Tag Archives: investing

Legions of investors have been schooled to believe that Treasury bond prices and the major stock market indices should move in the same direction.  In other words, changes in the valuations that investors attach to both high-quality sovereign debt and equity markets are presumed to be positively correlated.  In this context, it is not surprising that each time bond yields drop to fresh generational lows, the uber-bulls spring forth to declare that stocks have rarely looked so cheap relative to their fixed-income cousins.

The optimistic hypothesis however, is nothing more than a stale remnant of the dangerously flawed bull market thinking that dominated investment strategy during the heady days of the late-1990s.  Not surprisingly, the use of models that are without theoretical foundation ultimately proved disastrous for bottom-line investment performance.

The supposed positive relationship between bond and equity yields has not been observed in financial market fluctuations for more than a decade, as ever higher bond valuations have been greeted with lower cycle-adjusted price/earnings multiples.  Nevertheless, the tired argument continues to feature heavily in investment commentary, and few practitioners even bother to search for reasons as to why the presumed relationship may not be valid in the current climate.

It is important to appreciate that the secular trend in debt and equity valuations is regime-dependant, and what worked well in one period may not hold true in another.  The primary determinant of bond and stock market valuations is the volatility of inflation – the uncertainty regarding future inflation.  High levels of inflation uncertainty make it increasingly difficult to isolate the signal from the noise emanating from fluctuations in the general price level, and as a result, elevated inflation volatility is accompanied by relatively poor growth outcomes.

The historical record demonstrates that inflation volatility has been at its lowest when the inflation rate has been sustained in a range of two to four per cent.  This can be defined as the ‘sweet spot’ of effective price stability, and has historically been characterised by fewer and milder recessions, and higher long-term economic growth.  Once the inflation rate strays outside of the two to four per cent range, either above or below on a sustained basis during inflationary and deflationary regimes respectively, inflation volatility trends higher and negatively impacts long-run growth.

It is important to note that high inflation volatility is universally bad for equity valuations.  Investors demand a higher risk premium over and above the real risk-free rate to compensate for the greater variability in cash flows, and mark down equity valuations even further to reflect lower expected future real growth.

In other words, the high inflation volatility observed in both deflationary and inflationary regimes precipitates a secular bear market in stocks, as valuations are struck by the double-whammy of a higher real discount rate and a lower expected future real growth rate.  This is exactly the phenomenon that was observed in the deflationary 1930s, the inflationary 1970s, and once again in recent times, as inflation volatility jumped to the highest level in thirty years.

Although high inflation volatility is negative for equity valuations in both deflationary and inflationary regimes, the same is not true for Treasury bond yields.  An inflationary regime is accompanied by a secular bear market in bonds, as investors incorporate not only higher expected future inflation into yields, but also a higher inflation risk premium to compensate for the greater inflation uncertainty.

However, a deflationary regime is accompanied by a secular bull market in bonds, as investors become increasingly willing to pay a premium for financial assets that will provide insurance during poor economic states.  This effect has been particularly pronounced in recent times, as investors learned to their cost that few asset classes provided any protection whatsoever during the global financial crisis, and has been exacerbated by the relative shortage of safe assets arising from multiple sovereign rating downgrades and unconventional monetary policies.

An examination of the historical evidence reveals that the conventional Wall Street wisdom that presumes a positive relationship between changes in debt and equity yields is decidedly misplaced.  The truth of the matter is that bond and stock prices trend in the same direction only in disinflationary and inflationary regimes or roughly half the time.  In a deflationary regime, the financial assets part company, as the lower risk premium attached to safe bonds is accompanied by a higher risk premium attached to stocks.

Investment practitioners continue to insist that lower Treasury yields should result in higher equity valuations, even though debt and equity yields have moved in the opposite direction for more than a decade.  Elevated inflation volatility and the increased deflation risk calls for structurally lower equity valuations, and not higher as the uber-bulls seem to believe.  The astute will be aware that flawed thinking is bad practice.

www.charliefell.com

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

I’ve got a pair of graphics that I think tell and interesting story. They look at a pair of currencies which fall into the commodity category in that they tend to be highly correlated to changes in the price of things like oil, gold, etc. The first graphic shows USD/MXN with oil (front month futures), the correlation between those two markets, the S&P 500, and that index’s correlation to USD/MXN.

Mexico is an oil producer, so the peso often sees its value impacted by changes in the price of that commodity. As you will notice in the chart above, though, the correlation between USD/MXN and oil prices, as indicated by the red line in the middle of the chart, has been up and down on both sides of the zero line (Note: When the line is positive, the MXN is actually negatively correlated to oil).  By contrast, the correlation between USD/MXN and the S&P 500 (bottom line) has been strongly positive for most of the last 12 months (on a trailing 20-day basis).

