Tuesday, March 12, 2013
03/12/13 The Carry Trade
A short squeeze in the Yen? It's just a matter of time. I don't know what Abe's 'target' is, but obviously it's not zero. I'm tempted to at least throw a few stacks of Japanese currency in a box and shelve it for a year or two. Now that's a 'carry trade' anyone can understand.
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If there's one 'theme' that has begun to emerge in my trading, it's waiting for the right pitch. Patience pays off. Pick a spot on the corner and wait.
ReplyDeleteIt matters not how many lost opportunities pass by. The right trade will pop up.
DeleteThat's a mark of a professional, according to what I read in the timeless trading book by Alexander Elder...
DeleteI hope so 2nd. I barley feel like I'm at the plate.
DeleteI do like to see 'mark' and 'professional' used in the same sentence though!
DeleteYes, except the sentence lacks specificity unless the qualifying adverb "clown" is included.
DeleteI like that!
DeletePreceded by the pronoun "ass".
DeleteI've always liked ass hat..although I'm not really sure what that means.
DeleteWearing one's ass as if it were a hat, head up the ass.
Delete"One whose head is so far up their rear end it could pass for a hat; used to describe a person who is stubborn, cruel, or otherwise unpleasant to be around."
Man I know someone like that like work.
DeleteIt's painful to watch and wait. Especially when your target goes against "the plan". Feel ya though. You can't make money if you don't trade, but you cant lose it either.
DeleteRobot remains long, I think there are a few beads of sweat forming on his brow though. 1548 is support.
ReplyDeleteRetail sales in la manjana pajamas.
VELT- I just don't have the energy. Any of you?
ReplyDeleteDoesn't the three day rule apply? I'm already playing one island reversal(VMW) and it's taking much longer than I'd like.
DeleteRaw industrials prices have been holding up well:
ReplyDeletehttp://www.crbtrader.com/data.asp?page=chart&sym=BVY00&name=BLS%20Raw%20Industrials&domain=crb&display_ice=1&cancelstudy=&type=LINE&studies=SMA%2813%29;&a=W
You guys have it all wrong. Mark's 'signature' can be found in his phrasing: 'I barley feel like I'm at the plate.'
ReplyDeleteThis tells me he's sitting behind home plate consuming a product derived from malted barley.
It's unclear if the barley is malted, could be pre-chewed.
DeleteDon't ruin it for us beer drinkers.
DeleteGood article on seeking alpha on the potential for YRCW:
ReplyDeletehttp://seekingalpha.com/article/1266331-buy-yrc-worldwide-based-on-improving-fundamentals
Retail Sales are up 1.1% much better than expected.
ReplyDeleteUp 0.4% excluding gasoline and autos
DeleteGOOG - Ass hat?
ReplyDeleteEU gram neg. approval for NSPH. Totally expected though.
ReplyDeleteOK, skip the ass hat thing. Too serious for me.
ReplyDeleteIt's too early to be getting upset over nothing.
DeleteNah, I just had this funny cartoon image of what that meant. I've lost track. What are you holding right now?
DeleteStill got NLY/PMT/VMW, trying to find an entry in AGO missed $18, wwwwaaaaaaaahhhhhh!!!!
DeleteWatching BAH closely.
I don't know guys. Maybe everything is OK now. Interviewed for a 3.7M job yesterday. Getting calls all the time I never return. Could just be a burst of pent up projects that will fizzle out though.
ReplyDeleteMarket reaching new highs allows folks to feel comfortable about cracking open their wallets a little more.
DeleteThat's great, Mark!
DeleteVMW - Something happened, someone said something?
ReplyDeleteearnings. looks like a spin off also.
DeleteEarnings were Jan 28th? Now Inverse H&S formation maybe, $90 geometric target on that. Back to ~$77.50 before moving on up?
DeleteI wonder if Jesse would be buying X right here.
ReplyDeleteChina seems kinda soft, XIN tested support and might begin moving back up? NUE is testing support today.
DeleteThere's a steel producer in Luxembourg that looked interesting, forgot the ticker...
3/5/13
Delete"What is DRI and why you should care
Direct reduced iron (DRI) is a steel-making input that replaces scrap or pig iron in
the steel-making process and can use lower cost, cleaner natural gas in lieu of
coking coal or met coke. Cheap, plentiful natural gas makes the U.S. an obvious
beneficiary of the technology. We anticipate at least 20M tons of new DRI
capacity will hit the U.S market by the end of the decade, lowering costs to make
steel by at least $50/t, and converting U.S. steel producers into some of the
lowest cost mills in the world. We have discussed DRI as it pertains to initial
beneficiary and top pick NUE, but in this report we delve further into the upcoming
DRI revolution and its broader future ramifications for the steel industry.
