A private Swiss Bank has a more shorter term bullish view of the US dollar. His argument:
ECB policies are set to have a disproportionately large impact on
markets, with consequences experienced in the far corners of the world
• A shortfall in the supply of liquid euro government bonds is likely to
push up bond prices to unrealistic levels, while a shortage of safe assets
could distort global asset prices
• The euro will continue to undershoot its fair value, combining with
ongoing Japanese QE-induced yen weakness to provide dollar strength
for a while longer
hd, not exactly.
1. The bonds pay interest not dividends.
2. The bond current yield is only 9.28%.
The yield to maturity in 3 years is 11.3%
The A preferred's have a current yield of 10.1% and a yield to call of 13.8%.
The B preferred"s have a current yield of 11.2% and a YTC of 12,0%
Since it's unlikely that either of the preferred stocks will ever be called, they should be valued on their current yield. Therefore my opinion is that the B's with their current yield of 11.2% are probably a better buy than the bonds since you aren't locked in for 3 years to gain the added cap gain from the bonds.
While the bonds rate higher on the security ladder, they're still rated C as junk bonds and their liquidity is not as good as the preferred.
Those numbers are if the stock isn't called. If it is, the numbers drop to 4%, 6% and 9%. Still very respectable for a one month return.
A nice Buy/Write combo is to buy at $2.60 and sell the Apr $2.50 calls for 20 cents for a 7.7% guaranteed return for 29 days. But you might be able to get 25 cents for 9.6% or stretching it at 30 cents for 11.4%. The ask is currently 35 cents.
energetic, anytime you can buy a stock for $2.40 and then sell a 30 day call for 20 cents is a slam dunk, unless you think it will fall and stay below $2.20. The worst I can do if it's NOT called is make 8.2% in 30 days which compounds annually to 162%. If called, the gain is 14% which compounds to 374%. Sometimes you just gotta settle for table scraps.
Tell me how you would close a short position of half a million shares without massively moving the market, or is that what partially happened yesterday? But, voume was only about 800K shares, so a buyer couldn't have bought more than 100K shares. A couple of days ago, there was another big burp to the upside, so maybe he picked up another 100K shares. But the PUT position is still open. He can't close it with contracts, there aren't that many available, except at a huge ask price of maybe 30 cents, Oh well, three more days of fun.
There doesn't have to be a single seller. Buying a PUT is the same as selling a CALL. I was one of those who sold $2.50 calls when the price was around $2.40 and got a 20 cent premium. I would have been satisfied having it called and getting out with $2.70. Instead the stock soared well above $3 and I was stunned when someone bought the March $2.50 puts. And it was a single buyer who bought the 5000 contracts. The sellers were many smaller holders who thought the bid was nuts and happily bought the other side. I doubt if he even paid 5 cents/share. Notice that today the stock surged to $R2.50 and then was beaten back. Three more trading days to go. The battle is on to keep the price below about $2.45.
dragon, some more bad news. There is in a bid to buy about 300 June $2.50 contracts for 45 cents. That means he needs a price of $2.05 to break even. Another pretty good size bet for a lower price. No large call contracts in sight.
ultra, I just spent he past hour looking at the ratio of copper/oil prices for the past 15 years. You're right, they track well except for sudden spikes, like when the oil price surges in one dirfection or the other. But those periods are usually short, lasting less than a year.
The long term correlation of copper with Brent I saw was 0.94. The highest of any variable's correlation with copper. So aside from arnolds good point of the sudden dramatic increase in the supply of oil, if you think oil is headed down, copper should follow.
UNLESS, there is also a corresponding dramatic decrease in the supply of copper. I'm guessing that the mine operators wouldn't mind shutting down some mines to intimidate labor unions and govt officials as well as reduce supply.
This is making my head hurt. I'm going to the golf course.
arnold, your point was well made. but then you spoiled it by saying "there was never a perfect correlation." There never is a perfect correlation between two independent variables.
My best quarter mile ever was 90 secs. I jogged one a couple of months ago in 150 secs (10 minute mile.)
I felt so good I started to do another lap and then stopped myself with "Are you nuts?"
But with paramedics standing by I'm pretty sure I can still do a 10 minute mile. :-)
No aches or joint pains anywhere. That's the best part.
I've been looking online for a correlation between the prices of copper and oil. So far all I've found are short term studies of about 120 days showing the correlation to be about 0.6 which is fairly good. Whenever the linkage weakens, it seems to be a fear of disruption of supply from the Middle East, aka, periodic wars.
I'm looking for a longer corelation like 10 or 20 years which I'm going to guess will also be around 0.6.
The reason I'm bringing this up is that I've turned very bearish on oil for many reasons, specifically that oil production in the US is being cranked up, even with low prices. The rig count is down, but wells are still being drilled, just not finished with the fracking or horizontal drilling. But pumping is up. Storage is reaching it's limit and the refineries can't handle WTC. Lots of other reasons most of you already know.
As a result I think oil is not yet near the bottom in price and may remain down for several years.
How will that affect the price of copper? TC?