Notice below that we can see a similar type of pattern in AUD/USD relative to those two markets.

 

Now, it should be noted that the S&P 500 and oil tend to be positively correlated, but it’s a choppy thing. The relationship often breaks apart and sometimes even goes negative. This is a function of the factors which influence oil prices (such as geopolitics and supply/demand considerations) which may not be as significant a factor in stock prices. Equities are perhaps better indicative of general economic conditions, especially on a forward looking basis.

So what does this all mean? It’s telling us that the so-called commodity currencies are more sensitive right now to general economic conditions than to commodity prices. In the case of the peso, we often see it responding to conditions in the US as better economic prospects north of the boarder means more exports. In the case of the Aussie, there is more of a Chinese linkage, but also a carry trade factor. With the higher Australian interest rates, that’s a favorite for longs against the likes of the yen when the markets are feeling positive.

With these things in mind, it is worth watching how these currencies perform as they can sometimes tip off underlying strength or weakness in the global markets. That has actually been the case of late in the way commodity currencies did not dip as much as they may have been expected – or in the case of the MXN, rallied very strongly. Something to keep an eye on.

 

The global economy began to stabilize following the most severe downturn since the 1930s during the summer of 2009.  The recovery that subsequently materialized outpaced the previous post-1945 recessions of 1975, 1982, and 1991, as relatively lackluster growth in real income-per-capita in developed economies was more than offset by a robust rebound in economic activity across the emerging world.

Three years on, the world’s largest advanced economies continue to struggle, and require ultra-accommodative monetary policies simply to prevent the already sizable output gap from widening further.  Despite the ongoing life support, recent data indicates that activity across virtually the entire developed world has down-shifted close to ‘stall speed.’

Equally troubling, if not more so, is the observation that unlike previous ‘growth scares,’ the emerging world’s primary growth engines have struck a ‘speed bump,’ with a pronounced slowdown in economic activity evident in Brazil, China, and India.  All told, roughly two-thirds of the global economy is slowing, stagnating, or contracting.

Against this disquieting background, it is hardly a surprise that the voracious appetite for risk assets apparent earlier in the year, has all but disappeared.  Indeed, investors’ increasing emphasis on wealth preservation over capital gains has seen global equity indices slip into negative territory year-on-year, and lose virtually the entire advance in prices recorded during the first quarter of the current calendar year.

Few risk assets have escaped investors’ desire for safety, and the unsettling global outlook has precipitated a particularly pronounced decline in commodity prices.  The Thomson Reuters/Jefferies CRB Commodity Index has plunged more than 15 per cent since late-February, and is more than 20 per cent below the highs registered last summer.

More trouble could well be in store for risk assets, as investors’ ‘dash from trash’ has pushed yields on both short- and long-term debt securities across ‘safe haven’ sovereign bond markets to levels that are simply not consistent with economic expansion.  Indeed, the message emanating from government debt markets that include Canada, Germany, Japan, the Netherlands, the U.K., and the U.S., is one of mounting financial stress and economic turbulence.

Increased investor concern has pushed rates on short-term sovereign notes deemed default-free to near-zero, while the scramble for ‘safe’ assets has seen the yields available on long-term government bonds plunge to historic lows of well below two per cent.

The yield on ten-year U.S. Treasury bonds for example, dropped to below 1.5 per cent in early-June, while ten-year German Bund yields fell below 1.2 per cent.  Meanwhile, the yield offered on U.K. gilts declined to levels never seen before in a data-set that extends back to the first issue of British government debt in 1694.

What has sparked the recent panic and the purchase of ‘safe haven’ sovereign debt at prices that would appear to promise zero real returns, at best, on both short and long maturities?  The seemingly irrational dash for safety can be partially explained by the fact that the current economic slowdown is detectable almost everywhere and virtually assures a ‘growth’ recession or below-trend growth – if not worse – during the second half of this year and beyond.

The U.S. is currently experiencing the weakest economic recovery in the post-1945 era, with growth averaging just 2.4 per cent over the last eleven quarters, as compared with 4.8 and 5.5 per cent respectively over a comparable length of time following the deep recessions of 1975 and 1982.  Economic growth is running at less than half the pace that is typical for this stage in the cycle, and slowed to below two per cent in the first three months of the year.

