Diary of a Financier

Top Newsstuffs (March 24-30)

In Bookshelf on Sun 30 Mar 2014 at 05:35

April showers… Spring, is that you?

The real price of Gold (1791-2014) | Visualizing Economics
Even with $GC_F -40% from its 2011 alltime high, it’s still not far from its inflation-adjusted peaks in 1980 & 2011, and it’s far above the gold standard’s trading range (pre-Nixon shock/fiat).
$GLD

30-year US Treasury yield tumbles to 9-month low | Tyler Durden (ZeroHedge)
$TYX fell < 3.5% to the lowest level since 7/2013.
Despite QE tapering, the curve has unexpectedly flattened ytd:
2s10s @ 221bp spread, flattest since 6/2013
5s30s @ 180bp spread, flattest since 9/2009
10y Tsy vs 10y Bund @ 112.5bp spread, widest since 1999 & 2006 (i.e. German yields are lower)
[Bond buyers loaded-up to front-run rising rates in 3q/4q13, but with the Fed tapering POMOs & ZIRP’s end creeping-up, the front-end has risen with the back-end inexplicably falling. See also: $TNX technical pattern setting-up a breakout]
#Bear flattening $TLT

Rail traffic weekly: Pent-up demand prevailing in pervasive rally | Association of American Railroads (AAR)
Weekly traffic: +7.3% y/y
Growth ytd: +0.5pp @ +1.6%
Carload groups: 9 of 10 posted gains, including grain +16%, petroleum +10.3; chemicals -0.2
[After tough winter weather in January/February, pent-up demand surges for second straight week.]
#Bullish! $DBA $XLE $USO $UNG

Investor sentiment survey: Buy signal as indicators overshoot mean reversion (March 16, 2014) | American Association of Individual Investors (AAII)
Surveys sentiment for equity performance over next 6 months (through 8/2014):
– Bulls -5.6pp @ 31.2% vs 39.0 historical avg & 60.6 high in January (45% considered extremely high)
– Bears +2.5pp @ 28.6 vs 30.5 historical avg & 18.5 postcrisis low in January (25% extremely low)
– Bull/Bear ratio @ 1.1x vs 1.28x avg (4x alltime record 1/2014)
[Very bullish to see “bulls” overshoot mean reversion on the downside during a bull market.]
#Bullish #Contrarian

How Japanese single malts surpassed Scotland’s | Bloomberg
In 1918, chemist Masataka Taketsuru traveled to Scotland to learn how the Scottish make their world-class whiskey:
“There are only seven active single-malt distilleries in Japan… All share a basic DNA with traditional Scotch: Japanese whisky also starts with malted barley imported from Scotland, because it’s the best and the cheapest… pot stills are heated by coal fires, as opposed to steam, which gives their single malts richer, peatier flavors.”

Manufacturers’ durable goods shipments, inventories & orders: Wait & see if weather-related pent-up demand is coming (February 2014) | US Department of Commerce
– Orders–  core durable goods orders (ex-transportation) +0.2% m/m, +1.0 y/y; core capex orders (nondefense, ex-aircraft capital goods) -1.3, +0.1
– Shipmentscore durables +0.7, +2.9; core capex +0.5, +1.7
– Inventoryinventories +0.8 to a nominal record ($392.3B)
[Most January data were slightly revised-down, and again this adds to the inventory oversupply that’s still working-off the hangover from Q3′s spike in orders, but gains in shipments are a welcome sign considering the weather so far in Q1; now that the QE taper has begun, shipments really must rally: Previously]
#Neutral

Attention suckers: Send us your money (AKA The “Jumpstart Our Business Startups Act of 2012”) | Barry Ritholtz (The Big Picture)
President Obama’s JOBS Act will go down as one of the greatest deregulation scams in history — a “legal way to separate fools from their money” — for example:
Recently acquired by $FB for $2B+, Oculus Rift raised $2.4mm startup capital on Kickstarter, but instead of receiving equity in exchange for their funds, crowdfunders received t-shirts and VR goggle prototypes — all of which was clearly disclosed.*  Nevertheless, crowdfunders have brought a class action suit against the company.
[*Kickstarter’s explicit mission is to crowdfund working capital for startups’ prepaid sales, so no amount of regulation can defend greedy idiots from their own stupidity, although newly minted CFPB should do its best to defend the naive from fraud.]

Yes, Biotech is a bubble | Josh Brown (The Reformed Broker)
[Previously & See also: Why nobody should care about a biotech bubble]
$IBB $ICPT $XLV

Video documentary: “The Wall Street Code” | VPRO
Haim Bodek, “The Algo Arms Dealer,” reveals High Frequency Trading (#HFT) as an almost criminal underground–a conflict of interest for the algorithms & stock/options exchanges.
[Previously: Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System]

–Romeo

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  1. […] Retail sentiment’s bull/bear ratio @ 1.1x is far from the 1.8x average observed in prior, exuberant extremes. […]

  2. […] – Good idea: 46% respondents (vs. 67% in 1999 & 54% in 2006)) [Thanks to the #Recency Effect, low retail participation in this rally is allowing it to extend into a secular bull market; the history of […]

  3. […] are going lower as long as they’re at a premium to German Bund yields (< 1%) [Previously: Bund/Tsy spread widest since 1999 & 2006]     ii. 2015 outlook: 2014 followed historical analogue, with a great year ($TLT +24% ytd) […]

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