33 Years In The Making

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Trading Strategy

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

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

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

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

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?