The slump in payroll additions to a miserable 73,000 per month average in April and May, alongside weaker capital expenditures and government outlays, suggests that further deceleration took place in the second quarter.  More troubling however, is the fact that tax cuts and spending increases amounting to roughly four per cent of GDP are set to expire simultaneously at the end of 2012, and the uncertainty surrounding the ‘fiscal cliff’ is hurting growth.

Much has already been written on the euro-zone, where the economic performance since the ‘great recession’ struck trails the Japanese experience following the deflation of its twin property and stock market bubbles more than two decades ago.  The periphery is mired in recession, and recent data confirm that the loss of confidence and the resulting adverse impact on economic activity has spread to the core, including Germany.  It is safe to conclude that the euro-zone will not provide a boost to global economic growth anytime soon.

Meanwhile, the malaise apparent in advanced economies has been accompanied by a growth slowdown in Brazil, China, and India.  The Brazilian economy slowed to a virtual standstill during the first quarter, and the pace of expansion in China dipped to the slowest rate in almost three years over the same period, while India’s quarterly growth performance deteriorated to its worst level in seven years. A return to above-trend growth may not arrive as soon as optimists believe given over-investment in China, a tapped-out consumer in Brazil, and a disturbing fiscal deficit in India.

Investors have dashed to safety, as data confirmed weakness in economic activity virtually everywhere.  Investors must appreciate that fiscal and monetary policymakers are short of tools with which to combat the latest weakness.  Caution is warranted.

 

www.charliefell.com

 

 

 

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Key Man insurance. Morbid, but quite necessary; especially when it comes to hedge funds.

In a press release published Monday by risk management and insurance advisory firm SKCG, an arising issue in the hedge fund industry was confronted: Over $600 billion of assets are currently allocated into hedge funds whose managers will cross the 60+ line within the next decade. Basically, though they may seem immortal, illustrious hedge fund managers are still in fact perishable.

David Parker, President of the employee benefits division at White Plains, NY SKCG explains how the uniqueness of hedge fund products can be seen in that the positive returns generated are usually a result of its manager’s intelligence and skill. In the event of this ‘key man’ passing away, a disorderly company dissolution is often just a few steps behind.

The biggest factor in the recent surge of key man insurance popularity is the appeal it has to investors. While conducting their due diligence, an investor seeing that a hedge fund manager has insurance of this kind will inevitably work in the managers favor. If something does happen to them, the investor will be left to deal with an unmanaged fund and all the complexities that accompany it.  Things like unwinding illiquid investments while maintaining needed cash flows are all realities that need to be considered, and key man insurance can come in clutch in this situation.

A recent report by KPGM and the Alternative investment Management Association entitled The Evolution of an Industry, demonstrates how the hedge fund sphere is experiencing an increase in demand from institutional investors calling for more transparency. After conducting 150 interviews with hedge fund management firms world wide, the report gathered that over half of their AUM come from institutional investors. The report also states that the amount of time managers spend handling due diligence questions from institutional investors has doubled since 2008.

With this strong of an influx in institutional investor allocations, complying with their demands would definitely be in a hedge fund manager’s best interest. So having one more requirement that they’re able to check off an investor’s due-dil list could mean the difference between getting a new sizeable allocation and not.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

This month, we were very excited to learn that Currensee would be featured in the magazine Alternative Latin Investor. This bimonthly publication covers the alternative investing industry in the Latin American region. The Latin American (LatAm) markets are among the fastest growing areas for the industry globally.

What was most interesting about the piece was the perspective put on Currensee, as it was being observed through the eyes of the LatAm investment industry.

Titled “Currensee: The Next Step in Forex Trading,” the article began by explaining a few aspects of foreign currency trading that are alluring to the LatAm investing industry. Characteristics like the massive size and liquidity of the world currency market, the speed and flexibility in which transactions can be executed, and being aware of the potential to generate returns during times of volatility are all attracting LatAm investors to Forex.

The ALI’s article discusses two aspects of this program have been particularly appealing to LatAm investors: transparency and diversification.

Because Currensee began as a social network for Forex traders to collaborate, communication has always been an integral component of how Currensee operates. Though today the focus has shifted more towards the Trade Leaders program, communication is still there and it equates to a high level of transparency.

“What’s unique is that our customers can give one another permission to view their actual trading activity and performance… There’s a level of transparency beyond any alternative investment I know of,” says Currensee CEO Dave Lemont.

LatAm investors are also drawn to the program’s ability to achieve “double diversification.” What this means is that as an investor in the Trade Leaders Investment Program, investors benefit from asset class diversification in the Forex market as well as diversification in their individual accounts by choosing from a variety of Trade Leaders. This new method of diversifying is an exciting development for the world of investing.

