis. If you do a straight 3-mos. deposit with your bank then your money is as safe as the bank's ability to repay, plus any minimum deposit insurance.

However, if you buy a money market fund then there is no guarantee implicit or otherwise. It is contingent on the bank's or fund's ability to repay, and may contain CPs and other money market instruments of third parties, to enhance the yield.

With these funds there is always a small risk of default or more likely rescheduling, so that a short-term investment becomes a long-term investment with more risk and little extra reward (in the case of a problem).

Ask before you click! Cheers.
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Re: Trader's Corner 2007

Postby Daryl » Mon 17 Dec 2007, 16:51:49

$this->bbcode_second_pass_quote('Mechler', 'J')ust a quick question for whoever:

Are US Money Market funds a safe place to park money for the short term? Long term? Is there any chance I could wake up one day and the assets I have in a money market fund would be significantly decreased?

I've always considered these funds to be zero risk (or close to it). Am I wrong?


Depending on how much money you are talking about, a bank CD should be better protected, because it will be insured by the FDIC. A money market fund won't be. Also, CDs are usually safer when deposited with an institution "too big to fail" ie more likely to get a federal bailout in case of trouble. The safest place for your money would be a 3 month treasury bill, which is a direct obligation of the US government. However, it pays less interest accordingly.
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Re: Trader's Corner 2007

Postby qwanta » Mon 17 Dec 2007, 17:32:05

$this->bbcode_second_pass_quote('Mechler', 'J')ust a quick question for whoever:

Are US Money Market funds a safe place to park money for the short term? Long term? Is there any chance I could wake up one day and the assets I have in a money market fund would be significantly decreased?

I've always considered these funds to be zero risk (or close to it). Am I wrong?


Long term, it's not a good idea because inflation will eat away the value.
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Re: Trader's Corner 2007

Postby MrBill » Tue 18 Dec 2007, 06:02:40

$this->bbcode_second_pass_quote('qwanta', '')$this->bbcode_second_pass_quote('Mechler', 'J')ust a quick question for whoever:

Are US Money Market funds a safe place to park money for the short term? Long term? Is there any chance I could wake up one day and the assets I have in a money market fund would be significantly decreased?

I've always considered these funds to be zero risk (or close to it). Am I wrong?


Long term, it's not a good idea because inflation will eat away the value.



A drop in the stock market can erase the value of your capital a lot quicker than persistant, long-term inflation, but you're right. Money on the sideline at the moment is safe, but it won't keep up with inflation or a wider US dollar devaluation. Mind you I am expecting the US dollar to rally back to $1.4040 in the medium term. We are firmly under $1.4400 this morning after testing an all-time high of $1.4966. Down there I will likely be a buyer of euros and Swiss franc again, but then what to invest those currency into? Hope to see some bargains in energy stocks by then or buy commodity linked certificates.

ABN Amro Commodity Linked Certificates

These are publicly available, but there is no gearing. Commerzbank and some others offer 160% of any gain with 100% capital protection. However, they are not publicly traded.


UPDATE: I saw this technology featured in The Economist a few years back and I wondered at the time whether it would ever be commercialized? Apparently it has!
$this->bbcode_second_pass_quote('', 'T')he 132 meter (433 ft) long MV "Beluga SkySails" will make its maiden voyage in January across the Atlantic to Venezuela, up to Boston and back to Europe. It will be pulled by a giant computer-guided 500,000-euro ($725,000) kite tethered to a 15-metre high mast.

It is a throwback to an earlier maritime age, harnessing the winds that fell out of favor over a century ago when sailing lost the battle for merchant shipping to modern steam power because it was seen then as primitive and unpredictable.

But now, in the age of climate change, wind power is making a remarkable comeback thanks to modern technology.

