A few days ago, all the locals were surfing the main beach break.
I decided to take a long walk around the point and take a look at this cove beach I spocked a few days earlier on a jog before the swell came. (I have a unique ability to find secret spots and set ups).
I anticipated correctly as I was able to surf this perfect right hand tube off the rocks to the head. No one out. (Took a picture from high above on the cliff after the session. It was bigger/better earlier, when I surfed it.)
What’s up now?
Now, you ask, “Where exactly is that spot?”
Do me a favor.
But I will say it is kind of near here:
Or maybe not.
In Gold News:
The gold bug has hit the shopping center.
Gold Max — said to be he largest chain of jewelery-purchasing stores — says it’s on track to open 100 gold-buying shops in Southern California within the next year. It already has seven Orange County stores.
Yesterday Marc Faber first made a guest appearance at the Ira Sohn conference, warning his audience to prepare for war, then promptly shifted to Bloomberg’s offices where he discussed his outlook primarily on China, but also on the US, with Carol Massar, once again warning about war. As usual, he did not mince his words, warning of a “recession”, and predicting that China is simply not growing fast enough in real terms. Nothing new. He did however branch out into the topic of class divergence in both emerging and developed economies: “in front of far too many luxury hotels there are far too many Ferraris, Maseratis, Bentleys… I see a boom everywhere, except for the working class, except for the lower, middle class. But among the well to do people the wealth that is floating around and the prices you pay for high end properties is incredible, and I think that will come to an end, and a lot of people will lose a lot of money… I was in La Jolla, Laguna Beach, Newport Beach, I was in front of a restaurant smoking and I’ve never seen so many Ferraris, Maseratis, Bentleys and fancy cars anywhere in the world, and this is in America. I am not saying this is wrong, but there is an opulence among a small group of people that is huge when there are lots of people that are struggling. This gives me a bad feeling because I’ve seen so many emerging economies when they were booming, that was the time to get out.” As for the US economy, Faber agrees that the only thing that can help is a massive crisis (or “conflagration” as David Stockman calls it) that jars America out of its hypnotic state. And, sure enough, it will come.
Second, I usually have a lot of input in years past for the Cinco De Mayo weekend’s boxing festivities/Kentucky Derby Weekend. (Check the archives for a near flawless track record on boxing picks/racing picks in years past). This year I haven’t really focused too much. Manny Pacquiao VS Sugar Shane Mosley doesn’t really capture my attention, neither does this years field for The Kentucky Derby.
In fact, I won’t be showing up at either event. Which is really a shame since I just picked up the sickest Custom Suit from my tailor.
(Side Note: as we all know, this weekend marks the start of summer on The G Manifesto Calendar.)
Anyways, that all being said, I am going to defer to Andy Beyer (a gentleman that I have been fortunate to have a table next to at The Turf Club of The Del Mar Racetrack in the past) on the Derby:
At the start of the year, people involved in Thoroughbred racing were speculating whether Uncle Mo would win the Kentucky Derby and go on to sweep the Triple Crown series. Three weeks ago they were asking if he would be fit and healthy enough to perform well in the Derby. This week they were wondering if he would even get to the starting gate. On Friday morning they got the disappointing answer: The colt is scratched from Saturday’s race.
In a way, the decision by trainer Todd Pletcher and owner Mike Repole shouldn’t affect bettors’ analysis of the Derby. There were so many negative signs surrounding Uncle Mo that many handicappers were prepared to throw him out – even though he was, on his best form the oustanding horse in the field.
After his championship season as a 2-year-old, Uncle Mo’s 3-year-old campaign has gone awry from the start. He won a trumped-up race at Gulfstream Park that was little more than a glorified workout and then suffered a shocking loss against a terrible field in the Wood Memorial Stakes. A few days later Pletcher issued a press release saying that Uncle Mo was found to be suffering from a gastrointestinal infection – the excuse for the defeat.
