Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Bear in a China Shop (by Fayssoux)

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Jim Chanos and Mark Faber have been making high profile observations about a potential implosion in China due to excess credit and overbuilding ("Dubai, 1000 times worse").  The inference from the Chanos interview is that he is looking to short raw materials companies that have been riding the China infrastructure boom, as well as companies listed in Hong Kong.

FXI is already down a bit since November.  Near term, the Baltic Dry Index has started to dip, possibly a seasonal effect, but potentially a signal the decline has begun.   .

$bdi 

Leading Indicators to Contraction (by Gary)

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Hi Slopers, it's Gary with another macro-view of the rally in markets and human spirits.  The following is a brief excerpt from my newsletter  this past weekend, NFTRH61.  There is a reason that bears encounter agonizing periods of market melt-up and as we all know, that reason is inflationary monetary policies designed to pump all manner of assets at the expense of paper promises (USD) printed at will.

Now, with that obligatory gold bug moment is out of the way, let me explain… In a boom, most everything goes up in dollar terms and usually in terms of gold as well.  This is what has happened in our mini-boomlet that I call Hope '09.  In actuality, the entirety of this farce has simply been a consolidation by gold after its ratios rose unsustainably along with the USD last year.  Now look at the lower panels of the second chart below. 

It is my opinion that Hope '09 will last approximately as long as it takes gold to finish its consolidation in silver terms and join the rise being shown in ratio to the stock market, oil, copper, foreign currency, and many other assets.  Anyway, here is the excerpt:

Excerpted
from the November 29th edition of Notes
From the Rabbit Hole (NFTRH61) 

The junk bond etf HYG is a good indicator of the mood of speculators and their confidence in policy makers’ ability to keep the inflation going because the fundamentals of the companies represented here boils down to the fact that money is created out of thin air (inflationary debt creation) and targeted toward keeping enterprises destined to fail, that should fail, alive. This is part of the wasteland where money goes for very unproductive means, other than to enrich speculators taking in interest income while playing a game of musical chairs with the public trust.

Comm48hyg

The lower panels show that damage has been done to HYG’s ratio to safer 7-10 treasury bonds (IEF) and higher quality corporate debt (LQD). These breakdowns, if they follow through, are expected indicators to the next round of credit problems that would attendanother deflationary impulse.

Of course, it is the ratio of the historical honest monetary anchor, gold to various assets that would be the ultimate gauge of speculators’ urge to continue gaming the system or perhaps cash out of the game.

The gold-silver ratio (GSR) continues to be the stubborn holdout to gold’s otherwise good looking bottom-making stance as measured against a whole host of other positively correlated assets. The short-term uptrend continues but the intermediate downtrend line has not yet been broken.

Comm48gsr 

Gold continues to do impressive work against the stock market, oil and copper in establishing fledgling up trends after fanning through the various bottoming processes.  The NFTRH stance remains that, as with the explosion of fear that was Armageddon ’08, gold’s upside explosion in ratio to these things was unsustainable. The entirety of Hope ’09 has seen a downward consolidation of these ratios in anticipation of the next upward leg. This will happen along with the next credit contraction and deflation impulse.

An Introduction to Wine Collecting – Part 1 (by Biffermas)

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Thomas

I'm fortunate to be spending the Thanksgiving holiday touring through Mendoza, Argentina, home of fantastic Malbecs, periodic nauseating inflation, and economic collapse.  Mendoza is Argentina's most famous wine region and sits at the foot of the Andes, which rise 16,000 feet above the valley floor.  This provides desert-like conditions ideal for growing grapes.  Since I'll be unable to contribute anything on the trip I’m writing a series of posts on the subject of wine collecting beforehand.  I will speak directly to the small-fry wine collector, not the mega-rich sleazy oligarch collector (I'm sure some of them are nice).  If hot robber-baron on Sotheby's auction action is your forte, I have nothing to offer you.  I buy collectible wine by the bottle or case, not the gross. My “cellar” holds 500 bottles, not 10,000-20,000+.

I possess a few qualifications that might enable me to speak as an amateur wine collector:

  • I've been collecting wine for five years, and witnessed the stunning euphoria through 2007 and the precipitous decline that bottomed out recently.
  • I'm taking the certificate series of wine-making courses from UC Davis, the finest wine making school in the United States.
  • I've been making wine from kits or grapes for 10+ years.
  • And most importantly, I'm a wino, and so is my father, wife, siblings, and friends.  

What is a collectible wine?  Is it possible to lay down a case of 2009 Ernest and Julio Gallo wine (we will sell no wine before it’s made) and realize some serious capital gains 15 years later?  No.  A collectible wine must possess certain structural qualities to age properly, namely a high score from The Wine Advocate / Robert Parker, and a high score from the Wine Spectator (Wine Speculator).  Just kidding (not really).  I'll cover what qualifies a wine as collectible in the next posting; I can say that most wines you'll find in the supermarket and small liquor store are meant to be consumed quickly, not stored for years.

Steadman

Two wine periodicals set the stage for prices based on their ratings.  The most influential is The Wine Advocate, authored by Robert Parker.  High ratings of 94 or better will automatically inflate a wine's worth, while a sub-90 score will plummet a speculative wine future's value.  The Wine Spectator is less influential but still valuable if a high score is given.  Two other periodicals, Stephen Tanzer's International and Wine & Spirits aren't as useful for collectors.  These seem to be more consumer-driven rating systems.

Parker 

 Some people say negative things about Robert Parker.  I've heard him referred to as, "A self-promoting, superfluous windbag", or an "Over-rated, compromised lap dog of the famous French producers", but I can't speak directly to these claims.  After all, I'm merely a small-fry collector.  Regardless of what "they" think, he's hugely influential on wine prices.  A 100-point rating will pound some lucky person's wine futures into the stratosphere, much like a surprise earnings report from Travelzoo.  A few wines manage to receive 100 points from both Robert Parker and Wine Spectator, and people thus pay dearly for them.

Next post: What is a Collectible Wine (besides a good score from Robert Parker)?