Blogs

My travels this week find me in Albuquerque, New Mexico. This morning I awoke before dawn and made my way to the north part of the city to see the annual Balloon Festival. This annual event brings onlookers from the world over. This morning, just after 7am, about 200 hot air balloons lifted off in a stunning display of color and spectacle. As I watched these magnificent objects rise.....I could not help but thinking about the markets and how it would be nice to see the Dow, S&P, Nasdaq and TSX rise with graceful elegance once again. Read more »

Mention the word Capitalism and what comes to mind? New York, Wall Street, Lehman, Merrill, Hedge Funds are but some of the expressions. Read more »

In previous blogs I have discussed provocative topics like the Trillion Dollar Meltdown written by author Ron Morris. I have talked about the upcoming book (due out in December) by futurist thinker Harry Dent who argues that the 2010 timeframe will be ugly for financial markets. As I wrote these blogs in the past 6 weeks I must admit I felt a tad uneasy advancing topics so unsettling. Read more »

The US Treasury market seems to be running out of steam here in spite of supportive data from economic fundamentals. Canadian long term bonds have kept pace with the trend to lower yields in the US market and seem to be poised for a breather as well.

The cream of the financial crop is relentlessly taking turns at blowing up. Last week it was Fannie and Freddie – the largest mortgage companies in the world, this week it was Lehman Brothers - another one of the largest investment dealers on the planet, next week it looks like it could be AIG – not long ago the largest insurance company around – that might be on the bankruptcy block. I keep getting asked the question when this crisis will be over and the news indicates that the financial boat just keeps on springing new leaks. It seems to me that this might be good time to replace Bozo Bernanke and Powerless Paulson with a bunch of octopi as more hands might have a better chance of plugging up more leaks in that sinking financial boat. Read more »

Friends and family of the US Economy extend their gratitude to Hank Paulson and the surgical team at the Treasury Department Hospital. Read more »

In your readings and research on the markets you may have come across reference to Gann Lines. These are named after the famed market trader W.D. Gann who lived and prospered in the early part of last century. But there is far more to the man than just a few simple lines on a chart.He is also noted for his magical, almost mystical Square of Nine. Read more »

I continue to ponder the deeper meaning of the situation involving Russia, Georgia and South Ossetia. A recent article in the newspaper THE INDEPENDENT written by journalist Askold Krushelnycky further made me ponder the situation.
I am now convinced that the world is concerned that Vladimir Putin and his right hand man Dimitry Medvedev are intent on flexing their muscles and making a push to establish a Russian Empire. Let's face it, Russia does have natural resources and it does have some military power, so what's to stop it from expanding its reach at a time when global powers are otherwise pre-occupied with the threat of a stagnating global economy?
Mr. Krushelnycky in his article notes that Russia may now have its sights fixated on the Ukraine. The following is an excerpt from the article: Read more »

Ever since meeting the venerable Henry Wiengarten at the annual Triple Gold Conference in New York early in 2008, I have taken quite an interest in how the movements of the planets affect what happens here on earth. Many people dismiss this as pure bunk, but as a person whose University education is in the field of Engineering, I am convinced that planetary motion does exert pushes and pulls on the earth as it rotates about in the Universe along with the planets. We humans are merely objects made up largely of water and carbon, both of which are easily influenced by electrical forces and gravitational forces. We humans are the ones who influence the markets with our buying and selling decisions on a day by day basis. Hence, by watching how the planets interact with each other, we can get a sense of what to expect. Read more »

Heads up !!

The biggest financial bailout in USA history is now underway. It has just been announced by Treasury Secretary Hank Paulson that in order to support the US housing market, there remains no choice but to nationalize mortgage finance firms Freddie Mac and Fannie Mae.

The US Treasury will immediately purchase $1 Billion in senior preferred stock in each of Freddie and Fannie. This preferred stock will have warrants attached and the shares will yield 10%. Assuming warrants are exercised over the near term, the Treasury could well end up pumping $100 billion into each entity to eventually own 80% of each. In addition, the Treasury will buy mortgage backed securities held by each entity starting right now. Read more »

Keep an eye on developments in Peru.

Back in May and June, President Alan Garcia passed two decrees that effectively made it easier for oil companies to acquire land belonging to indigenous peoples. Prior to these decrees, it took a 2/3 vote by a Native community to approve oil and gas exploration on its lands. The decree made it so that if only 1/2 of the people at a community meeting voted in favor of allowing exploration, then the applying oil company could proceed.

But this week in a stunning move, Peru's Congress repealed Alan Garcia's decrees. With 58 of 64 property blocks in Peru ( all prospective for oil ) in Native hands, multi-national oil companies may now find it more difficult than ever to get their hands on new explortation ground.