Some skeptics weren’t fully satisfied with this explanation because owners and trainers rarely tell the whole truth about horses’ physical problems. Questions about Uncle Mo multiplied since he arrived at Churchill Downs. His two workouts were undefinitive. His camp kept hedging about whether he would run. Repole announced that he, Pletcher, and three veterinarians would confer Thursday evening to decide the colt’s status – hardly a sign of confidence two days before the Derby.
With Uncle Mo out of the lineup, Florida Derby winner Dialed In solidifed his status as the favorite. Many fans have watched his exciting last-to-first rallies and concluded that Nick Zito’s colt is a natural Derby horse.
Yes, Dialed In was impressive charging from far behind to win the one-mile Holy Bull Stakes at Gulfstream in January. But in his two subsequent starts at 1 1/8 miles, he lost an allowance race and then struggled to win the Florida Derby. The race – filled with speed horses, run with fast early fractions – was a perfect set-up for him, yet Dialed In barely got past the 68-1 pacesetter, Shackleford, to prevail in slow time. Eleven horses in the Kentucky Derby field have earned higher Beyer Speed Figures in 1 1/8-mile races than Dialed In did in either of his starts at the distance. I believe that Dialed In’s best game is rallying at shorter distances and that he will even less effective at 1 1/4 miles. Throw him out.
None of the Derby entrants (except for Uncle Mo) has yet run a race good enough to stamp himself clearly as a potential Derby winner. Their speed figures are all sub-par. Under these circumstances, it makes sense to look for a colt whose form is on the upgrade and is likely to improve further on Saturday. Based on this standard, these are my top three:
As far as Manny Pacquiao VS Sugar Shane Mosley, look for Pacman to stop Mosley in the fight that no one wants to see (I will watch it however, or at least I think I will). It might go the distance if Paxquiao takes his foot off the gas out of respect.
It will be good to watch Kelly Pavlik’s comeback though.
The Rest is Up to You…
Michael Porfirio Mason
AKA The Peoples Champ
AKA GFK, Jr.
AKA The Sly, Slick and the Wicked
AKA The Voodoo Child
The Guide to Getting More out of Life
A lot of action in the Cocoa Market so far this year. Many people have been asking me how to play it. If you don’t want to trade futures or options, you can always trade NIB iPath Dow Jones-UBS Cocoa Subindex Total Return ETN.
Battle Pits Cocoa Speculators against Chocolate Makers
On the morning of July 15, 2010, Nauck realized he was being attacked.
It was 8:30 a.m. on a cloudless, beautiful day. Nauck was sitting at his desk made of polished Oregon pine on the fifth floor of an old factory building with a view of the church spires in Bremen’s market square. Nauck was going through his mail. The quarterly figures were looking good, the company had just hired 62 temporary employees and the economy was picking up steam. As he was going through his morning routine of checking prices and stocks online and glancing at a few websites, Nauck saw something that startled him.
The price of cocoa was dramatically high. In just two days, it had risen by 132 British pounds (€148, or $220), and it was still rising. During the course of that trading day, the cocoa price in London would climb to £2,732 per metric ton, a 33-year high. It made Nauck fear for his livelihood, his workers and his factory — in short, for everything he was about.
Nauck is the majority shareholder and managing director of Hachez, one of Germany’s 90 chocolate makers. The company was founded in Bremen in 1890 by Joseph Emile Hachez, and Nauck’s grandfather was already a co-owner in the 1920s. In 1990, when the company was in trouble, Nauck took out millions in loans and bought shares in Hachez. As the company’s new managing director, he updated its product line to suit modern tastes.
Anthony Ward, the man behind the attack on Nauck, is sitting in an office in London. The fund manager and trader has been given the nickname “Choc Finger,” a play on the James Bond villain Goldfinger. In the industry, though, it is meant as a term of admiration.
