Basel, Basil, or the New Fawlty Towers?

3 out of 3 Analysts agree that their bonuses have been guaranteed for the next 9 years. A bit of a cheeky headliner on Zero Hedge, which likely is a decently accurate interpretation of how most folks see a 9 year lead in period to the new BASEL III Capital Adequacy requirements.

As pointed out by the folks at CS an awful lot can happen in 9 years. Infact a whole market shift can occur, not to mention new markets created and developed.

Seems on the face of it that in its finality the regulations seem a bit of a cop out but maybe not so surprising necessarily, in light of the "stress tests" undertaken and what belatedly has been acknowledged as the lax nature of said stress tests.

Understandably we have a pretty decent equity rally underway since last week led by European financials.

Interestingly the same financials no doubt where so much concern was being expressed a short while ago (in particular with a focus on French and German Banks) re their exposure to the PIIGS.

Suddenly they are all a buy, which once again brings up the whole notion and idea of market behaviour and the drunkards walk aspect it often seems to follow.

While summer isn't officially over, Labour Day seems to always provide that cut-off point and it. Lo and behold the Greeks having finished their summer vacation have taken to the street once more in protest. It has been a disaster waiting to happen and has seemed inevitable . The refusal to undergo the hard therapy that is restructuring, has simply put off the inevitable, as the ECB and IMF support is providing little sway based on what short term Greek rates currently represent!

Its mixed out there with some encouraging signs; but an awfully long way to go and with interpretation open to all ( bit like last weeks BoC guidance really)!

Adventures in Curing - BRESAOLA !

Well I pretty much scared everyone in the family last evening. I had gone next door to borrow my neighbours commercial style slicer to administer to two pork bellies I had cured and smoked earlier in the week, then I remembered my experiment hanging in the cold room in the basement. I had my eye of round from almost a month before that I had cured hanging in teh basement cold room.

I used a recipe from my smoking and curing bible[Charcuterie - by Ruhlman & Polcyn] as seen in the pikkies here and tried to follow the recipe as accurately as I could. One week of curing, followed by new cure and a second week of curing.

Rinsed and air dried initially for a couple of hours, the instructions would have me next simply tie up the eye of round and leave it to air dry for 3 weeks.

Because it was an experiment, I used a small piece of eye of round (687 grams).

The idea of simply hanging the meat in the cold rooms downstairs didn't much appeal and I have yet to obtain a magic curing chamber like my hero Michael on Menu in Progress http://snipurl.com/10pm4y [menuinprogress_com], so my concession was to buy muslin/cheesecloth and use that to wrap it first then tie it up as per the instructions.

After the first week of hanging, I was having concerns as I saw white fuzz appearing and was already conceding that I might have farked up and have to regard my initial experiment as a fail; however, I held the faith and proceeded and so here we were 2 weeks into the air dry phase and the piece of eye of round was already as hard as a stone.

I asked my son to bring it up to the evident horror of my wife and daughter who almost ran from the kitchen as they claimed it looked like a some small animal that had been mummified. (Not very nice).

I was starting to feel a sense of abject failure. I would have to throw the bloody thing away and simply put it down to experience; but as they say, in for a penny, in for a pound. I cut all the strings, and removed the fuzzy cheesecloth/muslin, which seems to have taken on an almost bluish tint in certain areas and was blown away.

Yes it had clearly shrunk in size; but what I had in front of me was this dark hued almost dark log like colour on the outside (it suddenly struck me hey, that's how it looks in my local deli).

Having just sliced two large pork bellies, time to give this slicer a quick clean and proceed with slicing this piece of evident joy.

I proceed to cut it in half to fit into the slicer and I am overjoyed with the result, take a look and let me know if you agree. The taste is quite remarkable with a nice spiciness (the extra mace and black pepper) with that hint of must generally associated with Bresaola.

There is some reluctance admittedly in the family to eat it as its associated with what looked like the mummified remains of a small animal; but oh joy my foodie mates at work, will no doubt be more appreciative.

