CheetahhhhhhhBlog Mark III

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We are going to see a parabolic rise in the price of oil. For example and Iraqi refinery is currently on fire. The Saudis are trying to calm the panic but the fact remains that the Middle East is going up in flames and may even spread to Saudi. Oil price risk is very high. This will have profound effects on the economic recovery.

Have long vertical spreads on gold, platinum, and Citibank.

The key issue with me was whether the SPX would hold its key support level at 1300, which it did. While the economic recovery is slowly building, instability in the Middle East is far from finished, and the Eurozone sovereign debt crisis is still there (we just kind of forgot about it after that revolution in Egypt). So, gut feeling? I anticipate volatile sideways movement. I am waiting for high volatility days to take out vertical or iron condor spreads on the SPX.

I anticipate a sharp rise in the noble metals this year, though I can’t guess the timing, and I see this trade as somewhat more risky. We have many factors at work here. First, the Fed has been printing money like there’s no tomorrow, which has debased the value of the noble metals, which are priced in dollars. Thus the metals and other commodities have the capacity to rise as much and as far as the dollar’s capacity to devalue. It’s not so much that gold is rising; it’s that the dollar is falling. That’s issue #1. Issue #2 is a bit more tricky. In Babylonian times, it was said that an ounce of gold bought some 350 loaves of bread. The wholewheat loaf in my bread bin cost $2.45, which suggests a fair price for gold of about $850. However gold would need to rise above the $2,000 an ounce mark to represent a bubble. Since 1900 gold has averaged $440 in 2010 dollars. By this measure, gold at about $1,400 an ounce is 2.5 standard deviations above its long-run average. Gold is also expensive relative to its cost of extraction, which Credit Suisse estimates at roughly $600 an ounce. Gold needs to fall by nearly 70 per cent to reach its long-term average price in inflation-adjusted dollars. To come back in line with its cost of production, the gold price would have to decline by about 55 per cent. Relative to the price of bread, gold is about 40 per cent overvalued and relative to oil it is 9 per cent expensive.

In short I see gold rising this year but agree with Goldman, who warned its clients to expect a correction this year or next.

Three rockets hit Kabul this morning. Like I said, going to hell in a handbasket.

Anyway one of the faculty members went to Bangladesh for the Christmas holiday. Why anybody would go to Bangladesh for holiday is beyond me. He came back with Bird Flu. About 2 weeks ago he was evacuated to Dubai for treatment. Now, I don’t recall if I was exposed to him before he was evacuated, but other people were, and I was exposed to other people. I don’t know if I have bird flu now, but I am about as sick as you can possibly be. Interestingly the entire house here (several other faculty live on other floors) seems to have gone down on Thurs night. Yesterday I was so feverish I was delusional and would have had a hard time telling you my name. I have been very careful to segregate myself from the kids but it is probably too late, though they seem ok. Last night my high fever broke and while I am still sick as a dog, I am much better than before. Taking some powerful horse pills. Van wants me to go to the hospital but I am really in no mood for IV drips, stool samples, and insurance claim forms. So I’m letting the antibiotic do its work and hopefully the hospital will not be necessary.

I haven’t blogged up to my usual proclivity because I’ve been swamped. Which is rather irritating for me because this is, at least theoretically, supposed to be one of the more easy-going professions. It’s my own fault for getting involved on committees. For those of you not in academe, I will explain. At a university, decisions are generally made by various committees of faculty members. This is in part the reason why change happens slowly at universities, but it is also why the institution can lose staff and admin and still function. So anyway I (perhaps stupidly) got myself involved on committees. For example in 6 minutes I go to hear the president talk about his strategic plan.

On a financial note, the Middle East is going up in flames and this will cause a big spike in oil prices, which will affect the economy. Further this increases worldwide perceptions of instability. I would advise not being invested in equities for the time being, and I would advise defensive investments such as silver and gold and platinum (which had a big spike recently and are in a small pullback at the moment, which I am taking as an opportunity to buy).