Anyone who understands the basic rules of Ward’s game, commodity speculation, can also understand why the global economy is plunging from one crisis to the next.
Ward doesn’t like journalists, and he hardly ever grants interviews. Instead, he employs two public relations agencies, whose publicists can say a lot without saying anything.
A broad-shouldered man in his early 50s, Ward grew up in an upper-class family with a long line of merchants. His grandfather reportedly supplied the British Navy with rum. His office is in a black-painted townhouse in Mayfair, London’s most exclusive neighborhood.
“When it comes to money,” says a man who worked with Ward for years, “he focuses on this goal alone.”
Cornering the Cocoa Market
Ward had long spoken of his ambition to corner the world cocoa market, and he had already attempted to do it twice before, in 1996 and 2002. He embarked on his third attempt on July 15, 2010.
Ward’s plan could work because the global economy has become more and more complex. The price of cocoa has been rising — seemingly unstoppably — for the last five years. But this is only part of the global boom in commodities. Over the last year, the price of wheat has risen by $4.83 per bushel, to $9.03. In the same period, the price of a metric ton of corn has gone up from $3.46 to more than $7.00.
Commodities speculation fuels inflation in India, drives up the price of tortillas in Mexico, causes famines and fuels political unrest. Speculators act as accelerants — and the smaller the market, the easier their game.
Cocoa makes up one of the world’s smallest commodities markets. Indeed, the annual harvest amounts to only 3.5 million tons, with more than half coming from Ivory Coast and its eastern neighbor, Ghana. The average price per metric ton is £2,000, meaning that it takes only £7 billion to buy a year’s harvest.
The cocoa market’s simplicity makes it particularly vulnerable to speculative attacks and attractive for the billions of roving dollars and euros. Depending on the estimate, speculation in the commodities markets alone entails somewhere between $400 billion and $800 billion. Ten years ago, it was only about $5 billion.
Experts say the money comes from three sources: from private wealth investors or, in other words, the world’s super-rich; from banks trading for their own accounts and at their own risk; and, finally, from pension funds in the West investing the retirement savings of millions.
The cocoa business is actually very straightforward. During the harvest, traders buy cocoa beans directly from farmers in places like Ghana and Ivory Coast and, later, they resell them to chocolate makers in Europe. Since traders can’t know when manufacturers will buy their cocoa, there is an exchange, where traders and others can buy and sell goods at any time. Still, the downside for traders is that the price that the exchange offers is generally lower than the price that chocolate companies pay.
To make cocoa scarce, Ward had to manipulate how the cocoa business works. He had to lure traders away from the chocolate factories and convince them to sell their cocoa on the exchange, instead, because it was only there that he could buy large quantities of cocoa in an ambush-like maneuver.
Chocolates may not come easy on the pocket as cocoa prices surge ahead in the domestic market due to global supply constraints.
India imports more than half of its requirement of cocoa every year with demand increasing at a rate of 8% per annum. “With supply from Ivory Coast disrupted due to political problems, availability is low in most of the markets,” traders said.
Indian cocoa prices are now at a premium of more than 12-15% compared to the global markets. Dry beans at the farm gate are above R175 per kg while wet beans are selling at around R55 per kg in Kerala. “There is a scramble for cocoa and the supply is tight. Farmers are getting good returns for their crop,” Shiny George of Indian Organic Farmers Company.
Ivory Coast produces nearly 40% of the world’s raw cocoa, valued at about $3.8 billion. Interestingly, the wholesale price of cocoa has been surging ahead and doubled in the previous four years as global demand increased, particularly in India and China.
No one is taking the cacao or cocoa plant for granted these days. Chocoholics and chocolate manufacturers everywhere are anxious about the political turmoil in the Ivory Coast, the West African nation that produces nearly 40 percent of the world’s raw cocoa, valued at about $3.8 billion.
