A New Forking Threshold - The magical Animal

I must admit the headlining is becoming somewhat tedious now, so that's the last time it will be used.
Its been a month since I started reading the Menu in Progress blog that provided me with the necessary inspiration to pursue my desire to make my own charcuterie. I seem to be almost there having crossed an initial threshold over the Labour Day weekend where I completed smoking my first two pork bellies after a week curing in the fridge and produced bacon that was then hand cut. I don't own a slicer...yet.


This was followed up by me trying to obtain a "magic fridge" ( a bar fridge essentially that I can use as a sanitary and temperature controlled environment for curing my products) with no luck.


However I still made a major stride forward by making my own sausage for the first time also, over a two day period. It has taken me quite a bit of time to get some of the more specific items such as the prague powder/pink salt and the hog and beef casings, as well as my temperature controller for the fridge I don't yet own.

Nonetheless, the products seem to have been very well received by a couple of friends, though I have to admit that the bacon was saltier than I had planned, so thank goodness for the Quebec maple syrup that i had added to the cure.


Now Pandora's Box is open, who knows what up next; but I have some ambitious plans , though the lack of my curing environment, has forced me to go slower and in fact it has been helpful as I continue to t eh read the excellent tome by Michael Ruhlman & Brain Polcyn - Charcuterie as my current food bible on these topics. AN excellent investment indeed.

I have added some pikkies from Picassa.

New Frontiers Ahead - Forking Good!

I seem to have gone a little crazy on the Charcuterie front of late.

I have wanted to try my hand at smoking sausages, bacon and all manner of meats for sometime; but have refrained from lack of knowledge, equipment and any number of other reasons including fear of failure and botulism.

I had a fab conversation with a young chef from what is to be a new restaurant BUCA, back in June, (the new restaurant associated with Jakobs Steak House and Brassai) as they fed us at the annual Set Sail for Hope Charity event on Toronto Island, one of my top if not my foremost event of the year. I asked the young chef if it would be possible for me to possibly use a wine fridge for curing as a more sanitary condition rather than the open area in one of the spare rooms in my basement, which while keeping a fairly consistent temperature, still had me concerned and worried about the sanitary nature of the environment. (The room is is primarily used to store dry and tin goods, extra clothes thats been packaged away, wine beer, a dusty rowing machine and any other types of stuff not in use that needs to be stored)

After quite a bit of dialogue and in particular probing on my part, I was 90% convinced that it could be done; the question was then some more research to get comfortable on exactly how I would go about this.

Luck and circumstance would seem to have delivered a path to me filled with knowledge, trials, experience success and failure and lots of pikkies through an exceptional blog if you are a "foodie" (general term) called Menu in Progress.

I say exceptional only because the writing is great, the pikkies excellent, the food very scrummy and not only are recipes provided; but there is wonderful detailing of the experiences.

So over the Simcoe Day holiday weekend I had the opportunity to visit the site a number of times and leave some comments, which were responded to by Mike who writes the blog.

This has led me to do a ton of research on what one might require to get going, for my initial attempts, which I suspect will be pancetta and bacon (start slowly).

This will provide me with the requisite time to get hold of the various equipment that I require from myriad sources. As I mentioned I may start off with bacon and pancetta; but i see a variety of sausages smoked, dried and fresh in my future as I try and advance my knowledge in this area.

Are We There Yet?

I was asked a few mornings ago with some other colleagues from different asset classes, what we felt might be the biggest impediment to the rehabilitation of the economy and markets over the next number of months. My response and concern was based on the reality of a market that seems hell bent on reading the tea-leaves as being positive for the market at all times and with every piece of data.
This should worry pretty much everyone. In particular the idiotic blabbers at CNBC (though there are a few there that should be paid attention to including the Guru of the Pit _ Rick Santelli) and their desire to find positive headlines and put positive spin on pretty much anything.

The most recent example was Mondays "New Home Sale" figure, which came in as up 11%. Sure its a good number; but the reality is that the number has to be understood in context, and that context represents a number of things that should provide food for thought. First no mention was made of the fact that median prices had dropped by over $13,000 from May at $219K to June at$206K as the folks at Housing Bubble put it

***This is pure economics with prices falling you will expect new home sales to increase especially in the spring and summer months which are normally stronger.**** http://www.doctorhousingbubble.com

This is hardly about being pessimistic and more about realism and pragmatism. The same article points to the growing and largely forgotten Alt A and ARM's situation that's still ahead especially in California.

