Weekend Reading

Bill Gross at Pimco:  “The cult of equity is dying.”  Sounds like something a guru would say as equity markets navigate the second half of a secular bear market.  Meanwhile, Asian Millionaires Take Charge of Own Wealth in a interesting piece at Bloomberg.  Add another hedge fund titan scaling back in today’s markets (NY Times).

Grantham on resources, particularly food:  GMO.  Remember when Molycorp (MCP) was a high flyer?  Mining

Days Supply of Global Grains Stocks 1960-2012 from Gregor.  Seasonal drought outlook:  Mays Report.

Rail Traffic Pushes To Year’s Highest Level at Value Plays.  Rail and port securities should be derivative play on our coal rebound discussion.

Excesses of  the “housing boom” have been largely eliminated at Sober Look.

Career advise for a young man:  ChessNwine.  Yet Americans spend more than 100,000 years a month on facebook.

Non-farm payrolls at Chart of the Day.  Bond topping process at Image Shack.


Commodity boom over?  “…over the past decade, commodity prices grew at an annualised rate of approximately 9%, but 200 years of history suggests that this frantic growth rate is likely to moderate…”  Financial Sense

Understanding value investing:  Loews Chairman and CEO Jim Tisch speech.  The well capitalized and patient take from the leveraged.  ChessNwine

About balance sheets and write-downs:  Value Plays.

A brief introduction into Behavioral Economics:  Ritholtz.

Uranium Sector Catalysts:  AMP 2012.

The 10-year Treasury yield:  Chart of the Day.

Interactive chart on Olympic participation:  Economist.

Investment Smorgasbord

The U.S. Housing Bust is Over (WSJ).  “Vacancies are dropping rapidly on the back of a significant and growing shortage of housing in the market.”  (Economist).  Anecdotal news reports such as Des Moines home sales increase 14% from June 2011 seem ubiquitous (Des Moines Register).

Nick Barisheff on $10,000 gold (Minyanville).  The comparison of the current gold stock bull market (LOL?) to the 60’s and 70’s was particularly interesting:  Daily Gold.  Yet even mighty Goldcorp seems to be a serial disappointer at Yahoo.  But the fundamentals are not in doubt, as There is no exit plan (Gold Money) while the mainstream still has no idea how to even look at gold (Dismal Optimist).

ECRI’s Achuthan: We’re in a recession already from Ritholtz.

“I am presently long Bonds for a swing trade because I believe the market is driving to the final high. Wherever this high is, it is likely to be a high for 50 or more years.”  Peter Brandt

Three doves coo louder and one hawk stands firm at the WSJ.  I speculate the strike price for the ‘Bernanke put’ is continually rising, but here is another take:  Zero Hedge.

Corn:  Sell the news.  ” The USDA report, released early Wednesday, detailed a 12% reduction in acreage yield, on what had been a record-breaking planting for corn this spring.”  Marketwatch

College as an indentured student program:  Bloomberg


Both energy and industrialization of China related:  China to Cut Retail Fuel Prices at WSJ.  “Car makers are falling over themselves to get a slice of the action in China, the world’s biggest market.”  Telegraph

The structural economic problems are huge, real and weigh heavily on sentiment (Hussman Funds).  But a thought process going around suggests auto’s and housing, yes those red-headed step children, might contribute meaningfully in a positive fashion going forward:  Econbrowser.  Before laughing, continue reading.

Indeed, auto sales are on track to be the best since 2007:  “Strong June sales…prompting analysts to revise their consensus forecast of  13.9 million upward, to 14.2 million.”  Detroit News

Additionally, for ten consecutive months the construction sector has shown year-over-year job growth:  WSJ.  I believe residential rents have begun a secular climb with stellar fundamentals.  Supply is so tight for decent rental housing that it is almost impossible to find, demand is pent up, and market psychology has shifted:  WSJ.  Even homeowner equity has improved after collapsing:  Mortgage News.

