Morning all! In trying to keep with all of the Egypt updates over the weekend got me thinking - is Egypt our "Black Swan?" Or least a close relative of sorts? It's probably too early to fully ascertain all of the implications of the uprising, but we can still speculate a bit, which is what I thought we'd do this morning. So folks, what do you think could be some of the geo-political, economic, and market implications? Will hot money flows flee other emerging markets? Rising oil prices, and resulting commodity and food prices? Will there be at least a short term flight to "safety", and/or to the least bad of a bad lot of currencies, namely the U.S. dollar? What are the potential longer term implications?
Here is a small sampling of articles from over the weekend:
Dollar, Yen, Swiss Franc Gain Versus Euro for Second Day on Egypt's Unrest
Dubai Shares Fall Most Since May on Egypt Unrest, Pacing Mideast Decline
The Egyptian Unrest: A Special Report
Opposition Rallies to ElBaradei as Military Reinforces in Cairo
Israel Gauges a Conflicted Partner
Oil ETF Call Trades Soar to Record Amid Egypt Unrest
Unrest in Egypt Unsettles Global Markets
What else is on your mind this morning?
@MAnnwich
ReplyDeleteSome good articles.
I am of the opinion that Egypt is not a "black swan", but I'm thinking the big pullback will come later in the year, like Dastro says.
Egypt is too small. I'm looking for something bigger, like Europe. However, Bloomberg is saying that "European financial stocks are on course for their best January in more than a decade "
(frontpage, www.bloomberg.com).
So the black swan may be European sovereign debt but not the banks. (You don't suppose the banks are trading in their treasuries for bucks, do you?). Let's see, what other country has saved their banks at the expense of sovereign debt...hmmmmm.....um.....
Also, look at ford, what a buy! Up 18 percent! Go F150! (I wonder what the percentage of F150's go to business, as opposed to consumers). See
http://www.bloomberg.com/news/2011-01-31/u-s-auto-sales-may-reach-second-fastest-rate-in-17-months.html
As soon as I see a higher low, I'm back in!
I commented the other day about stop loss orders. Here's counterpoint:
ReplyDeletehttp://www.bloomberg.com/news/2011-01-27/stop-loss-orders-may-lock-in-losses-when-stocks-plunge-in-volatile-markets.html
I will say this, if you're looking to catch turnarounds, like highs and short or lows and buy, then stop loss orders may not be for you. But if you're playing trend, then get out and wait for your moment.
Running Mannwich's numbers up.....
ReplyDeleteHere's a link to David Kostin's outlook for 2011.
http://wallstreetpit.com/52393-david-kostin-on-goldmans-2011-forecast
Bascially he says that companies will be successful, but the consumer will not. Companies cash/asset ratio is >10%, they are refinancing debt and taking on debt at close to 0%, which raises Return on Equity, which is good for the market, and stock price.
At the last part of the link, he's listing the stocks that he/GS thinks will do best. They're saying technology will do well because that investment by companies will raise margins.
He's saying that a company's profits are going to capital investment as opposed to adding labor, which will make them more efficient. They're saying margins will go from 8.7% (now) to an average of 8.9%.
This is sad news for unemployment, he said that they don't expect unemployment to improve for a long time, but the market, with 0% interest, is not based on employment.
Personal spending is up much more than they thought. I wonder if that spending went through Visa and Mastercard?
ReplyDeleteVisa has had a pullback, and stochs are below 20% on the 60 minute. I'm thinking to try the 15 minute and look for a higher low to go long just to see what happens.
Whispering at Autocrats. Why Wikileaks matters.
ReplyDeleteGhosts. Context.
Every time I look at NBG - I want to say - Is this next Citi.
ReplyDeleteDo your own due diligence.
ICan
Some wild pre-market moves in my little short this morning. Looks like they're trying to gun it higher. Or nervous shorts are covering. I'm not, but nutty moves already today.
ReplyDelete@Rock,
ReplyDeleteScrewflation and Middle East and Oil. Wouldn't it be ironic if rise on oil prices, in an indirect way cause regime change there.
ICan
Looks like they were unsuccessful in their bid to gun it higher, by the way. Odd moves though. Settled back in and barely up on the day after being up over 5% from the get go.
ReplyDelete60 Minutes interview with Julian Assange
ReplyDeleteI like the part where the interviewer starts talking about the consequence of breaking "the rules" and Assange reminds him of the 1st Amendment.
