Congress: BUSTED!!

What's taking you so long!? On May 16, 2007, Rep. Brian Baird [D-WA] introduced a bill known as "H.R. 2341: Stop Trading on Congressional Knowledge Act". This act had been created to "To prohibit securities and commodities trading based on nonpublic information relating to Congress, and to require additional reporting by Members and employees of Congress of securities transaction, and for other purposes." ARE YOU SERIOUS!? YOU ARE OUR NATION'S DECISION MAKERS AND YOU'RE EVEN THINKING ABOUT LYING/CHEATING/STEALING? Why is this even an issue? While I recognize that lobbying presents an obvious conflict of interest, what Congress-person would be unintelligent/dishonorable enough to use Government information to trade their own account? Below is the document, via GovTrack:

H.R. 2341: Stop Trading on Congressional Knowledge Act

Rapper's Delight

And we thought they were just wasting their money...

Congratulations to each and every rapper/thug/gangster/etc who was enlightened enough to plan for a period of inflation, and act swiftly to protect him/herself against it. By purchasing precious metal "Grillz", these individuals effectively hedged themselves against a weakening dollar and have made their prosthetic wonders yield a double-digit return. Is it a mere coincidence that these "new money" superstars predicted the onset of inflation? I doubt it. I think they realized that with dozens of people making six-figures (or more) creating jingles that include such notable lyrics as

"Hey ma, what's up, lets slide, all right, all right
And we get it on tonight
You smoke, I smoke, I drink, me too, well good
Cause we gon get high tonight
Got drops, got Coups, got Trucks, got jeeps, all right
Cause we gon take a ride tonight"

our money supply is truly misplaced, with, simply put, too much money available.

So, to all those who were ahead of the curve, "Stay fly"



Thank you to K. Shah of Oliver Wyman for pointing out such a profound reality.

Wanted: Your Riskiest Assets

In response to the Bank of England's recently announced actions to improve liquidity, TraderDaily provides great incite:

"Fresh from preliminary lab testing, the Bank of England has unleashed a powerful new anti-subprime tool, the Special Liquidity Scheme. Here’s how it works: you bring in your mortgage-backed securities (or, as we understand it, any toxic anything you can find lying around), the bank puts them through a giant meat-grinder, and out comes a pile of shiny-new government bonds. This is for a limited time only, so hurry to your local BOE window with whatever you’ve got. Act now and they’ll also accept old shoes, oil drums, Russian nuclear waste, day-old bagels and the gum you scraped off the bottom of your shoe this morning. Bond supplies are capped at $100 billion, so, just like happy-meal toys, they won’t last."

And you thought Bear Stearns was a bailout?

Capital Gains Tax

Interesting graph from the Wall Street Journal showing capital gains realizations with different tax levels. This obviously shows that lower tax rates leads to greater revenue for the government which is the point of taxing in the first place. This is the "long term" capital gains tax which applies to any realization on an asset over a one year period. Any gain realized in under a year is taxed at rate you pay on the rest of your income.

It is almost a certainty that tax rates will increase with the Bush tax cuts about to expire in 2010, and it's really a shame, but if we get a candidate who is willing to be prudent with government spending then the tax rates may not have to go up as much. Although the capital gains tax has an impact on economic growth, the tax that really could stimulate the economy is the corporate income tax. John McCain advocates lowering it from 35% to 25% but this could just be pre-electoral talk.

Natural Gas Prices

U.S. natural gas prices has risen 93% since last August and there is some concern that prices might retreat over the summer. The interesting thing is that comparing U.S. prices with the rest of the world they are undervalued. Many analysts believe that this will drive prices higher in the future. However, Chesapeake's chief executive believes that production levels will also increase which will keep prices in the range they currently trade. I find this intriguing because they would definitely benefit from higher prices, yet he sounds pretty confident that his assumption of stable prices will hold.

LNG (liquefied natural gas) has made transportation of this energy source easier which could potentially lead to higher level of natural gas use as an energy source. Natural gas emits the least amount of carbon dioxide out of all hydrocarbons and many green initiatives will include increases in natural gas over crude oil and coal.

Source: WSJ

Euro-Dollar Position

Enough said.
Via: The Big Picture

Recession Odds

Its funny how easily opinions are changed about recessions. GOOG, IBM, CAT report good numbers and you see recession odds go from 70% to now 20.5%. This chart is from intrade and in now way this is an exact indicator but the media and people who comment about the markets need to start having more concrete convictions before they speak.

We're going to be alright. The US economy is strong. Emerging and developing countries are experiencing growth we've never seen before. I've been buying for the last few months, I think you should be doing the same.

Chart via mjperry.blogspot.com

Alternative Investments [MS-AIP]

The following is for educational purposes only, and is by no means an offering of securities of ANY kind.


This is definitely a conservative fund-of-funds. As you can see, the fund is entirely large managers such as Perry, DE Shaw, Cerberus, Citadel and Och-Ziff. Why would someone invest in a FoF like this? Take a look at the drawdown...that's VERY small..also, the larger funds are more effectively able to handle huge institutional inflows. Finally, most of these firms have established track records, which makes the FoF easier to pitch to clients.

What's REALLY Going On At Citi?

Today was Citigroup's closely listened to conference call. I'll admit, I was the first person to say Vikram Pandit was the wrong guy for the job. I'll now admit, however, that he's doing a much better job than I ever thought he would. Below is the handout from today's call.

Analyst Supplement

Your Backdoor to China/India

New Chinese/Indian Currency ETNs

Yes, that's right...the most undervalued currencies in the world can now be bought in an exchange-traded form, courtesy of Morgan Stanely.

VanEck Vector ETN (Chinese)

VanEck Vector ETN (Indian)