DataBadger

Read This

2009-07-02T20:42:00.002-06:00

It is not in the easiest format and I am posting it a little late, but it's worth a read nonetheless.

George Hincapie Documentary Preview

2009-06-30T20:38:00.004-06:00

Finally...

2009-06-23T06:49:00.001-06:00

The Tour De France for prisoners is well under way [NYT]

Not Many

2009-06-16T12:01:00.002-06:00

The title sums up my recent posts. I have come across lots of interesting stuff lately, but for one reason or another, I have decided not to post about.

Zerohedge always has interesting posts as does Abnormal Returns. Zerohedge provides some of the best insight I have come across in recent memory. I am amazed at the volume of posts over there. Abnormal Returns collects a bunch of links that are varied enough to almost always have something interesting.

On the economy front, I think I am still bearish overall. With the stock market recovering, a lot of people thought we were out of the woods. I still think that we will need to see the job destruction slow down before we really start making any actual headway. I think the price of oil is too high and so is the price of natural gas. The CAD/USD FX rate overshot. I think the CAD should be in the 1.16-1.20 range. If it appreciates too much it hurts Canada's recovery because exports in USD will be relatively high.

On the cycling front, not a ton going on. The Dauphine just finished and the Tour of Switzerland is going on. Both are used as final tune ups for the Tour. I guess there is some unrest over at Astana. Contador views Armstrong and Levi as adversaries and Val Verde has said he would help Contador in a sort of Spanish solidarity thing.

But that could all be moot if Astana's money runs out. And that could happen today. Apparently, they need to have a sizable chunk of change in the banks as a deposit for the second half of the season, but if they do not, that could be all folks.

Almost

2009-06-09T14:00:00.003-06:00

It was not quite what I was looking for, but Toni Colom tested positive (Katusha) for EPO in an out of competition test in April. I do not think he raced in the Giro, so this is not what I was thinking in my previous post.

Interestingly, news broke earlier this week that Katusha wanted its riders to sign an agreement that stipulated that they would pay 5 times their salary to the team if they tested positive. I wonder if Colom had signed yet, I wonder if it is retro-active.

Today also saw a statement from Bernard Kohl regarding his doping protocol from the past few years. I have to say that it is refreshing to see someone be so honest and forthright about this side of cycling. His nonchalant attitude is a bit worrisome, as are his accusations that everyone is on something, but who knows...maybe he is right.

I Am Waiting

2009-06-04T20:16:00.003-06:00

The Giro D'Italia ended on Sunday. All in all it was a pretty exciting race: lots of attacking on the climbs, unusual stages, drama and weather all added to the mystique. The only thing missing was positive drug tests.

I'm not an expert in testing procedures, but I think roughly 6 riders get tested per day: the top 3 finishers of each stage and 3 random riders. So after 21 stages that is just over 120 tests. And no positives. Could it be that the guys taking drugs could not win a stage? Or is there another generation of drugs that are under the radar?

I have a hard time believing everyone in the professional peleton is clean. I wish that was not the case, but at least this sport is taking a hard line approach.

Tour De Felon

2009-05-26T10:05:00.003-06:00

Apparently French prisoners are going to be participating in a bike tour of France to develop skills that will help them on the outside. Since it's probably the closest I'd ever get to riding in the real Tour, I may have to go to France, commit a crime and hope I get picked for the team.

I foresee no issues with this event. The prisoners will be on their best behaviour and will not try to ride away from the guards on bikes.

I think it is going to take them forever to make their way around France--the distance seems rather ambitious. I highly doubt the guards will get them on regimented doping programs, so be prepared for passed out prisoners scattered over the highways of France.

Giro D'Italia

2009-05-21T11:14:00.002-06:00

Pretty interesting day in the Giro today. It was a crazy 60km TT with tons of turns and lots of elevation change. I think everyone I saw had clip-ons on some sort of road/TT hybrid. Menchov ended up winning the stage, which was quite surprising. His form looked crazy good and I don't think he had anything left when he got to the line. He left absolutely everything on the course.

Di Luca lost a bunch of time and is now out of the jersey in 2nd. He kinda bugs me, although I'm not really sure why. Levi had a good ride and is in 3rd.

The top 3 are separated by 40 seconds and then the next gap is 2 minutes. This should set up nicely for some attacks and breaks in the remaining mountain stages.

The plot thickens....

Cycling And Economic Crises

2009-05-20T06:52:00.004-06:00

Looks like the problems affecting the Kazakh sponsored Astana cycling team have (sort of) made their way onto Bloomberg. No wonder the team hasn't been paid in a while: companies, some of which are partly owned by the government, are defaulting on their bond (principal and interest) payments.

The team is riding in the Giro D'Italia with the sponsor's logos faded out. The only ones that can be seen properly are the ones that have paid in full: Nike, Trek and maybe another one.

I hope they get some financing in place by the time the Tour De France rolls around. The team is looking decent now, and will be much fitter and motivated in July.

Ouch, That Hurt My Ego

2009-05-12T10:55:00.002-06:00

I entered my first road race on the weekend and boy was it humbling. I had been training quite a bit over the winter, so I figured I'd be in decent shape.

But that was not the case.

Oh oh oh, that was not case.

