Friday, March 30, 2012

Food Shortages and The Dissapearing Bees

Think bees are not important? Think again.

Don Coxe has alluded several times to the mystery of the disappearing bees, a problem which may have devastating effects on agriculture worldwide.

Two studies to be published in this month's Science journal., one by UK researchers and one in French researchers, suggest that neonicotinoid insecticides, could be the culprits and harm bee populations worldwide.  These have been in use since the early 1990s.

Scientists have in the past proposed that pesticides could be partially to blame for the disappearing bees, but it's been unclear exactly how. In the last few years, much time has been devoted to the mysterious disappearance of bees, referred to as Colony Collapse Disorder. Honeybee populations have been decimated and bumblebee species have also gone missing.

In the US, the Environmental Protection Agency says on its website  that France, Germany, Italy and Slovenia have all instituted bans on neonicotinoids over fears of their effect on bees, but says that "to the EPA's knowledge, none of the incidents that led to suspensions have been associated with Colony Collapse Disorder".

Not so says Dave Goulson of the University of Stirling, co-author on the British study: “Some bumblebee species have declined hugely. For example in North America, several bumblebee species which used to be common have more or less disappeared from the entire continent. In the U.K., three species have gone extinct,”

Dr. Goulson and his colleagues exposed developing bumblebee colonies to a neonicotinoid called imidacloprid at doses comparable to what they might find in the wild. These colonies were around 10% smaller than those that weren't exposed. They also produced 85% fewer queen bees (which means far fewer bee-leaders that can set up new colonies).

“Bumblebees pollinate many of our crops and wild flowers. The use of neonicotinoid pesticides on flowering crops clearly poses a threat to their health, and urgently needs to be re-evaluated,”

Lost. The French study  stuck tiny RFID chips on to honeybees so they could track them as they buzzed in and out of their hives. The French National Institute for Agricultural Research (INRA) found that bees they had blasted with a sublethal dose of the neonicotinoid thiamethoxam got disorientated and couldn't find their way home.

Honeybees have a homing ability that lets them navigate back to their hives, which the researchers think was  messed up by the pesticide. The lost honeybees were two to three times more likely to die outside the nest, pushing populations down to levels that would be difficult to recover from.

Says study author Mikaël Henry of INRA: "Our study raises important issues regarding pesticide authorization procedures. So far, they mostly require manufacturers to ensure that doses encountered on the field do not kill bees, but they basically ignore the consequences of doses that do not kill them but may cause behavioral difficulties," Read More

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More Bailouts: Greece Now Talks About New 3rd Bailout

Nobody really expected Greece to have a balanced budget, possibly ever, so that new bailouts would not be needed. . Today, Lucas Papademos, Greece's Prime Minister  said that Greece may need a third bailout package "if the sweeping austerity measures demanded by its international creditors fail to stabilize its shattered economy and restore market confidence".

It was the first time Papademos talked about the risk that the austerity program might fall through if they don't try hard enough.

"Greece will do everything possible to make a third adjustment program unnecessary," (!) "Having said that, markets may not be accessible by Greece even if it has implemented fully all measures agreed on". (Yahoo)

"It cannot be excluded that some financial support may be necessary, but we must try hard to avoid such an outcome."

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Thursday, March 29, 2012

FIFA WC2014 In Brazil: Costs To Skyrocket; As If It Was Unexpected

You read this here before, years ago.

Prestigious newspaper O Estado de Sao Paulo reports that delays in the 2014 World Cup will make the final cost of the 2014 World Cup be far higher to what everyone imagined five years ago. The finding was made by the leaders of FIFA, which on Wednesday put full pressure on the country because of the difficulties in the organization and made it clear: Brazil should not save money to ensure that everything is prepared.

Sure... As if none of this was known and expected. Somebody will make lots of money.

The actual costs are conflicting. A recent report by the TCU (Court of Audit) indicates a value of just over R$25 billion (US$ 15B), based on data from the Responsibility Matrix. But the agency itself complained of outdated data and gave 60 days within the Ministry of Sports to update the information in the Matrix.

In the evaluation of the members of FIFA, the delays will make the final price of the world cup explode.

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Push This Button On Your Fridge And It Automatically Orders Pizza for You

It's real, push the button, it sends a bluetooth signal to your cell phone, and pizza is delivered to your door.

