Tuesday Tidbits

A little while back I mentioned a large filing from GlobalX of resource oriented niche ETFs and it looks like the first one might be coming as soon as this week. The WSJ reported that the GlobalX Lithium ETF could list as soon as this week. Also in that filing were uranium and fishing ETFs among others.

In that post I joked about the lithium fund only holding Sociedad Quimica y Minera (SQM) so we could know as soon as this week what it actually will hold. The largest lithium deposits are in south and central America, specifically Bolivia, although a big one apparently exists in Afghanistan as well.

You may have heard that China now consumes more oil than the United States. This is something I have been writing about for years. I first heard this from Puru Saxena on CNBC Asia. Back then, maybe 2003 or 2004, the US was using 25 barrels of oil per capita compared to a little over one barrel for China and about 0.75 barrels in India.

It was obvious that those numbers, while unlikely to ever get close to the US number were going to move up and it wouldn't take much for increased demand to impact oil prices. This played out for a while on the way up to $147 WTI but obviously at some point that run stopped being about the fundamentals. Oil is something China needs and is going to use more of. While we do not currently have exposure to China or Chinese oil stocks this continues, IMO, to be one of the better way to access China. There are several NYSE ADRs and GlobalX has a China Energy Sector Fund for people who do not want to pick stocks but one thing to keep in mind is that that fund, symbol CHIE, also has a fair bit of solar stock exposure too.

iPath launched Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN (XXV)--that's an inverse VIX fund. The hat tip on this one, as usual goes to IndexUniverse. This will surely be a very popular product. Although not my type of trade one thing that I think this fund can do is allow people to not just play a decline in the VIX but on a deeper level, game changes in the roll yield of the VIX futures curve. The curve these days is apparently steep, in a state of contango, so people who believe it will stay steep can trade it one way and people who think the curve will flatten can trade it another.

That I used the words "play" and "game" in the preceding paragraph should underscore the extent to which this is not my trade. The VIX has far more moving parts (IE influencing factors) than gets discussed on stock market television. Take this as my knowing what I don't know, no one has to be an expert in everything.

The last item is this from the WSJ noting that Temasek, one of the Singaporean SWFs, will be issuing "sterling-denominated bonds: £700 million ($1.07 billion) of debt in a mix of 12-year and 30-year paper." Perhaps there is demand in the UK for Singaporean paper and also Temasek isn't selling this debt because they think the GBP will skyrocket higher against the SGD.

Generically speaking, I'll repeat, generically speaking too much issuance of debt in other currencies can cause serious problems. Taken to an extreme, an extreme we have seen play out a few times in the last few years, if the home currency were to go down a lot versus the currency where the debt is being issued it would create substantial problems for the borrowers. This was problematic people in Iceland and Hungary who took out mortgages in euros and Swiss francs and it has also been very bad for various countries in years past.

Of all the pictures we have ever taken at the Grand Canyon, this one might be my favorite.