10-21-2010 09:04 AM
After the fireworks of yesterday I am still going to cling to my consolidation trade.
Corn called 1 to 2 better
Beans are called 5 to 7 better
Wheat is called 1 to 3 better
Still a dollar based trade. Not what I like to see but that is the world we live in. So far the dollar is quiet which means we will be as well. Some small fresh bullish news out of Australia concerning dry wheat conditions but that story seems to be taking a back seat to the dollar swings. Until we really decouple or have some new bullish news that is the trade headline.
Good luck folks....feel free to ask any questions.
10-21-2010 10:19 AM
We all have to be currency traders I guess right now. This thing might stay good until after the elections and the next Fed meeting in November. My feeling is the market is going to be disappointed about the amount of QE 2 and the dollar will rally and all other "stuff" will decline. As far as QE goes, what is the magic number? Bernanke himself has said that the reason it didn't work in Japan and resulted in deflation is that they didn't do enough. But he also said that doing too much can cause inflation to spiral out of control. But I'm sure the "all knowing" Fed (same Fed that missed the housing bubble, etc) will get it right. What do you think???
10-21-2010 10:43 AM
I agree with Krugman that the "right" number is probably north of $10 trillion which is a heck of a lot more than they are going to do.
Like the stimulus, not doing enough is worse than not doing anything. If you're going to shoot the gun you'd better empty the clip or risk just pissing the bear off.
All a $trillion will do is scare the dollar lower- probably before the fact (and then leave the market addicts craving more, and pitching a fit until they get it).
10-21-2010 11:24 AM
I'm not sure there is a right amount at all. What I do believe is that we will slowly turn this ship around 'in the short term' which I think is about 5 years. Then, when the potion wears off and the inflation really comes home to roost, we realize that we have ABSOLUTELY no chance of ever paying back the money we are spending today. Even when the economy expands we won't be able to bring the debt repayments down.
So, other than that pretty picture, 'how was the play Mrs.. Lincoln?'