Available only in Dubai - for now.

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The Perfect Storm For Natural Gas and UNG, Now You See Why UNG Reversed Split Was the Kiss of Death; Full Report

This is quite remarkable: Natural gas prices are almost at a 1 handle.

Today's reason for the big drop was that storage actually increased in North America, this still in March. The red curve is the current year's curve, compared with the average 5 year range in shaded gray. Amazing.

The woeful UNG reacted accordingly, remember the kiss of death post on UNG?

5 year chart:

Contango is now at a huge 5.5% on the two front months contracts.

Contango us UNG's killer.

Indeed the perfect storm for UNG today.

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbol in the Technical Trend Analysis Tool, (powered by INO).

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Monday, March 26, 2012

Why You Should Stay Away From Volatility ETFs

Larry Berman today explained why investors should stay away from volatility ETFs, specially vehicles like the TVIX.

The reason is that they invest in futures, and as pretty much all of them, they are money-losing machines when there is contango In the case of TVIX, that is clearly the case as investors expect volatility to increase in the future, thus, the ETF has to lower (lose) the number of contracts every month. These ETFs should really be banned.


Note: You may receive technical analysis and alerts of TVIX sent automatically to you by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

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Thursday, March 22, 2012

Airlines About To Go Belly Up

Emirates, the biggest airline by international traffic, warned yesterday that airlines will go bust this year due to fuel costs and "sluggish economies".

Interesting that the same was feared about Air Canada, and most likely many others.

Tim Clark, Dubai-based carrier’s president, said that  “We can reel off a whole load of airlines that are teetering on the brink or are really gone,” “Roll this forward to Christmas, another eight or nine months, and we’re going to see this industry in serious trouble.”

Bloomberg reports that "Airline profits will plunge 62 percent in 2012 to $3 billion, equal to a 0.5 percent margin on sales, as oil prices rise, the IATA aid this week. Emirates’s fuel bill accounts for 45 percent of costs and may jump by an “incredibly challenging” $1.7 billion in the year ending March 31, according to Clark, who says he’s sticking with a no-hedging strategy rather than risking a losing bet.

“You think you’re going to win, but in the long term you always lose,” Clark said yesterday at the Gulf carrier’s head office near Dubai International Airport. “When we enter into derivatives, betting whatever it may be with counterparties who actually control the price of fuel in the first place, you have to ask yourself, ‘Is that smart?’”

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Friday, March 16, 2012

Risky Business: Apple Stock Goes Ballistic

Apple stock passes to $600.

You know how this story ends when a stock goes like that..

Note: You may receive technical analysis and alerts of AAPL, sent automatically to you, by entering the symbol in the Technical Trend Analysis Tool, (powered by INO).

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Wednesday, March 14, 2012

The Banks That Borrowed The Most In Europe

These are the banks that have borrowed the most from Europe's LTRO, represented as a ratio of amount of funds borrowed to the size of each entity:

(click to enlarge)
The ECB's balance sheet now  represents over 30% of euro area GDP.  Portuguese Commercial Bank is in first place, followed by Bankinter, Bank of Ireland.

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Friday, March 9, 2012

The Greek Restoration Project: Greece "Fixed" Again: Rates Already Creeping Up

From Phil Davis today:

"Greek bonds are already passing the 20% mark again  so this "fix" has lasted all of a few hours and already we're seeing rates creep up in Italy, Spain and Portugal (Ireland can't even borrow money – at any price)"

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Greek Debt Swap Participation Reaches 85%; Collective Clauses Forced on 95%; Potential "Credit Event"

 So the question now is whether the CDS will finally be triggered. Was this a default or not? ;-)

Bondholders tendered 152B euros of Greek-law bonds, or 85.8%, and 20 billion euros of foreign-law debt. Greece also extended its offer to holders of non-Greek law bonds to March 23, after which the "sweeteners" will no longer be available.

After the collective action clauses are triggered investors with 95.7% of Greece’s privately held bonds will participate in the swap.

 Officials from the International Swaps and Derivatives Association will meet later today to consider a “potential  credit event” relating to Greece.

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Thursday, March 8, 2012

U.N. Says Food Prices Rising Again

The U.S.'s Food and Agriculture Organization says global food prices have risen for the second time in two months. The main reason being blamed is bad weather in major exporting countries. Rising oil prices must affect prices too. 

