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hardnox604008
Advisor

And it's just that simple.........

with the Fedco Printomatic.

 

And wait, that's not all!!!!

 

The Printomatic is so powerful that even the hint of it from Dr. Bernanke in an 8 AM address sent drowsy risk markets soaring higher.

 

If you act now, this special offer can be yours for only $19.95

 

Shipping and Handling $1,000,000,000,000,000,000,000,000,000,000,000.

 

Please wait until the April FOMC meeting for delivery.

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8 Replies
Hobbyfarmer
Honored Advisor

Re: And it's just that simple.........

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hardnox604008
Advisor

Re: And it's just that simple.........

Apparently Ben thinks that $120 oil is just what the economy needs.

 

Prolly get our $7 corn then, too. Which will help about as many people as $120 oil which is to say some but not many.

 

Actually I'm not conviced that they will use of of their remaining trumps here but it is fun to watch Ben and the other governors work the market with little teases here and there that create brief but dramatic moves.

 

Next up, now that Ben's self esteem has been sufficiently replenished to get him through the week, will be one of the regional govs throwing off a comment that QE is unlikely.

 

But that will be after the stock market has been saved from any risk of technical exhaustion.

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hardnox604008
Advisor

The plot thickens..

Actually seems to be more a matter of lower bond prices and higher interest rates and his perturbation on the matter.

 

But bonds are, of course, down this AM on more risk trade.

 

Getting rates down isn't hard- let the risk trade sell off and shake the Dow down 1000 or so and I guarantee that bonds will rise nicely.

 

Rock? Hard place?

 

Equities- which drive "consumer confidence"   Oil, which pulls the other way.

 

 And bonds- Ben's owner banks are going to get murdered if bonds contimnue to drop given that they're all invested in the free money carry trade that he lured them into.

 

Yech.

 

OK, thinking through the free association that I've just run through, maybe he does have to QE, $150 oil or not. And maybe corn goes to $8.

 

And then you tell me that Ruger is sold out. Talk about a bad monday.

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Palouser
Senior Advisor

Re: And it's just that simple.........

You still haven't explained how the printomatic seems to affect oil and grain but the rest of the economy stays essentially flat. Not how inflation has been in the past.

 

And yet record soy imports from China etc. are surely not to blame. Hmmm. 

 

Hat to keep badgering you but why won't you make the case?

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hardnox604008
Advisor

Re: And it's just that simple.........

1) conditions present that make it possible for hedge funds, prop trading desks etc. the create free money through carry trades. Risk on.

 

2) that free money is put into markets seeking yield and often further leverage through rehypothecation. A lot of this is short term trading but when there are more buyers at a particular price than sellers, prices rise. Free money rehypothecated 50X times 1% yeild equals a whole lot of money. Or a mess when it goes wrong.

 

3) With positive correlations well established between broad markets and commodities there is a long side bias to "risk on" HFT trades.

 

4) many portfolio strategies now call for 5-10% commodity diversification which can be indexes, actively managed, anything. So as the general portfolio grows, rebalancing allocates more money to commodities on an automatic and realtively dumb basis. And it actually tends to put a floor under the most fundamentally weak markets as internal rebalancing within the index is mandated by most strategies.

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hardnox604008
Advisor

Re: And it's just that simple.........

PS. Oil is the big dog of the indexes with crude plus products often making up 20-25% of an index.

 

As oil goes up and brings dollars into the index account that will automatically be distributed to other comms upon rebalancing.

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Palouser
Senior Advisor

Re: And it's just that simple.........

Is that reflected in the grain contract volume??? Generally speaking, if there is more interest in grains because of easy money (remember - it's not free and goes on a ledger) there there should be some evidence in contract volume. My understanding is CBOT contract volume has been down  for awhile and hasn't recovered. Is that wrong?

 

You can say what you want but, your thesis lacks evidence. Maybe it's there. You haven't presented it. 

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Palouser
Senior Advisor

Even more interesting ....

.... has been a near record short on wheat. Maybe that's 'easy money' betting the other way. So how is this all so simple?

 

And the record shorts haven't been able to capitalize on their positions - so far. Of course the reality of how much wheat has been damaged in Europe and Asia is an issue. But the weight of 'easy money' should bend the markets to it's will.

 

I don't think there's anything easy about this market. And I don't see a plausible explanation yet that 'easy money' is having much of an effect that can't be explained by physical fundamentals and the anxieties surrounding physical. 

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