The article drives home the points around diversification for all investors and the proof is in the numbers – the fact that from 2000-2010, the S&P 500 has dropped a cumulative 3.7%. That means if you’re one of the many who had been adhering strictly to the general 60% stocks/40% bonds rule of thumb, you ultimately lost out.

Lemont says: “The stock market is manipulated by big players and algorithmic traders on a daily basis. The foreign currency market is so much bigger: US$4 trillion a day, with 24-hour trading. We’re not going to get together and move the euro today. But we could get together and move the price of a small-cap stock.”

So although collaborating and trying to move the euro is not likely something investors can achieve, keeping a diversified portfolio is. Keep cool and keep it diversified.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Earlier this week, Sina Corp., the company who provides the Chinese social media service called Weibo, saw a 3.8 percent rise in stock prices. Bloomberg reported that Weibo, a micro blogging platform comparable to that of Twitter, is now offering a premium service for users who are willing to pay a fee of 10 yuan per month. The hope is that they will be able to offer services users will actually really want to use in order for them to oblige to paying a fee.

Recently, Weibo has been appearing in the news due to the role it played in the June 14 Chinese food scandal. It was on this day that Inner Mongolia Yili Industrial Group Co. announced a recall of infant formula that was found to contain mercury. A Wall Street Journal article reports that searches pertaining to the incident were blocked from the social media site. It’s believed that censorship of this sort is done in an effort to control the spread of news on food safety, something that could threaten the stability of that Chinese economic sector.

With the growth of China’s economy currently in question, it makes sense that the Chinese government would want to preserve their strongest industries. Right now, with last years sales reported at $28 billion, one of those industries is dairy. Directly preceding the release of this information, Yili’s shares dropped 10 percent, which is the maximum fall allowed in one session.

This issue gives new perspective to the Chinese internet censorship issue. It is often projected in a negative light, attaching to it a stigmatism of the Chinese government encroaching on the population’s freedom of speech and freedom of access to information. But in situations like this, where negative news spread via social media could potentially wreak serious havoc on an industry integral to economic stability, should regulation be enforced? Also, what about people who might not have otherwise heard about the recall and continued to consume tainted food?

With the sharp rise in popularity of social media services, there very well might be an increasing need for new forms of regulation.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Based on its strong natural resources, Argentina should, in theory, be a gold mine for investors. With arguably the third-largest shale gas reserves in the world, the Argentinean economy is only one close step behind Brazil for the top spot in South America.

So why did today an analyst quote in a NASDAQ article that on a one to 10 rating for investors, 10 being the riskiest, he would give Argentina a nine? This statement addresses one of the biggest problems with investing in an emerging market: its governance.

Argentinean president Cristina Fernandez has enacted policies that have made foreign investing in this country an uncomfortably volatile thing. Dissonance amongst varying economic growth predictions has raised suspicion of a government that could very well be laced with corruption and in potential need of reform.

In fact, it could also be possible that the Argentinean government is evading Western investment altogether, seen in their nationalization of YPF (Treasury Petroleum Fields). This move sent the only Argentina ETF down over 20 percent since mid-April (NASDAQ) and demonstrated government hostility to the free market principals.

MSCI, an investment tool and index firm, is considering the removal of Argentina from its Frontier Markets index due to the government’s aversions. What’s further unsettling is that due to their richness in mineral resources, the country hosts a few popular stocks, such as Pan American Silver and Yamana Gold. With their removal from this MSCI index, further pressure could be placed on these stocks, as well as their ETF.

Their tempting potential continues to make emerging markets alluring to investors. Its unfortunate that this potential is often overshadowed by less than stable governance, making increasing the chance of risk for investors over that of return. Do these factors make investing in emerging markets more speculation than investment?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Despite yesterday’s surge in investor confidence that provided Asian markets a boost, things appeared to have fallen a bit flat this morning. As reality set in that Spain’s bond yields have hit record-breaking highs and Greece’s electoral success might not be enough to negate prior monetary upset, investor’s optimism wasted no time in fizzling out.

Bloomberg reported early this morning a slip of 0.8 percent in Japan’s Nikkei 225 Stock Average, 0.1 in Hong Kong’s Hang Seng Index, and 0.7 in China’s Shanghai Composite Index. Tim Riordan of Australian hedge fund Parker Asset Management Ltd., elucidated how he sees European problems increasing, as opposed to reaching a resolution. With bond yields hitting 7.29 percent, Spain is becoming somewhat of the elephant in the room. Riordan states that this is could really be a red flag indicating a downward spiral should be reason for caution.