However a recent publication this week on ZeroHedge's website by Tyler Durden with David Rosenberg (he of ex-Merrill fame and now brightening the firmament at Glusken Sheff here in Toronto) should be read for a reality check. While the document seems long, it’s primarily graphical and makes some very salient and focused points on the economy. It produces data with a little more depth and insight and is sufficiently worrying to leave one floundering in that the overly upbeat prognostications from government and media alike should be taken with more than just a grain of salt.

Specifically in its introduction it shares the following

“We believe an aggressive “fact-finding” investigation into the true depths of the recession is critical due to increased pressure by members of the Mainstream Media and conflicted Investment Banks to present a myopic, unjustified opinion. Furthermore, opinions based on overoptimistic projections and “hope” is the primary reason the Credit Bubble persisted as long as it did.

- As there is an all too real threat of a relapse into the same kind of optimistic zeal and the resultant formation of yet another asset bubble, Zero Hedge is presenting the factual side of the story . We demand that readers question any and all assumptions presented herein (as well as everywhere else) on this most critical subject “ - ZeroHedge Article

Here are a couple of morsels for general consumption that I found particularly chilling.
UNEMPLOYMENT: People have been on unemployment insurance so long it has expired. Benefits exhaustion rate hit a record 50%. Americans are rolling into various extended benefits programs such as Emergency Claims and Extended Benefits, which surged by 170,000 in the last week alone. While “unemployment” is still below 10%, U-6, or the broader underemployment metric is at 16.8%, 6.5% higher from a year ago
HOUSING: NAHB housing market improved in July… To 17 from 15 the 8th worst print on record. Sales outlook is stuck at 26, and anything under 50 is a contraction RealtyTrac disclosed that Q2 foreclosure activity was the highest on record. 􀁠 1.9 million foreclosure filings in the first half of 2009, a 15% increase from the prior year period *June foreclosure filings of 336,173 were the fourth straight month exceeding 300,000 *One in 84 housing units received at least one foreclosure filing in the first half and all this is occurring on the backdrop of an industry-wide housing moratorium *According to Whitney Tilson, foreclosures have been temporarily cut by 66% through moratoria which reduce supply *At some point the banks will need to release the flood gates – watch out below as millions of units in shadow inventory are unleashed on the few buyers out there

The full document can be found at this URL http://zerohedge.blogspot.com/ It is worth the time and effort to give it the once over.


My personal take is that we are some ways along in the process of rehabilitation and that it’s definitely not a V; but looking more like the W.
The kind of percentage returns that we have seen this year in the equity markets and in the S&P in the last couple of weeks alone should suggest that they are hardly likely to continue.

Undoubtedly risk appetite is back markets are on a better footing and business is once again underway; nonetheless the amazing compression in corporate and high grade spreads experienced over the last few months seems over done and unsustainable. Driven by supply (or rather lack of) and demand factors, that do not necessarily reflect the reality of the underlying US economy.
Even as our own Governor at the Bank of Canada tells us that we will be out of recession in Q3, I wonder about his certainty. Maybe it’s the rainy weather that has me all afoul and in need of amore upbeat disposition this week.

Man Without a Plan?

The other Bernanke my good mate Jimmy!

Maybe its the cynic in me; but I have read a any number of articles t his weekend dealing with Ben Bernanke's testimony last week and whether or not he will be re-elected in January of next year for another 4 years. There are the pros and cons; but before I deal with that there is still the conflicting statements of how he will take monetary policy ahead. Back in May I noted an article in market News that stated that the FED and Bernanke would try and adopt a two track approach to monetary policy within the very easy liquidity arrangements that have been instituted to drag us out of the current economic and credit malaise.
In this weeks testimony to Congress and even prior to that in a WSJ article the day prior to his confessions to Congress, Dr. Bernanke once again reflected on the trail balloon of May, the implications of which are t hat he could essentially drain the system very quickly, by paying for excess reserves held at the FED by banks at the same level as the Fed funds rate, while potentially retaining quantitative easing (vis-à-vis purchase of Mortgages and Treasuries).

It seems that Dr. Bernanke is speaking out of both sides of his mouth however or maybe its simple confusion on my part ( certainly wouldn't be a first), in that he is also stating that the Fed will retain rates at theses low levels for the foreseeable future (i.e. into 2010 as opposed to what the market believes is a necessary hike before year end).

