[MrBill]

If the global economy is so strong that it can easily decouple from US growth then what is up with metals?
$this->bbcode_second_pass_quote('', '
')Base Metals
Quantifying the risk to base metals prices

The risks to the downside in base metals are mounting as US demand continues to fall while worries emerge over Chinese demand in coming months

Prices have been moving mostly sideways for the past two years

Metals prices have been largely rangebound, as a strong China has been offset by a weak US, allowing consumers to opportunistically enter and exit the market.

Demand and inventories - the key drivers in our models - may be at an inflection point

Backward looking data on metals demand is still firm, but forward looking indicators suggest the potential for an inflection point in demand and inventories.

Updating our metals price elasticities

To help in responding to the unfolding macro outlook for base metals demand over the next weeks and months, we quantify the sensitivity in prices to the shifts in the key fundamentals.

[Starvid]

$this->bbcode_second_pass_quote('MrBill', 'I') told a Chinese girlfriend of mine who has made money in both real-esate and the stock market to please be very careful. But the Chinese love to gamble in any case, so up it goes, until it doesn't! ; - )

[Starvid]

$this->bbcode_second_pass_quote('MrBill', 'T')he S&P 500 is up a measely 1% year to date (YTD). That means it is down almost 10% YTD in euro terms. Not very impressive I am afraid.

[drew]

Completely off topic Mr Bill, (and Starvid) but I love your new avatar. The glowing halo strikes me as a bit Greek/Russian Orthodox/early Byzantine, which BTW is almost completely fitting for your present place of habitation. The monkey is good fun too.

As for the markets -yikes- although CIBC was looking rather sweet at $82 yesterday. That was around the point I bought it in '06. I dont think the banks are done bleeding yet, so I'll wait. Stupid CEF is making me some money, finally, just not enough yet.

A risky though for you; use the rest of my cash to buy BCE?? I'd get one more quarter of dividends (ex dec 14th) and the deal is supposed to finish in Jan 08. I'd profit about $3 bucks a share. The clincher is simple, the deal could fall through. How likely?? If the econ. really tanks does teachers have an escape clause? I bet they do. What do you think?

Drew

[drew]

$this->bbcode_second_pass_quote('Starvid', 'M')y Swedish holdings, two big investment/holding companies and a tiny local iron mining startup have been slaughtered, down 20-30 % since I bought them this spring.

[topcat]

Drew -- Trailing stops!

[MrBill]

$this->bbcode_second_pass_quote('drew', 'C')ompletely off topic Mr Bill, (and Starvid) but I love your new avatar. The glowing halo strikes me as a bit Greek/Russian Orthodox/early Byzantine, which BTW is almost completely fitting for your present place of habitation. The monkey is good fun too.

As for the markets -yikes- although CIBC was looking rather sweet at $82 yesterday. That was around the point I bought it in '06. I dont think the banks are done bleeding yet, so I'll wait. Stupid CEF is making me some money, finally, just not enough yet.

A risky though for you; use the rest of my cash to buy BCE?? I'd get one more quarter of dividends (ex dec 14th) and the deal is supposed to finish in Jan 08. I'd profit about $3 bucks a share. The clincher is simple, the deal could fall through. How likely?? If the econ. really tanks does teachers have an escape clause? I bet they do. What do you think?

Drew

[MrBill]

Posted for the benefit of some others that may have similiar concerns. Thanks.

$this->bbcode_second_pass_quote('', 'H')ello,

well, I don't want to scare anyone because I do not have all the answers either. I just think that historically and relatively speaking everything is expensive right now. I cannot find anything to invest in that is not already too expensive. However, I am afraid of inflation too, so cash is not really the perfect option either.

So what to do? Pay down debt. Conserve cash. Take a conservative approach to all my investments. Diversify. If a market drops two-thirds, and your investments only drop one-third, then relatively speaking your purchasing power has increased by a factor of two.