@emmy: Wife and I watchd that as well and I got a kick out of Kroft feeling like he was speaking for the American people when describing what "WE" thought of Assange. Without my prompting her, my wife got the sense that Kroft was actually speaking for the establishment or elites.......maybe she listens to my screeds after all?
ReplyDeleteThe take away from that interview was just how much of a lackey "60 Minutes" and Kroft has become for the establishment over the years. It's why I rarely watch that or "Meet the Press" or any other mainstream media program. They'll only go so far. And the juxaposition of Kroft's tone vs. the fact that Assange is basically doing the job that Kroft and his media brethren should be doing was, and is, pretty striking, IMO.
ReplyDelete@Mannwich
ReplyDeleteI wonder why Assange didn't ask him that.
@ICan
Ooph, have to boost Mannwich's numbers.....
Good question, Rock. I'll be he wishes he had.
ReplyDeleteMorning all - here's our bounce
ReplyDelete@ICan:
ReplyDeleteDon't forget the billion or so that the US holds over their heads (military aid), and that al-qaeda "second in command" is Egyptian.
I don't know, Thor. Seems a little tepid to me.
ReplyDeleteManny true - but we're not tanking right out of the gate like a lot of the permabears were expecting
ReplyDeleteFrom Trader Mark - fundmymutualfund.com
ReplyDelete(Video)CBS News: Even More Millionaires strategically Defaulting".
"This one 'gentleman' in CA has saved $240,000 in two years by living 'rent-free' in his ocean front home". The guy is not paying his mortgage because the value of his home has gone down.
"I haven't made a payment in two years...That was any easy decision".
"The loss is not mine..The loss is the bank's".
Trader Mark -"I wonder why Tiffany's is doing so well".
My question is whatever happened to contract law? Did he not know there was a risk, that he may lose(property price could collapse?).
I think this is JOKE?
Ethics?
ICan
"The Chinese authorities are censoring references to the protests in Egypt".
ReplyDeletewww.guardian.co.uk/news/blog
ICan
@ICan:
ReplyDeleteWouldn't it be fun to download a virus to Chinese computers.....call it Twitter?
I wonder if Norton360 would find it.....
but their illegal copies probably wouldnt.....
Wheat, Rice, Corn, Cotton!
ReplyDeleteFood subsidies coming near Ems soon!
ICan
Good morning all!
ReplyDeleteEarly rush out to the grocery store due to the fact that they are predicting a blizzard here with more than one foot of snow.
Our pantry and gas tank were empty so I dragged my tired and cold body to the store to get some food for the next few days.
This is a big deal in our house as I am not normally the person who goes to the grocery store.
@denise: Getting another 6 inches here. Ugh. Just had our roof and ice dam #2 cleared off by roofers too. East coast getting slammed again tomorrow too. Crazy winter this year.
ReplyDeleteThe 60 minutes interview was pretty much standard operating procedure for the formally muck raking program.
ReplyDeleteObviously, Croft positioned himself as the scold and conscience of America, not to mention jury and executioner.
Assange proved himself a worthy adversary, smarter, quicker than Croft, and didn't allow Croft to spin the story as he would have liked.
Manny,
ReplyDeleteI am not a morning person, so getting out of the house so early was definitely a difficult task.
ICan,
ReplyDeleteChina definitely doesn't want the masses to get any ideas about revolution. You know that China has the censoring thing down pat and I am sure that they have some sort of special magic button that shuts down everything, cell phone, internet, tv, radio, in a flash. China has probably rehearsed such a scenario many times.
@Denise: Me neither. Basically don't like to do much of anything before 9 a.m. or so, much less go out and mix with the public. LOL.
ReplyDeleteTotall agree with you about "60 Minutes", Denise, and think that Kroft totally embarrassed and exposed HIMSELF, not Assange.
ReplyDeleteEmmy,
ReplyDeleteThat "Whispering" article was so insightful. Exactly the reason why they are so afraid of Assange. The dithering that goes on in the name of "foreign policy" is shameful.
Manny,
ReplyDeleteThanks for the links! Great post today.
There is a bright yellow orb in the southern sky, I think it might be the sun! I better go get some rays before it all goes away.
ReplyDeleteHere we go again:
ReplyDeletehttp://www.zerohedge.com/article/10001
After a trend day, the morning session is usually a consolidation of the move, the afternoon session will be more telling on how the market will end the day.
ReplyDeleteShitty commute :-(
ReplyDeleteOil breaking out to new highs.
ReplyDeleteChina's got an army of hackers and defenders of their "system" in the blogosphere.