The New Normal or Crisis Fatigue?

Of late there has been very little to feel overly excited about in the market.

The majority of the important data seems to fall far short of expectations and the majority of the earnings season mixed. So too was the highly anticipated results of the Stress Tests for European Banks, which was awaited with much anticipation and bated breath last week.
It was rather interesting that the results would be coming out at the close of the European markets on a Friday, while North America was still open; but even more so, that what was meant to create one assumes greater transparency, was not necessarily the case.

In the end the results were published/leaked earlier than the time stated by CEBS and in typically cynical fashion the market gave it the secret thumbs down.
The conversation seems to have focused on there being a whitewash for the less than stringent rules being applied.

Why so surprised I ask?
Seems to me that it was no different for the other bank stress tests we have seen in the last year, so naturally market reaction was hardly positive.

This provides a nice sequitur for my next point which is the question of what kind of day we will deal with on market open. In the case of the result of said stress tests it was a risk off day, and reading headlines this morning as I journey the GO Train, its risk on once more.

This has been the pattern for some time now during this crisis (its not over). Yesterday, I read a rather good piece on the nature of risk-on, risk-off market from one of Shrill Bill's PM's from Pimco, Richard Clarida, who I had heard previously mentioned off based on his very interesting dissertations at this years CFA forum in Boston. Titled the Schizophrenic Risk On, Risk Off Market.

His assertion is that the fundamental nature of the market is changing and the degree of volatility has increased based on the greater number of fat tail events and the flatter normal distribution, creating what might be called a "new normal"

He used the following quote from Bloomberg writer Mark Gilbert to introduce and underscore the notion

"The 'New Normal'...turns out to be a world where scenarios move from impossible to inevitable without even pausing at improbable. Flocks of black swans go winging by with a frequency that is dulling our sensitivity to just how extraordinary these financial times are. Call it crisis fatigue." - Mark Gilbert, Bloomberg, June 2010

The piece is quite thought provoking as it also acknowledges the fact that with a large percentage of the shadow banking system (securitization) now gone, deleveraging taking place and as a client in Ottawa pointed out to me,

"some distributions have undefined means because tails are too fat" thus. "if returns are clustered around mean, then you increase leverage".

Clearly as these returns are not (i.e. clustered around the mean) because of the number of fat tails and the breakdown of the shadow banking system, the implication to me suggests some type of potential for a paradigm shift on how market are traded with much larger degrees of volatility. (Maybe of the three market behavioural books recently purchased based on Soc Gen's Dylan Grice's recommendation holds the answer).

As Mr. Clarida puts it "Now and for the foreseeable future, we are in a world in which average outcomes - for growth, inflation, corporate and sovereign defaults, and the investment returns driven by these outcomes - will matter less and less for investors and policymakers. This is because we are in a New Normal world in which the distribution of outcomes is flatter and the tails are fatter. As such, the mean of the distribution becomes an observation that is very rarely realized," **** [Zero Hedge]

The term fat tail is a reference to the tendency of many financial instrument price and return distributions to have more observations in the tails and to be thinner in the midrange than a normal distribution. Assets prone to price jumps tend to exhibit fat-tailed distributions. Courtesy John A. Robb
His take away, being three points discussed above. Managing fat tails (good luck), the risk-on, risk-off mentality as a direct result of those fat tails leading to obviously greater vol directed by the reaction to "news and data bombs" and finally lower leverage, which with the reduction of liquidity (read leverage) from the shadow banking system, naturally makes it more challenging.

By the way its risk-on day today as we had favourable data coming out of Europe including some bank earnings (UBS, Deutsche) giving European equities a a lift and rates cheapening up, so markets off to a positive start overseas and looking that way for this side of the pond.

Miami Beach & SoBE Eateries

Miami is such a land/city/place of contrasts,that's its hardly easily or otherwise tagged.
I spent a week there recently and my observations once again were about the evident wealth more so based on where I stayed this time in the SoFi (South of Fifth) area.
More Maseratis, soft top Bentleys, Mercedes Sports two seaters and Porsche Cayenne's than you can shake a stick at.