I fell off the back of the group about 5 minutes after the race started and I could not get back on. I don't think I quite redlined it, but I probably should have. It would have been worth it to use up a couple match sticks to get back and recover a bit.

So me and a guy from another team took turn dragging each other around the course. It was a great introduction to racing.

I learned that it is so important to always be near the front, that way when the group surges around a corner you won't fall off.

Point taken: for the next race stay near the front at all costs.

Go Figure

2009-05-07T08:16:00.004-06:00

On the eve of the Giro D'Italia, it looks as though Astana's sponsorship is about to fall through. A few days ago news broke that the Kazakh sponsors hadn't paid the team and weren't returning phone calls. No one saw this coming? Borat references aside, I doubt Kazakhstan has the best institutional framework to support following up with people/corporations who don't honour their contracts.

Now the rumour mill is churning out the possibility that Lance may secure backing from the US and possibly from himself. Isn't this the same guy who said that the Discovery Team ended because it was too hard to get new dollars into the sport because of the all doping? He thinks it's going to be easier now, given the current economic climate and the ongoing blood doping and regular doping investigations?

I'm not as confident. I think that the riders will pay their own way during the Giro and might even dawn the Mellow Johnny jerseys worn by Lance, Levi and Chris at the Tour of the Gila.

The Fed Is Propping Up The Economy

2009-05-06T09:52:00.001-06:00

Very good read on ZeroHedge about how the Federal Reserve is basically responsible for the 'recovery' we've seen so far. If they were to pull out, everything would come crumbling down...

Second Derivative

2009-05-06T09:39:00.002-06:00

Another sign that this thing is almost over: the rate of job loses has begun to decrease. In calculus speak, the second derivative is positive. The only think better than having a positive second derivative when the first derivative is negative, is having second derivative equal to zero. At this rate, it's only a matter of time...

Formula 1

2009-05-03T14:19:00.002-06:00

I follow F1 reasonably closely. It combines a number of my favorite things: constrained optimization, going fast, drama and technology.

In order to make the racing more exciting, the governing body of F1 (the FIA) changes some of the rules every year. This year they got rid of grooved tires and returned to slicks, they've allowed team to use the KERS system and they've changed what's allowed in terms of the front and rear wing and all the other knicks and knacks attached to the car.

A lot of these rule changes were made so that over taking would increase. That's been the biggest knock against F1 in the past few years: once the grid is set in qualifying, the running order basically stays the same and the winner comes from the top 2 rows.

It is funny because no matter what the FIA does, the teams almost always approach the track record from previous years. The engineers are just too smart. They're given a new set of constraints every year and within a few months they've figured out how to make the car perform at a level equal to or greater than last year.

The most interesting change this year is the KERS system. It stands for kinetic-energy-something-something. Basically, the car goes around the track and kinetic energy builds up in battery and then the driver hits a button for an extra 60 hp. The downside is that the system weighs about 25kg or 30kg. So, if you're a heavier you will most likely opt to not use it. It has made overtaking a little more common.

As much as I like F1 I find the arbitrary rule changes a little ridiculous. I think they should a minimal set of rules and just let the teams go nuts. But with large spending piles of money no longer in vogue the FIA is bowing to the pressure and taking various measures to bring spending in. In fact, next year they're talking about capping spending in the 30M or 40M Euro area (I think during the Schumacher era, Ferrari was spending about 250M). Shouldn't it be "ye with the most money wins?"

H1N1

2009-05-01T06:43:00.003-06:00

Bloomberg is tracking the swine flu. The index follows the number of cases reported by the WHO.

I wonder if some quant will figure out a way to trade different flu viruses. There could be spread markets where you short the H2N5 flu and go long the H1N1 flu. I wonder if flus are mean reverting, have jumps, follow geometric Brownian motion, obey a power law or increase exponentially. I guess it depends on how you define the index.

33 Years In The Making

2009-04-28T08:17:00.000-06:00

Watch This Guy

2009-04-25T11:57:00.001-06:00

Trading Strategy

2009-04-23T11:49:00.003-06:00

SemGroup, a large US private equity company that went bankrupt last year, lost most of its money with a "No-Loss" trading strategy. Did they think that if they named it that, it would make money no matter what?

They lost piles of money as the price of oil made a big run and they were effectively short. There were also a few executives making shady moves and doubling down as positions began bleeding.

Accounting Is Sweet

2009-04-17T08:42:00.001-06:00

Citi posted a gain because they can MtM the gain on their debts. So as their debts become less negative, they realize the change as a gain. Accounting is fun!

Crude Market

2009-04-17T08:14:00.003-06:00

FTAlphaville has a couple interesting posts going over some factors currently affecting the WTI and the sour crude market. Contango, shipping costs, sweet vs. sour and OPEC are all discussed.

Start here and then here.

Calculus Does Have A Role In The Real World

2009-04-17T06:33:00.002-06:00

We have been keeping our eyes open for any negative second derivatives. Basically, when the second derivative is negative, the rate of recessionary decline is slowing. It is a first step towards capitulation and an eventual turn around.

That's A Bad Miss

2009-04-14T13:02:00.003-06:00

Looks like Lehman could not get out of a uranium trade and now they are long physical uranium. They accepted delivery and now have a bunch of yellowcake. I guess now they are going to wait for the commodity markets to rebound before they sell the stuff. Nothing like trading commodities in an illiquid, heavily regulated market...