ReplyDeleteIt was an issue at the Globe and Mail internet site. Whenever paper posted an anti-China story, you'd see the comment section immediately overtaken by them. They tried to hide under western pseudo names too.
ICan
The Beach Ball is back!
ReplyDeleteOil shock, possible war in the ME, nothing stops the relentless buying!
If this keeps going, we will be making new highs by this afternoon.
ReplyDeleteIf the market goes through 1290.00 ES, then new highs will not be far behind.
ReplyDeleteThere goes my short...
ReplyDelete@emmy,
ReplyDeleteI am keeping mine on until the this afternoon.
My short still up on the day after pulling back following the initial gunning higher at the bell. I'm hanging in. For now.
ReplyDeleteIst day of the month. Tuesday, Funds inflows?
ReplyDeleteCAD down against all major currencies, yet market up. RRSP season - Tax shelter buying.
ICan
What'up with $Lumber? Emerging market demand?
ReplyDeleteI know hard wood is "precious" in India.
ICan
Suncor highest since Oct'08. We'll see what happens Tue. They are reporting Feb. 02.
ReplyDeleteICan
F getting sucker punched again today.
ReplyDeleteOil up as well - we're going to pop 100 in no time.
ReplyDeleteAlready did, Thor.
ReplyDeleteIt did? Damn I missed that! It settled back down pretty quick! Markets rising on bad news as well.
ReplyDeleteI have March crude at 92.40.
ReplyDeleteF getting hammered again.
ReplyDeleteNot sure if this article has been linked to but it was a good take and America in Decline and why China is not going to implode anytime soon:
ReplyDeleteThnk Again American Decline?
and = on
ReplyDeleteAnother view from Doug Kass on the effect of Egypt:
ReplyDeleteThere might be numerous reasons to sell equities and buy gold, but, in my humble opinion, Egypt is not one of them. Egypt's riots and political unrest will not derail the overwhelming and consensus view of bulls on stocks and their notion of a moderate worldwide economic expansion. Moreover, Egypt is a small economic power, with a GDP of only about $200 billion, one-seventieth the size of the U.S. and less than 4% of world GDP. Aggregate U.S. exports to Egypt are a pittance ($6.5 billion). Most important, large international oil inventories and the ability to reroute oil around the Suez Canal (with a modest 10- to 15-day delay) should constrain oil prices even if the violence escalates.
Refloating my short.
ReplyDeleteDenise - That article on China looks really good. Having a hard time getting 5 minutes free to read the damn thing though :-/ What's your take on it? Agree? Or is this guy talking his book. . . I see he's written on this topic before.
ReplyDeleteI should have added to mine earlier. Looking pretty stout. Still might on any pops back up as long as it doesn't breach the prior high.
ReplyDeleteThor,
ReplyDeleteI never heard of this author before, but he makes some valid points that I think that are ignored by gloom and doom China is going to hell pundits, and the media.
Healthcare ruled unconstitutional again. That mandate is going to be the death of it I think.
ReplyDelete"But predictions of the imminent demise of the Chinese miracle have been a regular feature of Western analysis ever since it got rolling in the late 1970s. In 1989, the Communist Party seemed to be staggering after the Tiananmen Square massacre. In the 1990s, economy watchers regularly pointed to the parlous state of Chinese banks and state-owned enterprises. Yet the Chinese economy has kept growing, doubling in size roughly every seven years. "
ReplyDeleteHe does not discount the problems of a real estate bust, though.
More good points:
ReplyDelete"Yet even if you factor in considerable future economic and political turbulence, it would be a big mistake to assume that the Chinese challenge to U.S. power will simply disappear. Once countries get the hang of economic growth, it takes a great deal to throw them off course. The analogy to the rise of Germany from the mid-19th century onward is instructive. Germany went through two catastrophic military defeats, hyperinflation, the Great Depression, the collapse of democracy, and the destruction of its major cities and infrastructure by Allied bombs. And yet by the end of the 1950s, West Germany was once again one of the world's leading economies, albeit shorn of its imperial ambitions."
All in all, the author makes many points that I have not heard discussed in the media, so far. Not that I am some sort of China scholar, but his analysis is certainly something to think about.
ReplyDeleteIt also fits into my own view that China ain't going away anytime soon and will be an engine of huge growth, eventually displacing the US. (decades) Which is not to say that they don't have problems, but they also have the luxury of being a totalitarian state where they don't have to appease the insane right or left wing extremes.
And I yield my short again.
ReplyDeleteDenise - will take a look - I tend to lean more toward the Stratfor forecast for China in that not only will their bubble burst, that at some point in the next 20-40 years, China will cease to exist as a unified country. Will try to find some back-up for that though!
