I'm exhausted and a bit embarassed at having disbeleived the idea that the Fed could ignite such a massive speculative fervor across all asset classes.
That said, today's market behavior to this point bears, watching in my exceedingly humbled opinion.
The dollar is getting thoroughly squashed yet neither the equities of CRB are acting very spunky.
Grains are the best performers and do have their own bullish story but the question remains how much air from the Fed is under them.
I wonder how long it will take helicopter Ben to figure out that the big inflation of energy and food which is normally excluded from calculating inflation is a direct result of his quantitative easing policies? It's not as though we haven't seen this before. In October of 1980, corn ending stocks were pegged at 1.6 billion bushels which propelled the price to $3.90 a bushel. By October of 1984, corn carryouts were pegged at 722 million bushels or a mere 45% of the 1980 levels. Yet, the price was $2.65 a bushel or 32% less than 1980. By October of 1985, corn carryouts were pegged at 677 million bushels or a mere 42% of the 1980 levels. Yet, the price was $2.20 a bushel or 44% less than 1980. It would seem that gov't spending less and reducing the size of gov't would have a direct impact on the dollar value which rose 40% from 1980 to 1985. This in turn had a far larger impact on the price of corn than did carryout figures. If the deficit hawks that are newly elected to Congress follow through with their campaign promises, it appears as though grains will be affected negatively regardless of the carryout levels. Even with all the money printed post 2008, the U.S. dollar has managed a 12-14% rally. Those who pegged the dollar as falling completely out of bed have been proven wrong just like they were in the 80's.
Grains will continue to perform rather well for the next 10-12 months. After that, they will see a lot of pressure. It's interesting that interest rates around the World are starting to tick higher as inflation sets in. It's quite amusing to see analysts predict good things to come in the economy even though we saw record reposessions of houses in 2010 despite little to no activity in nearly 20% of the year due to robo signings. It's likely we'll break the record for house repo's in 2011. While the gov't has come to the aid of Wall Street, it will be forced to come to the aid of consumers at some point in time more than likely sooner rather than later. China's grip over the World economy is loosening as witnessed in their trade surpluses falling rather than rising. Eventually, China will be buying more than they are selling which has huge implications for the World economy. The first corn contract to trade at $7.00 will be met with huge sellings of deferred corn contracts for me. I'll be covering myself out to 2014. If we push past $7.00, I only hope 2015 comes on line soon.
Hang in there Nox...........buy Ford on pullbacks. I believe there are new health and energy breakthroughs coming soon......doing my best to be ready. I don't like the system any better than you do, but I am trying to be open to opportunities..........my "stinkin thinkin" has already caused me to miss too much.
here is what to look for
when the "deficit hawks" reverse the latest trillion dollar debt bill passed on December 17 , 2010 it will mean the country is seriously thinking of getting its house in order. if, as I suspect, nothing happens....it is still business as usual.
Having said that, I picked the $7 mark to start selling, too, and to scale up from there. Seven always has been a lucky number.
Well at least NOX you aren't feeding livestock any more that has truly been exhausting! WHen I can finally stand up straight form being bent over like this I am goona still be hunched over! I wonder how manyguys will be screaming bloody murder when bomber ben pulls in the money?
THe really funny thought for the week was on Tuesday when Japan stepped in with a billion dollars for bonds in the troubled EU countries?
1 Billion was a drop in the bucket for what they will need and yet that strenghtened the dollar? Japan is who the EU is not resting it's hopes on?
This is where the puppet masters get tangled in the strings son they will fall to the stage also!
Just hope there is food for them to feed the masses. But thank God we will have ethol to ride into the sunset on!
Watched an U. of Nebraska extension program on cow -calf last night and seen some interesting items and underlying philosophy expressed in the program from farm credit person and another rancher---long and short of it seemed to say one only has time for contiguous mulling over paper work and hire some one for $10/ to do your labor and chores---maybe there was a misunderstanding on my part--don't have it figured out quite yet --am trying to get a replay of it.
Sorry guys didn't mean tosound so negative. I will crawl back under bossy now! Hey K if you get that back send us a link I want to know howe to earn $10 dollars an hour!
I can certainly live with it- the worst thing about bubbles is when they go on forever and make you think that they're real so you pile in late. Once out, stay out.
I'm all about cash- take profitable opportuniities, stay liquid. I'm still ahead on stocks after getting out in '07 but I'll admit to feeling like death by a thousand cuts watching it creep back up.
All trades are extraordinarily crowded- comms and stocks alike. I don't like crowds.
On grains, I'm donw with old and as far as I dare go with new. I can live with it and have to remind myself that at the end I was very happy in 2008 but sure felt lousy for a while. Either way, I can live with it.
Nox, agree with you on the bubbles. I'm about all in and watching very closely, ready to jump out any minute. Hope 2011 is your best ever. Rich in Mo
Hang in there
Many will watch the market continue to rise, and will watch it fall, also. If you have sales on the books that will earn you a profit, do not fret. The worse thing to do is to chase lost potential profits by entering into bad trades. Big Bob Utterbach made the statement that sometimes selling on the board, and being exposed to margin calls is a positive thing...it makes you keep asking yourself "am I sure I am right?"
I got bullish several times this past year, but also got spooked just as many times and ended up forward contracting as much as my crop insurance protected. I knew I had good crops in the field, thought I had great crops. In the end, they were just good, but my 2010 and 2011 will be the most profitable years of my life and I am happy. We were flooded here in September, and I think that made me think how fragile growing crops actually is, and how I did not want to be looking at having to replace forward contracted crops at a loss. So I actually did not sell anything on the wild rallies, yet.
I have a target of $7 for the remaining old crop corn, and $15 for old crop soybeans to make further sales. I think this is one of those opportunities that doesn't come along too often. I have new crop corn targets of $6 cash, and $14.50 for soybeans. With normal yields, this will net me a fantastic number for my operation, and I will take the bird in hand if the market offers it. Maybe I will wait too long, and take $3 and $7. I guess I feel the risk/reward ratio is tilted towards holding at this point. If the calender says May 15th, I will start thinking differently. I sold too much too cheap in 2008 and never sold a single bushel for anywhere near a good price. I would be embarrassed to even state what I sold corn for. But I ended up paying my bills, and even bought another farm when the market finally crashed. I guess I did collect on crop insurance big time, and also rode some winning hedge postions down. So I probably added a solid buck to all my grain sales. It is all such a gamble these days.