Value, commodities, emerging markets

CCR (CONSOL Coal Resources LP)

Greenlight Capital holds a ton of this. Div. yield > 34%.


The thesis is that with wheat prices on a roll, fertilizer is going to be in increased demand. Sounds plausible. Energy is an input into nitrogenous fertilizers, and that’s getting cheaper, so this might be a double win.


Reports of the “steepener” trade coming into its own have been heard increasingly lately. It is linked to inflation expectations, of course. I created this graph in FRED, which seems to show that it really is a thing. For the brave, the recipe is long five five-year treasury note future to (short) one 30-year treasury bond one. Don’t try this at home!!


Came across this bombed-out housebuilder. It’s a risky option, but Einhorn thinks it’s a winner.


Not close of US, but close of Europe. DX weak. Commodities broadly positive, metals, agricultural and energy. Miners mixed. Equities: Europe off a bit, US flat.

Update: 8:15pm GMT. Equity indexes all collapsed quite hard on news that Pelosi has given the Republicans 48 hours to reach a deal on the stimulus amount. I am not following this closely, but I believe that both parties have, at separate times, proposed $2.2T without the other side agreeing on the amount.

NASDAQ Index and the steepener

I listened to the market huddle, with Nick Givanovic. He basically tried to argue that equity market movements, and especially the Nasdaq, were entirely driven by movements in the bond market. He’s a lot richer than me, but this just isn’t true. Plotting the 5-30 yield spread against the NDX gives a chart which shows no correlation at all, to speak of.

The idea is the so-called “Fed model” of the stockmarket, i.e. that index levels are an NPV of a future series of dividend flows which never change. It just doesn’t work, mainly because profits, and therefore dividends, depend on what his happening in the economy too.

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