“Cocoa prices should come down by another $100, but not more, as there is a logistics nightmare waiting for the supply chain on the ground — banking, storage, trucking, workers, cash. No one will return until the guns are silenced.” – Luis Rangel, ICAP Futures
Alassane Quattara, the winner of the Ivory Coast’s November presidential election, suspended all cocoa and coffee exports for 30 days to cut off funds to incumbent President Laurent Gbago, who refused to leave office after a run-off election and who threatened to take over the purchase and export of cocoa.
While 68 companies are licensed to export cocoa from the Ivory Coast this season, the market is dominated by major international firms, such as Cargill, Archer Daniels Midland and Barry Callebaut AG. Among them, they bought 630,371 tons of cocoa during the 2009-10 season, more than half of the tonnage registered.
Cargill Inc.’s Ivory Coast unit honored the ban and suspended purchases. ADM told Dow Jones it was evaluating the situation, as did Barry Callebaut, adding it had sufficient cocoa stocks to cover its processing needs.
Even before the ban, the wholesale price of cocoa doubled in the previous four years as global demand increased, particularly in Asia. Uncertainty of supplies — and British commodity trader Anthony Ward’s attempt at cornering the cocoa market last year — led to cocoa powder prices holding at historical highs in 2010, and it appears volatility will continue to put pressure on prices.
Jim Rogers breaks down commodities from an old interview.
Jim Rogers : Missing out on Commodities?
Matthew Bradbard’s daily commodity round up:
Brace for the Fed as we expect it to be a market mover. Indecision in the oil market as prices close virtually unchanged today. If we fail to make a new contract high in the next few sessions we should resume the set back we’ve been forecasting, in June that would be a trade over $114.05. A settlement below the 20 day MA should confirm a move lower but before either scenario happens we’re just guessing, that level is $108.90 in June WTI. We suggest the sidelines in natural gas willing to be a seller on a spike higher. We cut losses for clients that still held bear put spreads in the June ES; it resulted in a loss of approximately $400/per position including fees.
America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we’re broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year’s retirees from the IRS, the SEC and the Department of Energy.
Most Americans know about that budget. What they don’t know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the “official” budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the “other” budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. “Our jaws are literally dropping as we’re reading this,” says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. “Every one of these transactions is outrageous.”
Fidel Castro confirmed he had resigned from the top leadership of the Cuba Communist Party in an article published Tuesday, after the party approved a raft of economic reforms.
“Raul knew that I would not accept a formal role in the party today,” Mr Castro said in an article on the Cubadebate.cu portal, referring to his brother Raul and his own absence from the party’s new Central Committee, elected on Monday.
Mr Castro, 84, had served as first secretary in the Central Committee of the party – which underpins the country’s communist government – since the party’s creation in 1965.
He said he had handed over the functions of the party head to Raul when he ceded power to his brother because of his own declining health in 2006, though he retained the first secretary title.
You’re quite the traveler! What made you want to start traveling? How many countries have you been to?
I’ve been to 58 countries now, including Antarctica and a few self-proclaimed republics. It all started on my trip to Antarctica when I was 18. It was the best experience of my life. In was then I found my vocation – to vacation. Since I was a little kid I always dreamed about being an explorer. The trip rekindled that passion. Now I refuse to accept an alternative destiny, at least in the medium term.
What was the most interesting country you’ve traveled to and why?
Ethiopia. I could talk all day about it… the women, the culture, the history, the vibe… Let’s just say it’s a very special place for me. I’ll have to dedicate a whole post to it; I couldn’t do it justice in this space. Second place would have to be the Philippines – it’s a sexual playground.
0:20 It’s a one-sided directive in Europe. The ECB’s only job is to control inflation.
0:55 The big question is whether the U.S. dollar should be the reserve currency; it no longer is, it shares that role with the euro, other currencies, and commodities. But it’s not just gold being used as a substitute, but oil too, which is putting upward pressure on the market.
1:55 The euro is under “some cloud.” It is “quite inappropriate” for the ECB to raise rates right now.
