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Call Me When You Have A Real Insurance Company!

Photo Credit: eflon || The title of the article comes from a comment Greenberg supposedly made to Buffett when AIG was much bigger than Berkshire Hathaway — times change…============================The title of the article comes from a comment Greenberg supposedly made to Buffett when AIG was much bigger than Berkshire Hathaway [BRK] — times change…It’s come to this: AIG has sought out reinsurance from BRK to cap the amount of losses they will pay for prior business written.  It’s quite a statement when you are willing to pay $10 billion in order to have BRK pay 80% of claims over $25 billion, up to $20 billion in total.  At $50 Billion in claims AIG is on its own again.So what business was covered?  A lot.  This is the one of the biggest deals of its type, ever:The agreement covers 80% of substantially all of AIG’s U.S. Commercial long-tail exposures for accident years 2015 and prior, which includes the largest part of AIG’s U.S. casualty exposures during that period. AIG will retain sole authority to handle and resolve claims, and NICO has various access, association and consultation rights.Or as was said in the Wall Street Journal article:The pact covers such product lines as workers’ compensation, directors’ and officers’ liability, professional indemnity, medical malpractice, commercial automobile and some other liability policies.Now, AIG is not among the better P&C insurance companies for reserving out there.  2.5 years ago, they made the Aleph Blog Hall of Shame for P&C reserving.  Now if you would have looked on the last 10-K on page 296 for item 8, note 12, you would note that AIG’s reserving remained weak for 2014 and 2015 as losses and loss adjustment expenses incurred for the business of prior years continued positive.For AIG, this puts a lot of its troubles behind it, after the upcoming writeoff (from the WSJ article):AIG, one of the biggest sellers of insurance by volume to businesses around the globe, also said it expects a material fourth-quarter charge to boost its claims reserves. AIG declined to comment on the possible size. Its fourth-quarter earnings will be released next month.For BRK, this is an opportunity to make money investing the $10 billion as claims on the long-tail business get paid out slowly.  It’s called float, which isn’t magic, but Buffett has done better than most at investing the float, and choosing insurance business to write and reinsure that doesn’t result in large losses for BRK.I expect BRK to make an underwriting profit on this, but let’s assume the worst, that BRK pays out the full $20 billion.  Say the claims come at a rate of $5 billion/year.  The average payout period would be 7.5 years, and BRK would have to earn 9.2% on the float to break even.  At $3.75B/yr, the figures would be 10 years and 6.9%.  At $2.5B/yr, 15 years and 4.6%.This doesn’t seem so bad to me — now I don’t know how bad reserve development will be for AIG, but BRK is usually pretty careful about underwriting this sort of thing. That said BRK has a lot of excess cash sitting around already, and desirable targets for large investments are few.  This had better make an underwriting profit, or a small loss, or maybe Buffett is ready for the market to fall apart, and thus the rate he can earn goes up.All that said, it is an interesting chapter in the relationship between the two companies.  If BRK wasn’t the dominant insurance company of the US after the 2008 financial crisis, it definitely is now.Full disclosure: long BRK/B for myself and clients

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dt Pro 101 – Get Started with Our Flagship Trading Platform

Get started with our flagship online futures trading platform! We’ll show you everything you need to know to get on the fast track using dt Pro, our flagship trading platform. dt Pro provides everything you need to trade with speed, transparency and powerful indicators. Contact Daniels Trading To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Editorial Team. Risk DisclosureThis material is conveyed as a solicitation for entering into a derivatives transaction. This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service. The post dt Pro 101 – Get Started with Our Flagship Trading Platform appeared first on Daniels Trading.

