TPC

• A 30-year stock market excess return of approximately zero is a huge disappointment to the legions of “stocks at any price” long-term investors. But it’s not the first extended drought. From 1803 to 1857 U.S. equities struggled; the stock investor would have received a third of the ending wealth of the bond investor. Stocks managed to break even only in 1871. Most observers would be shocked to learn there was ever a 68-year stretch of stock market underperformance. After a 72-year bull market from 1857 through 1929, another dry spell ensued. From 1929 through 1949, stocks failed to match bonds, the only long-term shortfall in the Ibbotson time sample. Perhaps it was the extraordinary period of history—The Great Depression and World War II—and the spectacular aftermath from 1950–1999, that lulled recent investors into a false sense of security regarding long-term equity performance.”

TPC

• A scenario of falling Chinese property prices, perhaps combined with a government clampdown on alternative sources of funding, would therefore be a devastating outcome for the copper market, simultaneously robbing the metal of an end-user and leading to a mini credit crunch. The obvious home for the bonded material would then be the LME warehouses in the Asian region, with very negative implications for sentiment towards copper prices.
• In relation to food / energy prices - More likely, we see stagnant job growth as producers protect margins and relatively stagnant consumer spending. For now, the sizable budget deficit is helping to bolster the economy.

BlackRock

• First of all, companies DO NOT equal economies. We invest in companies, not economies. US large cap companies are outperforming the US economy (see outperforming chart on next page), with impressive revenue growth since 4Q09 relative to real GDP growth.
• Also, we find that many companies within the large cap universe are super-efficient and highly productive at generating earnings and cash flow growth through market share gain and new product introduction

David Rosenberg - http://advisorperspectives.com/commentaries/gluskin_32911.php

• But with the University of Michigan consumer sentiment index faltering so badly, especially the key ‘expectations’ component, then it does appear that there will be no spending spring this spring.
• There are up to four million homes in foreclosure or in the pipeline so to be talking about any housing recovery at this juncture is premature, to say the least.
• Portfolio managers as a group are running their funds overweight equities by an average of 67% relative to their typical benchmarks. And polls show that onethird of them believe QE3 is coming this summer. We already know that this Bernanke-led Fed is willing to be extremely aggressive, but as we saw in 2010, the hurdle is high for quantitative easing. We need (i) signs of a double-dip, (ii) a stock market correction of at least 15%, and (iii) deflation, not inflation.

Considine - http://www.advisorperspectives.com/newsletters11/What_Investors_Should_Fear_in_the_Permanent_Portfolio.php

• Browne laid out a very simple asset allocation model in his 1998 book, Fail-Safe Investing. The concept starts with the premise that there are four extremes in the economy and that a good portfolio will have components that will outperform in each one:

• Inflation: Gold and precious metals outperform
• Deflation: Bonds outperform
• Prosperity: Stocks outperform
• Recession: Cash outperforms

The PP invests 25% in each of these asset classes, a strategy easily accomplished using three ETFs and a money market fund:

Asset Class	Fund or Stock Ticker
Total Stock Market Index	VTI
Gold	GLD
Long Government Bonds	TLT
Cash	-

• rebalanced annually, would have returned 8.5% per year, with annualized volatility of 7.7%
• There are, however, some potential problems with the PP. First, we have just seen a period when both long-term bonds and gold have substantially outperformed. Browne envisioned a world in which long-term bonds outperform in a deflationary period and gold outperforms in an inflationary period. What are we to make of the fact that gold has substantially outperformed in recent years in a deflationary environment? The trailing five-year annualized return of GLD is almost 20% per year. The long rallies in both government bonds and gold are a reflection of investors’ fear of equity risk. We should not expect gold and bonds to move counter to one another in coming years. In other words, the PP has enjoyed an extended period that has been perfectly aligned for its outperformance, but that there is no reason to believe that we should expect this performance to continue.