It raises so many questions: Have they talked to Iran or North Korea yet? What does storage cost? What is their cost of carry? When do they expect uranium demand to rebound? Who trades spot market yellowcake?

Ugh

2009-04-05T19:18:00.003-06:00

Lately, I've gotten tired of following all the developments in the de-capitalization of the capital markets. This bailout and that bailout. This promise and that promise. Those bonuses and whose bonuses? Everything is such a mess and it is going to take a while for it to be resolved. I'm tired of analogies putting the financial mess into terms even I can understand.

I'm suffering from negative-data-fatigue-syndrome or NDFS for short. It's exhausting being inundated with and having to process unemployment figures, growth figures, money supply changes, trade data, current account balances, consumer spending numbers and all the random indices that come out every week. And I'm an information fiend. I like to be on top of it. But, 'it' has gotten so big that I would have to leave my job in order to track 'it' to the extent that it deserves. But I can't leave my job cause there's a recession going on.

I have a high tolerance for information so I am used to handling a lot at once, but it is starting to get ridiculous. I would rather be smacking you with information instead of having it smack me. Ugh.

And On The 7th Day

2009-04-05T18:26:00.005-06:00

I smoked a cigar. I paid off my student loans in full this week. I think all in it was 25k+ and took me 2.25 years. I never crunched the numbers to see if it would have been better to make the minimum payments and invest the remaining funds. I just wanted to be debt free as soon as possible.

So, this afternoon I got together with a couple of buddies from grad school to sit in the sun and smoke. Since it was a special occasion, I went with a Cohiba Esplindido. It is probably my favorite celebratory cigar. It's 7 by 47, which means it's 7inches (178mm) long and has a diameter of 47/64th of an inch (18.65mm).

It's very full flavoured and the flavour changes dramatically as it is smoked. (I must apologize that my vocabulary for describing cigars needs some work.) It's not a super strong cigar like a Partagas Series D and it's got a nice draw.

I Like This Chart

2009-04-03T10:34:00.005-06:00

It puts things in perspective.

[Hat Tip dshort.com]

Star Wars vs Atlas Shrugged

2009-04-03T09:55:00.008-06:00

When I was reading Atlas Shrugged and Dagny crashed her plane in Galt's Gulch,

I couldn't help but think of Lando Calrissian and his city in the clouds from Star Wars.

Hear me out because there are numerous similarities.

Both got fed up with the way society was working and decided to set up shop on the periphery and under their own terms. They are visionary men are are not handcuffed by the status quo. Both locations are only accessible through air travel and have a certain Utopian quality.

Economic Indicators

2009-04-03T09:43:00.004-06:00

There's been a lot of talk about how to interpret all the economic releases that come out during the course of the week. Some looks promising, some not so much and some looks and good and bad depending on what kind of spin you put on.

The unemployment data that came out is bad. There is no way to put a good spin on it. None. In fact, I think the real unemployment rate is much higher. The current calculation does not include people who have stopped looking for work. Some argue that the actual rate is closer to two times larger than the headline rate of 8.6%.

I think it's difficult to come up a real number, but it is going to be higher than the headline rate for sure. I don't think the economy will turn around until we see these numbers decrease. The US job destruction is just massive and it will take time for job creation to ramp up.

Who Is John Galt?

2009-03-31T19:54:00.003-06:00

(DO NOT READ IF YOU PLAN TO READ ATLAS SHRUGGED.)

For the record, I started Atlas Shrugged back in November, before the internet was filled with studies documenting the positive correlation between sales of the book and the state of the economy. I started the recent bandwagon, I did not hop on it.

I had returned from a beach vacation and decided that I needed to read something other than Vince Flynn and John Grisham. I don't mind reading trash from time-to-time, but I needed to read something substantial. Somehow I settled on Atlas Shrugged, not really knowing what to expect.

The story is about how seemingly innocent changes to an economy, made with the best intentions, will inevitably lead to its downfall. The only thing that survives are the principles and values held close by a few industrialists, entrepreneurs and thinkers. In theory, economies should perform better when left to their own devices. The state of the economy in the book begins crumbling the moment the Unification Board starts interfering. In an attempt to increase equality, the Board distorts incentives to such a degree that the country grinds to a halt.

Overall I really enjoyed the book. I was surprised to find that I already viewed the world in a similar fashion to Rand: I'm big on self-sufficiency, staying true to one's beliefs and the ideals of laissez-faire.

My timing could not have been better. As the powers that be in the book slowly started regulating everything, talk of 'bad banks' and Government Motors (GM) became more and more prevalent. The parallels were uncanny. So far, the real has yet to spiral to the depths that the fictional US does, but we may be on our way.

The book is huge, literally and figuratively. She fully succeeds in getting her point across. It's powerful. It resonates.

Wikipedia has a good entry here, a discussion of themes and symbols is here and a recent piece comparing the book to the world we are currently in is here.

