OptionEye - The Cow Guy - Jan 27

[ShelladyOptions]

Good morning. 

Emerging markets and weather will be the stories of the day. 

Wheat getting the biggest boost with the freezing weather talk and damage to crops. Nat Gas another big gainer as it seems as though the storm caught some people by surprise. 

Wheat up 3, corn and beans up about 1. 

This will not be good enough to help out these traders that have gotten long all these straddles in corn. As I have said earlier, they need some sharp movement soon. 

The 10 year trading up to 2.76% and giving the Fed room to continue the Taper. I believe they taper but not because things are great. The taper will be an admission that the QE is not working. 

Gold is down 6.18 to $1236.90. Crude is up .33 to $96.97. 

This is going to be an interesting and frigid week. 

[Palouser]

The taper an admission it isn't working? Hmmm. Look at the stock market and no real inflation yet .... in fact there are worries of defation still ..... after all the hue and cry of rampant inflation that would result. Yeah, i know, it's right around the corner, right? Yet we haven't slid into the abyss ...... like people actually wanted ... to prove a point. So far the nay sayers have all been wrong.

The Fed has had limited tools to work with but their mandate on employment forced them to do something. It hasn't led to disaster as predicted. The heavy lifting should be done by Congress but it is all but paralyzed. Those who want deep cuts without restructuring tax policy are hung up on things like the sacred cow of farm subsidy caps. But they certainly will vote for the subsidues if they can EVER get something to the floor. Im putting off holding my breath still.

Meanwhile the middle class continues its decline. The Fed can't do anything about that. It can only help the financial sector.

[sw363535]

How can you ignore the inflation we have had the last 5 years.

Every category of agriculture spending has inflated.  replace a piece of equipment or a vehicle, rent a new piece of ground or better buy one.  Give me a break -------- no inflation?????  That is total fiction.

[Palouser]

Higher prices in an individual sector that is booming and creating demand is not considered currency inflation ...... just higher prices. As sometimes happens with grain prices.

So no, I'm not talking fiction. We are in an era of low inflation. And deflation is still a concern of many, especially in Europe.

[sw363535]

In economics, inflation is a persistent increase in the general price level of goods and services in an economy over a period of time.^[1] When the general price level rises, each unit of currency buys fewer goods and services

[Palouser]

Exactly right!

[lsc76cat]

http://www.coreinflation.net/Core-Inflation-Rate.html

Long story short - it's called "cooking the books".

When talking about inflation you cannot divorce day-to-day reality from the discussion.  The government has their agenda but it doesn't face the reality of having to balance it's books like the rest of us.  The basic costs of everyday life have gone up and continue to rise.  Only kool-aid drinkers try to deny that food, fuel, health care, taxes, fees, rents, etc. have risen dramatically.

[timetippingpt]

Come on Palouse...you must admit that there are lots of things that determine the TIMING of inflation. Money velocity being an important one. Public confidence maybe is most important. Inflation is not a straight line trend, it is far more chaotic. Especially as paper currencies reach a point of saturation. It is 100% herd emotion and no one ever knows exactly what will spook the herd.

IF a true leader emerged, we could balance the USA budget in about 18 months with very few ill effects. There are lots of reasons to be optimistic about the future. That said, the history of paper currencies should send a chill down the spines of anyone owning dollar denominated debt, or the poor subsidized classes, over the long-term.  Avoiding a debt restructuring now does delay the painful impacts of eliminating debt, unfortunately it does not allow the system to cleanse in a normal fashion and renew itself, which is the ultimate secret to capitalism in my view.

[redrotor]

Inflation is an increase in price that is greater than the increase in value. Corn going from $3 to 8 changes lands' value. Machinery with more technology, capacity or comfort etc. has more value and so not all of these price increases can be called inflation. 

[sw363535]

Holds true only if the cheaper option still exists.  the Land example is inflation----- unless the price or rent includes irrigation that did not exist before, but that is introducing "improvements" that should not be figured.

The other example is the same, You must strip off the cost of the tech. and the AC to be comparable.  Inflation is still there.

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When government imposed regulation introduces cost that cannot be avoided then options do not exist and self inflicted inflation is very real.  Maybe you would like us to believe that those costs are a big increase in value even though they do not increase productivity.

When $6 corn is required to break even and $3 corn was profitable 10 years back ---- that is inflation.  We are headed there.

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It is rediculous to use claim no inflation when you are talking about devaluation of the currency.  That also is inflationary.

As long as it takes more dollars to get the same product.  -------- Devaluation of the currency --deflation of currency--- is the fastest way to price inflation.  We are witnessing it.  Productivity is not saving us ---- helping---but not stopping it.  Inflation is being forced by ben and regulation.  With "do gooder" appeal.

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Traders and leaders who think they are going to get lots of corn bought below $3 are in a dream world.  There is not enough elasticity left in the economy to lower costs that far.  The price may go there but corn will have truely "peaked".

Lets get real on this issue, where does $3 corn compare with $0.30 cent wheat and corn in the 1930's in terms of buying power.  Land costs?  a car or truck?  a house? an education for your kids? shoes(clothes) for your kids?

Sounds alarmist,  but we should not ignore it when government changes the definition of terms or content of formula's to make the numbers sound better.