I feel that the way the Gov spends and the general malaise it will be inflation around the corner. Check out cotton prices. 28cents - it cost more to bag the product than it fetches. historically cheap. It's a huge mistake to focus only markets like indices and stocks. There are reasons cotton to be this cheap and fundamental plus technical must be followed . IMHO it will eventually back up over 35c and maybe more.
A lot of people feel that Cotton, Lumber and Copper lead the market. They're all at historical lows. One of the reasons I don't trust this rally.
Andrasnm, Surely we can trade commodities through their stock-related proxies e.g. Gold: ABX, NEM Cotton: cotton producers etc I concede that the correlation won't be perfect, but hardcore stockies like me tend to be afraid of venturing beyond stocks
Nicodemus, I kinda think that the market is grudgingly turning upwards...its been dead for a good long time...earlier in the year we had some speculation...but that soon died off...also I think we are starting to see more big money starting to slowly roll into the market that had previously been on the sidelines...the Fed keeps on squeezing...soon the big boys will have no where to make money except in the market...not to say things have turned around...but for reasons I can't really substantiate...I think we are coming back...all be it slowly and hidden and unforsaken.
Excelent article on subject inflation/deflation is in Spectator magazine. They have been worrying about inflation (non-existent) for last 10 years. As far as I know it's time to worry about deflation (commodities price level reflects this fact). Good thing Greenspan stopped fighting "inflation" at last. If There was the only one person I would want to listen to (regarding the state of economy) it would be Steve Forbes (matter of opinion). He has been predicting today's situation I don't know for how many years.
yes, you are correct. but unlike japan, where people save the us spends. on the government level as well as individually. this means inflation. eventually we get it right. like those who said the market was toppy at 6000. at 12000 they were proven right. i don't know if you remember the 80's in the US - I came here in 1979. rates were 14% for the long bond. credit cards were 21% and gold was $800. take care now. p.s. inflation can bring unheard of opportunities not only for commodity plays but fixed income folks who can lock into 18% treasury.
What was it like back then? I came to this country around the mid eighties but I was just a little kid. What was the trading environment like? Did trading volume dry up? Was fixed income the hot spot? Do you see similarities between today's environment and then? It would be great to get some real historical perspective from a trader. Most traders I've met are children of the boom. They know nothing but the good years.
Regarding cotton, lumber and copper. I think you are right. It's been said that copper prices "know" more about what part of an economic cycle we are in than any number of economists. As for lumber well... housing starts are just starting to fall off. They have held up well to now. What kind of lags have we been looking at historically between the time these futures bottom and the time the markets recover? Thanks and very nice post. ~EC PS I picked up Larry William's book... seems good so far. Thanks