Q2 Household Equity Up But Asset/Liabilities Ratio At 65 Year Low!

Well reflation is working at some extent. Household net worth increased $2 trillion during the second quarter as DV expected mainly because the stock market rallied, housing prices ticked up month over month and debt declined a tad. This is interesting, from 2007 (around the peak) to 2009-Q2 household assets were down 14% ($78.2 to $67.2 trillion) while liabilities were only down 1.7% ($14.318 to $14.068 trillion)...

Peter Schiff for Senate 2010, Stop Mal-Investment!

Lets make America worth something other than one big sub-prime credit. Stop the mal-investment, Peter Schiff for Senate, US Dollar Index to 185 by 2012!!


Trade Weighted US Dollar Index (St. Louis Fed)




Natural Gas: V-shaped Recovery Or $2.50 Retest, Karl Miller is Bearish

If the economy sees a V-shaped recovery why not natural gas? Karl Miller, a globally recognized energy executive and institutional investor who bid on over $25 billion in energy assets in his career, thinks natural gas will correct to $2.50-$2.75 mmbtu. He wasn't bullish on MLPs either and thought equities were overvalued. Natural gas rallied hard to $3.80 today from an intraday low of $2.40 last week. Karl aside, is natural gas seeing a V-shaped recovery or another bear market rally? Below I provided the Natural Gas December 2009 Futures chart which is at an inflection (or deflection) point and the most recent EIA storage report which is bearish and must revert to the 5 year range for $NATGAS to see a sustained bid imho.

Energy Industry Icon Calls for Lower U.S. Natural Gas Prices; Industry at Record Storage Levels and No Demand Drivers

MIAMI, Sept. 15 /PRNewswire/ -- Karl W. Miller, a senior energy executive and institutional investor, today issued the following statement through his advisor VBCC, regarding the fact that U.S. natural gas is at record storage levels and overpriced.

Mr. Miller re-affirms expectations for natural gas to correct to the $2.50 to $2.75 mmbtu price range and will continue getting cheaper, as there will be no sustainable drivers either by natural gas fired electricity generation or industrial demand in the U.S. for the next 6-8 quarters.

The natural gas pipeline companies, master limited partnerships (MLP's) and natural gas producers will suffer substantially reduced earnings during the next 6-8 quarters and are substantially overvalued at the current time.

Oil is dollar based, but has no linkage to the price or demand of natural gas in the U.S.

Mr. Miller retains a sell recommendation on U.S. publicly listed renewable energy companies. He predicts we will see many of these companies, which are reliant upon massive government subsidies, state approval of pass through price increases, and highly levered fail and/or will be purchased at distressed prices. Source

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Energy Industry Icon Calls Markets Overvalued and Overbought; Energy Commodities Especially at Risk

MIAMI, Sept. 15 /PRNewswire/ -- Karl W. Miller, a senior energy executive and institutional investor, today issued the following statement through his advisor VBCC, Markets Overvalued and Overbought; Energy Commodities Especially at Risk.

Mr. Miller agrees with Mr. Art Cashin's, director of floor operations at UBS Financial Services, statements today that the equity markets are substantially overvalued and overbought.

Earlier today, Mr. Miller predicted that natural gas will correct to the $2.50 to $2.75 mmbtu price range and will continue getting cheaper, as there will be no sustainable drivers either by natural gas fired electricity generation or industrial demand in the U.S. for the next 6-8 quarters.

In line with Mr. Cashin, Mr. Miller expects the natural gas pipeline companies, master limited partnerships (MLPs) and natural gas producers will suffer substantially reduced earnings during the next 6-8 quarters and are also substantially overvalued at the current time.

Mr. Miller retains a sell recommendation on U.S. publicly listed renewable energy companies. He predicts we will see many of these companies, which are reliant upon massive government subsidies, state approval of pass through price increases, and highly levered fail and/or will be purchased at distressed prices. Source



Natural Gas December 2009 Future (Courtesy of OptionXpress)


"Working gas in storage was 3,392 Bcf as of Friday, September 4, 2009, according to EIA estimates. This represents a net increase of 69 Bcf from the previous week. Stocks were 495 Bcf higher than last year at this time and 503 Bcf above the 5-year average of 2,889 Bcf. In the East Region, stocks were 163 Bcf above the 5-year average following net injections of 55 Bcf. Stocks in the Producing Region were 269 Bcf above the 5-year average of 830 Bcf after a net injection of 13 Bcf. Stocks in the West Region were 72 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,392 Bcf, total working gas is above the 5-year historical range." source: eia.doe.gov



Working Gas in Storage Compared to 5 Year Range (eia.doe.gov)


Natural gas has been a great trade during bear market rallies. At some point the 1.3 year downtrend will break and perhaps that is why 10,000 January 2010 Calls are open at $10. To be continued.

