House of Trade

The World Teeters

2011-09-26T15:36:00.001+10:00

At some stage there will be a default in Greece. There are a number of ways this could happen. The most likely of these will involve a Greek retreat from the Euro, the reintegration of a local currency and the element of surprise (sort-of). Whatever the case, it will send another wave of shocks around the banking world and make consumers even more cautious, but more importantly, it will become a model for those who follow (the rest of the PIIGS).
The most interesting thing (for those who don’t have their capital tied up in these countries and who have limited exposure) is the practical day-to-day of what a default looks like. If Greece reinvents its currency overnight, it will make deposits in Euros in Greece worthless. Canny Greeks will have their hard earned stashed away in cash (or will be in the process of withdrawing it from the bank) and will be looking to physically take this cash somewhere else to deposit or exchange.
For an historical perspective take a look at the Hungarian hyperinflation of the pengő in 1946 and the Argentineans in 1999

AUDUSD - The Risk is on the Downside

2011-04-05T13:47:00.002+10:00

This image is borrowed from IG Markets.

The AUD continues its remarkable run against the USD and seems unstoppable. There is a lot of good news for the AUD, relatively high interest rates, low inflation, a strong economy and near full employment. What will stop the AUD and what will see it repeat the precipitous plunge in mid-2008?

It's pretty simple and it all involves China.
1) A collapse in commodity prices
2) Popping of the Chinese Property Bubble
3) A slow down in the Chinese economy
4) Anything else really bad happening in China...

The fall from grace won't be a slow steady progression like the recent rise has been, it will be a drop much like the last one as all the carry traders unwind their positions and all the AUD bulls back out and run back to the good old USD.

Number of Deaths per TWh

2011-03-21T08:54:00.000+11:00

This is the source

These are the facts.

Energy Source Death Rate (deaths per TWh)

Coal – world average 161 (26% of world energy, 50% of electricity)
Coal – China 278
Coal – USA 15
Oil 36 (36% of world energy)
Natural Gas 4 (21% of world energy)
Biofuel/Biomass 12
Peat 12
Solar (rooftop) 0.44 (less than 0.1% of world energy)
Wind 0.15 (less than 1% of world energy)
Hydro 0.10 (europe death rate, 2.2% of world energy)
Hydro - world including Banqiao) 1.4 (about 2500 TWh/yr and 171,000 Banqiao dead)
Nuclear 0.04 (5.9% of world energy)

Things go up and things go down

2011-03-15T16:03:00.003+11:00

Investing is allocating risk. Investors look for a situation in which the risk outweighs the reward. That is the only sensible basis for making decisions.

No one can predict things like this or things like this and there's no point trying. Investor simply need to allocate their capital in a way that minimises the potential exposure to those types of events.

Apologies for the long break. I'll be back, I promise.

Choco-Tastic- Cornering the Market sort of works - sort of

2010-07-26T23:26:00.004+10:00

Anthony Ward is buying Chocolate, a lot of it and well might he do so. Last time he did it he cleaned up 10s of millions of dollars. There will be a few shrill chocophiles distraught at the notion that their Yorkie bars will get more expensive but there's nothing to get too concerned about. Cornering a market is very difficult, not to mention illegal. John Ward is simply making an informed bet on the movement of a market and his purchases will do nothing to slow down Nestle, Frito-Lay and anyone else who presumably has long term off-takes for mega-tonnes of Cocoa from all over the globe.
The great fallacy with cornering a market is that you are hoovering up all the supply and can therefore cause a price rise and benefit from the abnormal price action. If your buying causes a shortfall, then so too will your selling cause an oversupply. There will be volatility along the way, but unless the supply-demand equilibrium as somehow fundamentally shifted (all chocophiles switch to rhubarb) then buying up of a large number of futures simply causes a short time blip in volatility and a long term nothing.
Every time someone has genuinely tried to corner the market they've done their dough.
Copper - Sumitomo
Silver - Hunt Brothers
You know it makes sense.

House Prices in Australia

2010-05-03T15:52:00.004+10:00

Nearly every day in the Australian print media (Murdoch or Fairfax, the only 2 flavours) there will be an article claiming either 'House prices to go up 10% per annum forever' or 'house price crash imminent.' Presumably both of these statements are designed to attract the highest number of user comments as passionate home owners, property flippers and career renters weigh into the debate. Neither of these blitheringly stupid statements are correct. There are definitely parts of Australia where property prices could crash massively. Look at some of the resource towns, where prices are underpinned by one large mine/project. A shut of the mine will remove 90% of the reasons for living there (Ravensthorpe is a good example). New apartments in regional areas, massive MacMansions 50kms from Sydney, Melbourne, Brisbane selling for $1,000,000 are all vulnerable. Sensible investing in property is not as prone to correction. Good quality housing, close to public transports and major sources of stable employment or social utility (Hospitals, Universities etc) will not drop 40% because there will also be a demand for housing in these areas (both rental and purchase). If I own a house near a University that is currently renting for $600 a week (which I believe is worth about $600k based on the rental yield), I'm going to take some serious convincing that I should sell it for 40% less.
The value of any asset is not the possibility to sell it to someone else (capital gain) it is it's ability to produce income. Anything other than income based assessment of investment opportunities is speculating, which is very different to investing. At its worst speculating is like playing roulette or betting on horses, at its best it is like counting cards. Good for a while, if you're smart.

Stop Spending, Stop Spending, Stop Spending, Stop

2010-02-18T10:34:00.002+11:00

What is it with governments and deficit spending? Do they not realise that at some stage someone has to pay back all the money they borrow? I know it sounds simple, but the thing is, it is simple. Sure you can print more money, and we've seen that with the USD depreciating 97% over the last 100 years (thanks daily reckoning), but if you want to encourage people to invest in your currency, in your country, then you need to provide a stable platform, and a large part of that stable platform is a currency, that is largely immune to the ravages of inflation.
We mock people who continually live their lives on their credit cards, continuously putting off fiscal responsibly in favour of living large now, yet we sit idly by and watch our state and federal governments do just that. It is ridiculous. Those of us who pay tax are essentially making the minimum payments on our credit cards each months so that our elected overlords can pork barrel this and that and take no real responsibility for their actions.
Stop spending all our money and running up the national credit card you idiots.

Why am I reminded of the time Homer Simpson had his legs stuck in quicksand and he elected to pull his legs out with his arms, and when his arms also became stuck, he attempted to pull his arms out with his face!

Nick Bolton, Inflation

2010-01-18T07:53:00.004+11:00

Despite a barrage of negative and cynical articles, there is at least one thing that I know to be good and true. No they do not include Nicholas Bolton and his Vulture Fund but you can hardly blame him for wanting to profit from the mistakes of others. Brisconnections is/was a scam, a fraud and a rip off and anyone who bought equity in that was badly ripped off. We all know it is going to zero, the only difference between us and N.Bolton is that he decided to do something about it. If you are able to short Brisconnections at any price >$0.01, do it.
The thing that I know to be true is....drumroll, Australian inflation will rise, rise rise. St George bank is offering 8.00% term deposits for anyone who wants to put their cash away for 60 Months. What does that tell you? It tells you that the stimulus spending is having its desired effect, assuming the desired affect was to get inflation on the rise. If you spend lots of money and lend lots of money for cheap, that seems to grease the wheels. The big difference is that unlike the last time inflation rose (driven by some organic growth in the economy and a market with nearly full employment), this growth will be in an environment with rising unemployement and declining real wages...scary.