FT

• Emerging world scientific rise: Traditional leaders (North America, Europe, Japan). Popular (China, India, Brazil). Iran (fastest growing country 736 papers in 96, to 13238 in 2008). Turkey (improved scientific performance at a rate similar to china). Tunisia (R&D spending rose from 0.03% to 1.25% of GDP between 96 and 09)
• End of QE2 - Fed announcements for ending QE lead to rising bond prices and falling yields ( opposite of what you would expect). The logic is that less Fed liquidity leads investors to pull back from riskier assets and switch to safer T-bonds. This fits the pattern of US equities, which have closely tracked the size of the Fed's balance sheet since late 2008, support the widespread belief that the Fed's unorthodox monetary policy has helped shares prices. If the Fed stops EQ2 early, history suggest equities and bond yields may fall, rather than rise.

TODO: During short periods of gains or losses, note volume and compare to premium of SPY vs SPX to figure out if its due to absence of buyers or sellers.
asdf

Vix and More

• What is VIX = implied volatility for next 30 days of SP500
• Blends SPX puts and calls for options expiring on two different dates, with the result being an interpolated implied volatility number. For the record, the CBOE does not use the Black-Scholes option pricing model
• it provides important information about investor sentiment that can be helpful in evaluating potential market turning points
• VXO differs from the current VIX in two main respects: it is based on the S&P 100 (OEX) instead of the S&P 500; and it targets at the money options instead of the broad range of strikes utilized by the VIX
• CBOE alone recognizes nine volatility indices, the most popular of which are the VIX, the VXO, the VXN (for the NASDAQ-100 index), and the RVX (for the Russell 2000 small cap index). In addition to volatility indices for US equities, there are volatility indices for foreign equities (VDAX, VSTOXX, VSMI, VX1, MVX, VAEX, VBEL, VCAC, etc.) as well as lesser known volatility indices for other asset classes such as oil, gold and currencies.
• portfolio managers often find that buying of out of the money calls on the VIX to be a relatively inexpensive way to hedge long portfolio positions.

• AAII below 30 during minor market weakness will be enough for a rebound
• AAII below 25 during major market weakness will be enough for a rebound
• Volume MA (5 to 7) look for capitulation. Volume will increase exponentially. Recently volume has been declining steadily and then will increase for a couple days (>> than MA for that day), indicating a reversal. Use daily chart.
• For big gains, look for GOOD products of companies who make real things whose MC < 8B
  
• Don't buy when fear is greatest. Buy when your uncertainty is greatest. ie: when you believe there is a 50 / 50 chance of it going up or down.
  

ETF Fund flows show a highly negative correlation to stock market performance. ie: Lots of money flows into funds, performance over the next 3 months is poor. Typically a 44, 60, or 80 day MA is used to determine the fund flow.

TPC

• Shiller says there is a bubbled forming in farmland prices. TPC just says this is general commodity bubble
• Meredith Whitney says May / June should be fine, but foreclosures will pick up by the end of June. Still believes there will be 50 - 100 municipal defaults (not state) worth billions.
• Buffet / Rosenberg both believe Japan is attractively priced

TPC

• Pre-election year, first 7 - 8 months are positive, rest of the year is choppy
• corporate profit margins seem to bottom around 6.5% during a recession

ADash

• Good - ECRI new high (7.1%). SFSLI (.002). Philly Fed (43.4 multi decade high). Coordinated currency intervention (although TPC says this always fails).
  
• Bad - Core logic said home prices fell -5.7%. Building permits were down -8%MOM, and -20%YOY.
  
• Middle east turmoil has created a +/-$15/bbl price oil premium. However, depending on how events play out, it is more likely it is +$15.
• 45% bullish. Will be buying mid week if prices seem to stabilize.

