Participation . . .

As much as I worry about my old shop UBS they still can produce research. I won't reprint it here but I received a really great series of charts showing the participation rate for stocks in the current rally. It's a simple idea and all they did was look at the number of index constituents in various countries now above the 200 day moving average. They also sent me some views on iron ore and other commodities. It all makes some sense, but the problem is that the whole thing can be taken apart very easily by a switch in policy emphasis and that's why most people I meet are under invested in equities . . . no one trusts governments.

I never caught the gold bug. The market also looks to be tiring of the yellow stuff because some of its biggest investors have started cutting their holdings. Lots of stories yesterday that Soros was liquidating his holdings in various ETF's. Soros likes to portray himself more like Warren Buffett and less like the gambler he once was. I'd like to know his feelings about gold. He must  have concluded that so much more de-leveraging needs to be done that inflation id dead, or maybe he figures that there are better places for his money in the short term. Whatever the reasoning he's nearly out and investors might now re-examine their positions in the knowledge that the price hasn't completely collapsed. I still don't like gold stocks because so much of the margin seems to get frittered away, better to just buy gold if you like it.

During the last 3 years the Germans have benefited hugely from a weak Euro, so much so that their relatively austere stimulus as had their European partners particularly upset. One can only imagine what a Deutsche Mark might have traded at if it had been available during this period. Now leaks are coming thick and fast that Germany should join the Keynesian party. Wolfgang Schäuble the German finance minister, said on Wednesday that his budget for 2014, involving spending cuts of more than €5bn to trim the total below €300bn. He wanted to push back against such lose monetary forces. €5bn isn't really much of a cut so we can take this as being pure symbolism. Germany will now reach budget balance in 2015, a year earlier than required under the “debt brake” written into its constitution . . . the French of course are likely to miss all their targets as Hollande realises all his big taxing initiatives are going to add up to nothing.

Here is Sydney one of the major talkback AM stations has been running a competition for listeners to win premium economy tickets on various Cathay Pacific routes. I hadn't paid that much attention until yesterday when they reported full-year net profit of HK$916m (US$118m) versus a net loss in the first six months of financial year 2012 of HK$935m. That's a pretty good turn around and they seem to have a region leading cost income ratio of "only" 64%. That's why I hate airlines. . . .  64% seems absurd in an industry so leveraged to a commodity like oil. The buffer that Cathay has seems just ridiculous given the risks. Having said that airlines are cyclical for a reason and if you pick the cycle right and have the premium seat focus you will get rewarded . .  get it wrong and you'll be discounting those extra wide seats and eating into your margin.

I also noted this weak that Ryanair, the least premium airline in the world was making a $15bn order for new aircraft. On the short haul routes of Europe they have great flexibility and a mad man (with greatest respect) running the company. Of course they'll be leasing the aircraft in question what mad man would do otherwise?

This weekend I'll be riding near the country town of Orange in NSW. We're doing a 100k's on Saturday followed by a trip to the vineyards for some wine tasting. On Sunday we'll be taking it easy with an 80k morning jaunt.

I now have the Cannondale and the nightmare of the braze-on tab seems to be over. I took her out for a spin yesterday and discovered that the guy who did the work had left the old rivet pins in the down tube. That was was annoying, but easily solved by taking out the seat post and turing the bike upside down. I'm always a little hesitant with these carbon seat post and I like to tighten gradually taking the torque wrench up about a half a NM at a time. The seat clamp said 5NM, but I stopped at 4.75 and thought it looked good to me. Sure enough no slippage. f course I had wiped down the seat post and added a thin smear of carbon paste before re-inseting the piece.

When I did finally make it out I just couldn't believe how badly aligned the front derailleur was. I had to stop in and see ex-Cannondale dealer Andrew at Bike Lab in Bondi Junction to get him to adjust the gears. He did it as a favour and I promised to bring him over a bottle of wine next week. While Andrew was fixing the bike I helped a lady customer who had the guys pack here bike ready for transport. Until I picked up the box I thought it must have been a new racing bike . . . I mean why else would you take it on holiday with you? The box had to weigh 25kgs. I had a look inside and realised it was a 20 year old mountain bike. I asked her where she was going and she said Jakarta! I mean of all the places on earth to take a busted up old bike. I reckon a $100 would have bought her a better bike from one of the numerous street bike vendors. On top of that I really hope she's insured because traffic there is horrendous. I didn't say anything . . . I mean what could I say. She seemed nice enough and had to be in her mid-50's so she wouldn't have wanted a bloke like me telling her what to do.

When I go on vacation I prefer to get away from the cities if I'm riding. Check out this video . . . riding the Stelvio pass in early spring:

Makes me want to dig out my winter gear and call an airline.  Ciao!