Where is America's Debt

2010-01-15T15:57:00.000+11:00

Useful guide.

This can't be true...can it?

2010-01-12T08:22:00.001+11:00

From the Daily Reckoning.

01/11/10 Stockholm, Sweden – Congo’s new economic stimulus package of distributing one AK-47 to each citizen certainly sounds — in a humanitarian sense — morally inferior to the various good-natured but ill-conceived measures applied by the US government.

Let us go then you and I

2010-01-12T07:51:00.002+11:00

What are the brave and bold predictions for 2010? It's fairly straightforward really.

1: China will start slowing down. They have been growing like crazy (If you believe the official propaganda) for decades and it appears that they are building in some over capacity. The Global media is starting to pick up on this. Al Jazeera report on Ghost Cities
Does this remind anyone else of the Japanese government paving rivers in an effort to stimulate the economy.

2: Chinese slowdown will start to freak out the commodity bulls. This will cascade through all markets. The next big leg down in equity markets will be led by China.

3: Selling US debt will be the best trade you could make this year. There is basically no yield on T-Bonds. Inflation will rise. Yields will rise. The credit worthiness of the Fed is not in question, but their propensity for printing money will count against them.

4: USD to devalue further against the EUR, but to potentially to gain some ground against the commodity currencies (AUD, NOK, CAD, BRL)

5: Trading carbon credits or any sort of global alliance to fight climate change will become less important as governments in western countries concern themselves with fighting against rising unemployment and deteriorating economies

Finally some predictions for 2010:

“The problem is not solved. They're only making it worse. Countries that take the pain [let bankruptcies correct mistakes] move on. The U.S. is following the Japan model.” Jim Rogers, legendary investor

“The moment this fear of deflation turns into a fear of inflation … interest rates rise will in the long end … we are heading … into stagflation.” George Soros, chairman, Soros Fund Management LLC

The Only Thing That Makes Sense To Me

2009-12-14T17:22:00.002+11:00

The only thing that seems to be going up with some sense and predictability is the population and by my thinking that means we need more food. Fertiliser makes more food. Ergo, buy MAK.ASX and POT.NYSE and put them away for 10 years. You know it makes sense.

Dust in the Wind

2009-12-11T17:30:00.002+11:00

At some stage all the Zombie banks are going to come home to roost. In the immortal words of Kansas, all they are is dust in the wind. There is a lot of bad debt floating around in Zombie banks, that no one will be interested in purchasing or refinancing, even with the preponderance of cheap credit that is again flushing through the system. This is a different sort of cheap credit boom. It's cheap credit for the risk adverse. There is no doubt that we are in the middle of one of the greatest dead cat bounces in history. 60% run in 12 months, what a joke. If you haven't moved to a market neutral or slightly short position then you are dreaming. What's the assumption? Are forward p/e ratios of 18 too low? Too much cash, no where to put it, Treasury yields are zero to negative, Gold has gone crazy.
China has built up a ridiculous amount of over capacity and as the world turns to China to pull them out of the depths of depression, their economy will surely start to falter. 8% growth is unsustainable.

One of these things first

2009-10-27T14:13:00.001+11:00

There's clearly another cheap credit bubble building across most asset classes. Debt is cheap and thanks to the intervention of governments readily available. There is/are massive carry trades pushing up the commodity currencies (AUD, NOK) and pushing down the much maligned USD. This carry trade will unwind and when it does, down goes Oil, Gold, Equity Markets and of course the AUD and NOK.

All asset classes have been picking up in the last 6-9 Months and it has been cause by cheap credit. Nearly every OECD economy is shrinking, so how can asset values be rising? It doesn't make any sense.

This house of cards will fall down again. Everyone has forgotten about the last time it happened and the next time will feel like the first. Unfortunately some of the master criminals of the last dance are still alive and kicking (S&P, Moodys and Fitch) and telling us precisely that nothing is wrong and it's time to leverage up and bet the farm.

Buy land with cash and sit on it.

What becomes of the broken blogger?

2009-08-24T07:02:00.003+10:00

The MQG.AX short was a turkey. These clowns are the masters of pumping up their stocks. The satellite funds are currently in the process of buying out the Millstones that are their management contracts and the parent is back doing what they do. I'm still hearing all sorts of rumours that they've got >$10bn worth of re-fi in the non operating company to complete in the next 18 months, which should keep them busy.

One thing I can't for the life of me figure out, is that at the height of the banking crisis, many banks created these so called 'bad' banks, where they stuffed their bad debts (CDOs, CDS etc). Where have these time bombs gone? and when they blow up, who gets hurt? Surely the shareholders (or the taxpayers) still own these walking disasters. It was a nice trick sweeping all the bad debt under the rug, but at some stage the corpse is going to start smelling, and then what?

Half Volley

2009-06-09T17:21:00.003+10:00

MQG.AX has traded up very strongly in the last week and with their share purchase plan due to list tomorrow at $26.60, we should see this stock come under pressure. I've sold today at $37 in anticipation of picking them back up tomorrow at a decent discount. I'm quite confident with this trade, although last time I was short MQG.AX, ASIC in their infinite wisdom changed the rules of the game...

The XJO seems to be struggling to break through the 4000 level. It has flirted a few times with breaking through properly, but I think even the most bullish investors know that the stock market can't go up 20% a month every month and I'm sure everyone is familiar with bear market rallies. This is a bear market rally and if you are playing this market it makes a lot of sense to play it from the short side.

I am a long term commodity bull (soft and hard) because there are more and more people needing/wanting more and more things, but that's a 10 year play and I need a 10 day play, hence the short MQG.AX

you know it makes sense.

You know it makes sense

2009-05-26T14:50:00.002+10:00

Sell Macquarie Bank into the rights issue. As of yesterday (25th of May) ASIC kindly allowed the shorting of Australian financials and we saw a healthy drop across most of the majors. I think the trade of the month has to be taking a short position in Macquarie Bank in anticipation of the rights issue which goes live on the 12th of June. Eligible investors will be allowed to purchase up to $15,000 worth of MQG.AX at $26.60 per share and I'm sure at the time of the offer, when Macquarie was trading at $33, most investors who took up the opportunity were doing so with a view to locking in a decent stag profit. MQG is hanging around the $31 level today and I think selling here with a view to buying back on or around the 12th of June at the $27 level is a smart trade.

Coalworks

2009-05-25T13:15:00.002+10:00

Coalworks.AX is currently undertaking a Bankable Feasibility Study for their Oaklands North Project near Albury. They are trying to prove up a 750 million tonne thermal coal resource. Thermal coal is used to power coal fired power stations and if there's one thing that people need to turn the lights on it's thermal coal. As the Global warming hysteria dies down and people realise that coal is cheap cheap cheap compared to other forms of energy, Thermal coal will be the new new thing. It's just started running hard, from 18c to 25c today (as at 1320hrs), there are approximately 100million shares outstanding. You don't have to be great at maths to realise that 750 million tonnes of thermal coal is worth a little more than $20m....