Nursery Rhyme Bailout

2009-03-29T19:00:00.000-06:00

Old Obama has several banks
Trilli-illy-o
And in these banks there were bad assets
Trilli-illy-o
With some MtM here
And a writedown there
Here a loss, there a loss
Everywhere a loss-loss
Old Obama has several banks
Trilli-illy-o

Old Obama has a few mortgages
Ree-ee-ee-ee-set
And now these mortgages are not affordable
For or or close
With a for-sale sign here
And a for-sale sign there
Here a sign, there a sign
Everywhere a sign-sign
Old Obama has few mortgages
Ree-ee-ee-ee-set

Old Obama has a FED
Print some more money
And with this money go to the mall
Speh-eh-eh-end
With some more debt here
And some job losses there
Here some debt, there some losses
Everywhere some debt-loss
Old Obama has a FED
I-i-i-i-flation

I'm A Fan Of This Tax Increase

2009-03-29T18:19:00.002-06:00

I'm not a big fan of taxes. I'd rather pay less than more. But this tax I like. I bear the brunt of smokers indirectly. I have to smell it and breath in smoke. And I have to pay their hospital bills through my taxes. Therefore, increasing the cost of this habit can not be a bad thing.

Hopefully, the extra revenue generated from an increased tobacco tax will remove the burden of their healthcare costs from me. I wonder how many people would smoke if they had to pay for their own care when they get lung cancer?

On the other hand, maybe I'm contradicting myself. People should be able to slowly kill themselves if they so choose. Who am I to say whether or not that's a good idea? But the other part of me just thinks: "tax the living daylights out of tobacco". And I think that's the part of that will win out.

Good Piece From Rolling Stone

2009-03-28T21:31:00.002-06:00

This stuck out:

As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

He maintains a good balance between scathing sarcasm and simplifying complex events. A lot of time is spent mapping out the relationships of the current players: Paulson, Geithner and the guys who were/are running banks. It's a small world and everyone wants to help out their old friends.

The entire piece by Matt Taibbi can be found here.

FIrst Pass

2009-03-27T07:27:00.002-06:00

Mini-Madoff, Canadian style [Bloomberg]
Ecuadorean oil cuts [IHT]
Surprise build in US nat gas stocks, sends price back down [Forbes]
Taleb's crusade rages on [Slate]
A scathing story about working at AIG [Clusterstock]

The Next AIG Shoe Has Dropped

2009-03-26T06:45:00.000-06:00

And it's a size 19 [WSJ]

All of AIG Exposed

2009-03-25T10:34:00.003-06:00

Apparently, the insurance side was into crazy derivatives as well. The whole company was making massive bets. This story just keeps getting better and better. I wonder what will happen next? One side of the company was selling complex, structured products to the other?

We're Out of the Woods

2009-03-25T09:54:00.004-06:00

I think everything is fine now: U.S. economy shows new signs of life. Maybe everyone is spending their bonus money on TVs and fridges. We're all good. Phew, that was quick. I guess CNBC has been right all along. If we just stay bullish for long enough, everything will work it's way out.

(Just be sure and ignore anything that points to downward revisions in any data and don't read in to what exactly is making up the numbers. Just be greatly that they've got a '+' in front of them.)

Cycling in Canada

2009-03-25T09:06:00.006-06:00

I've been riding bikes for about 5 years, with the last 2 being quite serious. This year I decide to join a club and enter some races. It seems that cycling is one those sports you can't just participate in. In order to be legit, you must be on a team and be training for something specific. I could resist no longer so I joined the Speed Theory team.

We were supposed to ride a TT today because there are so many Cat 5's on the team and we need to rank them for training rides. However, since it's March and we're in Canada there is snow on the roads and it's below zero out. I think we managed one day of spring on Friday with temps in yhe 10's or so. Now the TT is postponed indefinitely and we're relegated back to riding indoors on our trainers.

You've got to be mentally tough to ride in Canada. The 6 months of winter are spent riding indoors watching horrible movies that never should have been made. The summers in southern Alberta are spent riding outside in a swirling head/tail wind that seems to follow you around. It's not easy battling the winds coming over the Rockies all the time. Just when I think it can't get any windier, I am proven wrong.

On Saturday, I was out with a buddy and the weather changed out of nowhere and we got slaughtered by a massive wind. It was so powerful that we were almost blown over riding up some hills. It got so cold that we stopped early and called in for rides home. My face was so frozen that I could barely talk. It was like I had been to the dentist. All in all it was an adventurous Saturday, but I would not knowingly go out in massive wind and plummeting temps again.

View Larger Map

Moron

2009-03-25T06:31:00.001-06:00

Geithner Market

2009-03-24T11:52:00.005-06:00

Thought I'd take a quick look at the implied odds of Geithner leaving office by June 2009. Volume has picked up recently and volatility looks to have increased as well.

It'll be interesting to follow this as his plan plays out.