ReplyDeleteStill short, but on a very tight stop.
ReplyDeleteObviously, the "no fear" market is still very much present and willing to buy no matter what is happening in the world.
Thor,
ReplyDeleteI am not going to live to see that forecast's outcome, but it just doesn't make sense to me on a number of levels. People keep talking about bubbles as if having one burst means the end of civilization as we know it.
One of the points of the article is that countries can have extreme events in it's history, wars, hyper-inflation, more wars, the complete destruction of their industry and major cities and still come out and thrive.
We just had a global economic meltdown and the world has not come to an end.
I have never bought into the worst case world economic scenarios that are too popular today.
Denise - naw, not basing that prediction on extreme events - just looking at China based on it's own history and what has happened there at least a dozen times in the last couple thousand years - China is a pattern it has been in several times before and in none of those past situations did it ever end well for China.
ReplyDeleteBasically taking the long view of Chinese history rather than the usual economists 10-50 year view.
There is no possible way China can grow beyond a certain point - there are simply not enough trees, water, oil, natural gas, coal, on the planet to bring even half their 1 billion into the middle class. They'll hit a wall there at some point and if they keep gobbling up world resources the way they are and jacking up commodity prices you can bet that there will eventually be a war - a war in which I think China would lose.
Also, I think far too many people look at today, or the last 5 or 10 years, and try to project that out into the future. There are any number of things that could happen over the next 10 - 20 years that could throw a wrench into the Chinese Miracle. To assume (not that you are) that China will continue to grow like it has for another 20 years is too much of a stretch I think. Also, to assume that we are in decline, because we've had three years of a pretty shitty economy is missing the point. Look at where we were just 10 years ago, surpluses as far as the eye could see. Things can, and more often than not, can change very quickly. . .
For what it's worth - I think China will grow to a certain point, their economy will crash when this bubble bursts, and then it will resume it's growth, but at a much lower rate. Japan has stagnated for nearly 20 years, there's no reason China couldn't do the same, especially considering the similarities in demographic trends in both countries.
ReplyDeleteThe all-powerful army came out in support of Egypt's people on Monday and vowed not to fire on protesters, who are demanding President Hosni Mubarak's ouster and have called a general strike.
ReplyDeleteIf army turns its back on Mubarak, it's game over.
Ready to pack your stuff Muby? first class ticket for Saudi Arabia.
This reads like a spy novel - from Guardian
ReplyDeleteWikiLeaks: Strained relation, accusation – and crucial revelations
Extract from WikiLeaks: Inside Julian Assange's War on Secrecy reveals twists and turns in the fraught lead-up to the publication of US embassy cables
And this is just bizarre:
ReplyDeleteGuardian: Assange Dressed as a Woman To Avoid Surveillance
Among the book's more entertaining revelations: Assange would dress up as a woman for hours on end to avoid American intelligence agents, even though there was no evidence that he was being trailed. "You can't imagine how ridiculous it was," WikiLeaks' James Ball said. "He'd stayed dressed up as an old woman for more than two hours." But to backtrack: after attending 37 schools during his childhood, Leigh and Harding write, Assange had, by the early 1990s, established himself as one of Australia's most prominent hackers.
Ah, also:don't forget the shiny metal;)
ReplyDeleteActually, wrong quote in my 4:23PM comment. In case you've not stumbled upon that statement yet, here it is:
ReplyDelete"To the great people of Egypt, your armed forces, acknowledging the legitimate rights of the people," stress that "they have not and will not use force against the Egyptian people," the military said in a statement.
Thor,
ReplyDeleteYes, all of those things can come true, but I think in the end there will still be a China that continues to grow in some fashion or another.
China may or may not grow like it has, it doesn't matter. China or India for that matter may never see all of their citizens become middle class, but even a generation ago it was thought that India would not achieve what it has because of the huge population and other factors.
All that I am saying is that the predictions of China's demise because of this bubble or that bubble are exaggerated and a means to an end.
How did all of these countries survive so long during times of occupation, war, and severe economic upheavals? A bubble popping is supposed to destroy them and bring them to their knees?
@Wolfie,
ReplyDeleteI saw that. How long do you give Mubarak?
Denise - Very true, and I will admit that there is an aspect of my position on China that might be more akin to wishful thinking on my part ;-)
ReplyDeleteThor,
ReplyDeleteHistory tells a more believable story than many in the media.
@Denise:I'm not knowledgeable on Egypt.
