Posts Tagged ‘financial derivatives markets’

Meanwhile, at the Hall of Unintended Consequences…

Meanwhile, at the Hall of Unintended Consequences…

Courtesy of Joshua M Brown, The Reformed Broker 

Can ultra-low rates combined with the hedge funds’ Need for Speed create a food price bubble?

Damn right they can and they probably will.  They did it with commodities like wheat in early 2008 even as the consumption-to-stock ratio actually warranted a decrease in prices.  This is now happening again as cotton hits a 15 year high, exploding corn prices drive the price of beef up to 25 year highs and the rest of the agricultural commodity complex takes off into the stratosphere.

When you link a financial derivatives market, which is technically infinite, to a market of actual hard goods (finite in supply), a price bubble becomes highly possible, even probable.  When you drop rates to nothing, leave them there and then add the sex appeal of a long-term uptrend for global food consumption, you are tying a goat to a post in the T Rex cage, virtually beckoning the beast to come and gorge himself.

Marshall Auerback quotes an email exchange with commodities trader and portfolio manager Mike Masters over at Naked Capitalism:

Speculation in commodities can be exemplified from the following illustration. Money can be “created” by fiat. Because there is already much more capital available in the world than hard commodities, and also because money can effectively be created in a nearly infinite way; speculators, without limits, and with determination, can increase the price of consumable commodities, like food stuffs or energy, much higher than traditional consumers and producers (hedgers) can react. When derivative markets are linked to real commodity markets, this nearly unlimited capital from the financial sector can cause financially driven excessive price volatility. This is because in the derivative markets, a nearly infinite amount of new commodity derivative contracts can be created to satisfy the demand of financial sector speculators armed with fresh capital. However, because there is only a FINITE amount of bona fide actual hedgers (producers and consumers of the actual commodity), any speculative demand that exceeds the real amount of commodities that can be hedged at that time must be sourced from other speculators. However, these speculators will only supply new contracts via price- i.e. a new speculative demand that exceeds hedger supply must be sourced from new speculative supply at ever higher prices.

To sum up, we’re talking about an untethering…
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Kimble Charting Solutions

Bull Case For Stocks, Testing Critical Breakout Level, Says The Inspector!

Courtesy of Chris Kimble

Some price points lend themselves to potential turning points. Is the S&P at one of those price points? The inspector suggests it is!

This chart looks at the S&P 500 over the past couple of years. Fibonacci was applied to the 2018 highs and 2018 lows.

The rally off the December 2018 lows, has the S&P testing its 161% extension level at (1).

While at this extension level, momentum is the 2nd highest in the past 5-years.

The Fibonacci extension level becomes a price point where some stock market bulls need/want to see...



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Zero Hedge

Rabobank: "Imagine London In Full Lockdown"

Courtesy of ZeroHedge View original post here.

Submitted by Michael Every of Rabobank

Imagine London in full lockdown. Hard? Well, Chinese authorities just decided to issue a Wuhan travel ban, locking down a city with more inhabitants than London. Stopping the spread of the new SARS-like corona virus is the aim, as more and more cases of contagion have been reported, for which the majority are pointing at Wuhan being the place of origination. The WHO delayed its decision on whether to brand the situation as an a public health emergency of international concern and is expected to report on its deliberations today. Meanwhile, China reported 8 new ...



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Insider Scoop

9 Technology Stocks Moving In Wednesday's After-Market Session

Courtesy of Benzinga

Gainers

Teradyne, Inc. (NASDAQ:TER) shares increased by 11.6% to $82.10 during Wednesday's after-market session. The most recent rating by Evercore ISI Group, on January 13, is at Outperform, with a price target of $85.00.

PTC, Inc. (NASDAQ:PTC) shares rose 8.1% to $86.43. The most recent rating by Barclays, on November 04, is at Overweight, with a price target of $81.00.

Akoustis Technologies, Inc. (NASDAQ:...



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Phil's Favorites

"It Just Keeps Getting Crazier" - Options Speculation Reaches Record High

Courtesy of ZeroHedge

Despite the fact that the bond market refuses to sell-off (as it should in a well-behaved market sending stocks to record-er and record-er highs each and every day), the levered long crowd has never been more "all-in" than they are right now.

While stocks are at record highs, bond yields are plumbing 2 month lows...

Source: Bloomberg

However, there are some notable anomalies in the VIX term structure that could become problematic in the next few days. As contracts expire, so the very steep term structure (fueling lots of short-vol-tilted carry trades) will flatten...

...



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The Technical Traders

TRADING STRATEGIES FOR GDXJ, SPY, BONDS, AND NATURAL GAS

Courtesy of Technical Traders

Chris Vermeulen joins me today to shares his trading strategy for 4 different markets. While most of these markets are not correlated he has reasons for why he is long in each. Pick and choose where you want to deploy your capital.

Get Chris’ Trade Signals Today – Click Here

...

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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Monday, 16 September 2019, 05:22:48 PM

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Comment: This chart says SP500 should go back to 2016 levels (overshoot will occur of course)



Date Found: Tuesday, 17 September 2019, 01:53:30 AM

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Comment: This would be HUGE...got gold!


...

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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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