Archive | May 2016

Floating Oil


Oil has had a nice recovery this year (see graph for Brent, YTD), up about 18% to over $48/barrel today. Of course, this is still well below the +$100/barrel we saw from 2011 through most of 2014, so will oil continue its climb higher? Um….no. I don’t see any oil tankers in Santa Monica Bay today, but if I looked out my window in Singapore, it would be a very different story. Through the Straits of Malacca, between Malaysia and Indonesia, one of the most strategically important shipping lanes in the world, flows more than 15 million barrels of oil Read More

Housing Has Legs


Surprisingly strong housing numbers out this morning: new single-family homes rose 16.6% in April to an annual pace of 616,000 (see chart below), well above expectations, and up 23.8% over the past year. Supply of new homes fell to just 4.7 months, all due to faster sales (inventories were flat). Sales are up strongly in the Northeast, solidly in the South and West, although down in the Midwest. The median ($321,100) and average ($379,800) prices jumped 9.7% and 13.5%, respectively, the last year. There is more to come. The graph below shows the data from 1963. We may never reach the Read More

Inside the Triangle


Complexity makes investing so challenging. Unlike the pure sciences, there are no hard truths in investing, no discoverable axioms that determine outcomes with 100% confidence. At best, we can speak in probabilities, but even these probabilities come with large standard errors. Investing demands humility, even from the best of us. This complexity comes from the infinite number of variables that affect investments. These variables are not just economic and financial, but also political, social and emotional. Investing cannot be reduced to a formula or an algorithm, however many Greek letters they may contain. It’s not just the sheer number of Read More