There may be some that rush headlong into gold and silver, but I am not sure of that strategy myself. I think at very best a severe world slowdown or US recession may bring the price of all metals, including gold and silver, down, so one might see better entry levels. Even then I could not justify having more than say 5% in gold and silvers. Too many variables to consider. And they are not income earning investments.

I would like to increase my investments in real-estate and farmland, but those are tricky to find the right properties at the right prices. I do not want to overpay at what might be the top of that cycle as well. The Economist calls real-estate the biggest bubble ever. They are not usually alarmist, so one should keep that in the back of their mind when deciding to make the plunge.

Never the less, all things being equal, and they never are, governments tend to favor homeowners and shareholders over all others. This is inherently unfair to other taxpayers who might be renting, but this seems to be a self-evident truth. I cannot fight it. So my feeling is that central banks and governments will always in the end try to save homeowners and investors from their own mistakes in the name of stability. So I have to invest accordingly.

I have survived several emerging market meltdowns and currency crises over the years and the bottomline is that you have to invest your way out of a crisis as inflation and/or devaluation will erode the value of your savings. It is okay to have cash on the sidelines while you decide where to deploy it, but employ it you must eventually. I am a deer in the headlights at the moment, but I also know that I have to make some decisions soon, and that there is a great deal of uncertaintly no matter what direction I choose.

Therefore, an even-handed approach is probably better than an all or nothing bet at this point. Capital preservation is more important than having bragging rights over calling the market correctly. Take care and all the best.

Have a good week ahead. Cheers.

MrBill

[rostov]

$this->bbcode_second_pass_quote('MrBill', '
')I am a firm believer that global stock markets are headed lower, and that a potential recession in the USA will erode demand for energy, metals and commodities as well.

[MrBill]

$this->bbcode_second_pass_quote('rostov', '
')
MrBill,

I want to express alongside your concern on stagflation (right now I'm still gathering proof of a deflationary cycle short term), but could I ask for advice on how the USA's recent 10-year yield (and thus the bond market rush to safety) fits into what you just said?

Last night's action was NASTY : I could not find a similar move (since my trading platform's 20-year history) whereby so much treasuries was bought after a few days (and weeks since mid July 2007) hard -- all within 1 day.

The bond market doesn't seem to buy the inflationary model, and therefore declaring their stand(?) on the Fed moves. FFR, IRX, etc are still on track, and provides very little insight on why the Fed would want to cut rates. What boggles my mind is why anyone would want to park their capital into a place with very little yield compared to the true inflation rate (we know the latter is really double digits).

I suspect this may also answer the global decoupling position these folks are buying. This is going to be hard to trade.

[NTBKtrader]

Any thoughts on the actions of Mr Rubin securing $7.5 from Abu Dhabi for Citi? The news greeted me with shock while the markets saw it as a positive, almost equally shocking to me. In my opinion, when the largest US bank has to send it's top political rep on an 11th hour mission to secure financing from a middle eastern country by promising to pay junk bond rates to shore up capital... something just ain't right. We all know that the subprime fiasco that started this entire issue won't even begin to subside until well into mid next year (judging by the credit suisse/deutsche bank arm resets graphs). By then panic will have stricken the markets and banks will be deathly afraid to lend to each other, car loans and credit cards will be having major issues and they are all ready. Foreclosures really haven't hit the streets yet but I predict will come in droves by mid next year.

I am one of those people that moved much of my investments into treasuries. I did so Monday. I am still holding several gold stocks, a mutual fund that invests in China although I am pondering taking my profits because I do believe the US slowdown/credit issues/and oil and food prices will start to effect the rest of the world.

I strongly feel that the write downs and credit issues are not even half way through, therefore I think some of the big mortgage lenders/banks with ties to sivs i.e. cfc, bsc, merrill, etc have only one way to go in the medium term and that is down. I was thinking about buying puts on bsc or merrill, it's an easy way to play what I think will happen without having too many chips in the pot.