First Pass

2009-03-24T10:39:00.003-06:00

Lance crashes in Spain; future races in doubt [cyclingnews]
Canada's banks are looking more and more liquid [portfolio.com]
A fantastic idea [clusterstock]
A very timely analogy explaining the most recent round of bailouts [econlog]
More on Geithner's 'plan' [self-evident]
I'm not a huge Alberto Contador fan, so it was nice to see this [velonews]

First Pass

2009-03-23T07:46:00.003-06:00

More US LNG in the summer [Oil and Gas Journal]
'Rumourtrage' [ftalphaville]
Large Canadian M&A [NYTimes]
Toxic asset plan, just in time [Bloomberg]
Part I of carry trade school [Zero Hedge]

First Pass

2009-03-20T06:46:00.003-06:00

Ratings shmatings. Do credit ratings mean anything anymore? [Clusterstock]
US budget deficit balloons [Reuters]
Goldman profiting from AIG's collapse [Zero Hedge]
GS conference call regarding relationship with AIG [WSJ]
Surprising retail numbers in Canada [Report on Business]
Next year, I'm going to get Barclays to do my taxes [Guardian UK]
Just in case your Friday is going too well, read this [Daily Reckoning]
Give Bernanke a run for his money [San Francisco Fed]

First Pass

2009-03-19T10:07:00.006-06:00

Quashing deflation fears in Canada [Report on Business]
The effects of quantitative easing in the US [Bloomberg]
Is this what brought LEH down? [Bloomberg]
Not according to this interview [Portfolio.com]
Changing status of the USD [ftalphaville]

It's not looking good for Geithner:

This is a graph from Intrade showing the probability that he will be out of job by by June 2009.

First Pass

2009-03-17T11:42:00.002-06:00

Do what this guy does [Clusterstock]
Interesting advice for AIG [Reuters]
A workaround for the gov to recoup the AIG bonus money [Dealbreaker]
Surprising housing numbers out of the US [Bloomberg]
Lance calls out his teammate [Cyclingnews]
Large decrease in worldwide upstream energy deals [Oil & Gas Journal]

Screenplay

2009-03-16T14:44:00.001-06:00

I think I will base my new screen play on this.

First Pass

2009-03-16T14:17:00.002-06:00

Declining nat gas rigs in the US [Bloomberg]
A view on the eventual recovery [Econbrower]
Encouraging numbers from Canadian investors [Report on Business]
Not so encouraging Canadian housing numbers [Report on Business]
Interesting goings on at the weekend OPEC meeting [Oil and Gas Journal]

First Pass

2009-03-15T16:07:00.005-06:00

AIG just can not stay out of the news. Now, there are publicizing their counterparties who are getting bailout money and their bonus program is coming under harsh criticism. [Bloomberg]

This gets a little technical, but it is a good explanation of credit spreads, CDSs and broader view of the industry. [A Credit Trader]

Canadian growth will not be in line with the Bank of Canada's most recent estimate. [Report on Business]

An unexpected move by OPEC. [Bloomberg]

An Interesting Take On Stewart Vs Cramer

2009-03-14T21:00:00.002-06:00

[via Kreepie Kats]

Mixed Bag

2009-03-13T21:41:00.005-06:00

I read Madoff's allocution the other and was immediately struck by the fact that he deposited large sums of cash into accounts at J.P. Morgan Chase. How did the bank not know that something was? Maybe they did... [Portfolio.com]

An interesting piece on magnesium bikes. My bike is a carbon fiber monocoque and I've heard of titanium bikes, but I've never heard of a magnesium bike [velonews.com]

I watched Cramer get trashed by Jon Stewart. Stewart did a good job of asking relevant questions and Cramer did a good job of not really answering them while at the same time admitting he may have made a mistake or two. I think CNBC is in a bad position. They can't decide whether or not they want to be an entertainment channel or a news channel. One could argue that they've managed a decent balancing act until now, but that their perceived position is changing.

It was easy to fly all over the world with the CEOs of various banks and go on rants about companies and yell at the government when the markets were going up. But ever since the market has gone down, CNBC is seen more as part of problem rather than an impartial entity reporting on the problem.

They would argue that in order to get the best stories they have to be tight with the Wall St. inner circle, that there is no other way and that this is part of the territory. Wall St. is run by insiders and so CNBC promotes and rallies behind the companies and people it wants to remain close to in order to maintain a competitive advantage over the other financial news organizations.

I can understand why Stewart thinks that CNBC contributed to the current financial mess. They were bullish up until the very last second and started up again as soon as they could. The part that bugs me, though, is that Stewart thinks that CNBC is responsible for the drop in his mother's retirement fund.

Why are investing and finance areas where it's ok to be ignorant? You don't drive a car with knowing the rules of the road, how to operate it and what the risks are. If you don't understand the risks involved, that's fine, just don't invest and instead, put all of your money into a savings account. If you do invest, you must be prepared that crazy stuff will happen. People must take responsibility for their actions. That is the key point. Everyone wants to be absolved of responsibility and play the blame game. Granted, derivatives got out of hand and everyone bet against them all being in the money at once. But, the probability isn't zero. It's larger than we'd initially think, but it's definitely not zero.

And don't give me some story about an investment professional telling you that your money would grow at 7% indefinitely and you just did what they said and now your portfolio is down 50%. You could have not invested. If you are shocked at being down 50% you should never have invested. No one forced you to. You did it because you got greedy just like the Wall St. CEO's that are taking all the heat (I am in no way defending what they did. They got super greedy and bet the farm without fully understanding the risks and that was stupid.).

You could have put your money under the mattress and not participated in any of the craziness.

