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Senior Contributor
Posts: 1,024
Registered: ‎05-03-2010

OptionEye - The Cow Guy - Jan 30th

Good morning..


Grains still trading back and forth with no real conviction. A decent sell off of sorts yesterday in beans and wheat but in the scheme of things it's just white noise. 


Corn up 1, beans down 3 and wheat up 4. 


Wheats overnight bounce is from a 42 month low. That's 3.5 years....I think. Wheat was down 30% in the past year on expectations of a record world output. 


The Fed decided to continue with its plan of tapering. They are tapering on expectations of an improving US economy. I think that's BULL. They are ultimately going to blame their taper tantrum on the fact that it is a failed economic policy. They gave us the best piece of bad news yesterday and stuck to their plan. If they decided to pull back from the taper, it would have been even worse in the equity market. As it was, we were down almost 200 in the Dow. 


So here we are with a small bounce in equities this morning. Gold bugs bought the metal on Armageddon fears with the Dow down big. Today, gold has backed off to $1255.49, down $11.75. Oil is up .47 cents to $97.83. 


Which brings me to the 10 year yield. Just as the inflation hawks got way out in front of any perceived inflation and drove gold up to $1900, strong economy hawks got out in front of the 10 year and drove yields to 3.00% with the talking heads looking for 3.5% and some even 4.00%. Oops. That hurts. Today the 10 year is at 2.70% and I think it's on its way to 2.50% and then 2.25%. 


Deflation dead ahead. 




Senior Advisor
Posts: 9,965
Registered: ‎05-13-2010

Re: OptionEye - The Cow Guy - Jan 30th

Yes, that $10B/mo taper was sticking a big toe in the water and they see what happens to equities.  Wall Street is saying "real cute! but bring back the juice!!".  Inflation isn`t  the worst thing in the world, but once you start going down that waterfall, there`s no changing your mind  :smileyhappy:

"Courage is fear that has said it`s prayers"
Posts: 1,689
Registered: ‎05-14-2010

Re: OptionEye - The Cow Guy - Jan 30th

If the fed is backing off from buying treasuries who is buying them now forcing the yields down
Posts: 1,201
Registered: ‎06-25-2010

Re: OptionEye - The Cow Guy - Jan 30th

LOVE my beans. 

Veteran Advisor
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Registered: ‎05-13-2010

Re: OptionEye - The Cow Guy - Jan 30th

I think your argument on the taper supports the value of QE, at least to Wall St. You can't have it both ways. QE was never going to help the middle class or the general economy. But selling paper to the Fed gave them cash to buy stocks - resulting in a stock bubble. Tapering SHOULD result in declining stock prices. Wall St will cry, but so what and too bad! Whats good for the goose is good for the gander!

In this consumer economy investment in producing goods doesn't pay for a middle class that is shrinking and is purchasing fewer nonessentials. They are paying down and not borrowing and the banks aren't that eager to lend.

Fed money is helping the financial sector and not the middle class. Wall st will eat each other as the taper continues. Who cares? Congress will not get involved and will not restructure policies and will continue to be irresponsible. Witness the farm bill
The biggest socialist effort to maintain small business revenue and protect it from the market ever devised!!!!! With essentially no savings!
Esteemed Advisor
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Registered: ‎01-10-2012

Re: OptionEye - The Cow Guy - Jan 30th

Pal: I would have thought you and Krafty would be swinging from the rafters singing the joys of this new age.

60% of the time, it works every time.

"Political correctness is a doctrine, fostered by a delusional, illogical minority, and promoted by mainstream media, which holds forth the proposition that it is entirely possible to pick up a piece of dung by the clean end."
Posts: 606
Registered: ‎06-30-2010

Re: OptionEye - The Cow Guy - Jan 30th

Interesting thing is that the fed is reducing the amount of extra money they were pumping into the financial system -- it's not like they are starting to take the money out of the system.


"My reading of history convinces me that most bad government results from too much government." - Thomas Jefferson

"America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves." - Abraham Lincoln