Contributing Member of the Energy & Industrials Councils

GLG News by this Author

Crude Oil Inventories Swell to Obscene Levels

September 23, 2009

Analysis of:Oil Drops the Most in 5 Weeks on Unexpected U.S. Supply Gain | www.bloomberg.com

Long overdue fundamental factors should begin to come into play after the Sept 23 crude oil inventory report. The energy sector's y-o-y earnings comps in 2009 are going to be ugly and energy investors can not extrapolate forward earnings in 2010, expecting crude oil prices to average $75 to $100 in 2010. While the energy sector has been an outperformer.The energy sector has underperformed the broad market in 2009, the recent relative outperformance in recent weeks is apt to diminish after Q3 09 earnings are reported in October 2009.

Occupancy Fraud - Are you Surprised?

February 7, 2008

Analysis of:Speculators May Have Accelerated Housing Downturn | online.wsj.com

The teaser interest rate environment meant that people of every ilk would find a way to exploit the easy money made available by every financial institution. This includes every conceivable fraud that could be committed, was committed in the housing boom.

The Specter of credit rating downgrades will fray investors nerves in February

February 7, 2008

Analysis of:Moody's Reviewing Mortgage Insurers | biz.yahoo.com

Fitch, Moody's, and Standard and Poors are all placing bond insurers under further review.  And likely, things will get worse before they get better. 

End of 2007 Stock Market Review – Weathering the Financial Turmoil of a Credit Crunch

January 4, 2008

Analysis of:End of 2007 Stock Market Review – Weathering the Financial Turmoil of a Credit Crunch | www.financialfuturesandequitymarketanalysis.com

The blowup of 2 Bear Stearns Hedge Funds was the tipping point for equities in 2007. That event triggered the drying up of liquidity in the credit markets. As Bill Gross put it back in Sept, “the commercial paper market, in terms of the asset-backed commercial paper market, is basically history.” Investors seeking low risk, high yield, predictable, stable returns balked and said "No Mas." This left the major central banks as lenders of last resort. ABCP credit markets are still suffering from their lack of transparency and inability to price their products. Entering 08, Central banks continue to fulfill their obligations as lenders of last resort quite and will continue to do so. As the ECB stated at their Sept 6th meeting “Given [the] high level of uncertainty…The ECB has a ``determination to act in the future whenever it is necessary,'' As a result, Equities have proved resilient, – even if faltering, as a domestic recession in the US looms large in the first half of 08.

Cash Infusions into Money Markets and Financials Provide Significant Boost to Dow Jones and SP 500

December 6, 2007

Analysis of:Goldman's Cohen Sees S&P 500 Rising 14% by 2008's End (Update6) | www.bloomberg.com

Substantial relief to both financial centers plagued by mortgage loan defaults and to the broad equity markets has arrived and it is coming from all angles, the Federal Reserve, Middle East Sovereign Wealth Funds, the US Treasury as well as other major central banks.

Ethanol's long term demand curve is positively sloped

October 7, 2007

Analysis of:Ethanol’s Boom Stalling as Glut Depresses Price | www.nytimes.com

The forward demand curve for ethanol demand remains positively sloped. Projections for ethanol demand over the three to five year horizon are forecast approximately 70% or more. That said, however, for the near term many ethanol forty-niners expecting to hit the mother lode are winding up with nothing more than fool’s gold.

"We Can;t Handle Higher Rates"

September 20, 2007

Analysis of:Fed Cuts Interest Rates by Half Point | www.forbes.com

MacroMaven Stephanie Pomboy reflecting on interest rates a few years backed quipped that the US economy could no longer handle higher interest rates in a way that mirrors what Jack Nicholson shouted to Tom Cruse in A Few Good Men that he couldn’t handle the truth. She may have been early on her call, but we will soon find out how accurate she was.

Central Bankers are lending freely but not so freely as to bail out the over-levered players in the game

September 14, 2007

Analysis of:Rise forecast in company default rates | www.ft.com

Company default rates will undoubtedly rise somewhere along the 300% lines anticipated by Economy.com’s chief economist Mark Zandi. Risk of Default is simply part of the capitalist processes of “creative destruction.” The only way to avert the rising default rates would be for the Fed and other central bankers to orchestrate a “bailout” for all the over-levered players in the game involved in excessive risk taking.

Providing Liquidity to the Credit Markets may be outside the Fed’s Hands over the near term

September 7, 2007

Analysis of:Libor Pops Up | online.wsj.com

The widening of credit spreads and lack of liquidity may be may be with us for several more months and there may be little the Fed can do about it. If so, corporate borrowing costs may go up. This may diminish earnings growth for companies needing to access the corporate bond market over the next few quarters. In fact, they may temporarily suspend any plans they may have had to tap the corporate bond markets.

Libor and Commercial Paper Rates Spike on Moody's Aggressive Ratings Downgrades

September 7, 2007

Analysis of:FOCUS Credit ratings face credibility gap, inquiries in wake of sub-prime woes | www.forbes.com

Moody's Ratings downgrades in the first week of September are serving to further tighten financial conditions in the Libor and CP markets which are increasing the downside risks to the economy.  

If Past is Prologue, then the 2007 Carry Trade Unwind is Just Getting Underway

August 30, 2007

Analysis of:Mrs. Watanabe's Loss on Carry Trade to Help U.S. | www.bloomberg.com

Summary: Many market observers are inescapably drawing parallels to the carry trade unwind of 1998.  Some believe it will be similar, others believe the present unwind will be far worse. One curious similarity the current unwind bears to the 1998 unwind is they both share the same “born on date” – both unwinds started on the 15th of June. While it is still too early to tell how this unwind will all play out in real time, if the unwind shows even a remotely similar correlation, then the present unwind is still in its infancy stages.

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