Meanwhile, seems everyone wants easy money.  Fed’s Evans Supports More Aggressive Action to Aid Weak Economy at WSJChina’s Wen says policy fine-tuning needed to spur growth at Reuters.  Remember, ever more stimulus is required to keep the party going:  Ritholtz.

“He is probably the most successful long-term performer in the hedge-fund industry who has managed to stay out of the spotlight.”  A nice little write-up on Seth Klarman:  Economist.

“Given that China’s nominal GDP has soared at double digit rates for decades, why is anyone surprised Chinese house prices have risen rapidly?”  Money Illusion.  India’s is having a tough year, but expectations going forward are strong:  India Times.


Perhaps this idea is behind the rally this afternoon:  “…by establishing a European deposit guarantee scheme and resolution arrangements.”  Business Insider

“The downside confirmation to yesterday’s daily chart bearish engulfing candle has been rejected thus far…the market is essentially flopping around like a fish out of water on the daily chart.”  ChessNwine

The expanded version of my ‘silver date with my daughter’ post:  Seeking Alpha.

Borrowing money against inflated house prices to vacation and buy boats will have consequences.  New York Times

MLP’s should have yields higher than treasury’s; they have more risk!  Think critically and invest absolutely.  Even a richly priced asset class will compare favorably to a bubble.  Daily Wealth


If given the opportunity to export, U.S. E&P’s would destroy LNG pricing in short order.  Natural gas reserves in the Economist.

Long term chart of market capitalization as a percent of GDP:  Ritholtz.

Valuations, corrections and bear markets:  Yardeni

Occasionally good policy, like Health Saving Accounts, is implemented.  Crowdfunding is generating a lot of excitement:  Seeking Alpha.

Warren Buffet on “Owner’s Earnings” at Crossing Wall Street.

Introduction to MLP’s.  Just be careful with them as they are richly priced.  Dividend Insights


Cyclical Bull, Secular Bear presentation by Barry Ritholtz

The strength of the housing market:  Calculated Risk

Crude Oil and Refined Product Storage Charts from BMO  Hat tip Land_Lubber via Pedriven at Investor Village

More on crude and product inventories:  Hard Assets Investor

What ever happened to $200 Oil?  The end of growth is given the blame with no mention of horizontal drilling or the credit bubble by someone who should know better.  Jeff Rubin at the Globe and Mail

Perhaps the Greek drama is played out as futures are positive this morning with this headline:  Greece to Exit Euro, New Currency to Fall 60%: Citi at CNBC.

With the market direction largely dependent upon the velocity with which money is printed, here is cover for more easing:  Mark J Perry

Easing coming in the East too:  China’s flash PMIs point to contraction at  FT Alphaville

NG, Coal, Oil, PM’s

Natural gas crushes coal:  “In 1985, coal accounted for 57 percent of all power generated in the United  States. Last year, it was 42 percent. The U.S. Energy Information Administration  estimates it will fall to 40 percent this year. Prices for Appalachian coal are  down 24 percent over the past 12 months; for coal from the Powder River Basin in  Montana and Wyoming, they’re down 45 percent.”  SF Gate

Natural gas charts; rig count third one down:  EIA

Marginal oil production costs for new barrels is higher than I would have thought:  FT Alphaville

Sending Canadian production to Ontario rather than south to the US is proposed to help with the mid-continent glut (for WSJ articles google the title to read the whole thing):  WSJ

Petrodollars:  Economist

Extensive precious metal chart analysis:  Peter Brandt

Gold stocks behavior in a gold bull:  Minyanville


Chart of the natural gas production ramp:  Mark Perry

Perhaps natural gas supply and demand are coming to more of a balance:  RBN Energy

Energy equity under-performance:  Bespoke

The new natural gas paradigm is changing many industries.  Some for positive effect.  Not so thermal coal:  24/7 Wall Street

Getting the gold stocks to move?  Perhaps when they pay meaningful dividends:  Dynamic Dividend  Or maybe when the mergers and acquisitions get rolling:  Globe and Mail