Message to U.S. steel mills: Evolve or die
While investors are just beginning to discuss DRI, the topic is a buzzword in steel
industry boardrooms. Nucor has plans to build four modules of 2.5M tons each,
with the first slated to start up June/July. In mid-2011 U.S. Steel began talking
about building a DRI facility, potentially replacing a blast furnace needing a pricey
reline. Since then, other global mills have announced interest in building DRI
capacity in the U.S. (Chart 1). We expect DRI to proliferate in coming years, and
have modeled at least a $100/t cost advantage for NUE’s DRI projects. Potentially
the U.S. could reverse to a net steel exporter and a bigger scrap exporter. U.S.
steel mills will need to adapt to a new lower cost environment or face extinction.
Corollary read through for iron, met coal, scrap, and gas
Assuming DRI proliferates, more iron ore and gas will be consumed, albeit we see
ample supply available for both. CLF for one has been examining the potential to
make the low-silica, higher iron content grade pellets necessary to make DRI.
Scrap prices should fall as more DRI is consumed and lower grades of scrap
need to be blended with this purer input. This can in turn support margins for
scrap exporters like Schnitzer and Sims. Met coal demand domestically can fall,
i.e. another 20M mt theoretically cuts met coal demand 13-15M tons. NUE has
locked in much of its gas at cost with Encana, but other DRI makers may need to
hedge. Incremental gas demand for 20M tons of DRI would total ~150M mmBTU.
Dramatic market shifts coming, high cost AK and X troubled
Steel mill balance sheets are stretched, so not every steelmaker will be able to
take advantage of DRI cost savings. Permitting and construction require a threeyear
delay to start up and each ton costs ~$300. Aside from NUE, Voestalpine,
Bluescope, Essar, Severstal, and X have publicly discussed interest. Through DRI
we expect Nucor can reestablish its historical scrap cost advantage. Ultimately
the U.S. steel industry could become more competitive and potentially convert its
historical steel net import position of ~25% of its demand to a net export position,
challenging China and other higher-cost producers. We envision a shakeup in the
domestic steel market, in which only the strong thrive. Nucor can emerge as the
low cost producer, with higher cost U.S. Steel and AK challenged to compete."
"Winners and losers. Top-pick Nucor is a clear beneficiary as a sizable new
Deleteentrant into DRI making, with locked-in gas costs at least initially. Other minimills,
STLD and CMC, could see some small benefit to the extent scrap
prices fall. Other less obvious potential beneficiaries include: Schnitzer
(SCHN), as it can potentially procure lower cost U.S. scrap for the export
market; and equipment makers such as Midrex and Energiron. Midrex is
owned by Kobe Steel and Energiron is a JV between Danieli and Tenova. On
the losing side we see fixed-cost producers, such as U.S. Steel and AK
Steel, and globally regions that do not have access to cheap gas, such as
Europe and much of Asia."
NUE - 12mo PO currently is $49
DeleteI wonder what would happen if one of the states that legalized pot, also banned sugar drinks? That could get ugly.
ReplyDeleteThe "edibles" market would get much bigger.
Deletehttp://www.buzzfeed.com/emofly/my-life-as-a-professional-cannabis-baker
GMO - Stink bid @ $2.77, still no new info on SDL.AX yet...
ReplyDeleteARR- .07 per month div.
ReplyDeleteIs that down from $0.08, a 14% decrease?
Deleteis that one like NLY? i was looking at NLY the other day and noticed that divs have decreased steadily for the past few years. can't be good.
DeleteYes, NLY divs peaked while share price vs div has not really increased, right? NAV must be considered as well, these normally trade around 1x NAV, I think. So a falling NAV is the larger factor, IMO.
DeleteMark - Good to hear biz is doing well. Did my friend ever reach out to you about the website?
ReplyDeleteYRCW seems to be acting differently than it has in the past, where it used to just reverse any big gains in hours if not the next day. Famous last words, I know...
tvix @ 3.93
ReplyDeleteoff @3.96 Not working out
DeleteI'm not in BIDU right now but I really like the setup here. The $86 level has been support for a while now and if its going to hold then this is a VERY low risk trade. Stop out at $84 and upside could be a lot.
ReplyDeleteDMND rebounding nicely from yesterday's drop. Could be a buy right here.
ReplyDeleteFSLR looks awesome.
OK back in BIDU at $87.8. Small position. I like the setup. Will sell if it drops below $84.
ReplyDeleteLike the trade. Keeping my eye on it.
DeleteGTI - Rebound in progress? DRI Steel industry play?
