Tuesday, June 24, 2008

SKF - Lunchtime Followup

I just broke for lunch and checked on the price action for SKF (double short US Financials). I'm not following the news well enough to know what sparked the "comeback" -- but it was a bit predictable, eh?

I never thought I would say this, but when markets are as "manipulated" as they are, it really doesn't make sense to trade fundamentals in the short term.

You have better luck with tea-leaves, yak entrails, star charts, and yes, even technical analysis.

I don't have any better idea of what comes next than anyone else. But I would say this....if there was indeed a "stick save" (or rumor of such) that saved teh financials for now...If I can figure it out, so can everyone else.

I would say that the "gig" is about up. The next time they test the lows, they will fall. End of story. Trade accordingly. If you're interested in trading it, but aren't sure how, SKF is a (volatile) way to do it with no time decay (options) and limited downside (unlike shorts) but you have to be confident that things won't get so bad that there will be counterparty risk since SKF is a product of derivatives.


Monday, June 23, 2008


SKF (double short US financials) is setting up to test new highs.

Click on and take a look at the simple line chart i included as an image here.

Notice that the price is following the volume. Now that the double short is breaching 140 it is in rarified air. The financials are clearly breaking down to new lows.

What will be VERY VERY interesting to see is if the Federal Reserve, Congress, President, Banks themselves, Treasury Department, BOE, Chinese, Pope or *someone* can engineer another "sticksave" to keep the bottom from falling out on these.

*If they can*, what we are going to be looking for is another "smaller cup" to the right of the existing "cup", accompanied by lower volume at the bottom of the cup.

THEN, if we see that and another ramp toward 140 the breakout will be a classic "cup and handle" (aka, an "inverted, inverted cup and handle" :) ). Right now we just have a "cup" -- which isn't a terrible formation with the curved bottom, but statistically (supposedly) not as "predictive" as the venerated cup and handle.

go cool,

Sunday, June 22, 2008

Uruguay Real Estate

Uruguay Real Estate

It's been said before, but I'll say it again -- Uruguay will probably not see the kind of declines being seen in the US -- at least not right away.

The reason?

Mortgage Debt in Uruguay

While not unheard of, it's pretty rare. Only very recently have banks started to dip their toes back in the water. And, most famously, it is the bank 'Banco de la Republica Oriental de Uruguay' (BROU) that has the explicit (i believe) backing of the central bank of Uruguay that has begun offering loans in particular situations.

However, these are not the kind of high-risk loans that we saw in other parts of the world in the first part of this decade. They don't have to. There is little to no competition. The LTV, or loan to value, scores are pretty conservative and they are being made primarily to people who have nearly guaranteed lifetime employment through government and quasi-governmental agencies here. Could these peoples' employment and income prospects change? Of course. But one has to rate the risk as "low" compared with the turbulent employment markets up north....at least for now :)

Price of Homes in Uruguay

All that said, buying a house in the city of Montevideo or nicer parts of Punta del Este is still much much too expensive for the average Uruguayan to afford -- even on dual incomes. That is a problem. Because either the price of homes must be supported by an outside source -- foreign incomes, governement money, multi-nationals, expats, and foreign government money -- or they must revert to an affordable level as well.

Buying a House in Uruguay

Because of this divergence in where the "average" Uruguay Real Estate buyer derives his income or wealth, it's pretty difficult to talk about "one market" in Uruguay -- even in a country this small with only 3.5 million inhabitants.

The Interior

The Interior of Uruguay is anyplace away from the coastline. The drivers are much less reliant on expat, foreign influx, multinational buyers and domestic government and much more reliant on farming.

The price of homes in the interior will probably be driven primarily by the availability of borrorwed money and the price of Uruguayan beef (and other ranching and farming exports) and availability of open and available markets for what it is the interior produces. Since lots of Uruguayan campos feed their cattle primarily grass, they've been spared some of the incredible inflation in feed costs. However, all of the other inputs are apparently skyrocketing and Uruguay still has to ship its cattle a long ways to reach the North American, European, or Asian markets.

