cancel
Showing results for 
Search instead for 
Did you mean: 
ShelladyOptions
Senior Contributor

OptionEye...June 11th

Good morning.

 

All is well. Spain is saved. Now the markets can trade higher and we can breathe a sigh of relief.

 

But first, the ag markets. Corn is up 2 cents, beans are up 10 cents and wheat is up 5 cents. Things have a risk-on appetite this morning because of the Spanish debt deal facility. IT WILL BE SHORT LIVED.

 

While I am mainly a positive person and look for the good in most things, this deal just buys them more time. Just like QE1 and QE2 for us here in the states. The confidence boost that we see in the equity markets this morning is not coming through in the funding markets.

 

The bottom line is that we have a 1.9% GDP and an 8.2% unemployment rate and both seem to be trending in the wrong direction. And both are pitifully offside.

 

Let's hope the day improves from here.

 

 

0 Kudos
6 Replies
nwobcw
Advisor

Re: OptionEye...June 11th

  What news sent gas at the pump up 24 cents this morning?  Shouldn't gasoline be under 3 bucks with $84 oil?

0 Kudos
jec22
Veteran Advisor

Re: OptionEye...June 11th

Shellady,

I read how much the big banks are invested in gold, copper, silver and other metals.  Do you know how much they are invested in grains and oils?    So are they just taking depositors money and paying them .01% interest and using the money for fund their trading(including derivatives), or do those deposits  have to remain separate.   Should we be using credit unions or small private banks only?   Wouldn't a good solution be to ban derivative trading.

 

I ask because it seems the grain market is being played like fiddle.  ONE bushel to much produced and prices will go down two bucks.  Just to show my age, in the 70's sold beans for $14.  Now in 2012 I heard that 14 must be the top.  Yet crude in 2008 hit 140 and gasoline didn't get to the four dollar level here.  Yet with 82 crude, we still have gasoline at 3.25+. Makes it kind of hard to believe we are playing fundamentals.  Makes me want to hit the RESET button. 

0 Kudos
ShelladyOptions
Senior Contributor

Re: OptionEye...June 11th

jec22,

 

I am not quite as old as you but close. I remember beans at that price and know some of my father's friends that got a little to long up their with $20 in their sights. Needless to say that didn't work out too well for them.

 

The big banks all have agriculture trading desks. They trade everything from sugar to oil to corn and metals. The banks treat that side of the business much like the equity and credit side.

 

The key is that they make it very clear that they trade their own money and if they put your money at risk you know it and have to approve of it. Your money, if you choose, can only be on deposit earning interest and not at any risk.

 

Banks have been given special access to cheap capital to keep the cogs of capitalism running. As long as they don't risk customer money or break any laws I think they should be able to trade their own money. It is the rogue few (MF Global) that have given this idea a bad name.

 

Why is the CEO of JP Morgan testifying today? He didn't break any laws. No customer money was lost. In fact they could lose another $80 billion and technically would still be considered sound by our stress test parameters. Is it illegal to lose money? How do the congressmen who haven't balanced our own budget or even come up with one throwing stones from their glass houses? If they were businessmen they would be called to testify immediately. But to whom would they testify to?

 

The average age of the American farmer is 58, the Japanese farmer 66 and the Australian farmer 58. Canada's average age of farmers is at an all time high. With the price of inputs, the cost of land and the state of the industry farmers will get paid. They will do very well over the next 20 years. Just hang on. Some of the research that comes across our desks suggests that farmers will be the big winners in our very near future.

0 Kudos
GoredHusker
Senior Contributor

Re: OptionEye...June 11th

Farmers will do well over the next 20 years?  Where and when have I heard that before?  Oh yeah, my feeble old mind is coming to it now.  It was back in the late 70's.  If someone would be so kind, could you please reference a time in our history where farming didn't get drug into bad times when the rest of the country experienced bad times?  In 82', the general economy went down the tubes.  Farming with the lag factor that we have didn't really hit it until 84-85'.  People claim it's different this time around because of interest rates.  We're basically at zero.  There's really only one way for interest rates to go.  8-10 percent interest this go around will accomplish the exact same result as 18+ percent interest did back then. 

 

 

0 Kudos
kraft-t
Senior Advisor

Re: OptionEye...June 11th

Actually scott, some congressmen made exactly that point that congressmen shouldn't throw stones when they live in glass houses.

 

Yet there is also a good argument that banks shouldn't be involved high risk speculation with FDIC protection on their deposits

0 Kudos
jec22
Veteran Advisor

Re: OptionEye...June 11th

JP Morgan may have the MF Global money 'legally'.   I would question whether they do morally.

 

http://www.zerohedge.com/news/four-bullet-points-explaining-how-jpmorgan-doubled-its-money-mf-global...

0 Kudos