- UBS Bloomberg CMCI Index (UCI)
- UBS Bloomberg CMCI Industrial Metal (UBM)
- UBS Bloomberg CMCI Energy (UBN)
- UBS Bloomberg CMCI Agriculture (UAG)
- UBS Bloomberg CMCI Livestock (UBC)
- UBS Bloomberg CMCI Food (FUD)
- UBS Bloomberg CMCI Gold (UBZ)
- UBS Bloomberg CMCI Silver (USV)
If the mix of the others is a better mousetrap (haven't found the particulars yet) then great but I doubt me-too products have any chance of gaining traction.
I read a great one liner about UBS on the Seeking Alpha Must Know page by Eli Hoffman that said how can UBS convince anyone it can manage wealth when they are writing down $37 billion. While that is funny, remember that ETNs are debt instruments of the issuing bank (I did not find anything in the press release that mentioned a third party involved with these funds).
13 comments:
Most commodities markets are not very large (relatively speaking) and/or liquid and/or have restrictions on the percentage of active contracts held so this was probably inevitable.
At the end of the latest Audited Annual Financial Report for the PowerShares DB Agricultural Fund (DBA) is the following note
"(13) Subsequent Events
In February 2008, the Master Fund reached position limits with respect to the CBOT corn and CBOT soybean contracts in the Index and, since that time, has been purchasing futures contracts in the CBOT soybean complex in lieu of these contracts."
I don't know enough about the differences in action between the soybean and soybean complex contracts to guess as to whether this is "a difference that makes a difference" but do expect these kinds of wrinkles to crop up (heh, heh) more commonly as the commodities arena becomes increasingly popular.
The larger picture I think being that along with more ETN's I expect to see more "innovation" in the space fairly soon. CDO's, SIV's and other asset-backed derivatives may be currently discredited but something very much like them in commodities, appropriately (mis)named to hide their dubious ancestry I do not doubt, will be coming.
In the end we'll probably wind up paying little premium for the actual commodity class and pay more of a premium for the method (or player) and the instrument that accesses it. JMO
Roger,
The question remains!! Is the bottom in????????? If you think the Dow will not go below the 1-22-08 lows, than shouldn't you be carefully buying on the dips?? As i have posted before; I believe it is and I have been carefully doing just that and remaing diversived.
Thanks,
BWJR
Perhaps a sign of the top in hard assets?
No i don't think the bottom is in.
It doesn't make sense to me that a bottom could be in in terms of time or magnitude.
The financial event currently unflding is bigger than normal so I don;t think the bear market can be so much less than normal.
The bond market is an absolute mess.
Bear market patterns include a lot of feel good rallies which is what I think this is further buying at the bottom should be much more difficult than buying of late has been-IMO....
....unless this is not a bear market in which case I will be wrong about a lot of things.
Roger,
I agree that this event is likely be larger than normal so we should expect more time and more downside. I wish I knew how much :)
Can you elaborate on ETN vs ETF? My understanding is ETF's had normal equity risk and with ETN's you had that plus the issue if UBS goes bankrupt some other debt holder could claim the assets supporting the ETN because you do not own the actual assets.
Correct me if I am wrong but I don't want to buy any ETN.
technically you are correct about issuer risk.
practically speaking the risk is slim. that there could be a failure bigger than BSC as this event unfolds makes sense. many failures bigger than BSC seems unlikely.
just as you think about issuer risk in buying a bond you should think about it for ETNs.
if some ETN is the best exposure to something, in your opinion, you should buy it.
3% into a stock that fails is a bummer not a wipe out. ditto a bond or ETN. and again the odds of a given issuer failing is quite slim but it possible. mitigate don't eliminate.
I may patent that one:->>
you can mitigate.
I will stick with ETFs
Roger,
Just a word of continuing encouragement for the sanity, and for attracting an intelligent readership (self excepted, regretfully).
Regarding the extreme pessimism that attend the bottoms, have you had a scroll through the bloggers commenting on Mish's site? I always fear walking past the open window after I read those comments...a contrarian reads that blog and has got to go long!