Mixed weather but a fun time had by all with three distinct groups, including myself the host and a couple of mates, my host plus my family and me and my family.

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It was fun and different and opens up ones eyes to how it is elsewhere.
March Break in the US and Oceanside Drive was teeming with young black folk.
The accents and vocabulary as always interesting to say the least; but currently most noteworthy and equally foolishly idiotic as the pants on the ground phenomenon, is the latest trend noted, and that is to wear one's shower slippers/sport sandals with socks, preferably black.

Its distinct, ridiculous and amusing all at once.


Anyhoo the major piece here really is and woz a focus on the restaurant scene.

I posted my review on Chowhound under my nickname Grazor as I often do and had one individual challenge me at every turn on one of my reviews. It was interesting to note; but really my opinion simply isn't that important. Its mine and its individual. Oh well its all good shits and giggles from my perspective.

Take a gander below if you are interested.

A South Beach Visit - Places I ate and Places I Hate (not really hate, though found dissapointing)

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Emerils at the Loews Hotel

From a service perspective I can honestly say that it was quite good, very attentive and immensely professional deserving of high marks, something I cannot say about the majority of the food.
It was a wobbly and very expensive experience for five adults, coming in at about $200 a pop.
With a couple of bottles of wine.
Let's start with the first surprise, which is the lack of anything that might be Nawlins style food. While I really don't know what that is I had certain expectations (where are the crayfish dishes, dirty rice, estoufade, alligator tails) and was sorely disappointed. The menu is pedestrian at best with execution that can only be called unbalanced. I start with the lobster gnocchi, that well known Nawlins favourite (yes) and I am immediately pleasantly surprised and horrified, soft pillowy gnocchi in a lobster cream sauce folded in with sweet lobster meat works nicely; however I immediately notice to my horror that someone's hair seems to have been an unrequested addition ( i am bald, i mean completely shaved head bald).

The very professional waiter removes my plate with apologies and in short order my dish is replaced with another. Quite tasty. My main is an 18oz bone in rib eye, which I order cooked medium rare. Two things disappoint on this tasty cut. They serve it to me very rare and they plaster it with gloopy sauces galore that hides the meats lovely flavour. So two strikes right there. We order sides including the ubiquitous truffle mac and cheese and the creamed spinach.
It’s completely uninspiring. Not that either should be inspiring necessarily; however to have 2 side dishes where you could not distinguish one from the other because they are not only served in similar dishes ; but represents a glutinous mess topped with layers of cheese so deep as to be challenging to slop out of the giant ramekins in which they are presented. All rather disappointing and what's with a 34 oz steak for $155 on the menu?
It says a lot about the lack of imagination of the restaurant and the menu in general. Give it a miss, you won't be missing anything. No forks of appreciation here. It’s expensive and the food is totally lacklustre and uninspiring. Actually if anything it’s no forking good. Sorry.

$$$$ 5 forks out of 10.

MEAT MARKET (Lincoln Road)

My host in SoBe wasn't sure if he should bring me to this spot, simply because he has had mixed experiences there; but he decided to chance it and I am glad though the outcome was as he had surmised.....mixed.
Three of us including another friend who works in Barbados sat down for dinner and started with a trio of shared appetisers as recommended. We had ceviche three ways, the Sockeye ceviche (though the very competent waiter mangled the name, that as Canadians we all looked at each other thinking for all these years we had mispronounced it and it was possibly Japanese)
Was incredibly fresh and very tasty and was served as a sashimi style ceviche. The blend of flavours while clever has some overpowering aspects in particular I thought the sesame seed oil (if I am not mistaken). The next one was the tuna, which was served in small cubes with an Asian influenced marinade which was quite delicious. The final ceviche was a more traditional style with lime etc in bit sized chunks, the fish if I remember correctly was dolphin and while from a texture standpoint quite delish was overcooked in the lime which seemed to be the primary takeaway. I had to take a large swig of my Albarino to get away from that one. Our main was an excellent steak served sliced for 3 ($68) and a good value. We also ordered lobster tails and their version of surf and turf, which was from the description 2 braised short ribs topped with snow crab meat. In my dear little head I had visions of two large bones with succulent fall away braised meat sitting astride each other with lashings of crab meat untop. Well while tasty it was a real disappointment, I suspect the shredded meat from the short rib while rather tasty was likely not even one full rib far less two. We enjoyed the meal. The service was flawless, the sommelier extremely good in his helpfulness and all round a good meal, though not an excellent one.
Would most definitely go back.