Suncorp Break Up Story?

2009-05-25T10:46:00.003+10:00

Suncorp has been much maligned for a long time now and it seems nobody can really figure out if it's a bank, an insurance company or an investment manager and the share price has been savaged as a result. If you ask me, and nobody usually does, this business will begin to make a lot of sense once it's broken up. Any of the big four wanting to beef up their QLD credentials would have a lot to gain from taking out the banking division and there must be an insurance company that wants to take some cyclone and flood risk.

Where do we go from here?

2009-05-18T08:17:00.002+10:00

After a 20% run in month, where can the stockmarket possible go but down? The smart money must be getting short. Unemployment, despite recent figures is rising, business investment is down. The aussie taxpayers have been lumped with about $3000 each of Rudd government debt. I'd have thought it was a fairly simple trade to get set short and wait for at least a 10% retracement. Shorting of financials should end on the 30th of May and once that happens it seems likely that financials doing massive capital raisings (Macquarie Bank) will come under significant pressure. If it's trading anywhere north of $30, then sell sell sell.

Is there any Life in this old Dog?

2009-03-31T11:40:00.002+11:00

The machinations of Brisconnections and Nicholas Bolton, the TARP, the Geitner Plan, Kevin Rudd's 'Free' money. There's any number of schemes underway designed to restore faith in the markets, but will they do anything? What's the point? To me, they all seem a little misguided.
Take the Kevin Rudd plan. What is the point of handing out cheques for $900? These cheques can and do go to anyone. We've already seen that some of them have gone to people who've never even been to Australia. They've gone to people in prisons etc. Why not simply reduce tax, so that people who already pay tax, will have more disposable income and/or increase pensions. Doesn't that do the same without the ridiculousness created by the 'free' money campaign?
Maybe the point is that it's far more visible to hand out $900 cheques than to simply reduce tax. Rudd, stop with the stupid stunts.

I hate to say I told you so....Bris Connections

2008-11-21T10:09:00.003+11:00

The 7.30 report has a great story about the great Brisbane highway robbery carried out by MacBank. Seriously the mispricing carried out by Macquarie on this deal should be a criminal offence. Awful

Time to Take Stock

2008-10-14T09:44:00.002+11:00

Phew, it's all over....or is it? Central Banks around the world have conspired to pump some liquidity back into a market that had completely dried up. These facilities, most of which are swapping arrangements, swapping government debt of mortgage backed securities are design to rid the market of the 'toxic' MBS and CDOs and everything else that has been clogging up the system. It's a good idea and it needs to be done, but does it put the debt and equity markets back on track? In my opinion no. It is necessary, but it doesn't change the fact that the world is/was massively over leveraged and needs to de-leverage. It will takes months to get the liquidity and confidence back in the markets. Equity markets may rally for a week right now, but that doesn't mean it's time to dust of the margin lending account and get straight back to it. It's time to identify strong macro economic themes that will drive the global economy forward. What goods are people going to need in the future? Which goods will they need more of and who is best placed to benefit from this?

What's Going On?

2008-10-08T14:06:00.002+11:00

Banks aren't lending to each other. LIBOR is a farce set to minimise derivative exposure, cash rates are not reflective of reality and the DOW on 5 times earnings is about 5000....so Half of where it is currently. The best things to own right now are tins of food and weapons.

So what to do?
Sell everything that has a large debt component that needs funding. Purchase Woolworths (maybe) and convert the rest of your assets into gold and or non perishable food. It's all over folks. It seriously is.

More or Less Sums it all up

2008-10-01T12:36:00.001+10:00

Credit crisis explained

Holy F**** S*, You Idiots.

2008-09-22T16:06:00.004+10:00

ASIC are idiots. Plain and simple.

If they think a ban on short selling will lower volatility and stop those 'nasty' hedge funds from profiteering from a bear market they're wrong. It's like they set their fiscal policy from whatever David Koch is saying on Sunrise.

Let's say you run a conservative little portfolio and you're long a few RIO.AX calls and you want to hedge your position by shorting some stock. You'd be doing the low risk, conservative thing, but now that those geniuses at ASIC have banned short selling, they prevent you from hedging your position, thereby increasing your risk, potentially forcing you to exit your position or even worse to sustain massive preventable loses.

How does ASIC decide what price level in the market is low enough that they can ban short selling? How do they know what represents fair values? They don't. What if the market is overpriced? (which it is)

If you run a super fund and you're getting smashed on your long market position and you want to buy a few index puts, are ASIC going to ban that too?

Seriously, the petty jealousy from the grubby little sneaks at ASIC has gone way too far and they have massively overstepped the mark. Their stupid over reaction caused a massive bounce in the market today (up more than 4%) and clearly didn't lower volatility.

We used to have a relatively free market Krudd and Co. The only other place they banned all forms of shorting was in Russia.
Next thing we'll be standing in line for soup and Brain surgeons will be paid the same as Ditch Diggers.

Why doesn't ASIC ban long only trading because a nasty hedge fund might buy up all the stock, artificially forcing it higher? That's just not fair, profiting from a rising market. They've got to start thinking.

Pack up, Go Home

2008-09-18T11:59:00.002+10:00

It's all over, if you haven't shorted MQG.AX it's not too late, it's going to <$10. BNB.AX to zero. BCSCA.AX to -$2.

OPEC 1: World 0, Kevin Rudd -1

2008-09-10T15:00:00.002+10:00

The oil price has been in steady decline for a number of weeks now, and this is not due to Kevin Rudd 'Applying the Blowtorch' to OPEC over high oil prices, this is because of a decline in the marginal demand for oil (and the recent powering up of the USD). People like Kevin Rudd have no influence over the price of oil (surprising, i know) despite implementing some sort of overly complicated, expense bureaucratic nonsense website.
Anyhow, OPEC got sick of the declining price, so what do they do? They do what any rationale cartel would do, they reduced the production of oil to drive up the price. The International Herald Tribute has a good article about it here.
Despite all the bleating, domestic politicians have less influence on Global Markets than they'd like to think. Why don't the ever get called up on their blatant misrepresentations of the facts, or their chronic over-statement of their usefulness.

What becomes of the broken Tollroad? BCSCA.AX

2008-09-04T01:21:00.004+10:00

Brisconnections (BCSCA.AX) was a scam and is a scam and while the CEO and Maccas (MQG.AX) are desperately trying to tell you that it's fine and that it's a good deal, the market are voting with their feet and getting the hell out of this train (or should it be car) wreak before they have to throw away another $2 of their hard earned. This thing could well go to zero, and if it were possible, it should be trading for a negative value because once you own the partially paid share you are obligated to pay the extra $2. There is no reason to purchase equity in this transaction. Debt holders should be nervous, equity holders should be hitting the sell button. Funny how when you rob the 7-11 of $200 they throw you in jail, but when you rob the public of hundreds of millions of dollars via a terrible deal and shonky prospectus you get away with it.

