How does oil speculation raise gas prices?
Posted by admin / Under Commodity Futures Modernization Act Of 2000
The next time you drive to the gas station, only to find prices are still sky high compared to just a few years ago, take notice of the rows of foreclosed houses you'll pass along the way. They may seem like two parts of a spell of economic bad luck, but high gas prices and home foreclosures are actually very much interrelated. Before most people were even aware there was an economic crisis, investment managers abandoned failing mortgage-backed securities and looked for other lucrative investments. What they settled on was oil futures. An oil future is simply a contract between...
Published on Saturday 19th of May 2012 03:03:06 PM
Warning signs on market liquidity risks
Posted by admin / Under Commodity Futures Modernization Act Of 2000
Eric Burroughs Warning signs on market liquidity risks May 15, 2011 07:28 EDT If the great commodity selloff of 2011 shows nothing else, it is that markets are undergoing serious structural changes that need to be followed closely. Our commodities analyst John Kemp has compared the oil plunge with the May 2010 flash crash in U.S. shares, and rightfully so. Four standard deviation moves in oil futures are not normal, even if Gaussian distributions underestimate the chance of such a move. The rise of high-speed electronic trading appears to be creating imbalances between buyers and sellers in nanoseconds that lead...
Published on Saturday 19th of May 2012 03:03:06 PM
U.S. faces $70 billion inflation hit
Posted by admin / Under Commodity Futures Modernization Act Of 2000
Rising food and energy prices could deal a $70 billion blow to the economy, but the recovery is likely to limp along anyway. If the recent run-up in energy and agricultural commodities persists, U.S. consumers will have to shell out $20 billion more for energy and $50 billion more for food this year, Capital Economics estimates. Among other things, that squeeze on consumer budgets will eat up most of the payroll tax holiday bonus that Americans were supposed to get out of the deal in Congress that extended the Bush tax cuts, at some cost to the deficit. So much...
Published on Saturday 19th of May 2012 03:03:06 PM
Bernanke Denies Causing Inflation
Posted by admin / Under Commodity Futures Modernization Act Of 2000
Is Federal Reserve Chairman Ben Bernanke stoking inflation? Of course he is. Anyone with common sense knows that if you give $600 billion cash to the banks with no qualifications -- as he did with the second round of quantitative easing -- they will use it to speculate in the markets. JPMorgan Chase (JPM) just bought $1 billion of copper. Bernanke's fatal mistake was that he placed no restrictions on what the banks would do with his $600 billion. If you opened the banks' books, you can bet that they've invested in commodities, currencies and foreign equities and bonds. What...
Published on Saturday 19th of May 2012 03:03:06 PM
Silver: The Best Commodity Investment in a Stimulus-Driven Slow Recovery
Posted by admin / Under Commodity Futures Modernization Act Of 2000
Precious metals outperformed most asset classes over a 3, 5 and 10 year period. Silver was a little late to the party. Silver is a business cycle sensitive investment against gold, which is a fear / value / wealth trade. Silver fell to its lowest level relative to gold in early 2009 as the silver price went as low as $8.92, which was 84th of an ounce of gold. However, as the business cycle turned, it became one of the best performing assets in 2010. This outperformance looks set to continue in 2011 due to the very bullish fundamentals. Many...
Published on Saturday 19th of May 2012 03:03:06 PM
Harvard Lobotomies And The Disgrace Of The Economics Profession
Posted by admin / Under Commodity Futures Modernization Act Of 2000
Let me say that again. ALL MONEY COMES FROM DEBT (for those of us who suffered the most indoctrination by attending schools like Harvard, let's pause here for a moment so we can catch up to the rest of the class). This means in order for governments, businesses, and people to have the liquidity necessary to live, they must agree to sign over a claim on their assets to banks. As the banking system inflates over time passing out credit, which makes everyone feel good with more digits in their accounts, it gathers claims on all the assets in the...
Published on Saturday 19th of May 2012 03:03:06 PM
The Fed's commodity bubble
Posted by admin / Under Commodity Futures Modernization Act Of 2000
Everything from gold to rubber is reaching new highs. And that's just one of many landmines the stock market bulls are ignoring. If Chuck Prince were in the game today, he would be dancing. In 2007, the former Citigroup CEO famously addressed a question about the bank's push into the booming mortgage market by saying: "As long as the music is playing, you've got to get up and dance. We're still dancing." As we well know, that music eventually stopped and many of the revelers were crushed. But memories are short. Today, plenty of investors are dancing as the S&P...
Published on Saturday 19th of May 2012 03:03:06 PM
CFTC, NFA to Require Quarterly Hedge Fund Reporting
Posted by admin / Under Commodity Futures Modernization Act Of 2000
On March 17th of 2010 the self regulatory organization for commodities trading and retail foreign currency transactions in the United States, National Futures Association (“NFA”), announced a major change to the way Hedge, Commodity, and Forex funds operate. The change, titled “Compliance Rule 2-46” is NFA’s latest effort to work towards detecting and eliminating Madoff Style investment frauds within the industries they regulate. In order to comply with any set of new regulatory standards one has to first understand the intentions and implications of the adjusted policy. So what then does this adjustment mean for the commodity and forex industries?...
Published on Saturday 19th of May 2012 03:03:06 PM
Citi: The Commodity Collapse Could Be "Subprime Part II"
Posted by admin / Under Commodity Futures Modernization Act Of 2000
In the bank's latest edition of its Monday Mining Minutes, Citi lays out a scenario which it calls the "Nightmare on Commodity Street." (via FT Energy Source) So here’s the nightmare scenario, which we hope will not happen: Thousands of very smart speculators have accumulated the biggest ever speculative physical raw material positions ever witnessed in the belief that either the dollar will collapse or an ongoing global ‘Supercycle’ will shake off the effects of the credit crunch and resume business as usual. They are funded in this venture by some of the lowest interest rates on record. What are...
Published on Saturday 19th of May 2012 03:03:06 PM
Crops Headed For A Tough Harvest
Posted by admin / Under Commodity Futures Modernization Act Of 2000
Crops Headed For A Tough Harvest by: Jim Delaney November 03, 2009 Although it appears the prospects for the producers of porcine products have prettied, yes, lipstick included, that cannot be said for all of the ‘ole MacDonald’s in the country. The U.S. Department of Agriculture reported recently that due to a late planting season and a cooler and wetter fall than normal, only 20% of the corn crop is out of the fields vs. an average of 58% during the years of 2004-2008. “It’s getting scarier. The longer we go, the more mold keeps growing and the more ears...
Published on Saturday 19th of May 2012 03:03:06 PM
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