On the other hand, MacNeil Lehrer had a guest commentator that mentioned that he had reviewed the job statistics from 2000/2001's recession and from early nineties recession and considered those worse than what we have now (implying a softer landing). (What's a contrarian to do?)
(I found that particularly non-credible, given the BLS methodology reported, ironically, on Shedlock's blog - whereby the numbers released reflected assumed net INCREASES in construction, hotel and leisure, and new businesses.)
If the nightmares from the extremists come true, consumers are going to shut down and a "trickle up" problem may make a number of BSC-like bailouts necessary.
In any case, the deafness extended to the bad news seems particularly perverse - especially since this is still the recession that wasn't. ("We are not in a recession, but if we are, it's already priced in...") I fear that everyone has internalized the shibboleth that markets move up before the recovery, and hence are buying (or itching to buy) on every bit of news that indicates that the recovery is still in front of us. (Suggesting that, Shedlock fans excepted, there is insufficient despair to mark a true bottom.)
RE: All world indices... I'd be interested in looking at a basket of foreign for diversification, but John Authers' Short View (on FT) on Mar 27th showed a chart that shows each of US/Nikkei/EuroFirst300 (in common currency) all moving in lockstep during this "crisis", in part the result of equity fund money flows moving in pursuit of stronger currencies. http://www.ft.com/cms/bfba2c48-5588-11dc-b971-0000779fd2ac.html?_i_referralObject=697966559&fromSearch=n
Moving away from the bigger markets puts you at a n informational and liquidity disadvantage, doesn't it?
Keep up the good work,
R in NY
Case Shiller index looks bad and getting worse.
Interest rate spreads still look out of the feds control.
I understand everyone wants to get behind a rally, but it just looks to soon to me. How bad will it get? I do not know, but I would expect a worse than average recession.
I have never seen house prices fall on a nationwide scale and I have never seen the fed not able to cure liquidity issue.
I am not saying the sky will fall, but asset prices will continue to decline for a while.
Still looks like we are turning Japanese to me. Actually I expect us to do a lot better than Japan, but the similarities are striking and I do not see us fixing in less than 1 year that took Japan more than a decade.
It took 20 years to create this debt bubble and it will not be solved in months.
SEG
Rick, I can't say much about counting methods but I can say the number of jobs created in this cycle was pathetic so shallower job loss seems reasonable but then also not much of a predictor of recession magnitude.
SEG, interesting comment about time to unwind the credit excess. I was hoping to wrap it all up by next tuesday.
Real Estate Plan
Buy a house in 2008 and get a $15,000.00 tax credit for an existing home and $10,000.00 for a new home. Buy a house in 2009 and ge a $10,000.00 tax credit for an existing home and $7500.00 tax credit for a new home. Buy a house in 2010 and get a $5000.00 tax credit for an existing home and $3000.00 for a new home. On the new home side if the builder is smart he will run a matching rebate for that period of time. A maximum of two rebated per year can be permitted to any one homeowner or investor. What do you think. If we have $30,000,000,000.00 for Bear Sterns we must have at least this much for the tax payer. As far as financing on the buyer side of the equation, the Fed will have to back the paper to some degree.
Its a start!!
What are we waiting for???
BWJR
at least ubs is up front on issuer risk in its fact sheet, which is far more than lehman does when plugging its opta etns
between barclays, lehman and ubs
in a generation's time
(when was it continental illinois failed and manny hanny went chemical?)might go for govt sponsored swedish export credit bank (at a shorter maturity too) elements
any idea on sharp divergence between cmci total return vs djaig and s+p gsci
Manufacter's Hannover to Chemical? Wow that's a while back, late 1980s?
I remember Chemical was ticker CHL and when that one got absorbed but Manny Hanny wow
Anywho, the UBS ETNs weight the products by something called Tradable Economic Weight...a process of their relevance in CPI, PPI and GDP then they assess lqiquidty of the contracts to make the final allocation decisions. Sounds complicated but the back test has been crazy good.
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