$$$$ 7 forks out of 10

Sushi Samba Dromo (Lincoln and Pennsylvania)



Being a lover of things Japanese and especially the use of other ingredients married with Japanese ones or a Japanese style applied for non Japanese ingredients, I was all up for the suggestion of dining with my buddies and one friend that was about to embark on a cruise from my Miami with his lovely daughters and wife.
I must say I was pleasantly surprised by my experience that when my son and wife joined me a couple of days later I took them there; but two very different experiences. A capable waiter with the right attitude can easily help ameliorate food not being up to what one might expect and that was so evident from 2 visits 3 nights apart.
On the Saturday night we sat outside and 5 adults and 2 kids dined and it was a wonderful experience. My three mates had previously eaten here and knew the drill, so they decided after much haranguing of moi, to go 7 course omakase, while I decided that the menu while overwhelming had a number of things that caught my eye, including the rock shrimp, the antichuros skewers of both beautifully marinated beef and delicious fish on Peruvian corn (its forking huge, the Peruvian corn that is, and has a slight sweetness and the texture of a boiled Yukon gold) and then my piece de resistance the Chilean sea bass marinated with miso That was cooked to perfection served with a few sautéed al dente vegetables and was a wonderful way to finish off my meal; but the beautiful marriage was the wonderful different plates that our waitress kept on selecting and bring to the table (which I naturally got to try in most instances- that tempura sisho leaf with the finely chopped and marinated tuna was quite divine). The food atmosphere and service was great and an enjoyable evening. Was had by all. With my wife and son coming in to meet me the next day - decided that I would treat them to dinner there on the Monday night and there-in lies the rub. The service from a balding and good looking and what I took to be a gay man was indifferent at best. The food wasn't as good though we enjoyed everything we ordered with the exception of the beef skewers and we finished of sharing the lovely sea bass with rather unusual coconut rice.
I would definitely go back.

$$$ 7 forks out of 10

Other places visited during my stay.

Larios on the beach.
Cuban influenced food. Relatively cheap and cheerful. Decent service and for what they provide. Two thumbs and 6 forks.

$$ - 6 forks out of 10

Big Pink on Collins and 2nd,

which I would have to say the jury is out. The service was indifferent on the two occasions we went for brunch (first occasion the waiter even wrote out for me what 18% tip equivalent was and what 20% was for indifferent service. Ha, farking cheek!). The food is ok to indifferent. My son who loves his burgers found his tasteless.
It’s convenient and you can order in and the menu is HUUGE and therein might be the problem I suspect; though the local Fire Marshals that frequent the place I suspect would not agree with me.

$ - jury is out with a tentative 4 forks out of 10

Smith & Wollenskys (at South Pointe)

We had to do steak; however walking back to our friend’s condo we could have tried Texas de Brasil which was much closer
My 18 ounce bone in rib eye was done to my exact specifications with that wonderful charred look and smell one can really only ever achieve from I assume a 1300 to 1500 F grill; but the first cut with my steak knife reflected my request for medium rare to perfection. Hell I had to take some back which was sliced and made ready for bagels for my journey back to Toronto the next morning. Ordered way too many sides and knew that.

$$$$$ 7 forks out of 10

News Cafe
Ah the ubiquitous all day breakfast joint. Guess what it never seems to fail to deliver and quite often after walking down Oceanside after dinner and way to many drinks we would slip into the bar and have final cleansing ale.
Its cheap, it’s cheerful, the quality of the breakfasts is always good and the service excellent.