TradersN

• Farrel Sentiment 51% (<>
• NAAIM 50% (<>
• HNNSI 20% (-45% = buy)

FT

• In the days after a natural disaster, the stock markets typically fall 6 - 8% in the days after the disaster and remained weak and volatile for about a month. But it resumed its pre-catastrophe level in between 23 and 78 days after the. A hundred days after disaster, the affected market was always up.
• Tmobile / ATT merger - Under the terms of the deal, AT&T will pay $25 billion in cash and the balance in stock. Deutsche Telekom will gain an 8-per cent stake in AT&T and a seat on the telecom giant's board.
  
  • Using 7.1 EBITDA multiplier and VZ EBITDA to PM of 26.5% implies earnings of 1.48B.
    
  • DCF using market discount of 9.5% = 15B valuation. If it grows at 20% for 3 years = 55B valuation. Avg = 35B.
    
  • So ATT might have paid 4B too much? Both stocks went up after the deal w/ ATT putting on 2.2B in MC, and Deutsch Telekom putting on 4.7B. Does this mean that 6.9B was 'unlocked'?
    
• Jim Turley - demographics of india and middle east (avg age of 27 - 28 in 2020) will be better than China / US (37.5) and Europe / Japan (47.5)
  

TPC

• Worried about commodity prices
  
• Japan nuclear meltdown fears - Nikkei down 5.5%. Japan makes 1/5 world electronic components, but currently have spare capacity, so not immediate problem. Japan imports oil, and oil prices fell immediately after the quake. However, if they have to replace all their nuclear capacity w/ oil, that would mean an extra 10% bbl oil / day globally.
• Uranium stocks were hit very hard (CCJ -13%) because of nuclear fears
• Risk on currency trades (AUD - australia, NZD - new zealand, CAD - Canada, SEK - swedish krona). Risk off (USD, JPY, CHF - Swiss Franc)
  
  • Bullish on Equities, but want to hedge, you buy EUR and sell SEK because as equities in the US fall, there is an 80% correlation w/ EUR / SEK. Trade is currently at 8.8. Stop @ 8.6, Close at 9.4.
• John Mauldin -
  

  Today, Brazil has very little debt, as it has all been inflated away. Its economy is booming, people trust the central bank, and the country is a success story. Much like the United States had high inflation in the 1970s and then got a diligent central banker like Paul Volcker, in Brazil a new government came in, beat inflation, produced strong real GDP growth, and set the stage for one of the greatest economic success stories of the past two decades. Indeed, the same could be said of other countries like Turkey that had hyperinflation, devaluation, and then found monetary and fiscal rectitude.

  In 1993, Brazilian inflation was roughly 2,000 percent. Only four years later, in 1997 it was 7 percent. Almost as if by magic, the debt disappeared. Imagine if the United States increased its money supply, which is currently $900 billion, by a factor of 10,000 times, as Brazil did between 1991 and 1996. We would have 9 quadrillion U.S. dollars on the Fed’s balance sheet. That is a lot of zeros. It would also mean that our current debt of 13 trillion would be chump change. A critic of this strategy for getting rid of our debt could point out that no one would lend to us again if we did that. Hardly. Investors, sadly, have very short memories. Markets always forgive default and inflation. Just look at Brazil, Bolivia, and Russia today. Foreigners are delighted to invest in these countries.

ADash

• Good - ECRI still improving, 6.7%. SLFSI same (.004 vs .03 [anything < 1 =" neutral).">
• Bad - initial claims were bad, barely under 400k. UofMich sentiment was very bad, Spain downgrade of debt is much worse than Greece. 23% of home mortgages had negative equity. trade deficit spiked higher by about 15%
  
  • this is bad because in a floating exchange rate system, net national savings = current account surplus. so large trade deficit = negative national savings. => so either there is a low private savings or large budget deficit, or both.
• Ugly - nuclear threat from Japan, might cause a change in political opinion of nuclear power. This might put pressure on fossil fuels. Saudi's have said they would be willing to supply extra oil, they would need to go to 1.8mb / d to replace it. But in 2008 when oil was $140 / bbl, they did not. If WTIC is at $106, will they do it?
• overall posture is slightly bullish (70%, -9% from last week)

TradersN

• Farrel Sentiment Index on II survey. Bulls / Bears + Correction, moved below 1.5 (sell signal). However, buy signals are much better than their sells
• NAAIM (active money managers) was overall positive
• Consensus is at a bullish extreme
• Leveraged ETF flows (-201M Long, + 355M Short). Last month (+558M, -650M?) Where to get this info from??
  