Human Behaviour

2008-08-23T16:15:00.002+10:00

What determines the price of something? Is it the intrinsic value of that item? What is the intrinsic price? In a world where currencies aren't backed by anything other than the word of the person who printed them, then I'd argue the value of something is the price you can get for it. It's what you can exchange it for. If you can exchange a handful of promissory notes from the Australian government for a little box of electronics from Japan/USA, then he value of the currency you handed over is one Xbox/Playstation.
And why is all this relevant? Well, in Global markets, the value of something is the price that someone is willing to pay for it, and that price is what they think the intrinsic value is. It's what they think they can exchange it for in the future. And the value that they attribute to it, isn't necessarily a mathematically derived formula. It is based on a belief that the item they are purchasing has value.
Where and How they find value for it, is determined by the individual, and the individual is not acting alone. They are driven by themselves, their peers and the ideas that are hard wired into their brain. As a trader you have to learn to take advantage of this. I highly recommend read Bob Cialdini's book, Influence: The Psychology of Persuasion that spells out clearly the different, yet predictable types of responses people have to certain situations.

I'm Short Climate Change

2008-07-16T20:39:00.003+10:00

If there was a way to get short the mass hysteria that is climate change I would jump on board with both hands. It is a massive con job. Here's some questions that everyone should be asking.

1) If it is getting hotter is it a bad thing?
-Plants grow better in high CO2, high temperature environments.
2) If it is getting hotter doesn't that mean it will rain more?
3) Won't higher temperatures mean more arable land? (get out a map people, and look at the frozen tundra of Siberia, Canada and Greenland)
4) Is it getting hotter?
5) Can we control the temperature like some sort of James Bond Villian (the answer is no, unless you have a method of altering the Earth's orbit of varying the intensity of the sun)
6) Why isn't water vapor considered a greenhouse gas?
7) If it gets hotter, doesn't that mean more water evaporation and won't this repel as much heat as it traps (therefore no change in temperature)
8)If higher temperatures are bad, does that mean colder temperatures are good? If so, why aren't we trying to make it colder?

Think before you start repeating the words of Lord Garnaut verbatim.

Why So Long?

2008-05-17T08:34:00.002+10:00

The bull market is back baby. If you don't own Iron Ore, Coal, Oil and Phosphate you're a clown. BHP Billiton is well on it's way to becoming a $100 stock this year. And if it does, and if the Aussie banks want to keep trying to buy each other, then the ASX is well on its way back up to 6500+. In the short term the Aussie economy doesn't really care what is happening in America, higher interest rates haven't really started to bite and our Chinese speaking turnip elect hasn't done anything to put the brakes on inflation.

Told you they were rubbish

2008-02-25T16:29:00.001+11:00

Biofuels are a waste of time, money and resources. See here. You've got to look at the big picture people.

Broken

2008-01-30T13:35:00.000+11:00

America is Broken and the World Economy will suffer. The Federal Reserve in their infinite wisdom (these guys are almost as smart as the monoline insurance* companies) dropped the cash rate 75bps on Black Tuesday (22nd Jan) and that didn't even stop the rot. Now that they have telegraphed another 50bps cut, we're going to see what happens when the cash rate is less than inflation. There's no incentive to save money because money in the bank is devaluing quicker than any yield you're getting on it. So the Fed is betting that once again America will be able to spend their way out of trouble. This sounds good, but when people are pessimistic from years of war (I can't even remember a time before Bush War Snr and Bush War Jnr) and falling asset prices (Houses, Shares and Money) then they're not going to be in a spending mood. This is going to sting for a while. The fed should have done what we all did on Tuesday, sucked it up. You can't keep shielding people from being hurt or they'll never learn Bernanke you Goose.

*these guys are insurance only in the sense that they're happy to receive your premium payments while the sun is shining but as soon as the storm clouds gather they are downgraded and aren't good for their AAA rating.

How Brave are you? Paladin Minis

2008-01-18T10:30:00.001+11:00

I am still bullish Uranium, there are a lot of reactors being built and not a lot of extra Uranium being dug up. PDN.AX has been getting hammered as has the rest of the Aussie Market. There's potentially a blockbuster trade out there for the brave investor. PDNKZC (listed mini) has a $5.22 stop loss and a $4.96 strike. PDN is trading around 5.35 at the moment, if you get long here and don't get stopped out, you'll be laughing when PDN bounces back above $7. At $7, this mini is about $2, so you'll make 5 times your money with only about 10% if you get stopped out....how brave are you?

House of Brown, Now Sit Down

2008-01-17T11:07:00.000+11:00

With CitiGroup writing down anything they can get their hands on, the long predicted fallout of the 'Sub Prime' Meltdown is starting to be felt. Is this the end of the world? No, but it does mean that the Dow is much more likely to see sub 12,000 levels than back at 14,000 any time soon. It seems to me that Bernanke will be quick on the draw should the American economy start turning further south and this should give us a little bit of short term relief from the sky falling in. I wouldn't want to be long the market with the current irrational selling. There is however a good opportunity for long term Aussie investors to get long at these levels. Quality companies like NAB, at $35 is a bargain, Zinifex at $10 is cheap as chips and I also like Iron Ore in the short term with price negotiations currently taking place. MMX looks really good at less than $3.

2008 - Simple Predictions

2007-12-29T22:04:00.000+11:00

Sub Prime Loses will be much worse than everyone expected.
The Chinese won't care because Americans are still buying their junk with more borrowed money thanks to Ben 'the put' Bernanke.
Australia will keep selling rocks to China to turn into junk for Americans to buy with money they don't have.
Twiggy Forrest will get to $10bn in quick time and won't look back.
Australian interest rates will rise.
Everyone will get sick of Kevin 'the Turnip' Rudd's smuggness and lack of substance.
Inflation will rise.

The World isn't going to end.

2007-12-17T10:22:00.001+11:00

I don't think it's particularly rosy for the next few months. Inflation is back on the agenda in the US, with higher than expected CPI numbers. This has to be a concern in an environment where Bernanke is dropping interest rates at the first sign of trouble. I'll be buying a few out of the money index puts as a little protection over the next few months. The Fed is in a difficult place because at every sign of trouble in the US economy, people are expecting them to drop rates, which is counter productive when you're trying to fight inflation. This seems to all be part of modern man's inability to be accountable for their actions. 'I'll borrow a stack of money and if I can't pay it back, then the government will freeze my interest rates at artificially low levels or drop interest rates to help me out'. All seems a little quick fix, a little phoney and bound to fail.
A lot of people think the world is going to end on their shift, it's not, but the US economy might head into recession.

igrin - Peer to Peer lending in Australia

2007-12-11T08:47:00.000+11:00

Well, it didn't take long for peer to peer lending to appear in Australia. www.igin.com.au offers the same service in Australia as www.prosper.com does in America. It will be really interesting to see how it goes. It seems to me that it will take a long time to get the sort of volume of lenders required to really make it work, but who knows.

