Posts Tagged ‘corn’

Which Way Wednesday – Wherefore Art Thou QE3?

China is still rolling along and the Fed says "maybe" on QE3.

That was all it took to get us to yesterday’s highs but we took the money and ran at 2:24, when I told Members in Chat "DON’T BE GREEDY!"  As I had mentioned in yesterday’s post, our Morning Alert to Members put us long on Dow Futures (/YM) at 12,400 and Nasdaq Futures (/NQ) at 2,350, which made vast sums of money of course with the Dow up well over 100 points at the time.  During Member Chat yesterday, we took advantage of the early dip to go long on TBT, FAS, WFR and QQQ  while killing our short positions on USO, EDZ and FXI (see Monday’s post) as they had a great run and WE ARE NOT GREEDY!  

Of course we have our bull call spreads from last week so we’re pretty bullish BUT still cautious because our indexes are not holding their lines – especially the always-troubling NYSE, which did not hold the "Must Hold" line and when we name a line "Must Hold" well, it MUST be held!

The other thing I said to Members at 2:24 in yesterday’s Chat was:   

Keep in mind this rally has 100 Dow points to go just to get us back to Friday’s close (12,660) so don’t be impressed with less (S&P was 1,344, Nas 2,860, NYSE 8,411 and RUT 852).  

At the moment, we’re not even getting a 50% bounce of this morning’s bottom and Friday’s close was way below Thursday so it’s very easy to give us a "rally" by tanking the Dollar and floating rumors of MORE FREE MONEY but, for now – it does nothing to change the greater reality.  

That’s good advise for today as well.  A mere hint of QE3 does not change the cost of Italian debt, nor will it help our Treasury sell $21Bn worth of 10-year notes today at 2.9% (what kind of idiot would trust our Government to give them back Dollars with less than 3% interest to guard against inflation?), nor will it employ people and we ABSOLUTELY know that QE3, if done like QE2, is going to
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The Commodity Bubble

Courtesy of SurlyTrader 

In the future they might coin this the “Bernanke Effect” or maybe the great commodity bubble of 2011.  The truth is that commodity prices are rising…dramatically.  You might have started to notice this disconnect in your grocery store shopping or in gasoline prices, but if you were to ask our government they would tell you that a basket of goods consumed (CPI) is rising modestly.  How modest do these numbers appear to you?

Sugar and Corn? Those are luxury goods.

If the basic ingredients to food are skyrocketing, then prices of food will eventually have to keep pace which will directly hurt consumers.

Of the 853 ETF’s that I looked at, which unleveraged funds do you think had the greatest return over that same time period?  It is not a trick question: 

Are you noticing a theme?

My conclusion is simple:  this time is NOT different.  Commodity prices cannot go up forever and China will not continue to support the market regardless of prices.  What is this “Bernanke Effect” doing to farmland prices?  Well, according to a survey by Farmer’s National Company:

“non-irrigated crop land in central Kansas averaged $3,000 an acre, up 50 percent since June…

Crop prices have seen an extraordinary run since early July. A bushel of wheat priced about $4 a bushel on July 4 is now more than $8.50. Other crops have experienced similar increases.

As the land generates more income, it puts more cash in the pockets of the most likely buyers, nearby farmers. It also provides an attractive return for investors who then rent it out to farmers.

The result: Auctions are drawing twice the number of bidders as before, said area agents.”

As with all hot speculation, the commodity run will surely come to an end and will probably have repercussions for all financial markets.  We should have learned by now that large financial dislocations tend to not occur in isolation. 


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Just in case you were planning to eat next week…

Just in case you were planning to eat next week…

food pricesCourtesy of Joshua M Brown, The Reformed Broker 

The next chapter in the quantitative easing drama takes place in the ag commodity neighborhood.

Over in Britain, the Guardian posted a full-scale freakout piece tying in Bernanke’s policies to a sharp spike in food costs…

UK food prices were 9.8% higher last month than a year ago, the biggest annual increase since October 2008, according to the Office for National Statistics. Imported food prices climbed 4.5% on the year, the fastest rate since October 2009, pushing up the price of bread and margarine. Prices are likely to be pushed higher in coming months, with refined sugar reaching a record of $783.90 a tonne today.

Greg White over at Clusterstock has a very worthwhile slideshow (can’t believe I just wrote that phrase) illustrating the food cost spike by commodity.  Corn, for example, is just completely absurd and very scary if you are in the business of feeding large quantities of animals (or addicted to Crackerjacks) :

The agflation beat goes on.

Sources:

US Accused of Forcing Up World Food Prices (Guardian)

Here’s the Massive Commodities Surge etc.  (Clusterstock)

Read Also:

Food Price Inflation No Longer Theoretical (TRB)

Pic credit: Jr. Deputy Accountant 


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Burning the Food Supply

Burning the Food Supply

Courtesy of Joshua M Brown, The Reformed Broker 

Farmer Brown here…if no one else is going to tell this story, then I might as well.

