Marc Faber is right, I would not be touching european and us bonds, but there is a problem, the Us bonds have been rallying, but most of that is just central bank manipulation.
He is also right, the Central banks are not saying when they are intervening but they are not saying it.
The day for the Us Bond market collapse are around the corner, but you do not know whether they would want to continue to buy the bonds they are issuing themselves.
One of the sure signs that the bond market is rigged is the Euro bond futures, France is still has relatively high priced.
The only reason that Central banks are buying bonds is that no one wants to buy bonds, sothe government is manipulating the markets.
Now Keynesian economist say that it is a good thing but anyone who believes in the marketsmechanism that is going to lead to problems down the line. If you want to lose money yocan do what central banks are doing.
He also says that low interest rates have led to people wanting to buy farmland,
What the Bank of England and the federal reserve are doing is so sick it has to be illegal, if you are reading this blog and you believe the quantatitive easing is something other than bold fashioned money printing you are in trouble already.
James Grant deals with the difference between inflaticencenton and deflation very well in this video, deflations have existed in history ut now the Central Bankers think they can print money prevent them. But that is the reason why inflation has been so high.
Bob Pretcher , he is on to something, I myself do not use Elliot Wave theory but I think there is validity in what he says. I believe in cycles
He dealings with Fiat are great.
The bullish cased for commodities is still bullish, there is still a massive shortage of various commodities casused by the long term declline in commodities in the past thirty years.
Will there be a war in Iran? The ground has been prepared for a war in Syria certainly, will Iran get involved?
But he still stands by the forecast oil at $200 , which is bullish, but there might be a short term blip.
We are all watching the unravelling of a faied economic idea, but the interesting fact is the work of the workof the IMF , World bank and the other busybodies.
The first axiom of trading is togo against the work of central banks.
Central banks are claiming that with a trillion dollars they can keep italian bond yields down, but that is impossible.
When was the last time the government intervened successfully in financial markets?
It can only work for a short time, but eventualy the itaian bond yields will have to go higher.
It is a good thing that the Euro is falling apart, for the first time they admit that greece might have to default I think that is a positive thing.
If Greece left the Euro and regained the fdrakhma that woud be excellent for the Greek economy.
Contract/Category Long Long Chg. Short Short Chg.
Copper
Large Speculator 29,860 -1,791 31,322 -3,628
Commercial Hedger 68,325 -1,011 59,770 111
Small Trader 13,049 -1,461 20,142 -746
Corn
Large Speculator 409,435 -39,993 100,643 2,493
Commercial Hedger 550,587 16,991 758,092 -29,798
Small Trader 138,084 -278 239,371 4,025
Crude Oil
Large Speculator 320,203 -6,847 182,517 15,432
Commercial Hedger 663,241 38 802,292 -27,311
Small Trader 64,887 80 63,522 5,150
Eurodollars
Large Speculator 845,523 -58,354 925,910 -19,435
Commercial Hedger 5,555,651 6,227 5,381,768 -48,077
Small Trader 719,842-27,049 813,338 -11,664
Gold
Large Speculator 181,723 -31,086 53,922 -8,358
Commercial Hedger 192,457 5,200 359,140 -25,745
Small Trader 63,231 -5,909 24,349 2,308
Live Cattle
Large Speculator 96,304 -4,460 53,286 -2,685
Commercial Hedger 153,036 1,683 166,552 3,405
Small Trader 25,437 -33 54,939 -3,530
S & P 500
Large Speculator 22,450 6,344 33,024 7,148
Commercial Hedger 198,403 11,640 166,703 8,061
Small Trader 64,246 2,642 85,372 5,417
S & P 500 (E-Mini)
Large Speculator 271,244 48,825 558,278 28,543
Commercial Hedger 2,313,433 64,939 2,087,089 86,026
Small Trader 360,627 -54,680 299,937 -55,485
Silver (Comex)
Large Speculator 25,153 -8,794 9,728 -1,681
Commercial Hedger 38,025 5,652 62,287 -10,794
Small Trader 20,325 -7,862 11,488 1,471
Soybeans
Large Speculator 167,037 -27,766 46,880 3,992
Commercial Hedger 278,348 14,531 366,372 -31,104
Small Trader 49,614 -5,871 81,747 8,006
Sugar (No. 11)
Large Speculator 140,237 -15,651 40,868 10,695
Commercial Hedger 241,289 -8,422 344,931 -40,742
Small Trader 61,914 -18,667 57,641
T-Bonds (Chicago)
Large Speculator 69,624 -2,773 92,981 -4,251
Commercial Hedger 423,525 -2,285 405,973 -18,617
Small Trader 136,723 -6,751 130,918 11,059
Wheat (Chicago)
Large Speculator 75,031 -1,779 125,108 8,117
Commercial Hedger 247,899 6,720 175,278 -2,003
Small Trader 33,461 -950 56,005 -2,123
Yen
Large Speculator 61,166 -2,722 18,844 573
Commercial Hedger 37,340 2,261 77,590 -4,663
Small Trader 27,225 -1,634 29,297 1,995
I have been gloomy on commodities based on traders commitment, because let us face it stocks are still low in supply.