Source: German ship fights climate change with high-tech kite

Image

One concern I would have - especially as the sails get bigger and are flown at heights of up to 300 meters or more - is the danger of low-flying aircraft in poor light conditions or at night over shipping lanes. Oilfield service helicopters flying sortes for example.
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Re: Trader's Corner 2007

Postby Daryl » Tue 18 Dec 2007, 13:12:12

$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('qwanta', '')$this->bbcode_second_pass_quote('Mechler', 'J')ust a quick question for whoever:

Are US Money Market funds a safe place to park money for the short term? Long term? Is there any chance I could wake up one day and the assets I have in a money market fund would be significantly decreased?

I've always considered these funds to be zero risk (or close to it). Am I wrong?


Long term, it's not a good idea because inflation will eat away the value.



A drop in the stock market can erase the value of your capital a lot quicker than persistant, long-term inflation, but you're right. Money on the sideline at the moment is safe, but it won't keep up with inflation or a wider US dollar devaluation.



All true, the problem is that over time the last 80 years or so, money market deposits and bonds haven't done that well versus inflation, while stocks have. The problem for investors is that stocks can fall into long bear markets and can also do poorly against inflation for periods as long as 20 years - and that's just looking at the past. There are no guarantees for the future regarding stock returns. This is why standard conventional wisdom financial planning reccomends keeping most of your money in stocks until you start approaching retirement age ie when you will actually start needing to spend the money. You don't want to get stuck in a bear stock market just at the time you need the money. So, you will see funds at Fidelity call "Retirement 2020 fund" What they are doing is gradually every year changing your mix of investments to lean more and more toward bonds instead of stocks as time marches on.

Generally speaking though, stock indexes are indeed a good bet over the long term, because at the end of the day the stock market represents the total value of the businesses of the US economy. As long as the economy grows, the stock market should keep increasing in value and paying dividends.
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Re: Trader's Corner 2007

Postby Mechler » Tue 18 Dec 2007, 14:02:54

$this->bbcode_second_pass_quote('Daryl', 'G')enerally speaking though, stock indexes are indeed a good bet over the long term, because at the end of the day the stock market represents the total value of the businesses of the US economy. As long as the economy grows, the stock market should keep increasing in value and paying dividends.


Thank you all for the input. Is it possible that peak oil will cause a new paradigm? I think it is Heinberg who is floating an idea about "peak economy" coinciding with peak oil. On the surface it makes sense, but I haven't looked into it any further.

On the flip side, the stock market has weathered plenty of storms over the past century and it's just short-sighted to think that we'll see anything like a world war, the great depression, etc. Although, I imagine those seemed quite bad at the time!!!

Anyway, I like to think about these things to help me guide my investments. I guess trying to predict the future is pretty foolish, though, but I just can't help it!
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Re: Trader's Corner 2007

Postby gnm » Tue 18 Dec 2007, 14:08:09

Just glanced at the poll up there...

I guess $91.00 is _near_ $75? Don't you hate it when we are collectively TOO OPTIMISTIC?

8O

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Re: Trader's Corner 2007

Postby Daryl » Tue 18 Dec 2007, 15:45:59

$this->bbcode_second_pass_quote('Mechler', ' ')Is it possible that peak oil will cause a new paradigm? I think it is Heinberg who is floating an idea about "peak economy" coinciding with peak oil. On the surface it makes sense, but I haven't looked into it any further.


I wouldn't listen to any Peak Oiler's opinions about economics. Even professional economists are operating inside a paper bag and tend to excel in explaining the past, not predicting the future.