Track Active Vessels via Maps, Google Earth Satellite: Vesseltracker.com

Check out Vesseltracker.com if you are interested in monitoring active ships on the waters globally. Definitely a great economic indicator if ships are DARK. They cover vessels across ports and regions around the globe. Download their Google Earth file and you can see if ships are active or not via satellite.

Posted by newsbysector.blogspot.com.

Baltic Dry Index Exposed, Down 43% From June Highs (Chart)

Perhaps the reason why the $BDI is down 43% since June? When is the next inventory rebuild?



Read ZeroHedge post for more info and pics.. and vesseltracker.com for updated pics

1) Thousands Of Rusting Ship Hulls Are A Fitting Tribute To The Speculative Market Bubble (Zero Hedge)

2) Revealed: The ghost fleet of the recession anchored just east of Singapore (DailyMail)

3) Baltic index drifts lower, cargo enquiry light (Reuters India)

4) Shipping Rates Seen Falling 50% on China, Fleet Size (Bloomberg, Aug 31)


S&P Above 38.2% Fibonacci Retracement, Eyeing 50% at 1,121

Technical update: From October 2007 highs 1,576.09 to March 2009 lows 666.79, with the S&P currently trading at 1,053 it is above the 38.2% retracement level 1,014 and is eyeing the 50% retracement level at 1,121.44. Meaning the S&P is eyeing the level to recoup 50% of it's losses from the October 2007 high. It is riding the steep uptrend and there's a downtrend that hits just above the 50% level. Watching for a blow out top sooner or later.


S&P 500 (Courtesy of Stockcharts.com)

US Dollar 3-Month Libor Cheaper Than Yen, Franc (Chart), 0.295%

Remember when banks were frozen and 3M Libor spiked to 4.75% on October 9, 2008? Remember it was a big relief when Overnight Libor declined 51% to 2.469% the next day? Now USD 3M Libor is at 0.29%! Perhaps Bernanke deserves some "props" for unfreezing credit lines for working capital. When looking at 3 Month Libor today across popular carry currencies, the USD is now cheaper than the Japanese Yen and Swiss Franc to fund higher yielding assets. Will funds continue to pile onto this trade and devalue the USD or will a catalyst widen yields and unwind the carry trade?






Other articles:
Dollar Near Weakest This Year on Record-Low Borrowing Costs (9/15/09)
Dollar Diminishing Makes U.S. Favorite for High-Yield (9/14/09)
Lord Lamont: Dollar As Carry Currency Is Risky Phenomenon (blog post today)

For Libor charts go to Bloomberg.com: US Dollar 3M Libor, Yen 3M Libor, Franc 3M Libor.

Rick Santelli and Liesman Argue On Lehman's Anniversary

Hell yeah Rick!



Previous clips:

Rick Santelli and Traders Rally for Capitalism at the Chicago Board of Trade (CBOT)

and..

Liesman vs. Santelli Regarding "Dumb Things"!

Lord Lamont: Dollar As Carry Currency Is Risky Phenomenon (CNBC)

Former British Chancellor Lord Lamont was on CNBC with Jim Rogers this morning. Jim is still banking on a currency crisis or terrible inflation and mentioned the risk of protectionism and dealing with Central Europe's horrible loans.

Lord Lamont said we've seen the end of fear and output falling but the road ahead will not be a strong recovery because there is still debt deflation in the system and banks will be cautious to lend. At the end Lamont said the US Dollar becoming a carry currency is a risky phenomenon. By the way, Germany just issued $4 Billion in Dollar Denominated bonds.


Nassim Taleb Speaks Before Congress on Value-at-Risk Model Defects

Nassim Taleb (Fooled by Randomness speaks before congress on the defects of modeling complex systems.



Bank of China's Zhu Min Bloomberg Interview (9/10/09)

I couldn't embed the full interview, the full video is here.


Quick points from the interview:
  • Plenty of infrastructure projects in China to soak up liquidity
  • Risk of asset bubbles forming due to ample liquidity
  • Money needs to go to real projects
  • Wall Street feels like the crisis never happened (over-myopic)
  • Financial crisis stabilized from a cliff drop
  • At the end he said: The real economic crisis is just starting

Wall Street Is ‘Myopic,’ Bank of China’s Zhu Says (Bloomberg)
Bank of China’s Zhu Sees ‘Bubbles’ in Asset Markets (Bloomberg)
China’s New Lending Quickens, Money Supply Rises by Record (Bloomberg)

More analysis by Andy Xie (Former Economist at Morgan Stanley):
Andy Xie: Shanghai Index Fairly Valued At 2,000, Could See Bounce (Video)

FXI Put Protection, Andy Xie On China's Bubble