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January 20- Breakout Rally in Crude Oil Futures

Crude oil futures had a breakout setup for Friday- Thursday was an NR7 (narrowest range of the previous seven sessions), an inside day and a doji bar. Additionally, March crude oil had come down to test last week’s low of 51.59, putting it in a position to break down below the recent lows (possibly for a bigger selloff) or for a recovery rally. For a breakout day we don’t need to guess as to which direction the market may go – that’s a strength of breakout trades. We look for the market to move past a nearby support or resistance level (reference price), looking for that initial push to be a springboard to a larger move in the initial direction. Breakout trades often work because the move creates positive feedback- the market picks up momentum as it moves away from its initial balance level. For March crude oil futures, our first breakout reference prices were the high and low from Thursday. Those were the levels where the market found support and resistance in the previous session so a move beyond one of these levels would be a natural first reference price. When I wrote the Swing Trader’s Insight Morning Watch List, crude oil had already moved below the Thursday low and then rallied back above it. Around 5:30 AM it moved back below the Thursday high, found support at the 20 period EMA to make a higher low and then again rallied back above the Thursday high. This gave us a second signal to go long, and the rally gained steam. Our initial stop loss for the second entry could go below the double bottom at 52.58. Crude made a series of higher highs and higher lows this morning. The market gained steam with the 7:55 AM rally above the Fibonacci retracement level at 53.02 (a 50% retracement of this week’s selloff). The advance continued stopping just short of trend line resistance at 53.70. Try Swing Trader’s Insight for 14 Days Swing Trader’s Insight Trial – This swing trading resource is designed to help you improve your trading skills and make you aware of trends and new potential opportunities in the commodities markets. Regardless of your current skill level, access to this exclusive swing trading information will enhance your trading experience. Swing Trader’s Insight includes an email newsletter subscription. Swing Trader’s Insight trial lasts 14 days. Try Swing Trader’s Insight for 14 Days Learn More View a Sample Essential Guide for Futures Swing Trading In this guide, experienced trader and broker Scott Hoffman explains the trading methods he uses to analyze and trade the futures markets and to publish his trade advisory, Swing Trader’s Insight. Register Now Contact Daniels Trading To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Scott Hoffman. Risk DisclosureThis material is conveyed as a solicitation for entering into a derivatives transaction. This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service. The post January 20- Breakout Rally in Crude Oil Futures appeared first on Daniels Trading.

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MDA SnapShot: ES Levels, Inauguration Day, 1/20/17

Here you will find the most recent trade levels released today in the Market Dimensions Advisory.  This update is showcasing the MDA SnapShot levels with potential buy and sell zones for you to consider executing starting your trading day.  If you would like to further discuss these trades do not hesitate to contact me directly.  If you are not getting these updates sent to your inbox each morning, please subscribe HERE.  To see all MDA updates (morning & intra-day levels, trade recaps, educational material) visit my blog page HERE. Contact me directly @ 800-958-9571 or via email: apawielski@danielstrading.com  Follow me on twitter @MDA_SnapShot Published 1/20/17 8:43 am central: Traders, Below you will find the Market Action Scanner levels as well as the 30 minute ES levels for the March E-mini S&P. We are seeing bullish navigator on the board for 15-60min time frames. There was a quick opportunity to buy an unfair low on the 30 min chart before the open, but typically I like to see how the market reacts on the open before putting positions on. I was looking for us to pull down more toward the lows. After the open, the ES broke through the top zone and we are now making new highs @ 2272.75.  Given this setup, we are waiting for a pull back to get long or for those looking to get in start small scale longs near @ 2269.00.  If you are waiting for a strong pull back look to buy near 2258-2260. With the Presidential Inauguration Day, we may some knee-jerk volatility but most likely we will have volatility across the board in the coming weeks when start seeing the executive orders coming through.  Don’t hesitate to keep your powder dry on a day like today. Click Images for Larger New Window Market Action Scanner: ES 1/20/17  Source: MDA/MAS MDA SnapShot: 30 Min Chart 1/20/17 Source: MDA/dt Pro Subscribe to Market Dimensions Advisory Market Dimensions Advisory – Get Inside the Mind of Commodity Market Professional Andrew Pawielski! The Market Dimensions Advisory leverages Andrew’s own live trading and a career of working directly with professional traders, commercial clients and institutional business. This deep understanding combined with countless hours of technical market analysis have made Andrew proficient with trading execution and the trading process. Market Dimensions Advisory includes an email newsletter subscription. Subscribe to Market Dimensions Advisory Learn More Market Action Scanner The Market Action Scanner is a premier Market Profile based scanner powered by the acclaimed TAS proprietary algorithms. Sign up for a 14-day trial to Market Action Scanner! Register Now Contact Daniels Trading To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Andrew Pawielski. Risk DisclosureSTOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER. THE RISK OF LOSS IN TRADING COMMODITY FUTURES AND OPTIONS CONTRACTS CAN BE SUBSTANTIAL. THERE IS A HIGH DEGREE OF LEVERAGE IN FUTURES TRADING BECAUSE OF SMALL MARGIN REQUIREMENTS. THIS LEVERAGE CAN WORK AGAINST YOU AS WELL AS FOR YOU AND CAN LEAD TO LARGE LOSSES AS WELL AS LARGE GAINS. This material is conveyed as a solicitation for entering into a derivatives transaction. This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service. The post MDA SnapShot: ES Levels, Inauguration Day, 1/20/17 appeared first on Daniels Trading.