Suddenly the unsmiling Dr. Ben is doing a world tour and has had more press in the last week than a politician running for office.
Well I guess he is running for office after all and so it should not be surprising; but I digress somewhat. It would seem that the there is a substantial split however on what and how Dr. Ben has done. I read two op-ed pieces in Sunday's NYT and I was horrified to find that Dr Roubini who wrote one, quite surprisingly was very supportive of the things that Bernanke had done to address the crisis; however I found myself siding with Anna Schwartz, the erstwhile and highly respected economist, who with great aplomb skewered Bernanke for his numerous failures ("Man without a Plan"). I am certainly with her. I was reminded that way too often the current incumbent of the position of Lord of The Universe like his predecessor Guru Greenspan, have chosen to articulate positions on all manner of things and have been horribly wrong in hindsight.

Where I would have to disagree is that part of his plan was always going to be about inflating the FED balance sheet. The 2002 speech referencing the printing press and distributing dollars from a helicopter has come to pass.

****"Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined
government can always generate higher spending and hence positive inflation." Dr. Ben Bernanke 2002****

The FED has liabilities galore and continues to print money at an unprecedented rate. This week alone the treasury will be issuing some US$211 bn between T-bills and the auctions for 2Y (42bn); 5Y (39bn) ; 7Y ( 27bn) and the TIPS (6bn).

Its interesting to note that even the disgraced Elliot Spitzer once deemed Wall streets own sheriff for his eager desire to prosecute wrongdoing is now accusing the Creature from Jekyll Island (the place the FED was born) of running a huge ponzi scheme based on discussion with the hubristic and substantially overpaid Dylan Ratigan ( I don't like him).

****Advocating in favour of a House bill to audit the Federal Reserve, Spitzer said: "The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it's supposed to be independent. Let me tell you a dirty secret: The Fed has done an absolutely disastrous job since [former Fed Chairman] Paul Volcker left.
"The reality is the Fed has blown it. Time and time again, they blew it. Bubble after bubble, they failed to understand what they were doing to the economy.
"The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through - conduit payments - to the investment banks that are now solvent. We [taxpayers] didn't get stock in those banks, they didn't ask what was going on - this begs and cries out for hard, tough examination.
"You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous, it is time for Congress to say enough of this. And to give them more power now is crazy." ******** [Source - rawstory.com]

Homecooking......

I cook and have done so for some time. Part of it has to do with my upbringing.
As the eldest of five and with a single parent, I learnt to cook early. Its amazing but cheese on toast with baked beans for 5 seemed back then as challenging as a putting out a beautiful roast rack of lamb with a potato pave, petit pois with carmelised shallots and a nice jus.
Furthermore my very first job and then the jobs that were to follow exposed me to the delights of quality cooking and restuarnats both as client and coverage.

In recent times I have tried to take my knowledge base up, by enrolling at George Brown College for their Continuing Education Series, specifically in Culinary Arts. At the start of the year I did a 12 week course, and I am about to finish a 10 weeks course, with a three week course coming up that will focus my knife skills. That’s my compulsories and over the next 2 years, taking 6 electives will provide me with my Culinary Certification. I think it simply suggest that I have attended and should have garnered some know-how along the way.

From Canada Day

I had pretty good food knowledge going into my courses; but have found that the classes have elevated that base, primarily because it has helped establish a framework for my knowledge thus expanded my understanding, as I have made connections within my knowledge base as well as learning new stuff.

While I knew that I liked cooking, I didn’t appreciate to what extent until I started attending class and found myself as excited as an eight year old on Christmas morning each Saturday, as I gathered my knife roll and other accoutrements for my four hour session at George Brown College.

The interesting thing is that most folks seem to assume that I want to work in or run a restaurant. Nothing could be further from the truth.
I simply want to be able to cook superb meals at home for both my family and friends. I am not talking about simply cooking elegant meals either.

One of the things that I have found out over time is that as much as I enjoy an elegant meal, beautifully cooked and expertly presented, I am as keen or possibly keener when it comes to braised foods. Ultimately it’s the whole low and slow approach, whether BBQ-ing or braising.
Using a relatively cheap cut, good seasoning and the process of low and slow, it is transformed into something super delicious.

This was evidenced this morning at our office, as I had BBQ-ed a pork butt Canada Day and shared the goodness with my colleagues this morning with my home made tangy BBQ sauce. I have posted a few pikkies of the BBQ process on my Big Green Egg (BGE) and some others from items I have made. Enjoy!

Obama's Ascendancy and Fall

Along the way I have had a rather interesting dialogue with a colleague of mine that I have the utmost respect for.
Not only is he one of the very best traders I have ever worked with and one of the funniest persons; but he is someone that has a love for the culinary arts like myself, fully interactive in any environment, and with every sort of company. One of his contentions and a consistent one to boot, was that Obama would be a one term President, a viewpoint I have not been able to embrace until recently

He has always ascertained for any number of reasons that Obama would be one term. Recent events that have had very little main media profile has me seriously doubting my opposition to my colleagues contention.

