Daily Reading – Wednesday, May 18, 2011
FT Alphaville: Please wait 10 months for your aluminium. Thank you
The latest developments come via Metal Bulletin which reports that backlogs at some LME aluminium warehouses are now so large that warrant holders are considering taking legal action just to take delivery of their own stocks.
Metal Bulletin adds that without the prospect of legal action the material could, in some cases, be stuck in warehouse queues for up to 10 months. This is especially true in the US, which is experiencing some of the longest lines.
FT Alphaville: The ‘Asia connection’ to the commodity rout
Our colleagues on the paper-side drew attention last week to the fact that silver trading in Asian hours experienced a clear pickup into the lead up to the commodity rout.
FT Alphaville: China’s trusts – still booming
Beijing may have cracked down on bank trust products– the unholy alliance of off-balance sheet banking and wealth management — but more traditional trusts? Those that function without banks?
The Big Picture: China’s Ghost Cities
The following video is the first of the great series on China’s ghost cities that Bloomberg is running this week. Getting China right is key to your P&L and the direction of many markets, including emerging equities and commodities. We’re grappling with who financed these cities, who is holding the paper, and how were they financed. Recall China’s massive money supply growth and credit expansion which funded the country’s stimulus after the 2007-8 financial collapse.
The Big Picture: Sloppy Market? Blame the Financials
Master technician John Roque of WJB Capital put out a fascinating chart this week, looking at what a drag the financial sector has been on the overall market. John also notes how poorly Goldman Sachs is trading; only AIG (-37% ytd) and HCBK (-27% ytd) have worse year-to-date performance among S&P financials.
The Big Picture: Japan shows up in April IP
In what seems to be a key look at the impact of the Japanese disaster on US Industrial Production, the Fed said motor vehicle/parts production fell a sharp 8.9% in April m/o/m as the delivery of key parts from captive suppliers in Japan were halted. Capacity Utilization in the auto sector fell sharply to 61.9% from 68% and it also helped to drag down overall Utilization to 76.9% from 77.6%. Taking out the influence of auto’s, IP rose .2% led by electric utility output, computer/electronics production, machinery and mining.
The Big Picture: Trading as a “Massive Multiplayer Experience”
The parallels between trading and the shoot ‘em ups was obvious: You feel your way around a shadowy world where perils and rewards lay around each turn. In the beginning, you get toasted regularly by people with superior kno0wledge and firepower. After a while, you develop a familiarity with the lay of the land, learn where some power ups and weapons were hidden, and start to out shoot your competitors.
The Big Picture: Religion vs Education vs Income?
“The economic differences among the country’s various religions are strikingly large, much larger than the differences among states and even larger than those among racial groups…”
Econbrowser: F for Fail
I’ve been grading papers for the past half week, so when this popped into my mailbox yesterday morning, I was in a “grading” mood. And when I finished reading it, I determined I would give it an F. From “The Price of Oil and the Value of the Dollar: Declining Value of the U.S. Dollar Adds to the Price of Oil and Gasoline,” Republican Staff Commentary (May 16, 2011)…