QuantE

• Option expiration week for March, April, and December avg about +0.9%, Oct .7%, all others [0.3% (aug) - 0.09% (Jul)]
• 
  

Being Wrong - Kathyrn Schultz

• Unlike earlier thinkers who had sought to improve their accuracy by getting rid of error, Laplace realized that you should try to get more error: aggregate enough flawed data, and you get a glimpse of the truth
• John Ross - 1818 went looking for the Northwest passage, but came back and couldn't find it because of an optical illusion. However his 2nd in command (William Parry) did not see the same optical illusion and made it known to the investor of the trip. A year later, William went back and also saw the mirage, but decided to sail right through it. The concept is known as an superior mirage - shows things that do exist, but only much closer. The mountain range was about 200miles away instead of the way it looked (25miles away). Essentially his sense of vision deceived him.
  
  • Failures of perception capture the essential nature of error
  • For the most part, people accept as true anything they see with their own eyes
  • Ex: when you look at the stars long enough it is easy to interpret their movement to mean they we are the center of the galaxy. Sense's don't necessarily give the correct information.
  • Philosophers came up a model of the rift between our minds and the world. Sensing is actually two different operations (normally not separable). The first is sensation, in which our nervous system responds to a piece of information from our environment. The seconds is perception, in which we process that information and make it meaningful. Perceptions is the interpretation of sensation.
    
  • The mechanisms that form our perceptions operate almost entirely below the level of conscious awareness. Our obliviousness to the act of interpretation leaves us insensitive to the possibility of error.
• Sensing incorrectly is often a side effect of a system that is functioning correctly, in an abnormal perceptual process.
• Anosognosia, denial of paralysis, patients say that they can move limbs that aren't there, see things if they are blind. The brain mistakes an idea in the mind for a feature of the real world. => this shows us that there is no form of knowledge that under certain circumstances can fail us
  
  • The fallibility of knowledge is gravely disappointing for humans because we really, really love to know things.
  • In sum: we love to know things, but ultimately we can't know for sure that we know them; we are bad at recognizing when we don't know something, and we are very, very good at making stuff up.
  • The feeling of knowing something is incredible convincing and satisfying, but it is not a good way to gauge the accuracy of our knowledge
  • The way we actually remember is by rebuilding the memory afresh every time. The vividness, ease to recreate, might be a side effect of the building process itself.
    => unfortunately, Plato's wax tablet is an excellent description of how remembering feels.
  • If we don't know something, and know we don't know it we can admit it. However, if we don't know something, and we are unsure whether we know it, our brains make up stuff to fill in the gaps. This is called confabulation and we are excellent at it.
  • In the end, everything we 'know' is actually a belief.
• We have implicit and explicit beliefs. However, we only recognize implicit beliefs when we are wrong about them in some way.
  
  • This because these beliefs are models of our world, and only once we fail do we try to create a new model.
  • The reason we do this is because at some point in our evolution it was necessary to formulate models of the world to survive (ie: I can eat these red berries, but not the blue ones. That rustling sound in the bushes is a bunny I can eat or a bear that will kill me)
  • However, this same mechanism which makes us form theories about important things also makes us theorize about everything.
• Cuz its true constraint - we confuse our models of the world with the world itself
  
  • Ignorance assumption - other people just don't have the facts and we do and have interpreted them correctly
    
  • Idiocy assumption - they have the facts, but don't have the brains to comprehend them
  • Evil assumption - they are smart enough, but they have turned their back on it (prevalent in politics and religion)
    