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GBP/USD – Pound Dips on Dismal Retail Sales Data

The British pound has posted slight losses in the Friday session. Currently, GBP/USD is trading at 1.2280. On the release front, British Retail Sales declined 1.9%, well below the forecast of -0.1%. In the US, FOMC member Patrick Harker will deliver a speech. It’s inauguration day in the US, so the markets will be listening closely as President Trump addresses the American people. British retail sales were down sharply in December, but the soft reading has not had a dramatic effect on the pound. The currency, which has been hammered since the Brexit vote in June, has shown signs of recovery and is poised to have a winning week for the first time in 2017. The currency jumped 2.9 percent on Tuesday, after Prime Minister Theresa May’s speech on Brexit. May has had little to say about Brexit in recent months, but that policy appears to have changed, as she stated that Britain would quit the European common market but was open to free trade agreements with Europe and countries across the world. May wants to start negotiations on Britain’s departure from the EU in March, and has said that the negotiations should take two years to complete. May Warns of Momentous Change For Britain All eyes are on Washington, D.C., as Donald Trump will be sworn in as the 45th president. Trump’s stunning victory in November has triggered strong gains for the US dollar and the stock market, and there is no arguing that the US economy is robust. Nonetheless, there is a feeling of unease in the air, as confidence and hope are starting to give way to confusion and uncertainty, as Trump has failed to outline any specifics on his economic policies, while continuing to tangle with the media and fire off controversial Twitter messages. How will the dollar react when Trump rolls up his sleeves and begins work on Monday morning? Earlier on Friday, Oanda’s Stephen Innes provided the following assessment: the downside risk for the USD remains elevated more so from Trump’s inauguration if he fails to underscore economic policy. On the other hand, if Donald comes out firing on all fiscal stimulus cylinders, bond yield will surge, and the greenback would catch an enormous updraft… the President–elect takes centre stage as we begin a new chapter in American politics and global financial markets. Buckle up; we are likely in for a wild ride in the coming 100 days [see the link below for the full article] We begin a new chapter for the US Dollar GBP/USD Fundamentals Friday (January 20) 4:30 British Retail Sales. Estimate -0.1%. Actual -1.9% Tentative – President Trump Speech 9:00 US FOMC Member Patrick Harker Speech *All release times are EST * Key events are in bold GBP/USD for Friday, January 20, 2017 GBP/USD January 20 at 9:00 EST Open: 1.2336 High: 1.2372 Low: 1.2259 Close: 1.2279 GBP/USD Technical S1 S2 S1 R1 R2 R3 1.1943 1.2111 1.2272 1.2351 1.2471 1.2579 GBP/USD edged higher in the Asian session but has reversed directions and posted losses in European trade 1.2272 was tested earlier in support and is a weak line 1.2351 is the next resistance line Further levels in both directions: Below: 1.2272, 1.2111, 1.1943 and 1.1844 Above: 1.2351, 1.2471 and 1.2579 Current range: 1.2272 to 1.2351 OANDA’s Open Positions Ratio GBP/USD ratio is unchanged in the Friday session. Currently, long positions command a majority (62%), indicative of trader bias towards GBP/USD reversing directions and moving upwards. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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