Required Reading

2009-03-12T11:12:00.003-06:00

Madoff's allocution [Dealbreaker via WSJ]
Some perspective on large amounts of money [Gizmodo]
Canadian doom and gloom [Report on Business]

First Pass

2009-03-11T06:47:00.002-06:00

And again...Paulson & Co cleaning up the UK banking sector [ftalphaville]
A nice discussion of AIG, CDSs and moral hazard [Econbrowser]
More on moral hazard [CafeHayek]
John Galt would hate this bill [Report on Business]
Libor rate are indicating that credit markets are still frozen [Bloomberg]

First Pass

2009-03-10T07:53:00.002-06:00

The contango in the crude market is almost completely gone [ftalphaville]
Will crude follow nat gas on its march to zero? [clusterstock]
This does not bode well for consumer confidence [Reuters]
Hayek wrestling with the economy [Taking Hayek Seriously]

First Pass

2009-03-09T11:56:00.004-06:00

Built on fake [Dealbreaker.com]
C'mon man, you didn't have to go that far, did you? [Reuters.com]
Update on the crude contango, the WTI/Brent spread and the goings on with the USO [ftalphaville]
Paris-Nice is the first meaningful European stage race of the season. A lot of riders will begin gauging their competition for the grand tours at this race.

It's A Good Thing She's Got Such Valuable Insight

2009-03-07T20:08:00.001-07:00

...to balance with her good looks.

First Pass

2009-03-06T06:39:00.005-07:00

This can't be good. [dshort.com]

Black Swan hedge fund closing because they're are making too much money. [Bloomberg]
Rogue traders at MER before BOA bought em? [Bloomberg]
So timely. If you haven't read this yet, now's the perfect time. [Asymmetric Information]
More on BOA's lack of due diligence. [ftalphaville.com]

I Love CNBC Just As Much As The Next Guy

2009-03-05T10:14:00.001-07:00

For some reason, Jon Stewart is not a fan. Rick Santelli was supposed to be on the Daily Show, but he "bailed out", so in fine form, Stewart tears in to the network.

Hedge Funds

2009-03-04T20:51:00.003-07:00

Another good piece, here, from Bethany McLean on hedge funds. One thing that stood out was the fact that no hedge fund manager has asked for their industry to be bailed out.

Cycling Photos

2009-03-04T19:38:00.002-07:00

Liz Kreutz has Tour of California photos here. Go to Index >> Lance's Comeback >> Tour of California.

More Michael Lewis

2009-03-04T07:26:00.003-07:00

I'm a fan of his pieces. This is his latest in Vanity Fair. He also had a good one, here, at Portfolio.com.

Quantitative Easing Vs. Open Market Operations

2009-03-03T19:42:00.005-07:00

In the Bank of Canada's statement today, they mentioned that they were open to quantitative easing. I'd heard this phrase used by the Federal Reserve in the fall, but I hadn't really understood what it means or how it is different from open market operations.

Turns out, they are quite similar. When a central bank announces a change to the target of their benchmark rate they must either buy or sell government securities in the open market. In order to lower (raise) interest rates, the bank must buy (sell) government bonds in the open market. These transactions change the size of the money supply causing the benchmark rate to approach its target.

Quantitative easing involves purchasing a wider variety of securities or accepting securities as collateral for loans from the central bank. Both buying and lending increase the amount of money in circulation.

Remember all those mortgage backed securities and collateralized debt obligations that the US banks couldn't wait to get off of their balance sheets? The Federal Reserve will accept the best of these assets as collateral for loans in order to infuse the economy with more money.

A slightly more technical, but still accessible explanation is available here.

FIrst Pass

2009-03-03T07:32:00.002-07:00

It's refreshing to see that someone had a good year. I guess with fewer players in the market it's easier to make a profit. [Bloomberg]
Low nat gas prices are trickling through and producers are beginning to shut-in. [Oil and Gas Journal]
Debt begets more debt. [The Australian]

Canada Cuts

2009-03-03T07:23:00.001-07:00

The Bank of Canada cut the benchmark overnight rate to 0.50%, the lowest it's ever been. The move was in line with expectations. Banks should cut the prime lending rate to 2.50%.

Large Hadron Collider

2009-03-02T18:55:00.002-07:00

Ever wanted to inside a particle accelerator, but didn't have the requisite PhD in theoretical physics to get in? Here's your best shot.

Good Reads

2009-03-02T10:11:00.003-07:00

Strange times in the crude market [FT Alphaville]
Interesting look at Wall Street bonuses being paid for with bailout money [Vanity Fair]
If you're looking for a car, I know a guy... [Clusterstock]

A Look Around

2009-03-01T19:09:00.003-07:00

A big loss, matched with more gov cash at AIG. [Globe And Mail]
Sorry Eastern Europe, we've got our own issues. [WSJ]
Oooooh, and that's a bad miss. [Reuters]
Think Q4 Canadian GDP will be as bad as the US? [Bloomberg]

Moscow, We Have A Problem

2009-02-28T16:28:00.002-07:00

Namely, why are you flying bombers into our air space?

Saturday Ride

2009-02-28T16:20:00.003-07:00

Spent 2 hrs on the trainer today watching the end of Transporter 3 and Thick As Thieves. The first movie was really bad while the second on was ok. I spent 40mins total in my threshold zone and about 10mins doing tempo. The rest of the time was spent warming up, recovering from the brutal 10mins intervals and cooling down.

It got tougher to hold some of the zones as the ride went on, but it felt good to get the HR up and hold it there.