ReplyDelete"The Industrial Materials segment manufactures and delivers graphite electrodes, which are used to produce steel and other non-ferrous metals"
NJ - Japanese recovery play? PO is $19
ReplyDeleteCAKE - looks awesome. we eat at this place a lot.
ReplyDeleteInventory restocking up most in 2 years?
ReplyDeleteMore proof of concept for CP's observation: Do NOT buy miners on strength.
ReplyDeleteSGG - Ah, Brazil eased ethanol producer tax rates.
ReplyDeleteEmployment - Will we reach $250k next month?
ARR - Probably decent buying op considering the 20%, 65M share Feburary stock issue hasn't deployed through to the bottom line and thus a good reason for the lower div.
ReplyDeleteInteresting how today's pps reached $6.50, the BACML 12mo PO
Delete"Interviewed for a 3.7M job yesterday."
ReplyDeleteI wish I were interviewed for a 3.7M job...
You'd just gamble it all away on gold and PM miners!
Delete"More proof of concept for CP's observation: Do NOT buy miners on strength."
ReplyDeleteI remember after the 2009 low, S&P was rising in a zig-zag fashion, as people were very nervous for some time. Same with the miners now -- they are rising in a zig-zag fashion. Today's pullback in SLV stopped short of retesting Monday's lows...
if only this was 2009 for the miners (and not the start of a bear market for the whole industry after a huge 12 year bull run). we shall see.
DeleteTOF -- have you read this article: http://www.zealllc.com/2013/congfut2.htm? On Feb 19, the total short position in gold futures of large and small speculators spiked to the highest level since 1999, which was the end of a 20-year bear market. Such things do not happen at the TOP of multi-year bull markets...
Deletedavid - just curious but have you looked at similar short positions in the nasdaq in 2001 or the nikkei in 1990? that is, after they topped out following a big bull run? while i'm not saying that the bull is over, if it is then you want to see if those two examples had similar readings in bearishness because that would tell you that things could get even worse despite such readings amid drops from the top. gotta be open to any scenario...
Delete500 GDX @ 36.84
ReplyDeleteToday is a head fake...we go higher this week!
DeleteMiners (using GDX as a proxy) closed higher Tuesday (3/12)> +2.5% on decent volume. Today they're giving it all back> -2.8%, but on lower volume (about half of yesterday's). So any positions opened this week at/near closing prices are now in the red. The temptation is to (double-)buy the dip, but that doesn’t feel like the ‘pain trade.’ It does set up a possible pain trade for Thursday!
Delete(I penned the above prior to reading your post, Pz. Since you're in, I hope you're right. No positions myself.).
I set the stop so max pain for me is 35.50. :).....I can deal with that. I will let this one ride a bit longer than normal if it goes my way.
DeleteAt the same time, take a look at GDXJ, which is supposed to be a proxy for risk-takers. It retested Monday's highs near the end of the day today, and bounced strongly off those highs. That's very bullish, IMO...
DeletePKX - Earnings April 11
ReplyDeleteTA - Luxembourg steel pipe producer, PO is $47
ReplyDeleteThis is the one I was trying to recall, earlier.
TS, not TA...
DeleteSo will these guys(TS) be supplying the Norwegian offshore fields?
"B. Riley Caris earlier downgraded Nautilus Group, Inc. (The) (NYSE: NLS) from Buy to Neutral and maintains $7.55 PT."
ReplyDeleteSomeone knew something about this yesterday. its about time it pulled back a little. i was getting nauseous looking at it.
"I was getting nauseous"
DeleteSo was I, quite frankly. Then again, there are quite a few like that.
DC Condo sales up 43% over last year.
ReplyDeleteWLL - I dunno, this one hasn't done too badly...
ReplyDeleteAPA - Looks like bull flag, doesn't it?
ReplyDeletehttp://www.zerohedge.com/news/2013-03-12/kyle-bass-warns-aig-world-back
ReplyDeleteRepeat, huh? Gold and PM miners crashed last time, if I recall correctly, and that was a great time to buy them.
DeleteI'm not sure how to short the Yen, how much Yen really are out there that could come washing back to Japan in a tsunami? Perhaps J-rates could soar but who owns a majority of Japanese government debt, citizens, right? What alternatives do they have for parking their capital, and why should they abandon their country?
What if this process takes more than a year, what does K.Bass do then, eat sushi?
Use the short yen ETF.
DeleteNLS - P/E is only 12, that doesn't seem overpriced.
ReplyDeleteSo finviz reports a PE of 29(WRONG!) while YHOO has 12....
Not surprising companies like finviz/FB/YHOO seem to have powerful info collection skills and unreliable dissemination skills.