Montevideo Real Estate

As I said earlier, montevideo real estate is out of reach of the "average" Uruguayan's income level. However, many of the inhabitants of Montevideo live comfortably OVER the average income of the typical Uruguayan. In addition, a much larger percentage of the higher paid governament and large multinational employees work, earn, spend, invest and live in the Uruguayan capitol.

Punta del Este Real Estate

Punta del Este Real Estate -- I have to admit to being no expert on Punta del Este. However, here is my general take. It's become a very large beach resort community. Very few (actually) off season inhabitants live in punta del este year around relative to the size of it's January visitors.

That said, a large large number of visitors there have vacation homes either in the form of apartments, or entire houses. Many of the residences owned by your "typical" Uruguayan are also investment properties for at least part of the holiday (summer) season. Rates for "nice" rentals are in extremely high demand, not just from Uruguayans, but also many Brasilians, and Argentinians come from southern Brasil and Buenos Aires to enjoy Uruguay's beaches, casinos, nonstop night life, and relative safety. Rental rates for the two busiest months of high season can nearly cover the entire cost of maintaining the property for the year....Which is good because after summer ends, demand and asking prices nosedive and vacancies soar.

At this point Punta del Este is in the process of reaching critical mass, where a good portion of its visitors are from somewhere else in the summer. Financial problems impacting European's willingness to take winter vacations, or international tensions with brasil or argentina effecting travel across the Uruguayan border can slow Punta del Este's momentum, but probably only slightly for now.

Uruguay Real Estate Agents

As an expat, or foreigner looking at Uruguay real estate most experienced players will tell you that it is "caveat emptor". Real Estate agents have no formal licensing process and so honesty and disclosure and moral compasses will run the gamut among the agents you are likely to run across.

The transaction costs will run you in the neighborhood of 10%, and the fact that there is no real "MLS", (multiple listing service), and no central repository of closing prices available to the public (that I'm aware of) it can make price discovery a bit challenging.

Unfortunately, if you are newbie here, you are going to have to work with *someone* so pick your poison. It's probably wise though to follow the advice of people that have gone before you and "never trust anything your realtor says". That is not to say that they are intentionally lying to you, but when it gets into more complicated matters like easements and land use restrictions it may be that they just don't know.

For instance I've noticed some lovely stately homes in the neighborhood I live in bordered by 10 story apartment buildings. And, when I say, 'bordered", I mean sharing a wall. How would you like to move in right before that two years of constructions, not to mention sayin "good bye' to the sun. Zoning, for one thing, is a lot more liberal here....just one thing that you're probably not contemplating when you find your new home.

Uruguay Guy

Wednesday, June 11, 2008

Sia Furler

a change of pace in the wake of fuBarrio's death.

Today, Sia Furler. A towering talent.

granted i'm in uruguay, but why is it that i know that paris hilton and lindsey lohan have released albums and i never heard of this girl until the other day surfin' youtube?

anyways, here is her signing some 4/6 time blues live in a radio studio.

the clip is a little squirrely because it starts with the end of the previous song in her set. hang in until the 1 min mark to see if she's your "cup o' tea". enjoy


Sunday, June 08, 2008

A Beautiful Soul, A fUgly Mug

Montevideo, 8 June 2008, AP Newswire - Mourners remembered fuBarrio today in a ceremony that characterized fuBarrio as a "beautiful soul"

Many of fuBarrio's friends and family - typically reclusive characters - were in attendance.

fuBarrio's only son, pictured below gave a stirring eulogy, that in typical fasshion, glossed over fuBarrio's many and varied flaws.

