Daily Reading – January 5, 2011

The Street: Kass: The Risk Remains

The media and strategists (in particular) are almost universally optimistic and remarkably certain and confident of view.

With few exceptions — here is one — a smooth and self-sustaining economic expansion has now become consensus.

Wall Street Cheat Sheet: Ten Themes to Watch in 2011

As we stand at the dawn of a New Year, everybody would like to have a crystal ball so we can know what’s coming next.

Of course, sadly, no one has such a crystal ball, and so any predictions or prognostications you read at this time of year are nothing more than educated guesses or hopeful stabs in the dark.

However, looking into the fog shrouded months lying just ahead, we can see some clear themes already emerging.  Here are ten things to watch for in 2011:

The Big Picture: Was 2010 Commodity a Rally in a Bear Market ?

Chris Kimble writes:

The CRB index had a huge rally from 2002 to 2008, followed by an decline over 50%.

The 2009/10 rally took the CRB index back to its “50% Retracement level” as well as two key resistance levels, at the same time.

Is a “Head & Shoulders” pattern at hand as well?

FT Energy Source Blog: Barclays: Oil will hit $100 per barrel this year

Oil prices neared 27-month highs yesterday, and analysts are expecting the run to go on and on. A survey of analystsyesterday by Bloomberg found they expected 2011′s average price to be the second highest ever.

Today, Barclays Capital has added to that sentiment, producing its list of five predictions for the oil price for 2011. Not one of them reads well for consumers.

FT Alphaville: Forget non-performing loans, how ’bout performing ones?

Non-performing loans — those defaulted or nearly-defaulted loans — have naturally grabbed headlines during the US housing crisis. In fact, they tend to be a focus for nearly every bond or bank investor in gauging investment risk.

What though of their current counterparts?

Laurie Goodman over at Amherst Securities makes the case this week, that the market is significantly underestimating the default probabilities of loans made to borrowers who have been paying on time — in other words current loans.

FT Alphaville: Casualties of the currency war

This is ironic, Brazil.

FT Alphaville: Presenting the Irish bailout bond…

Results from the issuance of the European Union’s first ever AAA-rated collective EFSF bond are in.

Paper Economy: Reading Rates: MBA Application Survey – January 05 2010

The latest data is showing that the average rate for a 30 year fixed rate mortgage increased 8 basis point to 4.93% since last week marking the seventh consecutive weekly increase while the purchase application volume increased 3.1% and the refinance application volume declined 7.20% over the same period.

Distressed Volatility: SP Future Large Specs Vs. ES Future Large Specs (COT Charts 12/28/2010)

Here are COT charts as of 12/28/2010 for the E-Mini S&P Future (ES) and S&P 500 Index Future (SP) (courtesy of cotpricecharts.com). I’m not sure if this means much, but look how large speculators net long SP and net short ES closed out open interest recently. Charts after the jump


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