But look at the numbers, looks at traders being short and commercials being bullish.
But that is the same pattern in copper, look all commodities are experiencing a major shortages but in the long term some markets, speculation has gotten out of control. Now you need these retractions but now you have speculators taking on markets they will not win in.
Commercials are not speculating, rather they are buying accrding to their business needs and speculators are trying to make a quick buck.
I happen to be optimistic on maize too but there might be further pain, in the short term.
Copper has the same dynamic, the price is up a lot but it is going further up.
I know that markets are often wrong, but this is a time like this again, how can you justify buying bonds at 2 per cent when inflation is five percent?
In the recent market turbulance they have been buying Us Bonds as a safe option, may be in the short term it is because there has been a rally. but with all the other factors factored in like high inflation, high commodity prices,money being printed by Bernake and Obama.
But that should mean more inflation and not less , what are these people thinking? Losses are certain.
People call what is happening in Europe a crisis, but those markets better reflect the risks rather than the US Bond market.
Italy , Greece, Ireland and Spain markets have a more real outlook than the mess in US and uk Bond markets.
Ofcourse the makert has been rigged for now.
The market is all over the place for now, up and down three and five per cent per day.
This by and in itself creates oppourtunity especially in write options arena.
Take Apple computers they are selling at 14 times earnings which I think is cheap given they are doublling their profits each year.
Now at the current price of 356 you can sell Jan 13 with a strike rate 420.00 at 43.55. The strategy is to buy the underlying share and sell the call leap at 43.55.
You are locking in profits and cushioning the fall in the share price.
The media thinks that the market is anticipating a raecession, but that is the media, ignorant as usual.
The real problem is that no one wants to buy bonds these governments are issuing, because let us face it . Inflation is wiping all the , what is the real interest rates on Uk and USA bonds? They are negative.
We are back to the tagflation of the 1970s but the difference is that people are still calling for more government spending.
The makert is so wrong on UK ad Us bonds it hurts, I would say if greek, Irish yields are closer to the truth than what the US Bond market is indicating.
Portfolio
buy Apple 356
sell Apple leaps 420 at 43.5
I am looking at the latest traders commitment and I have to say, the numbers are not good for commodity prices, just look at the table, what do you see? Speculators being otimistic and commercial hedgers being bearish, normallly that is not a very good sign for commodity prices to go up.