A near record wheat production is  forecasted for this year, expected to reach 690 million tons, just below the record 2011 harvest.

The agency's price index rose 1 percent from January to February. The index had climbed nearly 2 percent in January, its first increase in six months.

The latest increase was mostly caused by higher prices of sugar, particularly in leading exporter Brazil because of bad weather, oils and cereals.  

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Wednesday, March 7, 2012

Germany Openly Discussed With Greece That They Leave Euro

The Financial Times just reported that German finance minister Wolfgang Schaeuble admitted that he discussed openly with Greece's finance minister Evangelos Venizelos whether it would be better for the country to leave the euro.

However, Greek officials said they are 100% committed to staying. it sounds like somebody else does not want them to stay.

"However, Mr Schaeuble added that even though it may have been wrong for Greece to join the euro, the country had “100pc decided” that they wanted to stay inside the 17-nation bloc, and it was “ridiculous” to think that other countries wanted to punish Greece.

But Greece has more work to do, he said, and the eurozone as a whole must work to solve the competitiveness gap."

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What's In An X-Ray? Thieves Stealing Old X-Rays For The Silver Content

The thief's hand?

We had heard about the manholes and the bronze statues. With the price of precious metals up in the clouds, thus was only a matter of time. Thieves are now stealing old x-rays.

Ottawa police have charged a Toronto man caught with 30,000 X-rays stored in 13 barrels. The man has been impersonating an employee of a recycling company.

The films were confiscated from a U-Haul truck the man was driving after a botched effort in Smiths Falls,  about 75 km southwest of Ottawa. They believe the scam was operating across Ontario.
The man had told hospitals and diagnostic clinics in the Ottawa, Toronto and London, that he worked for Environmental Control Systems, who then gave the man the X-rays.

The company, which is contracted out by most Ottawa medical centres, confirmed  the man was pretending to be one of its employees.

Police also believe the man wanted the X-rays for the silver that can be extracted from the film. New forms of X-rays also include a lower amount of about 5 grams of silver per kilogram, while old film X-rays have 12 grams of silver per kilogram.

A search on the Internet reveals many such instancesThe emulsion on an X-ray consists of silver. During the silver recycling process using a simple chemical solution, the silver is released from the emulsion.

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Tuesday, March 6, 2012

Greece and Those CDS Create Market Havoc Again

A done deal is not really a done deal when it comes to Greece! Forbes reports that the debt swap with private sector bondholders may not come off as planned.

"Twelve banks in Europe have signed on to the swap – which will see creditors take a 53.5% haircut to the face value of their holdings – including BNP Paribas, Deutsche Bank, Commerzbank and National Bank of Greece, but only hold about one-fifth of the Greek bonds eligible for the swap".

While the deal could win 75%-80% participation, enough to execute the swap, however, the 90% that could require holdouts to acquiesce without enforcing retroactive collective action clauses (CAC).

ISDA, the body deciding whether the Greek deal will trigger credit default swaps (CDS) on the Hellenic Republic’s debt, has said that the use of CAC would lead it to revisit its current determination that Greek CDS will not pay out.

All to be likely "resolved":

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Friday, March 2, 2012

Rampant Oil Manipulation Caught

I loved this today from Phil Davis, the trading and options guru.

"The news was that a pipeline in Saudi Arabia had been attacked and oil had been running up all day into this "news," which, funnily enough, turned out to be fake.  We caught the news at 3:05 in Member Chat (thanks Kustomz) and we had been waiting for oil to stop going up so we could short it.  The turn came at the $110.50 in the Futures (/CL) and we caught a nice run down to $109 and I reiterated, at 3:36, with oil still at $109.88 my love for the USO April $40 puts, which were $1.08 at the time and finished the day at $1.15.

As Malsg pointed out in Member Chat: "The pictures of the fire are taken in daylight … but Saudi sunset was several hours ago … the oil market only stared going nuts after the close."  A very good observation that gave us the resolve to stay short on oil – which is working out fantastically this morning as well. "

Phil mantains a lively intra-day market chat. You can join here (link for free trial).

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Thursday, March 1, 2012

Video of German Finance Minister Playing Sudoku While Parliament Debates Greek Bailout

What the German Finance minister was doing while his parliament debated the latest Greek Bailout.

