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Global Economy Bursting?

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Randolph Kinney said:
Companies Hedge Bets at a Cost to Consumers

http://www.nytimes.com/2011/05/06/b...dities.html?_r=1&nl=todaysheadlines&emc=tha25

For reasons not well understood, commodities have become more volatile, increasing the costs of the futures and options that protect companies against such changes.

The sucker's play of passing risk onto the next guy is losing its appeal and effect.
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Randolph Kinney said:
06pricesGraphic-articleInline.jpg



Ending Run, Investors Abandon Commodities

http://www.nytimes.com/2011/05/06/business/06prices.html?nl=todaysheadlines&emc=tha25

Fear of an economic slowdown in the United States and the rest of the world pushes down prices for commodities. Place your bets gentlemen, will she or won't she? Excess money creation has to flow somewhere.
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Metals are also going down. That is OK, just get ready to buy when they end there drop. You just have to know when to get back in. I do can not PDF from my laptop, but will show a DBA, GDX, FCX, and PAAS charts later. I would short them all. But am shorting SLB, VXX and going long on BBY. Just have to be patient.
 
This pattern is clear evidence, imho, that too many markets are driven by hedge fund speculation and the trades are on both sides - long and short. The hedgers go long on commodities, then short their positions as "protection" to the downside, and make ever bigger bets. They did this in housing and that is why they crashed. They did this in oil and nat gas in 2008 and a couple of the shorts caught it in the shorts when they couldn't hold their positions and had to cash in - SEM GROUP is typical. Although based in Tulsa, most of the hedge funds are in Connecticut. They trade about 70% of all oil and gas. The bulk of the rest is smaller outfits, oil companies, and transport & airline companies. A tanker of crude may change hands 15 times while in route from Africa.
The same thing happens in most commodities. Silver is taking a huge hit over raising margins, something the CME has denied was a factor. duh...

Corn, wheat, soybeans... way too many things are trading on small margins and trading volumes that exceed the actual amount of crop or commodity that exists on the planet. Such "trading" is speculation and it drives prices TOO high then crashes. The cure is to require margins of 50% or more and allow hedge funds to buy only on one side of a trade....that would put it to a screeching halt of course, because it is that predictable volatility that traders make a killing on. It is when they cannot predict the direction of bias that they lose their cookies.

http://www.marketwatch.com/story/speculators-seen-leading-commodities-crash-2011-05-06
 
Terrel, you are right on the button. They are puffing things up, waiting for the mass of consumers to go in at the top, then making more money shorting as the market returns to natural levels. The only unanswered question is whether it is solely happening because of greedy manipulators, or is some greater conspiracy behind it. I think it is the former, but would not be shocked if data gathered last weekend in Pakistan revealed the latter.
 
It seems to me that the big (perhaps biggest) loser, could well be the small investor who cannot earn diddly on a safe investment (treasuries, for instance) which more or less means the investor is forced into equities... a market where they have no influence and can be or are manipulated by the hedge fund experts. It is a pretty unfair and unlevel playing field for a $2000 stock position to compete with a multimillion dollar hedge operated by nanosecond fast trading programs.

The worse position I would think would be someone who has to invest (say they have over $200,000 in a bank account) or have low return /no return cash sitting exposed should the bank fail. They put it in an investment that is completely dominated by traders with huge positions and without any protections whatsoever. For any big investment bank, anything less than $50 million in assets is managed by the newbies, not a savvy trader, to boot. you are small potatoes and your "service representative" is a joke. He is being used by his own fellow traders who bait them with "stock tips" that foist a bad investment off on the new guy while relieving them of a bad position they are in.
 
Small investors are best served by local investments like real estate.
 
... has there ever been a time when the wall street did not find a way to manipulate something when there is no real business performance on main street?

... the lunacy of fiat currency continues .... and the consciousness that goes with it ..

... how much thinner can it get before dollars walk on water?
 
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