I am short of ideas today — I have the kind of slovenly tiredness that comes from waking up at the wrong moment (rather than the creative tiredness that comes from not getting enough sleep, which I read about today (http://bit.ly/yco64Q) but have noticed before). And I have spent the week focused on a couple of investment ideas that have exhausted my reserves of creativity.

One interesting point in the FT concerned a particularly harsh harmattan wind that has hit Ivory Coast. The cocoa market reacted last week, jumping 15% in two days. Cocoa has been falling for some time and is near long-term lows (I haven’t been in it since I made money long in the standoff between Messrs. Gbagbo and Ouattara). Production is already expected to be down on last year’s bumper crop, and this wind will not help; on the other hand, global demand is likely to fall this year and it is still possible that the harmattan may fade and that rains may come in early February, according to an analyst quoted by the FT. Still, the price is pretty low compared to recent history, and if one could go long with a stop below the recent lows, one might have a trade with good risk-reward characteristics (before there was no crop damage; now there is crop damage; so the price should not fall to its pre-crop-damage level). The futures curve is in contango, but not so much as to put me off a trade. I think I will look into the idea, anyway.
Data:

Building permits fell, a.e., Dec. Still near the top of their post-crisis range.
Housing starts fell, d.e., Dec. Also still near the top of their post-crisis range.
Existing home sales fell, ~a.e., Dec. Recent falls have reversed the gains late last year.
US CPI 3% YOY Dec. Core 2.2%.
Initial claims 352k b.e. A new post-crisis low.
Philly Fed index fell a little, d.e. Cf. this week’s Empire State index, which was more positive.
HSBC China flash PMI rose to 48.8 from 48.7. At present, weak data are taken as indicating scope for easing. This may not last.
UK retail sales 0.6%, a.e., Dec. This follows a fall of 0.5% in November. Retailers discounted heavily in the run-up to Christmas. (In spite of this, I still did not buy a bed in a showroom. Have you ever tried to buy a bed? The mattress market seems designed to confuse the customer, delivery can take weeks, even when the delivery comes you have to wait in all day for it, and to top it all you can expect to pay £1000 for anything half-decent. I bought two single beds for £250 each from mattressnextday.co.uk, and they are fine, if rather too hot. There must be room in the market for a chain of bed showrooms that make the whole process easy by categorising their mattresses and offering flexible delivery.)

Advertisements