Again, this leads me to re-iterate my notion that Peak Oil (in addition to running out of the stuff) also means that the markets simply cannot get at it thanks to political roadblocks. Read more »

Late in 2007 publicly traded energy firm Petrobras (N:PBR) announced a major oil find off the coast of Brazil. Major in that Petrobras estimates this new oil field could contain between 5 and 8 BILLION barrels of the gooey black stuff. Energy traders breathed a sigh of relief and the cries slamming Peak Oil rang out around the world - "who said we were running out of Oil, Peak Oil be damned, all is well in paradise".

But is all well? Maybe not. Read more »

In a couple previous blogs I have advanced the notion that 2010 could be a downright nasty year for North American financial markets.

Now, further evidence comes to light to support this notion.

The International Monetary Fund, simply put, has a responsibility to watch over the global financial system. For the past 7 years the IMF has been pressing the issue of wanting to do a review of the US financial system. But a stubborn President Bush has been refusing to allow this review to start. Until now that is…..

As he packs his suitcase and gets set to leave the White House, Bush has now granted permission for the IMF to start this review. In order to complete this Financial Sector Assessment Program (FSAP), the IMF will be examining in painstaking detail data from the SEC, Investment Banks, Mortgage Banks and Hedge Funds. Read more »

Well, what a week it has been. My travels this week took me to Toronto where the gloom and doom was so thick you could chew on it. The weak junior resource sector is really hitting below the belt now as the end of the year comes into sight and no sign of a bottom is forthcoming. Read more »

I continue to ponder the deeper meaning of the situation involving Russia, Georgia and South Ossetia. A recent article in the newspaper THE INDEPENDENT written by journalist Askold Krushelnycky further made me ponder the situation.

I am now convinced that the world is concerned that Vladimir Putin and his right hand man Dimitry Medvedev are intent on flexing their muscles and making a push to establish a Russian Empire. Let's face it, Russia does have natural resources and it does have some military power, so what's to stop it from expanding its reach at a time when global powers are otherwise pre-occupied with the threat of a stagnating global economy?

Mr. Krushelnycky in his article notes that Russia may now have its sights fixated on the Ukraine. The following is an excerpt from the article: Read more »

The Treasury market streaked to 3 positive weeks in a row even after higher than expected inflation data.

On the financial sector front, write-offs have now exceeded $500 Billion. Conservative estimates from established organizations such as the IMF are forecasting the final tab to be over a trillion dollars. Meanwhile more pessimistic forecasters such as Nouriel Roubini are looking for double that figure by the time it is all done. The take away from this story is that the write-offs are nowhere close to being finished. The flavour of the past week was auction rate securities. A number of the leading banks and dealers have agreed to buy back billions of these securities to add to the inventory of impaired assets on their books. Capital requirements will be an ongoing issue in the financial sector. As long as they need to raise massive amounts of capital, financials will struggle to put in a long term bottom. On-going problems on this front are likely to support the bond market.

Short term rates lead the decline in yields globally again last week. The majority of commodity charts now look like blow-off tops. Bond markets world wide are starting to realize that inflation is a lagging indicator, so the high CPI and PPI readings are discounted as yesterday’s news. While PPI is close to 10% at this time, I would not be surprised to see a negative sign in front of it 12 to 18 months from now. The credit crunch is still gaining momentum. In a recent survey over 80% of bank lending officers indicated that they plan to further tighten lending standards. The bond market has been in a trading range for the most part of this year with the 10 year Treasury note yield stuck around 4%. While the Fed has eased aggressively over the past 12 months, their efforts to increase liquidity and get the Treasury to print boatloads of new money have failed miserably. They are pushing on a string. Staying safe in the short end of the Treasury market has been and continues to be the most stable investment out there. At the expense of repeating myself, I would like to reiterate that as time passes by I remain convinced that the Fed will not raise rates in the foreseeable future. Read more »

Call me a cynic, call me a skeptic. Whenever a hotspot flares up in the world, I invariably find myself exploring for deeper meanings instead of just accepting the perspective offered up by CNN.

The current situation involving Georgia, Russia and South Ossetia has certainly given me plenty to ponder.

As a brief history, as the Russian empire expanded in the 18th and 19th centuries, the tribal people of Ossetia generally sided with the Russians instead of trying to fight them. In the 1920's, this loyalty seems to have been rewarded when Russia established the South Ossetian Autonomous Region which today lies inside the breakaway Republic of Georgia.

As the Soviet Union began its fade to black as the Communist model failed, Georgian nationalist leader Zviad Gamsakhurdia began locking horns with South Ossetia. Violence flared in 1990 as South Ossetia declared its intention to secede from Georgia. When the Soviet Union officially failed in 1991-1992, South Ossetia ramped up its separatist rhetoric. Clashes followed and casualties mounted

Fast forward to the present and we see that the situation has again flared up. But this time, the dynamic is different and this invites a series of questions. Read more »