2:30 China, and its inflation problem, is a serious concern. It stimulated its economy, but is now trying to reign in its rate of growth. It is putting restraints on the banking system, but now a shadow banking system is rising. Big banks may not be willing to lend, but the shadow banking system is growing out of control. Real risk of wage and price inflation. Real estate price spike has led to a wage price spike. The Chinese government should have let its currency inflate, but because they didn’t, they now face wage inflation.
4:40 China was the main beneficiary of globalization, and the big winner in the financial crisis.
6:00 State capitalism may have worked better in China lately, but it’s a mistake for others, like Brazil, to follow suit now.
“Two different directives govern the European Central bank and the U.S. Federal Reserve. In the case of Europe, it’s a one-sided directive. Their only job is to prevent inflation, and in the case of the U.S., it is more balanced, to maintain employment and financial stability.”
On whether the U.S. dollar is still a safe asset:
“There’s a big question whether the U.S. dollar should be the main reserve currency and in fact it no longer is because it maybe accounts for two-thirds of the monetary reserves. The euro is an alternative and there’s a lot of diversification into other currencies and even more into commodities. Not only gold, but actually oil is now an asset class for investors. That has put some upward pressure on the commodities.”
On whether the sovereign debt crisis has diminished euro’s chances of becoming a reserve currency:
“The euro is under a cloud, but that is exactly because there are some inflationary pressures from the price of commodities, particularly now oil and also food prices have risen. That is what has induced the European Central Bank to raise interest rates at a time which is, in my opinion, quite inappropriate…It is not appropriate in current circumstances when you have a number of countries that are suffering from too much debt and high interest rates that they have to pay.”
On China’s economy:
“China has really stimulated its economy full force very successfully and now it is trying to rein in the rate of growth, and is exercising very strong constraints on the banking system. But because of that constraint, and because of the big demand for money, a shadow banking system has arisen and is growing very rapidly. So while the big banks under direct central control are in fact refusing to lend, there is a shadow banking system that is growing out of control. There is a real danger there of wage price inflation because prices have gone up, particularly real estate prices have gone up because there was a real estate boom.”
“Therefore, wage demands have risen, and we now have 20%, 30% wage increases. The Chinese government has made a mistake not allowing its currency to appreciate, which would have controlled the price of inflation. Instead of that, we now have this wage pressure, which is a little bit out of their control.”
Violence continues as former president refuses to concede defeat
What began as the week when Laurent Gbagbo would finally concede defeat ended with the Ivory Coast strongman defying the world from his bunker in Abidjan. After watching his area of control shrink to only a few pockets of the lagoon city, his forces pushed back dramatically overnight on Friday with an assault on the French ambassador’s residence.
AFP reported yesterday that Abidjan’s Golf Hotel, headquarters of the internationally recognised President-elect, Alassane Ouattara, had come under attack. The UN evacuated 17 British citizens from the high commissioner’s residence, which is close to the Gbagbo compound.
The heavy weapons that had supposedly been destroyed in joint UN and French air strikes re-emerged as Gbagbo loyalists retook some ground. Arrayed against the 65-year-old loser of November’s election are the combined might of the French Operation Licorne (Unicorn) force, UN peacekeepers and Mr Ouattara’s ragtag army.
The violent standoff has created its own tale of two cities: each day the commercial capital seems poised to return to normal but at night the shooting starts and everything becomes uncertain.
It is not a war with a single frontline. The complications of Abidjan’s lagoon is matched by the complex of alliances that rule its neighbourhoods. In the south of the city, the long queues for food outside the only working supermarket show the struggle to return to normality.
I had a feeling Laurent Gbagbo wasn’t going to roll over.
Gbagbo forces advance again in Ivory Coast
And as if silver bulls needed some more good news, here is a report from the Morgan Stanley metals desk…
I was told on Wednesday that big buying went thru on Tuesday in may atm silver calls which should make the market short gamma.