OK I am sorry to say it but the situation here in Kabul seems–seems–to be going to hell in a handbasket. This is obviously extremely unfortunate for all. I am not sure why the timing appears to coincide with me bringing my family. Perhaps the Taliban don’t like me having my family here. The fall semester was very peaceful and everyone relaxed and everything seemed under control. Now there is a new bomb every few days and I don’t want my family to even go outside. Twice now the Taliban has targeted public areas, not military targets.

One of my students who is politically connected said that because of snow, the Taliban can’t operate, and so have moved down into Kabul to cause mayhem. Perhaps so.

Things aren’t dull anyway.

I am very preoccupied with work and so don’t have much interesting to say. You’re not interested in me working on university committees etc. And I don’t want to think about it except for when I’m on the clock. So at the moment I’m rather preoccupied and don’t have a lot of personal news except, as I said, things aren’t dull here.

I like my job here, which is the primary reason I put up with all this nonsense (by which I mean the difficulties of Afghanistan). It’s more difficult for my family, who don’t have a something here to keep them busy. I’m actually extremely busy. At the moment I’m writing the department budget for this year and next year, teaching full time, and serving on the faculty senate. Today I was voted in as chairman of the Senate Curriculum Planning Committee, which oversees curriculum development for the entire university. This is a position of immense importance and responsibility which will involve a ridiculous amount of work. Looks outstanding on the CV though. But honestly I just signed on for a ridiculously large extra workload and am kind of kicking myself for it.

I don’t recall if I mentioned it previously, but one of my classes has the secretary to President Karzai. Another class has the assistant to the leader of the opposition in parliament.

We went to the Serena Hotel on Friday, which is a little oasis of civilization. It’s quite nice. Outrageously expensive for Kabul but fairly on par with similar quality in Dubai. First of all, the Serena is the first place in Kabul I’ve seen with good security. The thing is, in the Philippines, there has been terrorism going on for decades, and so the Filipinos know how to deal with it. Metal detectors, bomb dogs, guards at every entrance who search you and your bags, etc. Terrorism is, I suppose, relatively new in Afghanistan and so they don’t quite know what to do about it. A guard sitting outside on a chair with an AK47 is taken to be security. It is not. Any old Taliban lunatic with bombs strapped to his belly could walk right in. The Serena however has proper security, including 2 walls, metal detectors, body searches, and many guards with AK47s. You feel safe in the Serena. We also went to Boccacio, which is the best restaurant in the city. Good security there too, though I might note, the guard saw I was white and just waved me through, which is not good security. Anyway Boccacio has a delightful atmosphere and really delicious bread. We bought a dozen loaves. Boccacio also doubles as the expensive Russian whorehouse. The waitresses are all pretty with low-cut dresses and will apparently give special service. Everybody in the city knows this. The gift shop at the Serena has just fabulous Afghan items. Rather expensive but if you want exotic lapis jewelry or old rugs and antiques, you can find them there. I saw a million things I wanted to buy.

Tristan is going through a phase where he wants to be carried all day long by Vanessa and he screams his lungs out if she puts him down. Problem is he’s getting rather big and heavy.

Spent the day today working on my CV. My CV has grown rather impressive I think. I have a semi-administrative position this semester, working on the departmental budget for this year and next, and working on the curriculum committee. I am rather slow to learn or something and I only realized today about a dozen fairly impressive things I should put into my resume, but was just too dumb or something to think of it before. For example I had a full-time administrative appointment at Yanbu as curriculum developer, but it never occurred to me to point out the “administrative” aspect until now. The fact that I was elected to the faculty senate here is also a real plus for the CV, and I am listing my senate initiatives, which are fairly significant. In case one of my colleagues or students is reading this, the fact that I am working on my CV doesn’t mean I’m planning to leave. Periodically I always work on my CV. Indeed if you’re intelligent about your career you never stop working on your CV.

Anyway I have put a lot of thought into it and the only reasonable direction “up” from here is administration. Because of this I am taking on time-consuming administrative work such as the department budget, and I am also thinking about doing an MBA in Leadership and Sustainability. I’m not entirely sure I have the energy for the MBA but it’s certainly a big topic on my brain at the moment.