$ - 8 forks out of 10 (why? because it does what it does extremely well ,and continues to be dirt cheap)

Nikki Beach (at the end of Oceanside)

I love the house music and despite the invariable wait, its a great spot for people watching and the brunch while at $35 is hardly cheap, is all you can eat> So despite not being big on buffets, the French folks have got a decent formula on the go. I make a point of going on any Sunday I find myself in SoBe

$$$ 7 forks out of 10

Bentleys in Islamordora - Middle Keys

ovverrated,.....quite simply! Why would you slap a piece of grilled cheese on a nicely cooked and seasoned piece of fresh snapper for gawds sake.

$$$ 4 forks out of 10

The World Aroud US Today!

After what was a rash of new issues in the month of January, the pace seems to have slowed down sufficiently as market pundits take stock of the rather ambiguous nature of the global theatre from a political & economic viewpoint.



Currently trying to make an accurate assessment of the global environment is like trying to tickle a trout in a fast moving stream into your frying pan, you need real expertise and need to have done it previously. I don't know much about tickling trout; but certainly will try to at least make an assessment of the global market environment*



Last week we saw Bernanke reconfirmed; but not without dissent and one of the narrowest margins since voting for the position of Lord Incumbent of the Creature from Jekyll Island began. Talking of dissent we also had Kansas City Fed President Hoenig doing just that after the Creatures’ two day meeting where they maintained their lower for longer language. Hoenig’s singular dissent however had the whole market in a tizzy as shorts ramped up, longs tried to close out, steepeners became flatteners and once again everyone jumped on the wagon of higher rates around the corner. This week however Australia surprised the market, having started to raise rates last year, consensus from pretty much all economists was for a 25bp hike and a given event. It didn’t happen and one can only imagine that the IMF admonishments to the EU and the US of the possibility of rate hikes too soon derailing whatever recovery might be on the way being heard all the way down under.



This brings us to Canada where a relatively rosy picture exists (its relative after all). Canada while not having to deal with all the issues that plagued the US market and real economy did have "stuff" to deal with. While on the whole our economy and banks look in better shape and our housing market continues to climb, nonetheless our Finance Minister saw fit to throw some cold water on any over enthusiasm that was building on our economic outlook. There seems a pattern emerging; but no evident clarity.

What is evident is that the US deficit continues to grow and President Obama and his administration have an awful lot of work to do to right the US economy and by implication the world economy and require Chinese cooperation. With the recent US arm sales to Taiwan and the impending meeting of President Obama with the Dalai Lama, I suspect that those actions do very little for betterment of relationships with one’s biggest creditor, at a time when you are increasing your debt load (where is Handsome Hank Paulson, China expert extraordinaire when one needs him?).

"If the U.S. leader chooses this time to meet the Dalai Lama, that would damage trust and cooperation between our two countries, and how would that help the United States surmount the current economic crisis?"

Zhu Weiqun, vice minister of the United Front Work Department of China's ruling Communist Party, [Reuters]

The sequitur is then the implications for & the state of the greenback. Surprisingly despite competitive devaluation, it seems at all times that its untouchable as the worlds reserve currency, and despite Moody’s warnings about the US AAA ratings potentially being in jeopardy, the question that's is there for all to ask, what is the alternative?

***Moody's warns US of credit rating fears
By Michael Mackenzie in New York and Gillian Tett in London Published: February 3 2010 19:53

Moody's Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country's budget deficit ****[ft.com]

A rather good question indeed when one considers the state of the other major currencies.

