great selloff on thursday & friday - what do you make of this?
Across the board, most commodities recorded a sharp drop yesterday and today. After the 10 figure drop in the Thursday trading session, oil today plunged again to 94.63 before getting back up to 98. It mostly traded between 98 - 102. Gold dipped below 1500 (was forming the downward spiral since late April anyway). Corn went down to 680 from 730-740, despite the fact that weather had been quite unfavorable going through the critical planting season in the U.S.
So what is going on in the commodity markets exactly, and who initiated the selling? Do you guys think this year is going to be another version of 2008?
Also, does the fundamental (both demand & supply) stay as strong as it was earlier this year? At the time there were the issues of Libya, USD depreciation and the battle for acreage. What now?
no comment will be
no comment will be interesting to see could go both ways i just cant see a fundamental reason for oil being this high despite wars and weak usd
also will be interesting to
also will be interesting to see what some traders on this site say
as june 30 draws closer(end
as june 30 draws closer(end of QEII), players trading the long bond will begin to exit. Int rates may start to spike, and we can expect volatility to increase. Markets have made an incredible rally since mar 09, i think they could be entering in a topping period. Most important currency pair to watch: Aud/Jpy. Commodities are good to keep a sharp eye on in these types of situations, most notably copper, pms, oil. Equities could make some violent swings here in the next 2 months. I think what a lot of people fail to understand is that during times of excessive market intervention, the market is no longer a function of the economy or earnings, but rather an almost 100% positive correlation to the balance sheet of the Fed.
Think if the markets this way: right now theyre like an athlete on the juice, they outperform. So what happens when you take them off the juice? they underperform....its very simple, and doesnt take much thinking to make money in these types of markets. Its going to be quite interesting to see how this unfolds in the next 3 months. The best thing to do is watch your charts.
mfoste1 wrote: as june 30
as june 30 draws closer(end of QEII), players trading the long bond will begin to exit. Int rates may start to spike, and we can expect volatility to increase. Markets have made an incredible rally since mar 09, i think they could be entering in a topping period. Most important currency pair to watch: Aud/Jpy. Commodities are good to keep a sharp eye on in these types of situations, most notably copper, pms, oil. Equities could make some violent swings here in the next 2 months. I think what a lot of people fail to understand is that during times of excessive market intervention, the market is no longer a function of the economy or earnings, but rather an almost 100% positive correlation to the balance sheet of the Fed.
Think if the markets this way: right now theyre like an athlete on the juice, they outperform. So what happens when you take them off the juice? they underperform....its very simple, and doesnt take much thinking to make money in these types of markets. Its going to be quite interesting to see how this unfolds in the next 3 months. The best thing to do is watch your charts.
Very good analysis man, thanks.
In terms of Gold, I think the commodity reached its peak last week and then saw its correction (quite a sharp one by that). From what I've understood, it should fall to about the 1470 level until stabilising. With central banks seeming more interested in combatting inflation and the dollar seeing gains, I don't think the metal will see much action in the near time.
However, when QEII does end and the dollar plunges, Gold will see a rise.
CME also raised margin
CME also raised margin requirements last Sunday.
I win here, I win there...
Walkio wrote: mfoste1
as june 30 draws closer(end of QEII), players trading the long bond will begin to exit. Int rates may start to spike, and we can expect volatility to increase. Markets have made an incredible rally since mar 09, i think they could be entering in a topping period. Most important currency pair to watch: Aud/Jpy. Commodities are good to keep a sharp eye on in these types of situations, most notably copper, pms, oil. Equities could make some violent swings here in the next 2 months. I think what a lot of people fail to understand is that during times of excessive market intervention, the market is no longer a function of the economy or earnings, but rather an almost 100% positive correlation to the balance sheet of the Fed.
Think if the markets this way: right now theyre like an athlete on the juice, they outperform. So what happens when you take them off the juice? they underperform....its very simple, and doesnt take much thinking to make money in these types of markets. Its going to be quite interesting to see how this unfolds in the next 3 months. The best thing to do is watch your charts.
Very good analysis man, thanks.
In terms of Gold, I think the commodity reached its peak last week and then saw its correction (quite a sharp one by that). From what I've understood, it should fall to about the 1470 level until stabilising. With central banks seeming more interested in combatting inflation and the dollar seeing gains, I don't think the metal will see much action in the near time.
However, when QEII does end and the dollar plunges, Gold will see a rise.
You have it backwards. when QE ends the dollar will rally hard, not plunge. You must think of it in terms of interest rate. QE is pushing i rates lower, thus decreasing the demand for money, increasing private investment. When i rates spike the demand for money will increase, decreasing private investment.
Look at gold in Euros and you
Look at gold in Euros and you will see its performance hasnt been that great in 2011... its all been in the weak dollar.
"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
how is QE pushing interest
how is QE pushing interest rates lower?
and what makes you think that bond yields will rise?
where are investors going to go if stocks tank?
junior2012 wrote: how is QE
how is QE pushing interest rates lower?
and what makes you think that bond yields will rise?
where are investors going to go if stocks tank?
qe = fed buying bonds pushing yields lower
bond yields will rise if there are no buyers + inflation rises
nothing that is why they are "investors", lol.
junior2012 wrote: how is QE
how is QE pushing interest rates lower?
and what makes you think that bond yields will rise?
where are investors going to go if stocks tank?
come on man. the entire goal of QE was to push interest rates lower. honestly?
buying large quantities of bonds=buying pressure=price goes up=yields go down.
when QE2 ends, no more buying pressure+potential inflation=yields go up
http://www.zerohedge.com/arti
http://www.zerohedge.com/article/deja-vu-all-over-...
see slide 29
Right from Einhorn's latest
Right from Einhorn's latest letter.
Instead, it appears that in response to quantitative easing, investors now fear inflation and
have sold bonds. Interest rates have risen and housing prices have declined further. The
housing recovery has faltered, creating another negative wealth effect and putting additional
strain on the banking system. The money that the private sector would have lent to the
government, had the Federal Reserve not printed the money instead, has gone to other goods,
notably commodities and stocks to the extent investors see them as a better inflation hedge
than bonds. Though the Federal Reserve has produced “research” that purports to show that
quantitative easing has not caused commodity prices to rise, many observers disagree. As the
Bank of Japan put it in March, “[I]t is safe to say that globally accommodative monetary
conditions are a key driver of the rise in commodity prices by stimulating both physical
demand for commodities and investment flows into commodity markets.”
Likewise Rosenberg had a great peice on friday breaking out who bought "bonds" after QE1. It was banks, foreign banks, pension funds and other domestric buyers. There is still lots of buyers for treasuries and bonds once the fed leaves and QE2 ends.