News You Can Use for Wednesday
What I’m reading today …
MacroMarkets new paired oil ETFs launched last week, replacing the previous oil ETFs (UCR and DCR) that were liquidated in June after reaching their termination triggers. Unlike the popular United States Oil (USO), these paired ETFs hold cash instruments and transfer funds between each other, instead of holding oil futures contracts. The paired ETFs will track the price of crude on the NYMEX, and will transfer funds dollar-for-dollar with the price of crude. The securities will use a “reference price” of $100 crude, and the funds NAV at inception is one quarter of the reference price. The funds have a 95 basis point expense, for essentially holding cash.
This isn’t “new” news – I’ve seen it around for a bit – but I find the analysis by the “Economics and …” blog pretty interesting.
Five phases to the current down-cycle
David Rosenberg, North American Economist for Merrill Lynch, has a fascinating analysis. I’ll give you the Cliff’s Notes version …
- The first wave was the end of the housing cycle when starts peaked and began to roll over in the first quarter of 2006.
- The second wave was the end of the home price bubble when the Case-Shiller index began to deflate in the first quarter of 2007.
- The third wave was the end of the credit cycle when the interbank market froze in August 2007.
- The fourth wave was the employment cycle, which peaked when payrolls did in December 2007, prompting the Fed to reluctantly embark on an aggressive policy easing course.
- The fifth wave will be the end of the consumer cycle and the beginning of what may well prove to be the most significant recession since the mid-1970s, and while delayed by the tax rebates, this phase seems to have commenced in June when U of M consumer sentiment collapsed to its lowest level in 28 years.
WASHINGTON — U.S. drivers can expect to shell out more than $4 (U.S.) a gallon, on average, for gasoline for the rest of 2008 and prices will keep rising until November, the U.S. Energy Information Administration said Tuesday.
Horse sales slow to a trot
The rising cost of equine ownership from high feed, fuel and hay prices is causing a bumpy ride for those who sell the animals
Click on your state and find out what’s going on. Cool beans!
What is a little different about today's hedge fund sighting from Bloomberg isn't that certain funds or certain styles are faring poorly (remember the quant disasters of last August?) but hedge funds on average lost money the first half. And that was before fees. Nevertheless, this lackluster showing has put only a dent in their popularity. leading investors to switch managers rather than withdraw from the sector.