Personally, I like to stay nimble. All things being equal, I prefer to be fully invested in equities, since they provide the best chance for a large capital gain, while paying income along the way. But I am very wary of bear markets and will fully disinvest myself in a heartbeat. For example, I don't own a single stock right now and have all my money in money market accounts (although I alway maintain a small investment in metals). This kind of strategy was unthinkable even a few years ago, before the dawn of internet trading and ETF's. I use a lot of technical judgements to make decisions based on my career experience, but I also subscribe to a few technical advisory services. I can recommend a good one for you. www.fibtimer.com. You can follow his conservative strategy. He only charges a couple of hundred dollars a year and he will keep you out of a bear market.
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Re: Trader's Corner 2007

Postby Iaato » Tue 18 Dec 2007, 15:59:53

$this->bbcode_second_pass_quote('Daryl', 'G')enerally speaking though, stock indexes are indeed a good bet over the long term, because at the end of the day the stock market represents the total value of the businesses of the US economy. As long as the economy grows, the stock market should keep increasing in value and paying dividends.


You really don't have a clue, do you? I couldn't let this one go. This stock market has been in existence less time than our hyper-growth pattern based on fossil fuels. Our global stock markets are information systems about production and consumption in our economy. That production and consumption is directly related to its energy source, which is mostly coal and fossil fuels. Do you believe the peak oil premise? If so, then our economy and the stock market are now stopping their growth and are declining. Making sweeping statements about an information system like the US stock market that is based on fossil-fueled growth, and then disconnecting it mentally from its energy sources shows some amazing cognitive dissonance and denial from someone who has posted here 895 times. Growth is not an assumption. I guess I shouldn't be surprised. You're in line with the majority of the world, who have been indoctrinated into the idea.

Go back and read dieoff.org or Limits to Growth if you think that we can continue to grow. This stops right here, with the peaking of oil.
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Re: Trader's Corner 2007

Postby Daryl » Tue 18 Dec 2007, 16:42:56

$this->bbcode_second_pass_quote('Iaato', '')$this->bbcode_second_pass_quote('Daryl', 'G')enerally speaking though, stock indexes are indeed a good bet over the long term, because at the end of the day the stock market represents the total value of the businesses of the US economy. As long as the economy grows, the stock market should keep increasing in value and paying dividends.


You really don't have a clue, do you? I couldn't let this one go. This stock market has been in existence less time than our hyper-growth pattern based on fossil fuels. Our global stock markets are information systems about production and consumption in our economy. That production and consumption is directly related to its energy source, which is mostly coal and fossil fuels. Do you believe the peak oil premise? If so, then our economy and the stock market are now stopping their growth and are declining. Making sweeping statements about an information system like the US stock market that is based on fossil-fueled growth, and then disconnecting it mentally from its energy sources shows some amazing cognitive dissonance and denial from someone who has posted here 895 times. Growth is not an assumption. I guess I shouldn't be surprised. You're in line with the majority of the world, who have been indoctrinated into the idea.

Go back and read dieoff.org or Limits to Growth if you think that we can continue to grow. This stops right here, with the peaking of oil.



Hmmm. I'm OK on the dieoff.org thing. I'll leave that to you guys.

Basically, I think the investment strategy I've outlined accounts for your view. If you are correct, then we will enter the mother of all bear markets and I will profit handsomely because I will be long inverse stock index ETf"s all the way down. If your related goldbug "fiat currency" pessimists are correct, my small collection of precious metal coins will far out value any monetary assets I now possess. I try to prepare for as many foreseeable circumstances as possible and that's what I recommend to others. Those with a very pessimistic view can use Fibtimer or other such analysts to determine when the best time is to get short. Even if you are right, you might sell into a temporary 2 or 3 year bubble and get wiped out.

I think peak oilers who are advance trading and positioning themselves say 80% invested in gold or grains are taking a huge risk. They are betting the farm (no pun intended) that their vision of the future is the correct one. I don't pretend to have such certainty about the future and try be prepared for as many forseeable outcomes as possible.
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Re: Trader's Corner 2007

Postby qwanta » Tue 18 Dec 2007, 17:14:07

$this->bbcode_second_pass_quote('Mechler', 'T')hank you all for the input. Is it possible that peak oil will cause a new paradigm? I think it is Heinberg who is floating an idea about "peak economy" coinciding with peak oil. On the surface it makes sense, but I haven't looked into it any further.


