Producer Price Index Volatility Going Back To 1930, 1947 (BLS)

The PPI (Producer Price Index) declined 0.9% in July. I provided historical PPI charts below including the PPI: Finished Goods month over month percent change and 12 month percent change since 1947 and the PPI: All Commodities 12 month percent change since 1913. As you can see from the charts in late 2008 producer prices deflated to levels not seen since the 1930s (all commodities) and 1949 (finished goods - when BLS started reporting PPI data). In the beginning of 2009 we bounced back from deflationary pressures and declined 0.9% in July more than expected. So there's been interesting producer price volatility. The question is will the deflationists (Gary Shilling) be right going forward or will the bounce back in business inventories and underlying consumer demand bid up prices with the help from stimulus dollars and low interest rates.

Hedge Fund Manager Andrew Lahde's Farewell Letter 2008

Hedge fund manager Andrew Lahde of Lahde Capital Management made 877% betting against the subprime market in 2007 and decided to close his hedge fund in 2008. He wrote a farewell letter last year that I had to put up. Also read the Lahde Capital letter to investors on March 8, 2008 via FTAlphaville. Hopefully he's not smoking that bammer right now.

Check Out Zillow Real Estate Market Reports, Home Value Index

Zillow.com is a real estate site that has a real estate market report section which includes the Zillow Home Value Index, median list price, median sales price and more metrics including % homes foreclosed. You can compare states, metros and time periods. They also have a site that show the national mortgage rate and a chart. You can dynamically display rates and payments. Also check out their mortgage blog, Mortgages Unzipped. Here's a widget of the Home Value Index for Chicago and Detroit.

Trader Buys Cheap Out Of The Money Natural Gas Calls

This was an interesting article out of FT.com, Hedge fund bets millions that gas price will triple. Is someone levering up a bet to own natural gas cheap on a spike and/or capitalize on a move in call volatility before February? $NATGAS spot closed at $3.47 and the trader bought 10,000 January $10 calls for 0.056.

EIA's weekly storage report ending August 7 showed that 3,152 billion cubic feet were in storage. The storage number is up over the week, up over the year, and above the 2004-2008 range so it's flat out bearish and has been reflected in the price.


Natural Gas Spot (Stockcharts.com)

Genco CFO on Baltic Dry Index Volatility, Chart

Interview with Genco CFO John Wobensmith on Bloomberg News on the Baltic Dry Index. The BDI has been in a downtrend since June. When will there be a Baltic Dry Index ETF, ETN?
"I think that the dry bulk industry has turned the corner... What has really made the dry bulk industry come off of those lows is all the spending that has been going on in China. The stimulus spending, the increased loans and the increased steel industry which has been driving the iron ore imports. What we've also been seeing are coal imports going into China, increased coal imports going into India as well as Japan. So we are now starting to see just the beginnings of those recoveries, and we think towards the end of the year you'll start to see iron ore import numbers increase as well..."

FXI Put Protection, Andy Xie On China's Bubble

Here is an update on FXI or the iShares FTSE/Xinhua China 25 Index. From the chart below FXI almost doubled from the March lows and more than doubled from $19-20 in late November 2008. Also see Jim Rogers saying Chinese equities were overpriced. FXI is brushing up against the lower channel of the uptrend and sitting on $40 support and the 50 day moving average.


FXI (stockcharts.com)


Diane Swonk Sees Rocky Road To Recovery (Video)

Chi-town represent. Diane Swonk of Mesirow was on BloombergTV saying she sees a rocky road to recovery.
".... So all that along with inventories rebuilding a bit, you'll get some growth but it's half of what we should be getting given the depths of the crisis. And as we get into 2010, unless we see that emergence of good news, which is employment gains you can't see a self feeding recovery. I think we will see that but even that limited. Many companies who relied on short term credit to finance payrolls can't anymore even as we emerge from the crisis......"

Chart Comparisons: Copper, BHP, Shanghai Index, Baltic Dry Index

First went the Baltic Dry Index ($BDI, shipping indices), then the Shanghai Comp ($SSEC), now will $Copper spot and BHP (Iron ore co.) follow? Check out the chart comparisons. As you can see the BDI has been in a downtrend since June and the Shanghai Index broke below some support and the 50day moving average. Copper doubled since the beginning of the year and BHP has been piggy backing China. Shanghai is down tonight about 2.80%. Watching to see how Copper and BHP reacts, if it flat lines or breaks down. I think Asia needs reflation jumper cables.

$AUDJPY, $AUDUSD, FXA Fibonacci Retracements, Articles

I've been watching $AUDJPY and $AUDUSD recently and the 50%, 61.8% retracement levels. My post a few months ago retraced $AUDJPY from it's 2008 highs to see a correction which filled at 70ish (6/22 Post). Now I'm looking at AUDJPY's 50% retracement level from the 2007 peak. $AUDJPY pierced above resistance but could not hold 80. It might need jumper cables again. If the Baltic Dry Index doesn't rally back here and China and commodities sell off, AUD could take a hit IMO, thoughts? AUDJPY is part of the global reflation, risk appetite and commodity trade, however interest rate differentials and inflation data are also important. If Japan sees deflationary pressures while Australia sees inflationary pressures, money could keep flowing to the $AUD based on interest rate speculation. But when will that trade be priced in and/or the yield gap peak (article looks at AUDUSD)? We'll see what happens with the Aussie. Read the articles below for more info on what is driving the currency pair.

David Tice: S&P to Hit 400, Earnings Multiple Overpriced (Video)

Uber bear David Tice of Federated investors was on Bloomberg saying the market was dramatically overpriced and fair value on the S&P is $400 in the near future. He is bullish on gold and silver, hedging against Helicopter Ben.
"We think we are going to get to $400... We think the market is dramatically overpriced at 22 times 2010 earnings according to strategist numbers. That's an exceptionally high number for the bottom of a bear market.. We think earnings are still going down and the problem is that expectations that were beat were being done at much lower levels than last year due to cost cutting, revenues were down significantly..."
Anyone know what 2010 EPS number he is looking at to get a P/E of 22? Here is Standard and Poor's 2009 and 2010 reported and operating EPS estimates in a spreadsheet. It looks like 2010 EPS estimates average out to 70.