Europe is in deep doodoo with the problems of the porcine acronymed members ran by the Belgian Emperor Van Rompuy. The “PIGS” as they are affectionately referenced (Portugal, Ireland, Greece, Spain) are struggling with Greece as the evident example and problem child du jour, with concerns galore as they try and reduce their deficit as percentage of GDP from its current 12.7% to the inside 3% that’s required from the EU stability pact. It puts the whole EU in a pickle and begs who will blink first in the EU/Greece stand-off. With the wage freezes and cuts that the Greek PM has announced as he tries to bring the deficits in line, I can only imagine that the Greeks, who are well known for taking to the streets in spates of unrest, will do exactly that. What of the UK, where neither party is loved, bankers are hated and the economy continues to struggle and Cool Britannia is no longer?

So the status quo will likely continue for the foreseeable future; but lest we get too comfortable, there is a change taking place in the global paradigm and its implications for all that is currently deemed status quo.

The Creature from Jekyll Island Speaks!

At the risk of being dubbed Roubini's love child for my sometimes dour outlook over the last couple of years, let me start by saying that the economic data of late has been somewhat encouraging.

Let me then immediately point out, that clearly, we are hardly out of the woods.

Dubai World/Nakheel and its rescue by the UAE Central Bank is a very clear indication. Greece and its growing sovereign problems and the markets lacklustre response to how they will resolve them add to which the constraints of the EU's growth and stability pact, puts Brussels over a barrel.

How can they not rescue them, without forever damaging the EMU even as they own rules dictate that they cannot.

What about Austria and what we have seen with Hypo of late?

It brings our focus back to today, even as we wind down for the holidays with liquidity creeping backwards, in what has been a tumultuous year, questions galore exist on what next and all eyes on the FED.

Today the FED is likely to hold pat on its monetary stance; but with the recent foray into tri-party reverses, and as some of the QE measures coming to their natural end, the signals are probably starting to grow on how it may start dealing with the enormous amount of liquidity swilling in the system. We see the ECB finishing up on its 12 month LTRO and of course we know of jurisdictions actively hiking globally. While the market is starting to write rates higher, the futures curve is correctly of the opinion that we are looking into likely Q3 of 2010.

At all times one asks, if 1% rates back at the start of this decade led to the ensuing bubble and its consequences, what sort of implications will ZIRP have on a go forward basis. Despite that, the deep concern however is still whether all the cheap dosh has delivered what was intended. Sure we have observed some clear results from the cash for clunkers and the help for homebuyers; but as we have seen once that particular artificial support has been removed then conditions snap back to reality.

In my humble view the jury is still out. From a quick overview we are certainly in a much better place than a year ago, and while the data on the face of it looks good, the deeper reviews leaves lots of reasons for concern on how well the overall economy is performing. Lets hope that its starts to move to a deeper and more entrenched reality.



Season greetings to everyone!

My adventures in food....

Many of my friends and all of my family are aware of how keen a cook I am. My current journey through George Brown College on Saturdays is helping to elevate, not only my understanding of food; but also my abilities around techniques, style and recipes. At the same time my immersion in this topic has me pursuing charcuterie, new braising techniques and a whole bunch of other things. One of the things that I started to do a number of years ago was make my own gravalax.


I would say at this juncture I am able to create a superior product to what i can generally get in the store at a smidgin of the cost. Recently I have started to make a much better product however, by not only curing my lox for 2 to 3 days based on size; but by air drying it in my fridge for 8 to 20 hours to allow for the creation of pellicle and then cold smoking for a couple of hours at 50F. Yesterday I shared the end result of this approach with colleagues at work and it seemed to have been very well received. I am also experimenting with curing for a shorter period by using my food saver to vacuum seal and cure smaller pieces (half a side) that from all accounts should substantially shorten the cure. I also tried that with the smaller piece in the picture which delivered a firmer product with a much better colour.

There are only a couple of places that i believe provides a truly superior product and one of them is J Willy Krauch in Tangiers, Nova Scotia. Their approach is the more traditional Danish method of salting for one day and then smoking over 1 to 2 days. A truly amazing product. Great write up here. http://snipurl.com/t7wtg

Feel free to contact me if you would like my recipe.