ReplyDeleteAnd, as per the famous quote revisited:"A nation can remain unstable longer than MSM is able to focus your attention on it.", these things can take longer than you think.
Just for the fun of predicting, let's say he goes next week.;)
That's a great quote. I can't imagine that the Egyptian people are now going to back to simply accepting Mubarak Lite with a new cabinet complete with empty promises.
ReplyDeleteYou can't put the genie back into the bottle!
This decade is shaping up to be every bit as chaotic as the 30's. Hopefully we don't have a repeat of the 40's as well.
ReplyDelete"long term Fibo levels update on Crude oil" - afraidtotrade.com
ReplyDeleteICan
"Mubarak's family flees Egypt". http://tribunindia.com/2011/20110201/index.html
ReplyDelete"Panic stricken family of President Hosni Mubarak(wife Suzanne) has repordly fled Egypt for the luxurious refuge of their £8.5 million London townhouse".
"Son Gamal 47, has already arrived in Britain on a private jet with his family and 97 pieces of luggage. He owns a six floor Georgian mansion close to Harrods in Knightsbridge, west London".
"Mubarak is said to have amassed a £25 billion fortune for his family since he took power in 1981. First lady holds a British passport because her mother Lily May Palmer was a Brit".
ICan
iCan - I wonder if the Brits will want them to stay. I suppose there's not much they can do if the first lady has a British Passport is there? Maybe extradite him back to Egypt to stand trial?
ReplyDeleteWhere is all that money as well? None of it will ever make it back to Egypt either I'll bet.
This is amazing - from Al Jazeera.
ReplyDelete12:58am Google's official blog explains a new technology developed by a group of tech geeks who wanted to contribute positively to the current situation in Egypt. Read more about the new Speak2Tweet tool that allows Egyptians to send messages to Twitter from any phone line:
Like many people we’ve been glued to the news unfolding in Egypt and thinking of what we could do to help people on the ground. Over the weekend we came up with the idea of a speak-to-tweet service—the ability for anyone to tweet using just a voice connection.
http://blogs.aljazeera.net/middle-east/2011/01/31/live-blog-feb-1-egypt-protests
We worked with a small team of engineers from Twitter, Google and SayNow, a company we acquired last week, to make this idea a reality. It’s already live and anyone can tweet by simply leaving a voicemail on one of these international phone numbers (+16504194196 or +390662207294 or +97316199855) and the service will instantly tweet the message using the hashtag #egypt. No Internet connection is required. People can listen to the messages by dialing the same phone numbers or going to twitter.com/speak2tweet.
@Thor,
ReplyDeleteMore info on the heir-apparent son Gamal - investment banker - once worked for BAC and owns(?) some sort of investment firm in central London. So, I don't think they can kick them out.
ICan
@ICan
ReplyDeleteIf taking them in ensures that the Mubaraks depart Egypt bloodlessly, I'd leave them be.
(that is, if the Mubaraks leave)
@Thor
ReplyDeleteChina is making a mental note on that one by Google.
Emmie - Hah, I didn't think of that! God help India if they ever think about trying to shut off the internet. All the programmers are there!
ReplyDeleteDenise - I thought this was funny considering our earlier conversation ;-)
ReplyDelete2335: The BBC's Katty Kay notes: "For all the talk of end of American empire, no-one wants to know what the Chinese are saying to Mubarak."
http://blogs.aljazeera.net/middle-east/2011/01/31/live-blog-feb-1-egypt-protests
Manny,
ReplyDeleteIt was Brent Crude that went over $100.00 today. I follow WTI, traded on the Nymex.
The big protest begins soon. I'll be asleep for most of it :-(
ReplyDeletehttp://www.saynow.com/playMsg.html?ak=TkxFNENGTHVQQzdTdVE4N0xILzlLdz09
ReplyDeleteListen to that
ReplyDeleteThis is why I avoid the MSM - CNN's lead story.
ReplyDeleteReason to fear Muslim Brotherhood?
This info is invaluable. How can I find out more?
ReplyDeleteHere is my website ; cheap cigarettes
Hmm is anyone else encountering problems with the pictures on this blog loading?
ReplyDeleteI'm trying to determine if its a problem on my end or if it's the
blog. Any feed-back would be greatly appreciated.
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I know this if off topic but I'm looking into starting my own weblog and was wondering what all is needed to get set up? I'm assuming having a blog like yours would cost a
ReplyDeletepretty penny? I'm not very web savvy so I'm not 100% positive. Any tips or advice would be greatly appreciated. Thank you
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