  • This is the grim side of our passion for inventing theories. Like toddlers, we are quick to take our own stories for the infallible truth, and dismiss as wrongheaded or wicked anyone who disagrees. This also makes it difficult to accept our own fallibility because if we assume people who are wrong are ignorant, idiotic, or evil, we prefer not to confront this possibility in ourselves.
• Evidence - we should not believe things w/o sufficient evidence
  
  • We always believe things based on paltry evidence. It is the engine that drives human cognition
  • inductive reasoning - We make decisions based on if whatever evidence we do have supports one conclusion better than another.
  • This makes us 'leap' to conclusions, sometimes to the wrong conclusions.
  • Inductive bias (Confirmation bias) - we give more weight to evidence that confirms our beliefs than evidence that contradicts them.
  • This also causes us not to look for or accept evidence that contradicts us
• Society - many of our beliefs are a matter of fate (where are born, our family)
  
  • Instead of vetting information we simply vet the source, and then trust their information.
  • Asch study - 3 lines are shown on one paper, 1 line on the other. people asked to say which line is the same length (it is pretty obvious). When asked individually error rate is about 1%, however, in a group where many people answer incorrectly, error rate of the subject jumps to 37%! In another study they showed that when the group answers, our brains function differently, so people's brains changed how they saw the lines based on the judgment of the the group. Also, it only took 3 fake people to elicit this effect. However if in a big group, just 1 person says the correct answer, real subjects start doing so as well.
    
  • We also tend to disregard beliefs from people we disagree with or who are unfamiliar.
  • Dissent from within a community is especially damning for a community because it only takes 1 person from that group to help others come to the same conclusion since it is harder to disregard them.
• Certainty - conviction that we cannot be wrong - mental state of being without doubt
  
  • The feeling of knowing, our sensory perceptions, cuz its true constraint (thinking that our beliefs are grounded in facts), our biases we bring to bear when we assess evidence for and against those beliefs. Our communities and convictions are mutually reinforcing, so can't question our beliefs without running the risk of support status, and sense of identity that comes with belonging to a society.
  • this type of certainty can be 'murderous' but it is also evolutionarily advantageous because you don't want to have any doubt that you can't escape from danger,ect...
  • Spinoza - disbelieving is a two step process - initially accepting and only subsequently rejecting it => they set up an experiment where they told ppl fake things and the interrupted them immediately after. Since they didn't have a chance to mentally evaluate and reject the fake idea, they reported believing it
• Being Wrong
  
  • we cling to beliefs until something better comes along. we are rarely 'between beliefs'.
  • if we are between beliefs for something big, something that our model of the world is built on, it can make you feel completely confused (panic, anguish, rage and we fear we do not have the resources to find our way in the world again). with your belief of this model of the world gone, your understanding of how the world works is also gone. Until you figure out a new one.
    
  • being wrong about any type of belief makes you feel something. it is usually this feeling that is we try to avoid. being able to admit you're wrong depends on your ability to tolerate emotions.
    

USD / CHF (Swiss Franc) - both are viewed as safe haven currencies
FT

• Tangible Common Equity to Tangible Assets should be about 6% or higher for banks. So remaining losses are covered 3x by TCE
• Chinese imports of all industrial commodities took a tumble last month due to the Lunar New Year
• Copper was hit especially hard, local inventories have grown faster than demand because copper is being used as collateral for loans. If Chinese gov slows credit growth, then demand for copper should fall.
• Semiconductors (SOX) always tops and bottoms before the market because they go into everything.
  

FT

• PIMCO cuts T-Bond holding to zero in anticipation of rising rates due to QE2 ending.
• Portugal / Ireland / Greece borrowing costs hit euro-era highs amid concerns that Euro leaders will fail to take concerted action to dispel fears of sovereign defaults
• Sprint Deutsch Telekom talking about MA stuff.
• China’s trade balance swung to a deficit of $7.3bn ( supposedly big deal since it predicts growth of global economy. Although last year was the same...)
  