Ethanol is stupid

2007-12-10T14:53:00.001+11:00

Soft Commodity Prices will keep going up if people keep using their food as fuel for their cars and not themselves. One tank of ethanol for a standard sized car requires about the same amount of maize as to feed a standard sized human for a year. The increasing use of ethanol fuels, particularly in America means that they are forced to import more and more food as ridiculous ethanol subsidies encourage farmers to grow corn for oil (I'm blaming you Al Gore).
Another string to the bow in the Bull market of food is that fact that China is eating more and more meat. China was consuming 20kg of meat per person in 1985, by 2007 that is expected to be 50kg. It takes 8kg of grain to produce one kilo of meat. It's not hard to see where this is going.
Maybe we'll see America embark on a new global security program, this time securing an alternate source of energy, food. Anyway, the upside of it is, there's plenty of compelling reasons to be exposed to soft commodities prices.

Primed for PrimeAg

2007-12-03T19:38:00.000+11:00

With wheat prices up above $400 a tonne the drought and surging global demand for soft commodities means that the coming float of PrimeAg, which is being managed by Comsec will be a hot float. Macquarie Group has recently moved into this sector with one of their 'infrastructure' style funds being created earlier this year. If you want exposure to rising soft commodity prices (and you do) then try and get hold of some of this float. I'll definitely be putting my hand up.
The economies of scale in farming and in particular cropping are huge, so this is a trade that makes a lot of sense. Key management seems sound with Roger Corbett and a former president of the National Farmer's federation on board.

Key Dates:
Lodge prospectus with ASIC 14 November
Offer Opens 26 November
Shares trade on ASX 17 December

Credit Markets are Broken and Loan Sharking is Legit

2007-11-29T10:25:00.000+11:00

...and the proof is Prosper.com, which offers an online market place for person-person lending (loan sharking).
This is bizarre, as a borrower, you decide how much money you want, and the max you're going to pay for it. You write a semi plausible excuse as to why you can't/won't get money from the bank and punters bid to give you money at a rate up to the maximum the borrower specified, which they promise to pay back. It works a bit like pricing a bond issue at a bank. You call up all the investors and fill the book with their bids and shift the debt to the lowest bidders.

Aim Resources, AIM.AX

2007-11-26T13:19:00.000+11:00

This stock is an old favourite and anytime it's below 20c, it's cheap. It's been there a few times in the last week, and represents great buying at these prices. This stock will get back above the 30c level at some stage in the next few months. It's just a matter of some positive news coming out of Perkoa (which is their major project). While the stock is much more mature now and was weighed down by the significant capital raising done at about 28c, it just goes to show that there are plenty of investor who think that 28c is cheap. I'm going to keep buying these up below 20 and wait until I can tip them out above 30.

FDL.AX - Blue Sky Ahead

2007-11-22T14:11:00.000+11:00

FDL today revealed a potential 300m tonne plus deposit right next door to FMG. This is sort of size that MIS has and it has a market cap of $900m. FDL is about $60m at the moment and gaining rapidly. They also have a right to earn a 1% royalty from FMG on any JVs, which should fund further exploration activity. This is a very speculative trade, but it doesn't hurt to follow the weight of money that will surely pour into this trade.

Don't be a Fool of Randomness

2007-11-21T01:32:00.000+11:00

There is too much noise in the world, and by noise I mean unfiltered meaningless news and data. A higher and higher percentage of what we read, see and hear comes straight from the event to you. Doesn't matter what the event is, we'll hear about it as it happens live and unfiltered and full of unintelligent garbage from the first reporter on the scene. Where am I going with this? What I am getting at is that in a small time frame, a snapshot of recent activity is meaningless, and I'll use the example provided by Nassim Taleb in his excellent book 'fooled by randomness'
Suppose you have a portfolio with an expected annual return of 15% above the risk free rate (very good), 10% volatility (very low). This is a high return, low volatility portfolio. The one we'd all like to have. It should be almost painless as it grinds its way higher with little or no large unexpected deviations, but the results of putting this portfolio through a monte-carlo simulation are very interesting. We'll see that only 1 year in 20 is a down year. The interesting thing is to look at a shorter and shorter time periods and see what the probability of success becomes;
1 year = 93%
1 quarter = 77%
1 month =67%
1 day = 54%
1 hour = 51.3%
1 minute = 50.17%
1 second = 50.02%
in a given day in front of the screen (8 hours) that's 241 happy minutes and 239 sad ones. So the moral of the story is that if the pain of a loss exceeds the joy of a victory (which believe me it does) then don't watch the stocks you own (and plan on owning for a long time) all day. It's an easy way to get stressed and sell too early and miss out on making money.

Messrs Rogers and Soros

2007-11-13T22:55:00.000+11:00

"on the verge of a very serious economic correction"
-Soros
"I'm hoping to get all my assets out of U.S. dollars in the next few weeks or months"
-Rogers

Not exactly bullish sentiment from the co-founders of the Quantum fund.

The US economy is heading for recession and all the smart money has/is moving their cash out of USD assets. The recent dip in the AUD against the USD represented a great buying opportunity, and at 8900 it's still a buy. The US is due for a decent sized leg down, so it makes a lot of sense to position yourself for this. I am long AUD against the USD and I'm shorting the Dow. Don't forget that there are 3 Billion people in the sub continent and south east Asia and they are becoming a lot more independent of the US.

Dow Jones

2007-11-13T01:32:00.000+11:00

Here's a simple trade. Short the Dow.
Why?

More write downs from banks are on the way
Several large companies (AMBAC, MBIA?) will be downgraded by rating agencies (S&P, Moodys, Fitch)
Bernanke will get sick of dropping rates to spur the economy because it has a damaging inflationary effect. It can't keep happening. Inflation is much scarier than a dud economy, just ask Zimbabwe.
Global investors will get sick of losing money to the devaluing USD and will pull their cash out and invest somewhere a little more compelling (at home.)

Babcock and Brown Power (BBP.AX) div yield of 9% (not bad for just turning up)

2007-11-09T09:51:00.000+11:00

If you want a bit of safety I like Babcock and Brown Power (BBP.AX). Has a div yield of 9% (not bad for just turning up).
Very much exposed to peak electricity prices.

People use more electricity through Plasma TV's and A/C (these things use heaps of elec)
Going to be more black outs in Sydney this summer
Going to be hotter, more A/C used
These guys can charge whatever price they want cause their electricity isn't contracted. When there is a black out they can just choose what price they charge
There hasn't been any money spent on electricity generation in Aus in 25years, yet the population has bee growing circa 3% and we are all using more electricity

Get on board at low $3!!

-Wizz Kid

Are the Monolines Going Broke? MBIA, AMBAC et al?