Gasoline Tax

2009-02-26T18:44:00.004-07:00

The National Surface Transportation Infrastructure Financing Commission is proposing a gasoline tax, thereby declaring their membership in Mankiw's Pigou Club. The amount under discussion is substantially less than what he prescribes, but it is a step in the right direction.

Really? Really?

2009-02-25T19:02:00.002-07:00

The guy who runs Bank of America thinks that acquiring Merrill and Countrywide was a good idea and will pay off in the future. Huh? What does he know that we don't?

Contango In The Oil Market

2009-02-25T14:19:00.001-07:00

A great look at the goings on in the WTI market.

WOW

2009-02-24T21:01:00.003-07:00

I way underestimated the amount of money the US government has spent so far. It's not $1.7T, but $2T. Not a huge amount, but when you're measuring in billi...., no wait trillions, 17% is non-trivial. They've committed almost $9T, but have only spent a fifth so far.

Early? Or Late? Pass

2009-02-24T20:38:00.003-07:00

Who's with Rick? I am. [FreedomWorks.org]
What's a copula? [Wired]
Mortgage payments are beginning to converge to rent. [WSJ]
The gas lobby. [WSJ]

China Has The US By The Balls

2009-02-23T08:50:00.003-07:00

The average Chinese consumer saves way more than she spends. The Chinese government has taken these saving and purchased roughly $1T of US Treasuries. This money is then lent to the US consumer so she can spend more than she earns. Turns out, a lot of what she buys is imported from China. In other words, China's savings is financing the sale of their exports to the US.

Donuts + Cycling = Chris Horner

2009-02-22T12:27:00.008-07:00

From Lance Armstrong via Twitter:

Horner and his GF just walked into the bfast room with 2 big boxes of donuts. Oh lord, I've almost seen it all now.

[Levi Leipheimer via Twitter]

I'm liking Chris Horner even more now. His post-stage dash to In-N-Out Burger elevated him and now he's bringing in donuts for the pre-stage breakfast. This begs the question: "What's he eating during the stage?"

End Of The World Puts

2009-02-21T18:29:00.004-07:00

Warren Buffett sold put options that would force him to pay $40B if various stock market indices go to zero. When he sold them, he figured that they would expire worthless and he'd keep the premium. However, these indices are now plunging and these options are becoming less out-of-the-money. Since these puts are MtM, as the markets plunge and volatility increases, Berkshire must take balance sheet right downs.

Madoff Movie

2009-02-21T18:15:00.003-07:00

I was thinking today about who could play Bernie Madoff in the movie. Dustin Hoffman, Anthony Hopkins or Gene Hackman? It might be a slightly boring movie though. We could watch him not trading, generating phony documents and wooing famous people in invest.

This Can't Be A Good Sign

2009-02-20T12:18:00.002-07:00

Apparently, Madoff had not made an actual trade for over 13 yrs. He must've been spending all his time faking trade confirmations and wooing new investors.

Everything Is Down

2009-02-20T09:11:00.004-07:00

Nat gas traded below $4/MMBtu, the DOW is in the 7330's, the TSX is sub 8000, crude is off 1.62 to $37.86. Fortunately the despair can be hedged with another falling asset. Gold is the only thing going up and may hit $1000 by the end of the day.

I wonder how much money the US government needs to throw at this in order for things to turn around? $5 tril? $7 tril? Taking Bush's $.7 tril, Obama's $.7 tril, bailout of Wall St at about $.2 tril, housing and auto bailout at $.1 tril, we're currently at $1.7 tril (keep in mind that I'm just trying to remember all the numbers I've read about in past few months and I may be off...) and nothing.

First Pass

2009-02-19T06:45:00.003-07:00

Your information is about to be divulged [NYTimes]
Grim Canadian housing outlook [Globe And Mail]
Tiger may be in the hole [Clusterstock]
Record Unemployed in the US [Reutuers]

Profile

2009-02-18T11:22:00.004-07:00

This is one of my go to trainer rides. I stay in my endurance gear (level 2/5) the entire time and just adjust the resistance on the trainer. I've got the Tacx Flow. It's good for base building since you get your HR up, but since you're capped at your endurance watts, you don't induce anything close to threshold.

Westjet: The Last One Standing

2009-02-18T08:36:00.004-07:00

I say, let Air Canada go down. They don't come close to WestJet in terms of service or business model. WJ has never gotten government assistance and AC just keeps going to the trough.

First Pass

2009-02-18T07:34:00.003-07:00

Dismal housing numbers out of the US today may be a good thing. [Clusterstock]

Interesting relationship between shipping and commodity-driven exchange rates. [Bloomberg]

It's comforting to know that the BofC governor is worried about how much debt we all have. [Globe And Mail]

Did Stanford set off a bank-run?? [Reuters]

The GBP is down on calls for quantitative easing in the UK. [Guardian]

Who's Surprised?

