Jobless Claims in U.S. Increased Last Week to 472,000

http://www.bloomberg.com/news/2010-07-01/jobless-claims-in-u-s-unexpectedly-increased-13-000-last-week-to-472-000.html

Lets see if the markets start rising on bad news…thats usually a bullish signal !

Please remember this is just for discussion. This isn’t advice. Always seek a qualified financial advisor who knows your circumstances when making decisions.

Also, I think its important not to get overconfident and always make sure you allow for mistakes.
Mistakes are a constant and admitting them quickly is really important.
ATM my hit rate is unusually high but I fully expect it to drop as time goes on. Hence why i’m focusing on more outliers than just trying to make sure I am right 80% of the time (which is unsustainable).
Outliers are the keys to the castle

Please remember this is just for discussion. This isn’t advice. Always seek a qualified financial advisor who knows your circumstances when making decisions.

What’s the point of macro?

http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2010/06/21/what-s-the-point-of-macro.aspx

Please remember this is just for discussion. This isn’t advice. Always seek a qualified financial advisor who knows your circumstances when making decisions.

When looking at the BDI I suggest people also look at world shipping statistics such as scrapping rates, new orders and the number of vessels laid up.

The picture does not look good to me. Capacity is being taken out of the system via scrapping and laying vessels up and yet the BDI is still falling.

Of course a lot of new ships are hitting the water as a result of orders placed years ago but even so it looks like capacity is still falling as is demand.

Not sure? But if you’re suggesting we are going to have another major correction here I think that could be a possibility but unlikely? But I have portfolio insurance in place in case I am wrong of course, and to limit the drawdowns.
Looks like end of financial year tax loss selling, and seasonally this seems common for end of June.
Perhaps sideways for awhile and then grind higher over the next 6 months.

I do think that this is the last year for awhile for decent returns…so we better take advantage of it before the bear market takes hold again.

Please remember this is just for discussion. This isn’t advice. Always seek a qualified financial advisor who knows your circumstances when making decisions.

Found this interesting:

“But essentially one problem with using the BDI for economic forecasting is that the BDI could feasibly go up in an environment where commodities demand was shrinking, if the supply of ships was shrinking even faster. These would be negative economic factors. This is because the BDI’s value is not solely driven from the demand side. To me, it makes far more sense to just look at nominal demand for commodities rather than the BDI since the BDI has the complicating factor of vessel supply growth one needs to consider. The other thing is that the BDI is a measure of spot rates for dry bulk commodities consumers who, generally, are in the near term forced to pay whatever it takes to get their raw materials shipped (A steel plant needs to keep operating despite some higher ore transportation cost). On the flipside, vessel owners are in a similar boat (no pun intended), and in the near term are generally forced to take whatever rate they can get to fill their ships. (A ship sitting around is just a cost, ie. fixed costs are high, thus using a ship at a loss is usually better than not using it at all)

Because of these inelastic characteristics of supply and demand, and since the BDI is a measure of spot rates, the BDI is thus absurdly volatile. I can explain why via the following simplified example, which I used to use frequently at Citi.

Imagine you have 10 loads of iron ore and 9 ships, and that every load of iron ore must be sent no matter what while every ship must be filled no matter what. Imagine the bidding war between those 10 iron ore consumers fighting over just 9 ships. Shipping cost would skyrocket since they all need to ship regardless of cost. Now imagine if a week later two more ships enter the market. Now imagine the bidding process. Suddenly the tables have completely changed. You have 11 ships, that all need to be filled no matter what, and only 10 loads of ore. Shipping rates would plunge, despite a period of just a week passing by. This is, in a simplified nutshell why the BDI is so volatile.

Now, add to this the fact that predicting ship supply and commodities demand has a pretty high margin of error, at the same time remembering how sensitive the BDI is to small mismatches due to the inelastic nature of its underlying supply and demand, and you quickly realize that predicting the BDI is a fool’s game and also that it is not a reliable forward indicator given that it is a spot rate index in a market where both sides are basically forced to close a deal due to high fixed costs. The BDI is measure of supply/demand mismatch at the moment, and can change drastically on a dime. Its little else beyond this. It hit its peak not when the global economy was in its healthiest state, but in early 2008 when things were already starting to come apart, but Chinese commodities demand growth still had some steam and just kept outstripping stagnant vessel supply growth. For a moment. And then it all collapsed. And BDI correlators got annihilated in popular stocks such as DryShips (DRYS). Thus, let’s hope that we put to rest any talk of the BDI as a reliable leading indicator, even if in six months someone datamines some new, latest correlation.”

http://www.businessinsider.com/the-cost-of-global-shipping-is-a-lousy-economic-indicator-2009-5#ixzz0rqvEwxtx

Please remember this is just for discussion. This isn’t advice. Always seek a qualified financial advisor who knows your circumstances when making decisions.

I think when one is considering how markets might perform comparatively over the next decade, stuff like the following could have an impact:

http://en.wikipedia.org/wiki/Triffin_dilemma

http://en.wikipedia.org/wiki/Bancor

Although I’ve got to admit that I’m definitely not bright enough to figure out what any such impact might be!!!

Yep 75% of my portfolio is in the United States…and my OZ portfolio has alot of stocks that benefit from a higher USD. Most of my commodities exposure is related to oil…altho commodities is only about 10% of the portfolio…my big bets are in Walmart, Citigroup, Pfizer and Sanofi (70% of portfolio).

Please remember this is just for discussion. This isn’t advice. Always seek a qualified financial advisor who knows your circumstances when making decisions.

Also the factory strikes in China are going to make companies think of locating production elsewhere. So after the World Expo we might see a post-Olympics style slow down in China?