2007-11-08T23:15:00.000+11:00

With all the hype surrounding 'sub prime' and US housing and multi billion dollar write downs from American Banks (and European, that's right UBS, not so smart now, Rocky made more personally than your entire Investment Bank last quarter, although admittedly, so did anyone who didn't lose billions of dollars, which is most of us.) people have forgotten that the whole game with mortgages and debt products is really about shifting risk. Who is willing to hold the hot potato? If I bundle up a big bunch of bad debts so that on average, most of them get paid and I flog the product to a pension fund as a high yield product. I'm really just shifting the bad credit risk from the bank that issued the loans to the unit holders in the pension fund. Where is this ramble going? Well in a long winded and not particularly pointed way, I'm having a crack at the these so called Monoline insurance companies, who package up lowly rated credit risks from various companies and 'wrap' it to AAA. So that the investors in the product, aren't buying BBB credit risk and yield, they're buying something like AAA risk for AA yield. Sounds good right? But this little trade forgets one of the fundamental laws of nature. It's damn tricky to get something for nothing. If you don't pay for AAA, you don't get AAA. So when a few trillion dollars worth of CDOs and AAA wrapped bonds turn out to be worth a little less than the paper they're written on, no one should be surprised. When MBIA writes down $20bn on some dodgy guarantees, you know they don't have a 'business model' or any sort of mathematically sensible risk control, they're just a bunch of 'positive carry' cowboys like the rest of them. The kids who took economics and business maths at school were all the brightest ones right....?

Banks Bad

2007-11-08T09:28:00.000+11:00

Don't be long MBL.AX or BNB.AX, seriously, they've been good, great even, just not right now.
Have a look at the way all the Investment Banks have been getting smashed offshore. Night after night we read about it. This is just last night's action;

Washington Mutual down more than 16% after management warned mortgage lending would decline to an 8-year low next year. Adding to woes, a further admission that as much as $1.3bln would need to set aside this quarter to cover bad loans.
Morgan Stanley down around 5%
Lehmans off 4.4%
Goldmans down 3%
Merrills both down 3%
and JP Morgan 2.4% lower
Fannie Mae down 10%
and Freddie Mac more than 7% lower
Capital One down 12%

If you are adding to your portfolio, don't add banks right now, there's more pain to come.

Time for a Punt!

2007-11-06T10:00:00.000+11:00

It's Melbourne Cup time, and H.O.T's "Lock" for the cup this year is Zipping. Zipping has had a 9 day break after winning the Cathay Pacific Airways Cup at Moonee Valley. The win was a stunning come from behind, with Zipping demonstrating explosive speed on the final straight. Coupled with that, Zipping's solid performance in the cup last year is testament to the fact that the it can run the distance, and according to Zipping's trainer, he is much better prepared this year than last. All signs point to Zipping taking home the prize.
H.O.T's "dark horse" for the cup is Tungsten Strike. According to trainers, Tungsten is in the same form as when he romped home to a six-length win in the Listed March Stakes in England in August. At odds of Around $30 to $40, this seems to be one horse that has been overlooked by the betting public. Worth a punt.

Good Luck to All

China will end in tears part 2

2007-11-05T20:38:00.000+11:00

PetroChina listed today in Shanghai. They have a quarter of the revenue of Exxon and a larger market cap and no particularly exciting prospects. This makes no sense. Lock in this value by going long Exxon and short PetroChina. If you can stay solvent longer than this bubble can remain irrational then you're in the money.

PetroChina's Value Tops $1 Trillion. This is crazy valuation. It is bigger than;

The entire Russian stock market
Exxon Mobil Corp and General Electric Co combined and
The entire Chinese stock market in 2006!!!

The trade I suggest above is high risk, but you hedge out your oil price risk by being long short. You've just got to wait for the rug to be pulled out from under China.

The week ahead - Interest Rates, Child Care and Leverage, USD, Emerging Markets and other Hogwash

2007-11-05T10:04:00.001+11:00

There are a few interesting items coming up on for the Aussie equity markets this week, including the reserve bank's decision on rates. At my latest mark, it was about 90%+ priced in. So it'll be interesting to see if this slows the market at all. My feeling is that it's got to start hurting some of the highly leveraged margin traders who are bidding the market higher, particularly in some of the index heavy weights.
Early Learning Services (ELS.AX) the soon-to-list child-care provider will follow in the footsteps of larger rival, ABC Learning . We've all seen the progression of ABS.AX and I'm sure there'll be plenty of investors looking to get in on this trade. The company, which owns seven child-care centres and has contracts to buy a further 44, will float on the Australian Stock Exchange next month.
Sixteen contracts for difference (CFDs) products, listed over Australia’s top companies, will debut on the Australian Securities Exchange (ASX.AX) today. Later in the month, the ASX will also launch two index CFDs, seven foreign exchange CFDs and one commodity CFD. These will include a product based on the Dow Jones Industrial Average. This will provide more unneeded leverage for the average punter. With so many of these products already available. (CFDs, Warrants, Minis, Options, Margin Lending etc etc.) The only people likely to be impacted by this are people like CMC Markets, with investors taking it easier option of purchasing ASX listed CFDs instead of the bespoke ones from third party providers.
Emerging market equities have out-performed major markets in recent months. It is as if emerging markets are the new safe haven from the US and other developed nations. This makes some sense , given the strong external accounts of many emerging countries. It is hard to imagine that emerging market growth could diverge from developed market growth for a long period of time.
Fiscal policies in China and other emerging Asian countries, have resulted in accelerating FX reserves growth. The result is a world that sees the glass half-full, and problems in the US as a local problem. However, as the diversion in market performance becomes clearer, the risk grows that something gives, and that may be a global equity market rout and global risk aversion trading. If the USD continues to fall out of bed, the risks that it falls dramatically in a single session continue to stack up. I would not be trading USD from the long side at any point, the risks are simply too great. A friend of mine recently predicted the USD to be buying 50 Euro cents within 18 months, and while he's mad, he might be right.

Emperor Update

2007-11-02T15:51:00.000+11:00

Paradigm have just released a target price on Intrepid of C$0.50, which implies a share price of $0.13 vs $0.076 - a 75% premium!

Get to it. Se previous post for more info.

Opportunity Abounds Giralia and the AUD

2007-11-02T11:26:00.000+11:00

With the market having a panic all because Citi bank had a bad day, it's a good opportunity to add to positions. People forget just how poor a measure of economic health the Dow Jones industrial average is. You have to remember this only has 30 stocks in it. When one of them (Citi) drops 7%, the Dow will tumble. Fundamentals remain unchanged and I for one am trying to pick up a few more GIR, although in the last 30 minutes they've really got a run on. On another note, the AUD got a fair hammering against the USD and I'm starting to think about getting long again. I'll let you know when I decide to pull the trigger.

Going for Gold - The Emperor's New Clothes

2007-11-01T09:56:00.000+11:00

Gold continues to climb, closing in on US$800/oz, and it won't stop there. Here's another little tasty gold treat for all you punters out there:

Emperor Mines (EMP.AX) is a company that has undergone an amazing transformation in recent times. Not more than 6 months ago, the company was laden with debt and underperforming assets. Since then it has managed to sell it's Vatokoula mine, it's Porgera mine, and is soon to announce the sale of it's Tolukuma mine, leaving it debt free, with cash and investments of around $68m and a very valuable exploration program. Furthermore, it has now announced a friendly merger with Intrepid Mines, which has the Paulsens gold mine and the Casposo gold-silver development project.
The merger is the merchant banker's ideal "1+1=3" story. The combination of Emperor's cash and strong management team, plus Intrepid's quality assets in desperate need of cash and management, has the potential to really create value. Furthermore, being a laregley unhedged gold producer (at low cash costs), MergeCo will be very exposed to any upward movement in the gold price.
At a share price of around $0.07 to $0.09, the stock represents a real bargain. In addition to this the sale of Tolukuma will add another $0.015 to the share price, as this will be distibuted to shareholders before the merger.