We do some stupid stuff here in America – playing ultimate frisbee on skis, deep-frying Oreos, calling in to vote for televised dance show contestants…I could go on and on.

But of all the stupid things we do, one of the most dangerous is this ethanol nonsense, in which we gleefully burn up our corn supplies.  For very little in the way of environmental impact I might add.

First, look at the December 2010 corn contract, then I’ll give you some insane stats on the demands of ethanol:

You wouldn’t believe it, but according to the most recent estimate from the USDA, corn use for ethanol for the 2010-2011 corn crop will be 37 percent of the projected total harvest.  More than a third of our corn supply will be refined for energy use.  We’re talking about 4.7 billion bushels of the corn that would normally go to animals as fodder and to our own diets.

And while yields and production are up, corn races to ever higher prices.  There’s a good reason for that – industry experts say that we now need to produce 13 billion bushels each year just to keep prices restrained.

The stats above are mind-blowing and to me they represent the bull case for agriculture stocks and commodities in general.

They also represent a society that has become oblivious to the danger right in front of its face.  I believe that resource competition between the developed and emerging nations is a given for the coming decade.  While many believe this competition will center around oil, I’d be more concerned about the global demand for more and better food.

One of the most important determinants of animal protein prices is the corn fodder that supports production.  And we’re mixing this critical element of the food supply into our gas tanks.

One might ask "but if it comes down to it, we can adjust in time, right?"

And the retort might be "if we’ve learned anything from the economic earthquakes of the recent past, it’s that we almost never adjust until it’s too late."

Stupid, stupid, stupid.

h/t David D 


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Phil's Favorites

Jamal Khashoggi: Casualty of the Trump administration's disregard for democracy and civil rights in the Middle East?

  Jamal Khashoggi: Casualty of the Trump administration’s disregard for democracy and civil rights in the Middle East?

Courtesy of David Mednicoff, University of Massachusetts Amherst

The international crisis over whether top Saudi Arabian leadership murdered U.S.-based Saudi journalist Jamal Khashoggi is a striking example of the consequences of Donald Trump’s blanket disregard for democratic politics and human rights in other countries. This departure from decades of American foreign policy rhetoric remains comparatively undiscussed.

However, in the Middle East, my area of e...



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Zero Hedge

Kolanovic: Systematic Flows Explained Market Moves This Week - Here's What They Will Do Today

Courtesy of ZeroHedge. View original post here.

Last Friday morning, just as markets were set for a powerful bounce after the biggest two-day drop since February, JPM's head quant Marko Kolanovic predicted that the recent selling pressure, which had come from option gamma hedging, was ending and noted that since "equity indices already experienced comparable declines to February (and e.g. Russell 2000 even a bigger drawdown), we think that the cur...



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Kimble Charting Solutions

This commodity is breaking above resistance and moving averages, says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

At the beginning of the month, the Power of the Pattern shared that Coffee was testing long-term support, as it was at the apex of a bullish falling wedge, with momentum deeply oversold and commercial hedgers were betting big time it would rally. See Post Here

In the past when this setup was in play, Coffee rallied more than 50% in a short time period at each (1). Since that post, Coffee has been one of the best-performing commodities on the plan...



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Digital Currencies

Blockchains won't fix internet voting security - and could make it worse

 

Blockchains won't fix internet voting security – and could make it worse

An e-ballot is less secure than one on paper. SvetaZi/Shutterstock.com

Courtesy of Ari Juels, Cornell University; Ittay Eyal, Technion - Israel Institute of Technology, and Oded Naor, ...



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Insider Scoop

10 Stocks To Watch For October 18, 2018

Courtesy of Benzinga.

Some of the stocks that may grab investor focus today are:

  • Wall Street expects Philip Morris International Inc. (NYSE: PM) to report quarterly earnings at $1.27 per share on revenue of $7.15 billion before the opening bell. Philip Morris shares fell 0.07 percent to $84.50 in after-hours trading.
  • Analysts expect PayPal Holdings, Inc. (NASDAQ: ...


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Chart School

Weekly Market Recap Oct 14, 2018

Courtesy of Blain.

Wednesday and Thursday finally brought some fireworks to a very complacent market.   The S&P 500 had not had a 1% move in 74 days until Wednesday’s drawdown.

Rising yields were nailed as the culprit but months of rallying eventually require some sort of shake out – whatever the catalyst.  Wednesday’s sell off was the worst day for the S&P 500 since February and the worst for the NASDAQ since June 2016.

The market losses are “a reaction from investors finally realizing we are in a higher interest-rate environment, and given the elevated level of stocks, market participants were likely looking for a reason to sell,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “Higher interest rates typically bring on tighter ...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Members' Corner

Why obvious lies still make good propaganda

 

This is very good; it's about "firehosing", a type of propaganda, and how it works.

Why obvious lies still make good propaganda

A 2016 report described Russian propaganda as:
• high in volume
• rapid, continuous and repetitive
• having no commitment to objective reality
• lacking consistency

...

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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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