In addition, fuBarrio's daughter regaled fuBarrio's generosity. She even recalls when he accidentally tipped over 7% at a restaurant due to a calcuation error...He realized it while in the parking lot and reluctantly decided not to go back in and demand change.

fuBarrio's friend, clyde, amused guests at the reception afterwards when he did an impression of fuBarrio after going into diabetic shock after consuming too many twinkies in a manic binge after Ben Bernancke used tax payer money to back bad debts of Bear Stearns for JP Morgan

Among the guests were well known stars of screen and cinema, including pepe, whose likeness has been used for many movies including the gremlins.

fuBarrio's brother who despises crowds, people, flying and ceremonies made the sacrifice to make a special trip out

Fubarrio's uncle Ted drank a little too much of the Patricia Stout and spent the majority of the reception "sleeping it off".

The importance of the event even brought out fuBarrio's boss, who admits to hating "these kinds of get togethers"

Most guests seemed unwilling to discuss the suspicious nature surrounding fuBarrio's death, or were feigning ignorance as to the circumstances surrounding his untimely demise.

While police have not been able to rule out "foul play" surrounding the death of fuBarrio for now it is being attributed to natural causes.

"Look, that mutt had a big mouth, and an unforgettably fugly mug. That's not going to make you a lot of friends, so it's a little early to rule anything out" said Ernest Bauman, the detective in charge of the investigation.

Saturday, June 07, 2008

fuBarrio Services Scheduled for Sunday

Services for the enigmatic "devil dog" known as fuBarrio have been scheduled for this Sunday. At the request of the public health department, it will be a closed casket ceremony.

"Hey, there are going to be little children there," the Montevideo Director of Health and Human Services was reported as saying. "I mean, there's no reason to traumatize people."

Curiously, fuBarrio reportedly has never looked better. "I don't think I've ever seen him so peaceful. I guess it took his death to release his twisted view on life out of that poor corpse," Golden Lotus, his long-time caretaker, said during a press conference.

At the request of "conspiracy theorists" worldwide who followed fuBarrio's paranoid rants, authorities have not ruled out 'foul play' in the death of fuBarrio. A complete autopsy has been ordered however, results have been delayed after the medical examiner assigned the fuBarrio case quit under protest of inhumane working conditions.

Thursday, June 05, 2008

FuBarrio Dies

AP Montevideo, Uruguay - fuBarrio, blogger and notable bigmouth, cheapskate, and undisciplined trader passed away on Tuesday after a months long illness friends and family reported.

fuBarrio had been on death watch ever since Hillary Clinton lost a string of disappointing Democratic primaries in the US presidential election.

No stranger to controversy, fuBarrio will probably be remembered best for his acerbic wit, his utter unwillingness to use spellcheck, and a penchant for saying really stupid opinionated things. While not noted for accomplishing anything in his short twisted miserable life, fuBarrio lobbied tirelessly for the abolition of the US Federal Reserve, a return to sound money policies, and the irradication of pop artists who don't write their own music. Needless to say, the fight for his dream will continue on by those he inspired after his passing.

Friends and family (both of them) have tentatively scheduled private services on Sunday for those wishing to celebrate the life and times of fuBarrio. Anyone wishing to honor fuBarrio's memory may make a donation to the Hostess, Dr's against Diabeties, Foundation in fuBarrio's name.

Hey 19

Way back when
In two thousand-seven
....etc etc.
(with apologies to Steely Dan)

ok, i think the line is actually "sixty-seven"

They are buying dollars for 19 pesos even at a bunch of the cambios yesterday...in fact at some of the cambios the spread is an entire peso....5% spread between the bid and ask -- good grief -- we're not talking about airport exchange houses. I'm talking about downtown.

So, what does that mean? Well, since I got here, and the exchange between the US dollar and the Peso was around 24, it's down a bit over 20%.

Since the "crash" when it went into the 30's...hmmm....

The really shocking thing is the last little move took place at a time when the dollar was strengthening against gold and some of the other euro and asian currencies. Perhaps south america is gettin ready to extend its move to the upside.

Really aggravates and already inflationary situation for expats living off of US dollars here.

Ciao for now