Tuesday, January 15, 2008

Bargains everywhere

How is this for an economic indicator: I've been buying wine as it goes for low prices (usually at supermarkets that added premium wine selections during the bubble). The types of wine I'll only drink with friends. Usually a Wine Spectator rating above 91 (not every bottle) but always wine I've already tried and loved. Never do I pay more than 40 cents on the dollar (versus the old price).

Well... I have to stop that. My wine fridge is now 3/4's full of bottles that I shouldn't 'waste' on just me. A few years ago, I'd have one bottle over five years old. Last week I uncorked a merlot after just quickly verifying it wasn't one of the 'snooty lables' and was pleasantly surprised at the richness and smoothness of that 11 year old vintage...

There are bargains out there for *everything.* Cars, wine, toys. Production on most goods cannot stop overnight; but demand can. 'Just in time' cuts the quantity of goods in warehouses; it doesn't eliminate momentum in the supply chain.

We all know Citibank will layoff. Indymac is laying off 24% of their workforce. Gee... why not a full quarter of their people?

Nokia is laying off while sprint is expected to follow

Google "layoff" and click news. As you scan through the pages, there are lots of tiny little municipal layoffs in the news. Anyone who thinks this is local is deluding themselves.

The 'great squish down' has started. Nothing to do but kick back and watch it happen. I now have some great wine to enjoy watching the ride.

The Yen is at 106.34 to the dollar. Remember the Yen carry trade? How will it unwind? Suddenly a bunch of loans that were made at 115 to 120 yen/dollar cost at least an 8% more, in dollars, than they did when issued. oops We're testing the late November/early december low. If it breaks through (and should with the Fed rate drop), it will bite more than a few Hedge funds.

Got popcorn?

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