Borrowing costs of this caliber can be indicative of a country potentially in need of a bailout in the near future. Despite the notion of this possibility, European markets were able to rise Tuesday. Currently, the strongest fear amongst investors seems to be a contagion of Spain’s monetary battles over to Italy, who’s facing issues of its own.

A few weeks back I happened upon a very economically fitting Warren Buffett quote assuring American’s they needn’t fear a recession relapse lest things in Europe get out of control and leech into the US economy. If investors’ uneasiness over debt spilling across Europe is foreshadowing for imminent future fiscal events, will Buffett’s words prove true?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

The events of this past weekend were pretty monumental for the world currency industry (and the world in general). Up until Greece’s Sunday elections, animosity regarding the stability of the euro in the event of a Greek exit had been running rampant amongst investors.

Now, with the results finally established, they were able to enjoy a brief moment of revelry in the electoral success of the pro-bailout New Democracy party.

An Article in The New York Times provides a good outline of what potentially could have happened to the euro had the leftist Syriza party won. Vowing to repudiate the country’s bailout agreement with the “troika” of the European Union, the European Central Bank, and the International Monetary Fund, this move would have siphoned financing of Greek banks. In turn, this would have rendered them unable to continue operating and eventually drop the euro and revert back to the drachma.

But alas, this was not the case, and so being within hours of the election, investors applauded the win by reorienting the falling euro in a much-needed upward direction. Unfortunately, the vivacity didn't carry into Monday market action. The euro fell flat once again as concerns regarding Spain’s astronomic bond yields crept back into investor’s psyches. With interest rates having breeched the 7 percent mark, these loans are being viewed as unsustainable.

But amongst the angst, some positivity prevails arriving in the form of Asian market success. Emerging Asian currencies gained as a result of investor’s newfound comfort in the pro-bailout results, enthusing them to add a few riskier assets. Overall, Asian markets experienced widespread lifts with the Japanese Nikkei index prevailing with a rise of almost 2 percent.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Oil hit an eight-month low in Asia, keeping consistent in its recent jumpy behavior that tends to mirror news coming out of Europe. This comes down from crude oil’s up position June 11 after a European pledge that the euro zone countries would lend Spain $125B to alleviate the pain in its struggling banks. This, combined with talk about how investors have been looking into commodities as a safe place to park their capital as they wait out this passing economic storm, made me want to take a closer look at what’s going on in energy today.

Right now, Chesapeake Energy, the world’s second largest natural gas company, is a pretty entertaining case to follow. For anyone who hasn’t been doing so, the Chesapeake story started picking up June 4 as their stock saw a sudden turnaround rising 6.03 percent to $16.52 a share (previously on a longtime downward spiral as their stock had dwindled around 55 percent from its peak performance). At that time, I couldn’t help but wonder what kind of an investment this company could potentially turn into.

The change was a direct result of some democratic cuts that took place amongst the company’s board of directors. It was actually billionaire Carl Icahn, with his sturdy 7.56-percent stake in the natural gas conglomerate, who set things in motion.

In a letter he wrote to the company last month, Icahn spoke on behalf of himself and a group of disgruntled fellow Chesapeake investors voicing dismay with how the board was operating the company. In it, he expressed that he felt it was these board members who were largely responsible for the dismal Chesapeake stock performance.

On June 11, the company responded to Icahn by announcing that they planned to remove four of their nine current board members. This seemed to be just the antidote investors were looking for, as many of them openly expressed their satisfaction with the decision.

Though the company’s June 11 stock performance demonstrated Chesapeake was starting to regain traction with investors, they were and are still nowhere near a comfortable monetary state. With $12.6 billion in long-term debt, they are looking to disperse $14 billion in assets in an attempt to alleviate their weighty debt burden.

On June 8, Chesapeake announced at an annual meeting that it would be selling its Midstream Partners pipelines and Chesapeake Midstream Development to Global Infrastructure Partners June 26 for a combined $4 billion dollars. This move came at a prime time, as the company is clearly strapped for cash under their hefty debt.

The question now is, given the mitigating circumstances with both the company and the global economy, how should investors approach the wounded (but slowly recovering) beast that is Chesapeake Energy? Engage in buying off their debt via corporate bonds? Bank on materialization of a positive rebranding turnaround as Carl Icahn takes matters into his own hands? Consider commodities as a safe place to stash their dough until European turmoil cools off? Decisions, decisions.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.