Maurice's Rating (Take a swing)

Gold Gold Gold - ZAUWBA

2007-11-01T09:17:00.001+11:00

We've been bullish on Gold for a long time and I think there's plenty more left in it yet. It might as well be $800USD an ounce after it's movement overnight, but this is something that we believe will be going north of $1000USD in the near future. We saw a good bounce overnight, particularly amongst American gold stocks, we'll see the same today in Oz. There's plenty of ways to play this including buying physical gold in Australia. ZAUWBA is a an exchange traded Australian Gold warrant, with the physical gold being housed in the Perth mint. You could of course just buy gold futures, which would give you a stack more leverage and a lot more potential upside or just buy Australian gold producers/prospectors.

GIR.AX is off to the races

2007-10-31T13:16:00.000+11:00

GIR.AX submitted their quarterly report today and the market received it very well. They have an excellent suite of projects and today's bounce above $1.30 is a good sign. I think we stay long and see if it can't consolidate above the $1.50 level. They are due to release some more results for their Weld Range resources in the December quarter.
Interesting to note the negotiations that BHP.AX is currently involved with in trying to get rid of the antiquated Iron Ore price negotiations and move it to a traded market like practically everything else. This can only be a good thing for producers and prospective producers as the market is still in under supply. They still seem to have plenty of cash in the bank so things are looking good. I recommend getting on to the ASX website (www.asx.com.au) and having a quick flick through the report.

Happy Punting.

-Rocky.

China will end in Tears

2007-10-30T10:06:00.000+11:00

A recent report on Bloomberg highlighted the fact that of the 10 largest publicly listed companies in the world, 5 of them are Chinese.... Only 3 of them are American. This seems a little out of whack. The Chinese CSI300 Index is up 168% this year! The CSI300 is trading on a forward P/E of 43. While I believe there is a lot of growth to come out of China, a forward PE of 43 seems a little optimistic. If you want to trade the emerging markets story from the long side, I'd recommend having a look at India, whose Sensex Index is up a 'conservative' 48% this year, and only pricing in a forward P/E of 24.4. The interesting thing will be to see if a Chinese correction will cause global equity markets to slow down. It has happened twice this year that China had a decent size drop and on the first occasion (in Feb) markets dropped 3% globally, the second time it happened, no one seemed to notice.

Going for Gold - Chesser Resources

2007-10-29T17:15:00.000+11:00

Maurice's boot-of-the-week goes to gold, which is really starting to heat up. If you like it gold, small and risky, here's what I suggest:

Chesser Resources (CHZ.AX) is an undervalued leveraged gold option for investors who believe in the gold story and want to benefit from an uplift in the gold price.
Chesser's flagship asset is the Sisorta gold project in Turkey, where Chesser has the right to earn up to 70%. The project sits in the highly prospective Tethyan Porphyry-Epithermal Belt, which is host to 89 million ounces of gold. Previous drilling has been promising and all indications suggest the project may well host a multi-million ounce gold resource. Based on an average resource multiple of around A$60/oz, this values Chesser's shares at around $2.30 vs their current price of around $0.48.
Considering this, and taking into account Chesser's other exploration assets, a conservative share price target is $1. The time frame on this is likely to be in the medium term and I expect it to start moving when the drilling program starts in a few months and the company starts to promote the project much harder.
Couple with this the rising gold price, which is widely tipped by industry participant's to reach US$1000/oz (up from US$780/oz) and this is one stock that has oodles of upside.

Maurice's Rating (Do It!)

Stocks to Watch - FND.AX and ESG.AX

2007-10-29T14:32:00.000+11:00

Whack these guys on a watchlist. I haven't looked into them fully, but I'm hearing plenty of talk about them and the price action seems to indicate a bit of interest. Finders seems to have run out of sellers, which is never a bad sign. Only issue with this one is finding some stock. Easter Star is another one of those Coal Seam Methane guys that have been so good lately. On a cursory glance they appear to have a good amount of gas and ready market access.

The Week Ahead

2007-10-29T00:47:00.000+11:00

Well it should prove to be an interesting week, with the market already fully pricing in a drop in rates from the FOMC on Wednesday. It will be interesting to see what happens, remembering that the market spiked 300 pts North when 'Bad News' Bernanke pulled the trigger on the Fed Put.
What we need to ask ourselves is; "is the US economy really that bad?" I know I've been rubbishing it in recent posts, (mostly as justification for my long AUDUSD position), but should the Fed really be rushing to stimulate the American Economy? The fundamental driver of the big American Machine is consumer spending, which seems to be continuing with the same reckless abandon as always. If I was Bad News, I'd be more worried about inflation as Oil cracks the ton than whether or not a few property flippers in Florida will be able to service their loans. ANyway, it should provide a bit of interesting volatility, which will give traders and investors alike some good entry and exit points in the coming days.

PXS.AX - 10 Bagger

2007-10-26T14:56:00.000+10:00

PXS.AX is cheap. It's a punt, but it's cheap and the numbers make a lot of sense. It's currently trading around $4, and we think it could be $15 by 2010 as it transitions to a mature Pharma company with a suite of products being sold in a range of markets.

here’s why:
- A suite of products with multiple uses in markets where there is a huge need but there are no (or very
few) substitutes
- Importantly these products are either already being marketed and sold or in late stage clinical trials,
significantly de-risking the company
- A strong financial position with ~$125 million in cash
- Scale – PXS has a market cap now close to $800 million which means it will begin to get the attention
of funds and big investors, allowing the company to source the necessary financing needed to bring
its products to market… and has a NASDAQ listing
- A very strong, dedicated and proven management team
- A vision to develop an independent and fully integrated pharmaceutical company meaning
shareholders will reap the long term benefits of PXS success, not an international company
- Potential for a big re-rating as the company moves from a research and development company to a
fully integrated and profitable pharmaceutical company
- Tight share register with a number of substantial institutional shareholders on board

Don't bet the farm, but have some exposure to this stock, it's not often you find an Australian Company that has this much blue Sky Potential, particularly one that isn't leveraged to the commodity bull.

-Rocket.

AUDUSD

2007-10-26T11:48:00.000+10:00

The AUD popped above 9100, peaking around 9118. Time to take profits and wait for a little consolidation. Another nice 100bps+ profit on a long AUDUSD trade. Also, happy not to hold a position over the weekend. No point paying funding for 2 Days when you can't trade on anything. The trend continues to provide good opportunities on the long side and I'll next be looking at getting long around the 9080 level for a trade to 9150.

AUDUSD if you're not long you're wrong.

