Thursday, June 25, 2009

UNG again

Here we can compare the behavior of the Natural Gas when it was in similar inventory conditions as it is today.

Stocks of Natural Gas. The red line shows the increasing stocks of Natural Gas Today and in September 2007. Look and compare it with the movements in prices and take your own conclusions.

Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2004 through 2008.
Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report." The dashed vertical lines indicate current and year-ago weekly periods.

Source: EIA


UNG trendlines:

US Treasury Bonds: TBT & TNX

During the lasts day, is interesting to note how the Us Treasuries were going up, although the fear to the inflation that is around the markets.

If we look at the daily chart of the 10 years US treasury Bonds yield ($UST10Y), we can see that this uptrend still very powerful.

Note that it is still inside the uptrend channel.

10 years US treasury Bonds yield (Daily chart):

10 years US treasury Bonds yield(Weekly chart):


This is the short ETF of the 10 years US treasury bonds. We could expect a bounce on the 200 SMA (Green line).

TBT compared to TNX (The 10 US treasury bond Yield):

It is interesting to watch how the ratio is changing its trend. But, in the long term, this ratio should continue downward. In the short term, TBT should outperform TNX.

TNX LONG TERM logarithmic CHART:

Important NEWS:

Treasuries Gain as Asian Stocks Fall, Fed Plans to Buy Notes

Wednesday, June 10, 2009

U.S. Foreign Solvency

The economy theory developed a model with which we can analyze the solvency situation of a country. It defines the solvency considering the temporal budgetary constraints and the sum of the balance of payments of the public and private sectors.

Initial debt = Actual Value of the Trade balance + Actual Value of the Final Debt

The Actual Value of the final debt should tend to zero to avoid Ponzi scheme’s. Then, the foreign solvency requires that the country generates commercial surplus in the future in order to pay the external and internal debt.

In short, the foreign solvency requires that the country generates commercial surplus big enough to pay the net foreign liabilities.


Initial Debt = ∑_((t=1))^((T-1))▒〖BCt/[(1+i) 〗^t]

Also, i > ∆ Debt > ∆ GDP


Current Account = CC = Trade Balance (TB) – i x D* = -∆ D*

As D*2 (external debt in the second period) – D*1 (external Debt in the first period) =i x D*1-TB1

We divide by GDP:

d*2 – d*1 = i / [(1 + G) x d*1] – tb1 ; where d is D/GDP and G is (GDP2 – GDP1)/GDP1

d*2 = (1+i)/[(1+G) x d*1–bc1 G= nominal GDP growth

d*2 – d*1 = (1+i-1-G) / (1+G) x d*1 – bc1

d*2 – d*1 = 0 = (i – G) / (1 + G) x d*1 – bc1

If G = g(real G)+p(inflation)

bc = (r-g) x D*1

Then, the formula says that to maintain constant the relation Net Debt / GDP, the TB should increase if the difference between the real interest rate and the potential real GDP growth is rising and also if there is a bigger ratio D*/GDP.

If we apply this theory to USA case:

p = 3% (forecasted average for the next 5 years);
G=5% (forecasted average for the next 5 years) ;
g = 2% real growth (forecasted average for the next 5 years);
D = 11.5trillions (Jun/2009) ; GDP = 14.265 trillions (2008) ;
I = 6% (10 years US treasury bonds rate average forecasted for the next 5 years)


BC =( 3%-2%) x 11.5 trillions
BC = 0.115 trillions or 114.576.404.000 USD (115 billions)
BC 2008= -681 billions

In conclusion, the US should reverse its BC in order to pay it foreign debt by 681 billions + 115 billions, this is786 bllions. The open question is: HOW?

Tuesday, June 2, 2009


United States Natural Gas Fund. Specialty-Natural Res

The fund seeks to replicate the performance, net of expenses, of natural gas. The trust invests in futures contracts on natural gas traded on the NYMEX that is the near month contract to expire.

It looks like it is under accumulation. I am waiting for the break-up.

UNG is a good option to diversify the portfolio.

Daily chart:

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