Money Supply still contracting

The government may have stopped producing the M3 data, but several sources have done a fine job reproducing the broadest money supply data

Commodity carry-Roll trade generates alpha

Finding Buried Alpha With the Commodity Carry Trade

Commodity roll yields are usually discussed in the context of optimising the risk and return of long only commodity indices, or explaining why commodity indices have lagged spot performance but the “commodity carry trade” can be a huge engine of alternative beta in its own right, and one that eclipses both long only commodity returns and other risk premiums. The strategy could hardly be simpler, which is why it should be dubbed alternative or exotic beta that is passively replicable as opposed to alpha that’s not – and the ease of execution leaves plenty of time for 3 hour long French lunches.

IEA's view on key oil demand & supply issues over next few decades

Forecast says oil sands to play increasingly important role as crude prices to keep climbing for two decades

China's voracious appetite for fuel will push up oil prices substantially over the next two decades and will ensure that unconventional oil, notably Canada's oil sands, will play an increasingly important role in the global energy mix, the International Energy Agency said its flagship World Energy Outlook report.
The report, published Tuesday, said crude oil prices will reach $113 (U.S.) a barrel (in 2009 dollars) in 2035, up from an average of $60 last year.

ECONOMICS - Peripheral Euro bond action beginning to look ugly

AOK - excellent if slightly snippy post that notes some worrying trends for Ireland & other peripheral euro economies, as the run on their bonds seems to be shaping up while the German support is carefully but obviously limited ..

iPIGS + CBs = GSEs Redux

Thursday, November 04, 2010

That's QE behind us and if yesterday was Xmas eve then today feels like Christmas afternoon, with the parents on the sofa having eaten too much QE and sold even MORE dollars. But the ADHD market kids having unwrapped their pressies, broken most, lost the rest and will be looking for something else to play with. TMM have been waiting for Europe to fill the role for some time.

Feedback loop between home price declines & "walk-away" foreclosures

AOK - An interesting thesis and well-documented chain of casuation & feedback. The critical parameters are of course the delta and time-frame of incremental "walk-aways" to home price declines. And thsoe parameters in turn probably have feedback effects to the strength of the loca ljob market. The less income potential in the area, the less likely I am to feel good about buying a house and therefore home demand is weaker; and the less perceived income potential the more likley I am to consider wlaking away form my under-water mortgage and upping roots. All suggesting that we'll see an acceleration of differences between various US housing markets.

Understanding the Housing 'Walk Away' Threat and Measuring Its Risk

by: Michael James McDonald November 23, 2010  

The “strategic default” or “walk away” is the final hurdle housing must get over. It only exists in certain areas and regions but it is potentially very dangerous. It can trigger self-sustaining price declines that carry forward and destroy building projects, investor profits and bank earnings. Builders, bankers and investors must all know how to quantify this risk.
This article presents a conceptual approach to doing this.

Chinese forest products demand & prices higher

 China’s Hunger for Wood Raw Material Pushes Timber Prices Upward

by: Hakan Ekstrom November 23, 2010

"Continued increases in demand for wood raw-material from sawmills, plywood plants and pulp mills in China has pushed domestic log prices upward and many Chinese companies are increasingly exploring the opportunities of importing more logs and wood chips to supplement the domestic fiber sources.
The tight log supply has resulted in higher prices for domestically sourced logs this year. Chinese fir sawlogs prices were almost 17 percent higher in the 2Q/10 as compared to the same quarter in 2009, according to the Wood Resource Quarterly (WRQ). Eucalyptus logs, mainly used by the pulp industry, have also become more expensive the past 12 months, reaching new record-highs.
The continued high costs of locally sourced logs has resulted in higher volumes being imported so far this year.