2007-10-25T13:12:00.000+10:00

The outlook for the USD remains negative, with the market pricing in fully the probability of a 25bps cut to to the Fed funds rate on the 31st of October, and some economists pricing in a 50 bps cut and all of us (in Oz) are aware of the probability of the Reserve bank slapping us in the face on that most sacred of days, (Melbourne Cup Day) with another rate rise.
The reduction in yields is a reflection of the lower economic growth predicted for the US and it's not really hard to see why the market is predicting that. Merrill Lynch's announcement of more than $8bn of credit market write downs was a stinker, pure and simple, and we're already seen big losses at other banks, (Citi, GS et al). The housing data remains terrible, the only thing underpinning the economy is consumer spending, which sooner or later will have to abate.
On the plus side for the AUD, continued Chinese growth and demand for our natural resources seems set to underpin a strong, high yielding Aussie dollar.
I'm playing this long by purchasing AUD at low 9000s, with a stop about 50 points below. Keep rolling that stop up and take profits the other side of 9100 in the short term.
*The trend is your friend*

Where do we go from here?

2007-10-24T13:16:00.000+10:00

The AUD powered up against the USD and made the 9000 level quite easily in the end with not a lot of volatility along the way, personally I’m out at 9004, having decided that once the price got to 9000 it would punch through quite quickly, I didn’t expect it to run so hard once it got there. Can’t say I’m unhappy with the trade though, up almost 200 points in a few days. I am bearish the USD on a long term fundamental basis and believe that there will be excellent opportunities shorting the North American Peso in the coming weeks. I think there is potentially a trade of going long some low inflation, low yielding JPY against the USD and waiting for the carry trade to blow up in a big way, but I don’t think the market is signalling an attractive entry point at present. I will be keeping an eye on the EURUSD, the GBPUSD, the USDJPY and the AUDUSD and I’ll let you know when I think it’s time to pounce.

Iron Ore - UBS

2007-10-23T09:58:00.000+10:00

Broking Heavy Weight, UBS has just initiated coverage on 3 Mid-West Iron Ore companies, MMX, MIS and MGX. (Buy, Buy, Sell) This should focus more investor attention in this area and bodes well for GIR.

Long AUD-USD

2007-10-23T09:46:00.000+10:00

The overnight strengthening of the USD seems a little overdone and as a result, today provides a good opportunity for AUD longs to add to their positions.

· The global economy remains strong, with the IMF predicting global growth of 4.8%, keeping industrial production strong, keeping commodity prices strong and should keep resource driven currencies well bid.
· The US economy is weak, housing, low growth….recession?
· Carry trade should continue to drive high yielding currencies upwards and with the market now pricing in a 25bps rate cut at the next FOMC meeting, this should further the appeal of borrowing USD to buy AUD.

We may not be going to parity in the near term, but I’m expecting the 0.9000 level to act as a focus for the market and I expect it to get back up there with a week.

Non-Renounceable Entitlement Offer - CAV

2007-10-22T19:44:00.001+10:00

Lately there have been a slew of aussie exploration companies issuing entitlement options to shareholders as a sort of loyalty enticement. The latest is Carnavale Resources (CAV.AX). If you own the shares on or before the 7th of November this year, you'll be entitled to purchase 1 option with a strike of 20c and expiry in June 09 for 1c each. Carnavale jumped 6% today on the news, but it's my opinion that this run will continue up until the ex-date which is the 31st of October. This has happened a few times in recent memory with NTU.AX being a good example. In my opinion the best way to play this is buy the CAVs now and sell out the day before they go ex as traders rush to cash in on the $1.40 per share intrinsic value you are getting for 1c. Given that CAV is in the Iron Ore space, which has been running really well lately, this trade makes sense to me.

-Rocky

Why Giralia Resources (GIR.AX) is the cheapest Iron Ore play in the market.

2007-10-22T08:44:00.000+10:00

Giralia owns tenements in the Weld Range. This is the same part of town as MidWest (MIS.AX) and Murchison Metals (MMX.AX) and not too far from that other little Iron Ore stock, Fortescue (FMG.AX). Initial drilling has outlined grades in excess of 65%, this compares with the other's who have prospective grades in the region of 60%. The big advantage here is that the more pure the iron ore, the less you have to do it before you ship it. For GIR it's just a case of dig it up and ship it out. At $1 a share, GIR has a market cap of around $200m, and on a resource base of more than 100m tonnes (estimate), this is undervalued by about 4 times. The ongoing consolidation and interest from offshore investors (Russia, China, etc) means that this is one stock that is cheap at twice the price. This stock will be dragged along by the pedigree of it's neighbours.

A New Start

2007-10-21T18:23:00.000+10:00

Welcome to the House of Trade. A blog design for Traders of all descriptions. This is a place to discuss, speculate and above all to make money. Stand by for what should be a series of posts regarding what's hot in the Australian and international markets. It is my intention to have several contributors with specialties ranging across markets including Equities, Resources, FX, Futures and anything else that rises and falls.

-Rocky

House of Trade

The World Teeters

AUDUSD - The Risk is on the Downside

Number of Deaths per TWh

Things go up and things go down

Choco-Tastic- Cornering the Market sort of works - sort of

House Prices in Australia

Stop Spending, Stop Spending, Stop Spending, Stop

Nick Bolton, Inflation

Where is America's Debt

This can't be true...can it?

Let us go then you and I

The Only Thing That Makes Sense To Me

Dust in the Wind

One of these things first

What becomes of the broken blogger?

Half Volley

You know it makes sense

Coalworks

Suncorp Break Up Story?

Where do we go from here?

Is there any Life in this old Dog?

I hate to say I told you so....Bris Connections

Time to Take Stock

What's Going On?

More or Less Sums it all up

Holy F****** S***, You Idiots.

Pack up, Go Home

OPEC 1: World 0, Kevin Rudd -1

What becomes of the broken Tollroad? BCSCA.AX

Human Behaviour

I'm Short Climate Change

Why So Long?

Told you they were rubbish

Broken

How Brave are you? Paladin Minis

House of Brown, Now Sit Down

2008 - Simple Predictions

The World isn't going to end.

igrin - Peer to Peer lending in Australia

Ethanol is stupid

Primed for PrimeAg

Credit Markets are Broken and Loan Sharking is Legit

Aim Resources, AIM.AX

FDL.AX - Blue Sky Ahead

Don't be a Fool of Randomness

Messrs Rogers and Soros

Dow Jones

Babcock and Brown Power (BBP.AX) div yield of 9% (not bad for just turning up)

Are the Monolines Going Broke? MBIA, AMBAC et al?

Banks Bad

Time for a Punt!

China will end in tears part 2

The week ahead - Interest Rates, Child Care and Leverage, USD, Emerging Markets and other Hogwash

Emperor Update

Opportunity Abounds Giralia and the AUD

Going for Gold - The Emperor's New Clothes

Gold Gold Gold - ZAUWBA

GIR.AX is off to the races

China will end in Tears

Going for Gold - Chesser Resources

Stocks to Watch - FND.AX and ESG.AX

The Week Ahead

PXS.AX - 10 Bagger

AUDUSD

AUDUSD if you're not long you're wrong.

Where do we go from here?

Iron Ore - UBS

Long AUD-USD

Non-Renounceable Entitlement Offer - CAV

Why Giralia Resources (GIR.AX) is the cheapest Iron Ore play in the market.

A New Start

Holy F**** S*, You Idiots.