This article about the fishing industry in Iceland made its way into many newspapers yesterday. Apparently there is a boom in fishing, the Icelanders have not over-fished their waters and the weak ISK helps when they sell the fish abroad.
Iceland will recover at some point although it may look different that it did. If you read anything about the ascendancy of Iceland that occurred you will invariably find a comment about Range Rovers driving through the streets of Reykjavik and having been there for a few days a couple of years ago I can tell you it is true; Range Rovers and BMWs aplenty. Or it was true anyway.
While I don't know how they should do this I think they need to really push to draw in more things like data centers and certain types of manufacturing that would benefit from the geothermal energy. The cost efficiencies are obvious and the location (five hours from NYC and three hours from the European continent would seem to be ideal for many multinational businesses.
While the move up in foreign currencies and gold has been pronounced and I think it is the right direction for a while it will not be a straight shot up. If you are interested in these parts of the market (they are now all easily accessed) for a longer term hold you should remember that nothing can be a one way trade but the bigger macro is that rates in the US are at zero and going to stay there for a long time. Gold at $1500 is a bigger move than I would expect but a move that ends up looking pretty good seems reasonable even if the next $50 is down.
Speaking of which, sort of, the crew over at Bespoke noticed that gold and platinum are trading at about the same level which is a rare thing. A long/short pair trade involving gold and platinum (there are several ETPs to access platinum) is popular with some folks. Someone left a question about what absolute products I use and while a pairing of gold and platinum is not in my wheelhouse that is one that does work for some folks. Anyone just starting learn about absolute strategies and who has a knack for commodities might want to do some learning about that one.
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12 comments:
I just don't get trying to guess which "theme" will generate higher returns than a basket of diversified equities. Gold, currencies, commodities...by the time you read about it in the press, everyone else knows too (efficient markets). Goldman Sachs wizards were predicting $200 oil six months ago, now they predict $25 oil. Well, which is it? These prognosticators might as well be flipping a coin. No one, except God almighty, can know what geo-political event will pop up rendering everyone's guess wrong, except for the one guy who the day before was labelled a "kook". Identifying a "theme" ahead of time for the purpose of financial exploitation is a fool's errand. I am amazed at the effort expended by intelligent people pursuing this.
Personally, I feel a 50/50 portfolio of equities and 10 year treasuries over the past year has performed nicely, all things considered.
Forget geothermal
Iceland needs to slash corporate taxes.
Letting the Krona devalue more might be a short term solution.
Goldman Sachs wizards were predicting $200 oil six months ago, now they predict $25 oil. Well, which is it? These prognosticators might as well be flipping a coin. No one, except God almighty, can know what geo-political event will pop up rendering everyone's guess wrong
Amen my anonymous friend! These predictions are nothing more than noise. Ignore them. Unfortunately, many don't.
Roger- were you aware that richard Kang recently filed for an emerging market sector ETF provider?
specifically no but I have known for months that he has been working on this sort of thing. I knew some very vague things as far back as April, maybe earlier, not sure.
Roger- FYI, Kang has some of the details posted on his website (thebetabrief) today.
Roger- I would appreciate your persepctive on Mish's Elliot Wave analysis. In brief summary he beleives we are in Wave 4 which is another bear market rally that will likely end when the good news is announced (likely Obama's stimulus plan) and is forecasting that this rally can take us to SP 1008+ and than turn into Wave 5 taking us back to a retest of the Nov lows and possibly to SP600 or so.
Your insight is appreciated.
http://globaleconomicanalysis.blogspot.com/2008/12/catch-wave.html
i know very little about Elliott wave. For what are probably different reasons I have come to a similar conclusion. I have written many posts saying that I thing the bear market rally will go higher than 1008 but that the run back down would come close to the old low, give or take but I have never thought SPX 600 was coming.
According to Donald Coxe, the “TED Spread” has narrowed, this week. He seems to be saying that the light can now be seen at the end of the tunnel, even if it’s still far away.
Here's a “TED Spread” chart from Bloomberg:
http://tinyurl.com/2uwt2g
Roger, just out of curiosity, what is your obsession with Iceland? You blog about them a lot. I guess I just don't understand it. There are lots of other countries out there.
For almost everyone, Right on, anon 6:37am.
Random, however, is a professional trying to 'add value' to his clients portfolios; ergo a lot of the 'stuff' found here about themes and oddball investments.
Not to mention, it's kinda fun to try to occassionally hit one out of the park, ya know what i mean ?
Roger, (and Anon 1:41);
The one thing that maybe you can agree on (with Mish, and others) is the expectation that volatility is not likely to disappear. The "wave 4, then wave 5" business conveniently in opposite directions, and even Mish's post (wherein there is tacit admission that the disagreement amongst the Ellioticians leaves one scratching their head), concludes (implicitly) that there are "rough seas ahead".
Suggesting that profits may be had by "going long" vega (buying ATM index options, or at least vertical spreads) when the VIX is below 45 and selling premia (OTM index options) when VIX is over 60.
Defined risk strategies within this volatility environment (long may she last...) are offering consistent attractive returns, and, with some basic covered call writing on "value" stocks you want to own 5 years from now, some very tidy income as well.
R in NY
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