Like Iaato said, stock markets have only risen in the "long term" (which usually means since the early 20th century) by riding the wave of exponentially increasing oil & energy production. Our world economic system has unfortunately grown accustomed to this ever increasing energy & resource consumption and the vast majority of economic forecasts simply assume that this will continue forever. The problem is, you cannot have "growth" with a declining resource base and the shock to the system that this will cause will be unprecedented.

Remember also that the economists who talk about long term stock market growth are the same ones who utterly failed to predict the tech stock meltdown ("it's a new economy!"), and the housing bubble ("it's different this time!") when these pyramid schemes were comparatively more straightforward to see than peak oil. I'll take Richard Heinberg, Colin Campbell, or even Jim Puplava over those clowns any day of the week.

Buy gold, silver & oil stocks!
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Re: Trader's Corner 2007

Postby Iaato » Tue 18 Dec 2007, 17:22:52

$this->bbcode_second_pass_quote('Daryl', 'I') think peak oilers who are advance trading and positioning themselves say 80% invested in gold or grains are taking a huge risk. They are betting the farm (no pun intended) that their vision of the future is the correct one. I don't pretend to have such certainty about the future and try be prepared for as many forseeable outcomes as possible.


OK-it sounds like even though you still believe in growth, your forebrain has somehow dissociated from that belief and you are making investments consistent with contraction. You never answered the question; do you believe that we can continue to grow with peak oil?

It is very clear to me that fiat currency is done. That move by the ECB last night just about assures it. Maybe not this month, but certainly in the next year or two. Knowing that, the only rational choice is to invest in real assets, including gold. A brief perusal of the history of fiat currencies will back me up completely on this.

I have been investing with a peak oil compass for the past 5 years or so. That compass has not steered me wrong yet. My bets just keep improving. I'm with Airline Pilot on the betting thing (Housing Collapse). I'm not typically a betting girl, but I've bet the farm on peak oil since this is the first time in my life where I can somewhat predict the future. And that future is basically down from here. That fact is clear as a bell to me. I'll bet with you that we will not be in the same place as an economy a year from now.
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Re: Trader's Corner 2007

Postby qwanta » Tue 18 Dec 2007, 17:29:59

$this->bbcode_second_pass_quote('Daryl', 'I') think peak oilers who are advance trading and positioning themselves say 80% invested in gold or grains are taking a huge risk. They are betting the farm (no pun intended) that their vision of the future is the correct one. I don't pretend to have such certainty about the future and try be prepared for as many forseeable outcomes as possible.


You are safer in commodities than dollars because dollars are being printed at an alarming rate. And that's before the Chinese start converting there massive dollar reserves to hard assets. There are macroeconomic conditions, completely independent of peak oil, that make the decline of the dollar inevitable. (Check Peter Schiff http://europac.net/video.asp for a good example of a gold bull and dollar bear)

Also, I highly caution against trying to trade in and out of the stock market with services like http://www.fibtimer.com/ most people who do this lose money, even pros. The thing to do is to take long term positions (buying on dips if possible) based on long term trends. For example, where do you think oil & gold will be 3 years from now? I highly recommend Jim Puplava's free radio show for a primer on this kind of long term investing:
http://www.financialsense.com/fsn/main.html
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Re: Trader's Corner 2007

Postby Iaato » Tue 18 Dec 2007, 17:30:11

$this->bbcode_second_pass_quote('qwanta', 'R')emember also that the economists who talk about long term stock market growth are the same ones who utterly failed to predict the tech stock meltdown ("it's a new economy!"), and the housing bubble ("it's different this time!") when these pyramid schemes were comparatively more straightforward to see than peak oil.


Yes, Qwanta. And the irony is, it really is different this time. But not different in a positive way. The difference is the downslope of the resource curve. It really is different this time, just not in the way that all of the cornucopian pundits use the term.
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