A short gamma position will become shorter as the price of the underlying asset increases. As the market rallies, you are effectively selling more and more of the underlying asset as the delta becomes more negative.
So what that means is that the SELLER of the calls, probably bought Physical to delta hedge themselves neutral. As this market jumps just about 1-2% daily (this week alone +6.5%) they would need to now re hedge to bring themselves back to neutral by BUYING more Physical as SILVER goes higher, essentially driving the market Higher still and so the chase goes theoretically moving the market higher causing them to buy more to hedge and moving the market higher, thus buying into rallies.
Now they could BUY puts also to create positive Gamma as well to offset some of that pain they are not bound to the Physical for their hedge. Lots of what if’s but that’s the idea.
On the other side if Silver were to gap lower, this would not help either as they would need to SELL Physical into a falling market to re-hedge themselves.
Great in a slow steady market, nightmare in a volatile
“How I see it
Anything you wanna be you can be it
If your mind can preceive it
And your heart really believe it
Then you half way there and all you got to do is do it
And if you give it all you got there ain’t really
Nothing to it” – Dead Prez
Many people out there hate on the “Act as If”/”Manifesto Destiny” method of living one’s life. I guess people just don’t like when you try to better yourself and people don’t like change.
“Everybody look at you strange say you changed
Like you work that hard to stay the same “ – Jay-Z
Well, I am here to say that “Act as If” works. Here are three examples:
Back when I was in college, I took a younger kid under my wing and showed him the ropes. He was a cool kid, and reminded me of myself, so I kind of made him my “little brother”, of sorts. He was really into Hollywood and moved up there right after he graduated.
He got a job in the entertainment industry in talent. He always acted like he was going to be a big shot in HWood. I remember when he first started doing it, people used to hate on him.
Later I heard he became the youngest Agent ever at one of the Majors.
Where is he today?
He now represents one of the actors that I respect the most in the world (and I have respect for very few of them) and is the heir-apparent to run Hollywood. I don’t even have to mention the quality of girls he swoops today.
(Interesting Side Note: Over the last few years, we have been hanging out again here and there. Since he is now the man in Hollywood, he sometimes tries to flow me attitude. I have to slap him down real quick every time. After all, I showed him the ropes when we were young proto-type G’s on the rise. He might be the Prince of Hollywood, but when we are in the same room together, he is still #2.)
I knew another kid in college who was always a little more serious than the rest of us, who were mostly into partying, drugs, traveling and surfing. He got dissed a lot for studying and being organized; things like that. He was a pretty good surfer also, but not near the best.
Where is he today?
I recently re-connected with him. He is now CEO of a major Surf Company (everyone knows what it is). He made it happen.
“If you follow your dreams you can accomplish anything
If you always do your best then your destiny is king
Of the world” – Dead Prez
Want another example of “Act as If” working?
I would be a prime example (and I don’t mean Prime 112 in Miami Beach either).
For as far back as I can remember, I have always acted like an International Playboy. Even when I was a teenage two-bit Bean flipper.
I would talk about Custom Suits even before I had them. I would talk about Big Bankrolls even before I knew what one was. I would talk about swooping models, even back when I was swooping models. (That last one is a bad example).
International Playboy to the fullest, Oh my Brothers.
Act as If.
“And what you get is what you see
In your mind visually
And manifest physically
If you stick to it shit’ll work out terrificly”
Life is like twistin’ a blunt, it’s how you roll with it
Just figure out what you want and go and get it
anybody tryin’ to stop you
For tryin to do for you That’s your enemy dun
The sun be right up in your crew” – Dead Prez
The Rest is Up to You…
Michael Porfirio Mason
AKA The Peoples Champ
AKA GFK, Jr.
AKA The Sly, Slick and the Wicked
AKA The Voodoo Child
The Guide to Getting More out of Life