ADash -

• Use corporate bond yield to compare against SP earnings yield (http://research.stlouisfed.org/fred2/series/BAA) currently at 6.15% vs SP EY 7.41%
• VZ => DY(dividend Yield) 7% in July 2010, CBY (corporate bond yield) 6.2%, DCF $29 excl assets
• Nov 2008, DY on VZ = 7.4%, BMY = 5.8%, CBY = 9.2%. People seem to like dividend yield about 7%.
• Always check for preferred shares. In March 2009, BAC preferred H (8.2%) shares traded for $6.12, w/ a DY of 34%. Granted everyone thought they would be bankrupt, but money is made back in about 3 years along w/ capital appreciation (implied value = DY/Preferred Share yield = $25)

Bespoke

• Each week, Bloomberg surveys the head equity strategists at the major Wall Street firms for their year-end S&P 500 price targets

TPC

• JPM - Correction Late march / early april, target of SP500 1250. Newmont Mining, Metals USA, Thompson Creek Metals, FCX, DHT Holdings

ADash

• Good - ECRI hit another peak, Risk moved to .032 from -0.19, Employment showed solid growth(and better than he expected), initial claims improved (although hourly wage and work week weren't good)
• Bad - Gas prices postd the 2nd largest 2 week increase in history to 33c/gallon. Middle East tension (reports of Iran beind uprising in various oil-producing states, but so far SaudiA seems stable)
• Slightly bullish posture
• Next week - energy prices, jobless claims, JOLTS job report (not heavily followed)
• Look at M2 for Fed policy

AdvisorP - http://advisorperspectives.com/newsletters11/Ed_Hyman-The_Key_Threat_to_Economy_Recovery.php

• Bernanke wants equity markets higher, if equity markets stumble there will be moRE QE, Obama is going to the political middle, improving real economic indicators, inflation unlikely w/o wage growth.
• Recession if oil goes above $150. Gold prices are going up because of Argentina / China, commodities going up because countries are hoarding,.
• Every $10 increase in oil affects GDP .3%

Bill Gross

• America's negative net savings rate of 1-2%. "Basically the U.S. is not saving enough money to replace its own capital from the standpoint of depreciation and potential investment,"
• is concerned the economy will stagger when the Fed pulls the plug on its QE2 program at the end of June.
• If oil remains at current levels above $100 per barrel, Gross estimates it will sap $700 billion of consumer purchasing power; that could strip the economy of a half percentage point of GDP.

TPC

• Tepper - However, he is seemingly most concerned about developments in the Middle East. Tepper is said to be especially concerned about Saudi Arabia. Sources say if the oil fields in Saudi Arabia are burning, Tepper would react to that by selling and going heavily into cash. In general, he is said to believe if the Middle East blows up, you can lose half your money.

FT

• Rising petrol prices have a 2-month lag before they have a negative impact on retail sales. Potentially a problem for May - June
• Inflation expectations
  
• 10-year break-even inflation - measured by comparing US treasury yields with those of TIPS - touched a high of 2.51%. 5-year break-even inflation reached 2.2
• 5 year / 5 year measure - inflation expectations for 5 years that start in 5 years time - reduced the short-term influence of oil prices on spot break-evens and are favored by the Fed. this measure is lagging behind the jump in oil prices.
  
• Forward inflation break-evens reached a high of 2.6% and is not moving w/ oil prices as they have int he past, which makes the current spike in oil prices a more temporary shock
• Forward Rate - The forward rate is the price used to determine the price of a futures contract. It accounts for holding costs, appreciation and demand for the good.
• Dividends - although dividends should not matter, higher yielding companies outperform lower yielding companies significantly. This applies even to countries! Since 1975, high-yielders have outperformed low-yielders in 20 of 21 countries by an average of 4.4% / year
  

