ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
In December, 2009, Federal Reserve Chairman Ben Bernanke insisted that gold’s surge was not signaling increased inflation expectations because it was simply following along with the general rise in commodities. Now that gold stands head and shoulders above the commodity pack, Bernanke is expressing his bewilderment at gold’s strength. Gold is still not a signal … Read more
For many commodity-related stocks the bounce from the March, 2009 lows to the first peak in June encompasses the bulk of their respective gains in the past 15 months. The current, on-going correction has delivered such heavy losses to some of these stocks that they are now trading at those June, 2009 prices. About 1/3 … Read more
The on-going steep drop in steel stocks started in early April and preceded the S&P 500’s late April peak. With worries increasing about a global slowdown, I finally decided to look up worldsteel’s last update of its forecasts for 2010 (and 2011). I was quite surprised to find that in April, worldsteel expected “…demand in … Read more
The Australian dollar has been my single source of greatest pain during this market correction. I have long favored the Australian dollar as a play against the U.S. dollar. Even as the U.S. dollar index has rallied over 10% since hitting 16-month lows in November/December, the Australian dollar remained flat during most of that time … Read more
In December, Bernanke observed that gold prices reflected general commodity prices and did not indicate rising inflation expectations (in the U.S.). As gold makes new all-time highs, it is now outpacing many other commodities. Many commodities have declined sharply in recent weeks due to fears about the sustainability of global growth. Gold has diverged due … Read more
It appears even gold remains caught up in the carry trades that have supposedly kept commodities aloft for months. Gold plunged almost 4% along with a deep sell-off in the general market. As the market suddenly cared again about the prospects for sovereign defaults all over Europe, traders and investors dumped gold – and almost … Read more
During recent re-confirmation hearings for Federal Reserve Chairman Ben Bernanke, U.S. Senator Jim Bunning – a frequent critic of the Federal Reserve – asked Bernanke several questions about gold prices. Bunning’s questions appear targeted at prodding Bernanke into acknowledging that inflation expectations are much higher than the Federal Reserve’s current estimation. Bunning also uses high … Read more
In “That’s one long gold bubble,” Tim Ianaco created an illustrative animated graphic from Google news archives comparing the news coverage of “housing bubble,” “credit bubble,” and “gold bubble.” He rightfully observes the following: “…my understanding of how bubbles work is that they materialize rather quickly, fueled by media coverage toward the end and then … Read more
“Tricks are for kids he plays much gigs He’s a big bad wolf and you’re the three pigs He’s a big bad wolf in your neighborhood Not bad meaning bad but bad meaning good“ “Peter Piper” – Run D.M.C., 1986 from the album “Raising Hell” What was once bad is now good. Or maybe what … Read more
If inflation expectations remain “contained” why is a record amount of money pouring into commodities this year? Indeed, there is nothing like a rapidly increasing global supply of paper currency to drive interest in hard assets and push prices upward. Reuters summarizes a recent research report from Barclays on investment flows into commodities: “Barclays Capital’s … Read more