Post Tagged with: "commodities"
Week in Review: Hurricane ‘I-Lean’ Lifts Markets
Reports that hedge funds, with almost no tolerance for short-term pain, have opened the biggest net short positions since early 2008 has driven a relatively low volume short covering rally. We even heard predictions of a 400 point drop in the Nasdaq if Mr. Ben didn’t announce QE3. We guess they were positioned for it and had a front row seat at Friday’s performance of the Nutcracker
Is Resource Nationalism on the Rise?
According to an Ernst and Young (E&Y) report Business Risks Facing Mining and Metals 2011-2012, resource nationalism is the biggest risk companies currently face
Deal, Now What?
Almost everything that happened last week is irrelevant given what looks like a U.S. debt deal. What we’re watching is how the relief rally holds and whether the Friday’s poor GDP data was a game changer. Looking under the surface of the price action last week, it appears the market is starting to fret over the coming fiscal contraction into a soft economy. Note, the Russell was hammered the hardest, bonds rallied, and most commodities were lower
China Gets Picky
It turns out that China is not willing to pay whatever it has to for energy and metal resources. Several resource deals have faltered in recent months, indicating an increasingly choosy Chinese perspective on energy and metal acquisitions. Add to that the growing concern that the global economy is once again stumbling and that commodity prices may be near a top, and you have a Chinese deal-making market that has gone from 60 to zero in no time
After careful consideration, I remain bearish
The S&P has gone from 2 standard deviations below the 20-day moving average on the 16th June to 2 standard deviations above it now, something it did prior to the 87 crash when it rallied 6.4% in the week prior to the crash. It has been doing this more and more frequently recently although not of the scale of swing we have just seen. Our economists have already said that a single payroll figure is not sufficient to cause QE3 to which I agree. Commodity prices are telling us that further Asian stimulus is not going to happen unless offset by demand destruction elsewhere in the world. The risks are clearly mounting up
What are the all-in costs of Saudi Production?
Here’s an interesting note from UBS’ Andy Lees on the background story to the oil market. You may have heard that US President Obama decided to release some of the oil from the Strategic Petroleum Reserve (SPR). This move was bearish for oil, sending it way down in trading yesterday.
The question then becomes how much of today’s oil price is based on the fundamentals and how much is based on Middle East tensions or speculation
Limits of Monetary Policy
In this column, Marc Chandler argues that US monetary policy can be a powerful tool, but it has limitations. Some commodity prices have risen and some have fallen since the Federal Reserve signaled QEII. The anticipation of QEII did weigh on the dollar, but against some of the leading major currencies, the dollar was little changed net-net until the ECB shifted its monetary stance
On the fragile recovery and the likelihood of QE3
On balance it would then seem that the consensus remains weighed towards no QE3 either because it is not needed or because it does not work in the first place. I think it is very simple in the end though. If sideways movement gives way to a new downside in the market below key support levels it will be very easy for the Fed to argue for a new round of QE which I think they will deliver in due time.
From cautious optimism to caution
I am more cautious than optimistic on risk assets and the global economy. From where I sit global growth prospects are not improving; they are weakening
Here’s why Jim Rogers is bullish on Asia
Jim Rogers is bullish on Asia. In a twenty-minute interview with the BBC, he explains why? Hat tip Paul Kedrosky. Like Paul, “I find many of his rhetorical tricks maddening” but it is an informative interview nonetheless. Videos below
Looking for debt
An unsustainable rise in debt is, for me, one of the key indicators that the investment-driven model has passed its useful life and is generating negative growth while posting positive growth numbers. This is why I spend so much time trying to understand debt levels and the structure of balance sheets