In other countries, this would be Alfiderzen.

It is unknown whether he managed to finish the puzzle.

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Rousseff Strongly Criticizes U.S, Europe, Japan for $4.7T Fiscal Tsunami: Brazil To Fight Easy Money With Its Own Weapons

Brazil's President Rousseff today strongly criticized the actions of countries in crisis for generating excess liquidity in the global market. Without mentioning any specific country, the president said that "we care about these fiscal tsunami."

"They pour U.S. $ 4.7 trillion, it's very adverse, very wicked, for the rest of the countries, especially those in growth that are emerging. They compensate fiscal rigidity with utterly inconsequential monetary policy in what it produces on world markets,"

The president warned that one must understand "that we have to create other tools to fight the processes that are triggered by U.S. $ 4.7T today." "Only yesterday was a trillion euros. Japan is also doing the same monetary policy". The criticism was made at the launching ceremony of the "National Commitment to Improvement of Working Conditions in the Construction Industry".

The president made it clear the concern with the actions being taken by developed countries in crisis to overcome their problems. She explained that the Brazilian government is ready to defend national industry from predatory competition from foreign competitors. "We will be defending the industry, the methods of preventing the crisis from developed countries involving the cannibalization of markets in emerging countries,".

The President stressed, though, you want to promote economic growth in Brazil, with the development of a mass market, but also with the distribution of wealth and protection of social rights. "We want the mass market to grow. That the country to grow, but we want social rights, social protections, rights of the elderly.

She was very critical countries are abdicating that social safety net as a way to circumvent the effects of the current crisis.

"It is obvious that countries that do not have or do not need this protection, and then reduce this protection, throw in the trash historic achievements. But they are accountable to their people,". She then highlighted that Brazil will not give of social protections. "I mean that we are at another stage. We are not wasteful. We get the best possible quality of public spending. Let's get with the workers, entrepreneurs,".

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Greece Events "Do Not Constitute a Default", But They May Change Their Mind Later!

The EMEA said today that the events in Greece do not constitute a default (no no trigger for CDS payouts!

Who voted for this (unanimously, by the way):

  • Bank of America Merrill Lynch
  • Barclays
  • Credit Suisse
  • Deutsche Bank AG
  • Goldman Sachs
  • JPMorgan Chase Bank, N.A.
  • Morgan Stanley
  • UBS
  • BNP Paribas
  • Societe Generale
  • Citadel Investment Group LLC
  • D.E. Shaw Group
  • BlueMountain Capital
  • Elliott Management Corporation
However, if you read their statement, you'd see that they may change their mind!

" The EMEA DC noted, however, that the situation in the Hellenic Republic is still evolving and today’s EMEA DC decisions do not affect the right or ability of market participants to submit further questions to the EMEA DC relating to the Hellenic Republic nor is it an expression of the EMEA DC’s view as to whether a Credit Event could occur at a later date, in each case, as further facts come to light."

Full Text:

 "In light of today’s EMEA Determinations Committee (EMEA DC) unanimous decisions in respect of the two potential Credit Event questions relating to the Hellenic Republic (DC Issue 2012022401 and DC issue 2012022901), the EMEA DC has agreed to publish the following statement:

The first submitted question (DC Issue 2012022401) asked whether the holders of Greek law bonds had been subordinated to the ECB and certain NCBs whose bonds were acquired by the Hellenic Republic prior to the implementation of new Greek legislation such that such subordination constitutes a Restructuring Credit Event. (The full text of the question is available here

The EMEA DC unanimously determined that the specific fact pattern referred to in the first submitted question does not satisfy either limb of the definition of Subordination as set out in the ISDA 2003 Credit Derivatives Definitions (the 2003 Definitions) and therefore a Restructuring Credit Event has not occurred under Section 4.7(a) of the 2003 Definitions.

The second submitted question (DC Issue 2012022901) asked whether there had been any agreement between the Hellenic Republic and the holders of private Greek debt which constitutes a Restructuring Credit Event. (The full text of the question is available here

 The EMEA DC determined that it had not received any evidence of an agreement which meets the requirements of Section 4.7(a) of the 2003 Definitions and therefore based on the facts available to it, the EMEA DC unanimously determined that a Restructuring Credit Event has not occurred under Section 4.7(a) of the 2003 Definitions".

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