The first aspect deals with the Presidents assertion that Pakistan/Afghanistan would be the focus of the war on terror. His approach is philosophically and fundamentally no different to that of Dubya, just different geographically.

In his attempt to unearth Osama Bin Laden and his Taliban supporters, he has created a source of future enmity and hatred for the USA. The result of his actions is that there are anything between 2.5 and 3 million displaced persons now living in refugee camps in the Afghan/Pakistan borders. This is a direct result of the action of the new Commander-in-Chief. People are dying and displaced, the camps lack water and appropriate facilities, and the only thing that they know is that their current situation and circumstance is a direct result of US policy as ordered by Barack Obama.

Additionally while his recent speech in Cairo was a landmark one in many respects and reached out to the Muslim world, some may see it as cynical picking Hosni Mubarak as host, when one considers the record of the Egyptian leader.

What's even worse is that as part of the financial services industry I watch in astonishment as a bit of a double play occurs, on the one hand harsh rhetoric and the appointment of a czar to oversee executive pay even as the majority of the banks are allowed to borrow from Peter to pay Paul. In this instance I refer to the fact that many of the banks (and read Goldman Sachs, Morgan Stanley as banks now) happily feeding at the FDIC guarantee trough to borrow cheaply and pay back TARP Funds. Nice arbitrage especially when these institutions are only paying back a portion of what they actually owe; but it allows them a way out from under the heel of the administration re executive compensation and the like.

While I continue to believe in Obama to a greater extent than not, I am increasingly of the opinion that what has always been a plan that sits on a knife edge, will end up falling apart, especially with a likely second leg down in the economy as unemployment picks up and the federal deficit continues to grow at an astounding pace.

The End of US$ Hegemony - June 16th 2009

This morning I delve into the domain of my esteemed colleague on FX Jack Spitz. We have had numerous conversations on this topic and I suspect many more ahead.

Of late all eyes have been on the FX markets and with good reason; but it has not been the more traditional economic data and drivers that we have generally looked upon; but instead what increasingly looks like a complete paradigm shift.

With the G-8 Ministers meeting this weekend providing rah-rahs and pom-poms for the Greenback and the Finance Ministers of Japan and Russia suggesting faith in the worlds reserve currency for very different reasons, one might question my focus on the end of the hegemony of the Greenback and why this may be the beginning of a paradigm shift that will change the worlds reserve currency.

How can this be?

Currently and for the last number of decades the US way of life and its military spending in particular has been financially sponsored and supported primarily by the Chinese, Japanese and South Koreans, with the Russians in the last few years and the ascent of oil prices, jumping into second place for buying US debt and funding that lifestyle.

We have continually however, and with increased volume of late, heard and read about the concern that's been expressed by these nations, with the exception of Japan and Korea, about the continued depreciation of the USD.

It's a simple matter of observation, seeing the Chinese continually trying (not always successfully) to purchase real and in particular commodity assets with their USD rather than maintain overly large reserves in what is a continually depreciating currency. Recent examples are Chinalco's bid to acquire a stake in Rio Tinto (and despite huge concessions on the part of Chinalco, still a resound failure) and only yesterday Sinopec's bid to acquire Addax Petroleum with a Stg 4.8bn bid.

Over the last number of months the stories/rumours have been numerous on these same creditor countries looking to diversify away from USD and in the last number of weeks we have had stories from not only these creditor countries but also the IMF suggesting use of SDR's (a currency basket of Special Drawing Rights of which the USD is still the largest percentage, though with the Euro and other currencies also making up said basket); add to that Paul Krugman the recent Nobel Laureate in economics suggesting that the GCC should de-peg from the Greenback and the growing cacophony of voices spouting the same notion, demands that attention be paid.

Hence the shellacking that the USD has been faced with of late, as concern grows about the extent of US deficits ($2 trillion and growing) and despite all the talk of a strong dollar policy the evidence that continues to suggest otherwise.

But this week is especially important as the SCO (The Shanghai Cooperation Organization) meet in Yekaterinburg, Russia, (formerly Sverdlovsk) Monday and Tuesday with Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation group. The SCO continues to gain in significance and in the context of the refusal that the US received in its request to attend this meeting, becomes even more significant.

It's quite evident that the primary subject will be what to do about the US dollar as the world reserve currency. China is already establishing the Yuan as the preferred currency in bi-lateral trade agreements and Russian continues to express a similar desire to use the rouble.

I can't help but believe that we might be seeing a landmark moment in history unfurling before our eyes as it speaks to the hegemony of the Greenback as the worlds reserve currency.