The end of the beginning and the beginning of the end

What an eye catching phrase! I picked it from this article in the Independent. In it the author posits many bear case scenarios for banks as they try to raise capital to shore up liquidity. If right now is the end of the beginning, I think (post-Gustav) we are set for a relief rally...that would be something! But alas, it would be a head-fake and things should begin to unravel soon after. When will it all end? I do think the last bailout will be the fourth option (from the Independent article), direct state intervention to support lending! Levels to watch for upside bear market rally targets..1350 on SnP, 12250 on Dow, 75 on the BKX. And the breakdown..I think it should take us to 1100 or even a little below (on SnP). Ain't I papa bear :)

A Phelps like comeback for gold

If this article in TOI is to be believed, Indian gold demand has been surging recently. It says demand increased 10 fold from the start of the year which is a little hard to believe but I don't know the numbers that well anyways. However, I think if it's seasonal factors that affect demand, wouldn't there be an arbitrage opportunity in storing gold using a low interest rate currency (after hedging for some other price movements like exchange rate, interest rates, etc.) and selling it in peak season?

Coming back to my thoughts on inflation in India running at a 12% clip and the POG, I'm beginning to wonder if the gold price can decouple from the price of oil and the US $ and continue to hold steady or rise in spite of a fall in those. Well, I'm going to sell some longs into strength at the 50dma and maybe let the rest ride (or set a downside stop).

Business idea: Mobile search coupons

You're in a neighborhood and looking for a Thai restaurant, you run a google search by distance from current location (known via gps) and it brings up a list of restaurants - and you have to make a choice. You like one that's a little farther away but you're not sure. Now how about if the restaurant had a 10% coupon redeemable within the next 1 hour? Wouldn't that affect your decision? So the business idea is essentially being the provider that interfaces between these local businesses and the customer. Think about it,and get back to me if interested in delving deeper into this. The reason i need help is that I have ideas but ideas are a dime a dozen - I don't have good follow through. I know this weakness and hence want to compensate for it by teaming up.

An idea from my bike+VTA commute

I got an idea from personal experience and doing some reading. How about a mix of personal and public transportation? I rode my bike to the train station, got on it with the bike, got off and biked to the destination. So why not have some cheap electric bikes to do the last legs, and then have trains for the long haul. You can either buy your own bike and pay more for carrying it on, or there can be a ride-share service at each station. Sounds like a great idea to me. I wonder how the economics of something like this would work. Probably have to start seeing what an electric bike can/cannot do - you'd need approx. 5 miles of charge and be able to recharge at home and at the station. Whatsay?

Cram time

I just registered for the CFA Level I exam to be held in Dec! Wish me luck guys...I believe there's more than 5 books to chow down!

The bigger and maybe smarter market

They're not quite as sexy as stocks, but bonds are a much much bigger market than stocks. And when bond market participants see something different from the stock market, it is important to take notice. That leads me to a couple of articles, one from an investment manager and another in a more popular publication.
Something is about to give
Bond market jitters return

I won't go into details as both those pieces are pretty well written. But I will include a graph which sits at a critical juncture. The yield falling below 3.8% indicates severe flight to safety, and the spread from other rates like mortgage, investment grade bonds, etc. show extreme strain.

More theories on gold

To me, the recent rapid decline in the POG (price of gold) has not only been surprising, it's been mindboggling! Pretty much every reason ascertained for gravitating to gold has been shown the door. Cases in point...flight to safety (russia/georgia, pakistan), inflation (in china, india and now 5% yoy in US). Now simultaneously, it's interesting to see that US treasuries are getting bought at a rabid pace. However, yield spreads on the 3 month to 10 yr have decreased suggesting more pricing in of a recessionary scenario.

What I think is that many people, esp. those who got in on the trade this year, wear caught in a wave of panic selling. Price is almost always determined by supply and demand, and that's more so in the case of commodities like gold. Sources of supply are the trigger happy hedgies and others who got long recently like many etfs as well (+ maybe some central banks?). As for demand, it is supposed to be the slow season esp. in India. Another reason about Indian demand I believe is that the $/Re has recently appreciated by almost 10%, making the impact of the $ price decrease that much lesser. Also, with rampant inflation and the RBI raising interest rates, I think there's an incentive to lock in higher rates through CD's and the like. Interestingly, I think that when inflation begins to stabilize and even subside a little, and/or the RBI stops cutting rates, we should see a solid pickup in interest. Add to it the seasonal factors as mentioned by the commenter in the previous post and you have what I think makes for a great case of POG going up over the next 6 months or so. I certainly hope it does since I'm doubly long gold! (DGP)

Hot metal

Check out this news story...Man buys Chevy with small change. Amazing!

In fact, it's possible that the metal in the coins was worth more than the value of the coins themselves! Interestingly, this can't happen with paper money. Interesting analogy for a hyperinflating world?

Gold demand from India

This is question...does anyone have an idea of the factors affecting gold demand from India? I mean what affects the marginal increase or decrease in consumption? And what are the seasonal factors? The reason I ask is that is that with inflation running at almost 10%, when gold prices don't rise as much relatively, does that affect demand positively? On the other hand, if demand is coming from poorer sections of society, they may not have the money to buy the gold. So it's a complicated issue. Post your replies in the comments section if you have any thoughts. BTW, i think gold is a good buy for the 1 year timeframe. I like to play with leverage so I bought DGP, a double long gold ETN (exchange traded note) that's leveraged 2x to the POG (price of gold)

The mighty dollar

I'm sure the keen ones (:-) have been noticing how certain things have been moving in unision...dollar strength, euro weakening, oil and gold weakening, US equity strength, etc. Well, I think we are on the verge of the ending of that phase. Check out these graphs and see how they are stretched at the extremes of their bollinger bands and/or at major resistance/support. I expect dollar index finds major resistance at 74.31 and high rsi, euro macd moves back to normal, gold find support at 200dma low rsi, and moves back up to atleast test 50DMA. In short, I think long commodities soon. Here are the graphs...as always, for any questions pls post comments on the blog itself and i'll answer them to the best of my knowledge.

Dubya's parting gift

A failed administration that entered just as one bubble was about to burst, inflated another bigger one and leaves with a terrible economy, a sordid housing market, a record budget deficit, an unsuccessful campaign in Iraq, absolutely no achievements on the environment, broken ties with erstwhile allies. They screwed up with Guantanamo, appointment of justices, landed a lot of senior Republicans in the dog house, lost the Congress soon to lose the senate and the presidency. But to top it all off, Osama is still at large. George will certainly want to salvage his reputation but he can't do anything about it. Or can he? How about Osama's head on a platter? Wouldn't that be nice for a parting gift....to himself?