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darkhorse
Registered: Feb 2002
Posts: 3473 |
01-13-11 11:00 PM
Global Macro Notes: Reversal of Fortune
The Japanese have a proverb: "the reverse side also has a reverse side." That saying comes to mind reviewing recent action in the $USD.
As we noted last week, the dollar had registered an upside breakout from a multi-month channel, threatening to set the tone for the year with an early climb.
But then the breakout quickly reversed itself, as the situation in Europe -- for the umpteenth time -- morphed in investor's minds from "code red" to "crisis averted, everything's super"...
Read full notes here
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darkhorse
Registered: Feb 2002
Posts: 3473 |
01-17-11 02:28 AM
Weekend Comment: The Age of Cyberwar is Here
"There's a war out there, old friend. A world war. And it's not about whose got the most bullets. It's about who controls the information. What we see and hear, how we work, what we think... it's all about the information!"
~ Sneakers
One of the most fascinating (and perhaps most overlooked) stories of 2010 was that of Stuxnet, the mysterious computer virus that jammed up Iran's nuclear enrichment program.
This was no ordinary virus, as The Economist describes:
According to Symantec, a computer-security company, the worm performs an inventory of the systems it is running on, looking specifically for "frequency converter drives" made by two firms, one Iranian and the other Finnish, running at speeds between 807 Hz and 1210 Hz. (These high frequencies correspond to the rotation speeds of centrifuges; America tightly controls the export of frequency converter drives able to operate at frequencies above 600 Hz.)
If it finds the right configuration, Stuxnet sabotages it by making subtle changes to the speeds of the centrifuges over several weeks, while displaying normal readings to cover its tracks.
That is not all. Ralph Langner, a German researcher, says Stuxnet has a "second warhead". It targets a different industrial-control system that just happens to be used at Bushehr, Iran's much-delayed nuclear-power station, replaying previously recorded normal readings as it causes havoc. Mr Langner likens its complexity to "the arrival of an F-35 fighter jet on a World War I battlefield."
Disrupting key processes... creating false readings... covering its own tracks... this thing is like a trojan horse mayhem capsule filled with nanobot super-hackers.
Welcome to 21st century warfare...
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darkhorse
Registered: Feb 2002
Posts: 3473 |
01-20-11 06:11 PM
Global Macro Notes: Pondering the High Cost of Food
Next to guaranteed reelection, what is a politicians' fondest wish? Perhaps benign economic conditions -- the ability to enjoy upturned economic indicators, positive sentiment, and increased feelings of voter satisfaction all at the same time. "A chicken in every pot."
When fortunes are tied to the ballot box, this is what Washington wants. And it is what the Federal Reserve (with the help of China) appears to have delivered, for the investing classes at any rate: Unrelenting paper prosperity, in which an overall "crisis contained" attitude seeds complacency along with profits.
In this world of levitating asset prices -- never mind the possible correction brewing this week -- what could derail the Fed's "higher market mandate?" Is there any factor that could rudely intrude and kill the dream of perpetual paper gains?
Well, there's the rising cost of food, for one thing...
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m22au
Registered: Mar 2002
Posts: 3138 |
01-20-11 06:56 PM
Quote from darkhorse:
Global Macro Notes: Pondering the High Cost of Food
Is there any factor that could rudely intrude and kill the dream of perpetual paper gains?
Well, there's the rising cost of food, for one thing...
Read full notes here
Thanks for your notes again Darkhorse.
I agree that shorting restaurants are a good way to "play" the effect of higher commodity prices caused by loose monetary conditions.
However I prefer to short airlines, as outlined here:
http://www.elitetrader.com/vb/showt...threadid=193390
and here:
http://www.elitetrader.com/vb/showt...&postid=3066125
If peak oil is real, and manifests itself more noticeably in the coming years, it's entirely possible that all US airlines except LUV, DAL and UAL go bankrupt before the decade is over.
I assume that you prefer shorting restaurants instead of airlines. Is there / are there particular reasons for this?
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