2009-02-17T15:06:00.000-07:00

Stanford: The Manhunt Begins [Portfolio.com]

Looks Like Someone's Still Got Some Cash

2009-02-17T09:36:00.000-07:00

Russia, China sign $25-billion energy deal [Globe And Mail]

First Pass

2009-02-17T08:04:00.003-07:00

IEA: Oil Going Right Back To $150 Again [Business Insider]
Stanford investigation sparks fears in Antigua [Reuters]
U.S. oil falls to $37 on demand concerns [Reuters]
An overview of the proposals to fix the financial system [Vox]
Markets, dollar tumble in early trading [Globe And Mail]
Oil Falls Below $36 as Deepening Recession Cuts Fuel Demand [Bloomberg]
Lloyds facing further writeoffs as HBOS loan losses mount [Guardian]
US shares dive on doubts over rescue stimulus [Times UK]

Tour Of California Stage 2

2009-02-16T15:30:00.002-07:00

Pretty exciting stage today. A break of about 10 or so got out early and went over the first climb together. They started the final climb with 3 minutes on the main field, but Levi attacked from the bottom, bridged the gap and took over the top of the GC. The stage was won by Thomas Peterson on the Garmin squad.

The conditions were pretty miserable, but the sun did make a few brief appearances. Rock Racing was looking ok at the front of the peloton for the first part of the day, but once the final climb began they were nowhere to be found.

Popovych lead out Levi at the start of Bonny Doon and then once he began to slow, Levi just started to fly. He motored up the climb and passed the fragmented break. He looked really fit and comfortable going at a pretty torrid pace. Astana will now have to control the race right until the end.

In-N-Out Burger + Cycling = Chris Horner

2009-02-16T14:20:00.004-07:00

From Lance Armstrong on Twitter:

Getting massage and Horner comes in. He's just back from the race. Johan and I were like, "where have u been?".

Reply - "I was at In and Out Burger". What?? He ordered a double-double (xtra onions), fries, coke, and a strawberry shake. Wow.

That's my kind of post-ride meal: two patties and two slices of cheese. Love it.

Now That's What I Call A 'Contraction'

2009-02-15T18:07:00.001-07:00

Japan’s GDP Shrinks 12.7%, Most Since 1974 Oil Shock [Bloomberg]

Watching The ToC

2009-02-15T17:51:00.003-07:00

Here is a great way to watch The ToC. It's Versus out of the US plus the stage profile and all of the time breaks. You'll need to have Flash installed and a reasonable amount of bandwidth.

It's shaping up to be a good race. Looks like a few top guys dropped out today and the weather probably sapped a lot of energy out of the entire field. Francisco Mancebo has the leader's jersey, but Astana is not too far behind.

Lance's TT bike and few other Astana bikes were stolen over night. Apparently the truck was unmarked so the thieves may not have known what they were stealing until it was stolen.

Svein Tuft

2009-02-15T14:30:00.004-07:00

[velonews.com and Graham Watson]

He came in 9th, one spot ahead of Lance, in the Tour of California prologue. He was 4.2 seconds behind Cancellara, averaging right around 50 km/h. That is a fantastic result!

Ultimatum Time

2009-02-15T14:27:00.002-07:00

Report: GM considering Chapter 11 filing [Globe And Mail]

I Think I'm In The Wrong Line Of Work

2009-02-14T07:17:00.004-07:00

This guy and his hedge fund made 67M USD in less than half an hour shorting Lloyds Banking Group. The stock tumbled huge after a company it recently took over was about to report a massive loss. It's not certain that he's even closed out his short, so there may be more to be made.

I like seeing short sellers do well; especially in this market where shorting was banned at one point. It helps to keep the companies 'honest'.

Stocks also seem to have massive moves downwards way more often than upwards. Nice to see someone capitalizing on some company making a fool of itself.

Paulson May Have Made $67 Million in Lloyds Plunge [Bloomberg]

First Pass

2009-02-13T06:29:00.003-07:00

Jim Chanos, SAC Snared In Wall Street Research Scandal [Cluster Stock]
Europe Economy Collapses [Cluster Stock]
Madoff: A Family Affair? [Portfolio.com]
European GDP shows worst contraction ever [Globe And Mail]
Nearly 700 at Merrill in Million-Dollar Club [NYtimes]

That Was Quick

2009-02-12T20:21:00.003-07:00

China’s Economy Shows Signs of Recovery on Stimulus [Bloomberg]

Who knows how reliable the data is. Command economies are notorious for inventing 'official statistics'.

Elizabeth Kreutz

2009-02-12T20:01:00.004-07:00

She's got some great photos of Lance and the Astana boys training and racing. Go here, click on Index then on Lance's Comeback. The shots from California are amazing. Makes me want to get out there and ride.

From CarpeDiem.com

2009-02-12T11:57:00.001-07:00

Global Economic Activity On the Rebound?

First Pass

2009-02-12T06:38:00.003-07:00

Billionaire Stanford’s Firm Said to Face U.S. Probe of CD Sales [Bloomberg]
Fortis investors reject break-up, BNP deal in doubt [Reuters]
Farmers Face Empty-Nest Syndrome Amid Chicken Housing Crisis [WSJ]
Regulators Examining Stanford Group For Possible Fraud
[Cluster Stock]

Satellite Photo Of Fires In Australia

2009-02-11T20:39:00.000-07:00

Is An Hour Attempt In The Cards?

2009-02-11T20:18:00.000-07:00

Lance Armstrong's TOC Bike

2009-02-11T18:42:00.006-07:00

[twitter.com/lancearmstrong]

Not A Good Sign

2009-02-11T11:46:00.001-07:00

Madoff's wife pulled out $15 million before his arrest [Portfolio.com]