[MrBill]

NTBKtrader wrote:
$this->bbcode_second_pass_quote('', 'A')ny thoughts on the actions of Mr Rubin securing $7.5 from Abu Dhabi for Citi? The news greeted me with shock while the markets saw it as a positive, almost equally shocking to me. In my opinion, when the largest US bank has to send it's top political rep on an 11th hour mission to secure financing from a middle eastern country by promising to pay junk bond rates to shore up capital... something just ain't right.

[MrBill]

If this works then I can substantially spruce up Trader's Corner with charts and graphs, but I may need some help and practice with re-sizing the images. Please be patient. Thanks.



UPDATE: that seems to work with photobucket, so now I will see if I cannot link to my Bloomberg and Reuters.



I do not want to use too much bandwidth, so I will sometimes still leave links as well. Thanks.

UPDATE: okay that image is too big for the page and it distorts the page width which makes reading the text tedious. does anyone know how I would re-size that Bloomberg page so it is smaller? thanks.

[MrBill]

$this->bbcode_second_pass_quote('', 'C')anada: Trading with risk aversion.

The CAD has seen an abrupt change in fortunes following its decline close to 0.90 versus the USD. The CAD has fallen by close to 10% over the last three weeks due to a variety of factors not least of which has been the renewed increase in risk aversion. Concerns about Canadian economic growth have also contributed to pushing the CAD lower, with the Bank of Canada taking a more dovish monetary policy stance. The deterioration in sentiment has been revealed in the latest CTFC IMM positioning data, which shows a sharp drop in net long CAD positions to the lowest level since early May 2007. Is the long standing CAD rally over? It is difficult to conclude that it is just yet, but it is probably not too far from the end of the road for CAD appreciation. The CAD’s appreciation trend over recent months has been driven by a combination of factors including stronger commodity prices, the slide in the USD, and a shift in interest rate differentials with the US. The biggest driver at the moment however, is risk aversion and like other commodity bloc currencies the CAD has suffered as carry trades have been unwound. After having only a negligible correlation with the Calyon Risk Aversion Barometer over recent months, the last few weeks have seen a significant increase in correlation. The CAD managed to recover somewhat yesterday in line with the rise in global equity markets and drop in risk aversion. Given the prospects that market turbulence will persist over coming weeks it is likely that the CAD will remain vulnerable to a further decline, however. Much will also depend on general USD direction and given our view that the USD will recover over the course of 2008 this implies that the CAD will remain under pressure next year.

[seahorse]

Does anyone know of any publicly traded companies that are the actual producers of wheat, corn, or rice?

[MrBill]

$this->bbcode_second_pass_quote('seahorse', 'D')oes anyone know of any publicly traded companies that are the actual producers of wheat, corn, or rice?

[Daryl]

$this->bbcode_second_pass_quote('seahorse', 'D')oes anyone know of any publicly traded companies that are the actual producers of wheat, corn, or rice?

[seahorse2]

Thanks Daryl I'll check it out.

[topcat]

Another potential is 'MOO.' Put it on my watch list for some commidity-based reason, but cannot remeber why.

From the ticker, sounds like it may be dairy-based. Very recent fund.

Don't own, have not looked into, so all disclaimers apply.

TC

[eastbay]

According to this website the ETF DBC consists of oil, heating oil, gold, aluminum, wheat and corn. I couldn't determine what percentage of this fund is in corn and wheat.

I was also hoping to invest in an ETF or a mutual fund focusing only on basic food commodities. Late last SEP when I went to cash for a month I conducted a bit of research to locate such a fund and it was unsuccessful. Too bad. I'm sure it exists, but I couldn't locate one.

No doubt many investors here and elsewhere would be interested in defending against inflation and potential looming basic food commodity scarcities with such an instrument.

This article dated 07NOV07 says light oil makes up 35% of DBC. That's all I could find before running out of time. i