Futures / Swaps

• Interest rate swap - swap one set of cash flows for a different set of cash flows. Ie: hedge fund receives fixed bond coupon payments from company A at some rate. They want to convert it to a variable rate. They enter a swap agreement with someone that is currently receiving a floating rate.
  =>Interest rate swap can be fixed for floating or floating for floating in the same or different currency
  
• Hedge Fund => currently receives 8.5% bond from somewhere
• CompanyA => currently receives Libor+.5% from somewhere
• They swap => Hedge fund pays 8% fixed bond to CompanyA and receives Libor+.25% from CompanyA
• Hedge Fund new rate => 8.5% - 8% + Libor +.25% = Libor + .75%
• CompanyA => Libor + .5% - (Libor + .25%) + 8%
• Futures - obligation to buy/sell a a specified asset at a fixed date. For intangible assets, futures are 'cash-settled'. This enables many financial products to be traded such as interest rate futures (lock in a specified interest at some time in the future) to cricket match runs (expected # of runs on today's date vs when the match is actually played and finished)
  

FT - How to read 10k

• First, go to item 7. This is where a company has to give its most thorough assessment of current conditions and future prospects. it is here that shareholders might discover that a corporation holds most of its liquid assets overseas, or that a large proportion of its financing is off-balance sheet.
  
• Consider management's views alongside risk factors outlined earlier in item 1A
• Look at the explanation for difference in GAAP and non-GAAP measures. Whether the exceptional events that flattered the non-GAAP numbers are really one-offs.
• Credit Suisse analysts recommend looking at accumulated other comprehensive income, where anything from currency gains and losses to changes in pension fund status can be found.
• Lawsuit potential damages are listed in item 3
• Look at foot notes. They have info on gross positions for derivative assets and liabilities rather than netting them off(current profit / loss)
• If goodwill has been impaired, try to find out why. Do the reasons reconcile w/ management's expectations for earnings power in item 7?
  

FT

• Cocos - contingent convertible bonds - convert debt to equity if a bank's capital ratios fall to a pre-assigned level, and are supposed to make a bank safer.
• As soon as you get near a trigger level, the stock should fall VERY quickly because you know it will halve in value if the coco is triggered!

Underwriting - the underwriter bears the risk of being able to sell the underlying securities, and the cost of holding them on its books until such time in the future that they may be favorably sold

• US mortgage rules - banks must retain 5% of any 'non-qualifying' mortgage w/ downpayment less than 20%. This may be significant and only solved by the development of a covered bond market (coco's?)
• Oil vs USD
1. Oil prices goes up
2. More petro-dollars(USD) in other oil producing countries
3. Need to sell USD and buy home currency
   
4. Excess supply of USD => price USD vs other currency falls(or T-rates fall)

FT - bonds

• World bonds average 7.7%/year above inflation from 1982 to 2008, the best since the deflationary 1930s. But this was an aberration, which has made bonds look safer than they really are.
• History shows just how badly bonds can perform. at LSB, some researches pointed out that it took US treasuries 51 years from Dec 1940 to get their money back after inflation. At their worst, in 1981, bonds were down 67% in real terms
• By picking the fifth of countries w/ the highest inflation the previous year, rebalancing each year, would have returned 4% above inflation over the past century. Countries w/ the lowest inflation returned just 2.3%. => this didn't work well from 1900 - 1924 (even excluding Germany's hyperinflation)
  

TPC

• Chinese PMI came in at 51.7 a 7 month low. Stated as positive because it shows manf. sector is cooling

Bespoke

• Higher CPI on the horizon. Whenever ISM Commodities reported up/down in price (net) goes up there is a correlation w/ CPI Y/Y
  

TN

• Muni-Bonds will suffer $10 - $30B in defaults at some point. Watch for etf MUB crashing. I suggest buying around $64 (6% yield)

FT

• NE permit for deep water drilling approved. May 6, 2010 it was suspended. Stock bottoms in June 4, 2010. Starts moving beginning of December (8 months after drilling should be allowed to resume)