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Foreign Alternatives to Domestic Problems

Andy WaldockComment on Foreign Alternatives to Domestic Problems

People interested in the safety of investing short term cash in certificates of deposit who are unhappy with yields they’ve been receiving may want to consider some other
options. The total return on CD’s has been hammered throughout the economic crisis by the compounded effects of the declining U.S. Dollar and the fiscal stimulus packages designed to lower
interest rates and create inflation. This has created a net negative return for the people who are most reliant on income generating, principal protected investments.

The fiscal …

Currencies Macro Economics Macro Viewpoints

A Model for Economic Recovery

Andy WaldockComment on A Model for Economic Recovery

I’m re- posting an article I read this week. It’s so easy to focus on the problems and argue about the details. I had completely forgotten the magnitude of Canada’s economic turnaround. This is a
great example of focusing on the solution.
All rights go to John Mauldin and David Hay.
O Canada!
   
“Debt and deficits are not inventions of ideology. They are facts of arithmetic.”
– Paul Martin, Canada’s finance minister at the start of the country’s “Redemptive Decade” …

Current Markets Macro Economics

Stock Market Players are Increasing their Bets

Andy WaldockComment on Stock Market Players are Increasing their Bets

There’s a difference between a tradeable rally and a fundamentally sound trend. The stock market has been exceptionally strong since Labor Day, turning positive for the year around the middle of
September. During this period the two dominant news themes have been the Republican party’s campaign gaining momentum and the Federal Reserve Board’s verbalization of their willingness to do whatever
it takes to keep the economy churning. Additionally, we are heading into the strongest seasonal period for the stock market on an annual basis. When these factors are combined with equity managers
who have to put money …

Current Markets Energy Markets Macro Viewpoints

Oil Addiction

Andy Waldock1 Comment on Oil Addiction

The United States’ energy dependence has followed the same path as a junkie. We have become addicted to cheap oil over the last forty years. In fact, our entire economy was built on cheap oil.
Just like any good junky, we weathered the initial supply crisis in the 1970’s and, having seen the error of our ways, vowed to set ourselves straight. Fortunately, it was just a temporary shock and
we didn’t really mean it. Besides, remember how bad it was? It was horrible for domestic employment and inflation was everywhere. We were invaded by foreign automobiles. We …

Current Markets Gold and Silver Grain Markets Macro Economics

Perhaps We’ve Gotten Ahead of Ourselves

Andy WaldockComment on Perhaps We’ve Gotten Ahead of Ourselves

Commodity Prices have been on a tear. No question about it. Gold has traded over $1,300 per ounce and silver is over $21 an ounce. The grain markets have seen huge gains in corn, beans, rice and
oats. Even markets like coffee, orange juice and cotton have participated in the broad commodity rally. Does this mean it’s a good time to put more money in commodities? Not necessarily. This is
where our philosophy diverges from stockbrokers. We don’t generate revenues for the firm based on equity under management. Therefore, our best business practice is to provide our individual …

Macro Viewpoints

Economic Recovery or, Shell Game?

Andy WaldockComment on Economic Recovery or, Shell Game?

The National Bureau of Economic Research, the ones in charge of official business cycle dating, said Monday that the recession officially ended in June of 2009. Their statement allowed that
although economic conditions may not have been favorable since then and that the economy has not returned to normal operating capacity, the recession ended and a recovery began in June 2009. This is
good press for the incumbent party heading into election season. However, this is also a brightly burning example of why we shouldn’t trust a sound bite.

 

The bursting of the domestic …

Current Markets Trading Strategies

Crude Oil vs. Natural Gas Ratio Spread

Andy Waldock1 Comment on Crude Oil vs. Natural Gas Ratio Spread

This week’s trade has been all about the spread between natural gas and crude oil. Using inter-market analysis allows us to compare the value of substitute goods. In this case, we can compare the
price of crude oil to the price of natural gas to determine what price levels it becomes cost efficient for the markets’ participants to shift their energy needs from crude oil to natural gas and
vice versa. The key to this type of analysis is using the proper pricing methodology. The calculation of the crude oil vs. natural gas spread is done using a …

Currencies Macro Viewpoints

Following Up on Corn, Weekly Exports and the Dollar’s Devaluation

Andy WaldockComment on Following Up on Corn, Weekly Exports and the Dollar’s Devaluation

Corn continues to march to new highs, now trading around $4.80 per bushel. Much of what we’re seeing is demand driven. I was looking at corn sales for the marketing year ending September 1st and it
validated much of what we’ve been discussing.
 
From the USDA website. China has imported 236,000 metric tons this marketing year. Over the last three years, their U.S. corn imports total 0. Yes, that is a 0. While this is only 1.5% of our total
exports, it must come as a surprise …

Current Markets Macro Economics Trading Strategies

Bucking the Dollar’s Decline

Andy WaldockComment on Bucking the Dollar’s Decline

The main argument supporting inflation is based on the current prices in the commodity markets. The argument postulates that the massive injections of capital through low interest rates and the
government’s active purchase of long term treasuries is debasing the U.S dollar and making our products cheaper on the international market. The logic is sound in assuming that price paid has a
direct relation to the exchange rate. However, since 2007, the U.S. Dollar Index is down less than 5%. This doesn’t seem so bad on the surface until one considers that because the U.S. Dollar Index
…