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July 26, 2011 |
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| Number of Contracts and Changes from Previous Week | ||||
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| Contract/Category | Long | Long Chg. | Short | Short Chg. |
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| Copper | ||||
| Large Speculator | 51,606 | 2,050 | 27,015 | 1,208 |
| Commercial Hedger | 65,835 | 887 | 93,137 | 374 |
| Small Trader | 19,381 | -430 | 16,670 | 925 |
| Corn | ||||
| Large Speculator | 429,771 | 3,907 | 99,765 | 3,337 |
| Commercial Hedger | 544,362 | -2,299 | 785,850 | -5,731 |
| Small Trader | 140,342 | 2,079 | 228,860 | 6,081 |
| Crude Oil | ||||
| Large Speculator | 333,079 | 7,230 | 174,312 | 3,410 |
| Commercial Hedger | 710,340 | -2,737 | 901,893 | 3,713 |
| Small Trader | 84,831 | 2,193 | 52,045 | -437 |
| Eurodollars | ||||
| Large Speculator | 1,208,436 | 77,083 | 1,054,818 | 11,221 |
| Commercial Hedger | 6,811,818 | 24,610 | 6,859,507 | 80,628 |
| Small Trader | 879,469 | -44,972 | 985,398 | -35,128 |
| Gold | ||||
| Large Speculator | 278,473 | 981 | 42,856 | -15,339 |
| Commercial Hedger | 158,260 | -4,135 | 441,233 | 15,024 |
| Small Trader | 75,457 | 7,733 | 28,101 | 4,894 |
| Live Cattle | ||||
| Large Speculator | 93,518 | -1,415 | 57,698 | 6,213 |
| Commercial Hedger | 154,066 | -459 | 158,479 | -6,667 |
| Small Trader | 25,531 | -2,775 | 56,938 | -4,195 |
| S & P 500 | ||||
| Large Speculator | 27,449 | 4,705 | 27,085 | 363 |
| Commercial Hedger | 174,480 | 2,696 | 222,530 | 12,417 |
| Small Trader | 83,094 | 6,233 | 35,408 | 854 |
| S & P 500 (E-Mini) | ||||
| Large Speculator | 324,025 | 22,239 | 374,910 | 28,614 |
| Commercial Hedger | 1,996,102 | -14,535 | 1,884,495 | -40,271 |
| Small Trader | 218,067 | -10,566 | 278,789 | 8,795 |
| Silver (Comex) | ||||
| Large Speculator | 37,358 | 3,110 | 13,445 | -54 |
| Commercial Hedger | 29,990 | -1,019 | 72,763 | 2,241 |
| Small Trader | 30,883 | 676 | 12,023 | 580 |
| Soybeans | ||||
| Large Speculator | 191,559 | 4,150 | 55,884 | 1,787 |
| Commercial Hedger | 234,175 | -6,615 | 354,479 | -3,802 |
| Small Trader | 58,264 | 2,385 | 73,635 | 1,935 |
| Sugar (No. 11) | ||||
| Large Speculator | 217,640 | 1,974 | 54,287 | -8,590 |
| Commercial Hedger | 281,442 | -4,046 | 475,257 | 5,642 |
| Small Trader | 88,538 | 5,739 | 58,076 | 6,615 |
| T-Bonds (Chicago) | ||||
| Large Speculator | 66,183 | -9,818 | 138,531 | -4,620 |
| Commercial Hedger | 404,563 | -10,136 | 364,130 | -540 |
| Small Trader | 155,001 | 8,000 | 123,086 | -6,794 |
| Wheat (Chicago) | ||||
| Large Speculator | 75,214 | -3,611 | 111,378 | 5,882 |
| Commercial Hedger | 241,629 | 4,048 | 182,751 | -6,354 |
| Small Trader | 39,374 | -1,216 | 62,088 | -307 |
| Yen | ||||
| Large Speculator | 72,114 | 8,579 | 20,812 | -568 |
| Commercial Hedger | 31,950 | 76 | 86,498 | 7,662 |
| Small Trader | 34,722 | 740 | 31,476 | 2,301 |
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Some of numbers are surprising, look at silver, hedgers are selling while speculators are bullish,noe that is not a good place to be.
I would like to see a turnaround in those numbers before I become optimistic, betting against commercial hedgers is a losing prospect all day and every day, it is a se
ntiment indicator and it shows you that speculators are too ahead of themselves at the moment.
Commercial hedgers are not taking speculative positions but are driven purely by their commercial needs.
Copper is very bearish at the moment and would also expect the prices of corn, soyabeans and sugar to go down.