It’s seems counterintuitive, if not downright contrarian, to even be asking this question, with gold freshly minting an 11-week high. But with gold rising more than 15% higher in just a little more than a month, it behooves short-term gold traders to seriously consider the possibility that the yellow metal has gotten ahead of itself.
Thursday, February 2, 2012
Three week low holds in sugar while coffee is steady
Feb 2 (Reuters) - Raw sugar futures on ICE traded above a three-week low in early business on Thursday, while coffee and cocoa were steady, supported by firm financial markets after solid global manufacturing data.
Wanna give God a good laugh? Tell him YOUR plans!
Sifting through the MF Global’s “break the glass” plan is a bit like retracing the failed escape route in a charred building. The plan was hatched by executives at the brokerage firm in early October as a road map to survival in the worst-case scenario: What if ratings agencies downgraded MF Global to junk status?
You want a piece of Jon Corzine? Wait in line.
Feb. 2 (Bloomberg) -- MF Global Inc. futures customers are competing to lead a lawsuit against Jon Corzine, the parent company’s former chief executive officer, over the alleged theft of $1.2 billion of their assets. Court filings show at least seven actions against Corzine by futures customers in Manhattan federal court. Plaintiffs who’ve nominated themselves to lead a potential group suit include Sapere CTA Fund LP, which sued Corzine and other former MF Global Holdings Ltd. executives for $90 million; Seattle money manager William Fleckenstein along with Kay P. Tee LLC, a firm with a trading account at MF Global; and, together, Davide Accomazzo and Roberto Calle Gracey, who said in court papers they filed the first action on behalf of futures customers.
More talk of returning to the gold standard . . .
The legendary Wall Street writer, publisher of Grant’s Interest Rate Observer, has been mentioned by two of the rivals for the Republican presidential nomination. Newt Gingrich said if elected president, he’d name Grant to help run a commission looking at a possible return to the gold standard. And Ron Paul said, if elected president, he’d go all-in and name Grant — one of Wall Street’s best-known gold bugs — as the new chairman of the Federal Reserve.
The latest financial voodoo? Futures on credit-default swaps.
NEW YORK (Dow Jones)--Efforts to create an exchange-traded futures contract tied to credit-default swaps haven't yet gained traction after 18 months of talks, but banks dealing in the private multitrillion-dollar market for credit derivatives believe such contracts will eventually appear for a simple reason: They should attract new players.
Credit-default swaps function like insurance for bonds and loans. Investors use them to hedge or speculate against changes in a borrower's creditworthiness. If a borrower defaults, sellers of the protection compensate buyers.
“Glenstrata”? Two commodities giants talk merger
Glencore, the world's largest publicly traded commodities supplier, has confirmed that it has made an approach about an all-share offer for the stake in Switzerland-based Xstrata ( XSRAY , quote ) that it does not already own as part of its current 34% holding.
Time to reload on bonds?
There is no doubt that Treasuries are overvalued from a long-term perspective, but in the short run there is no measure of just how irrational investor behavior can become. Remember the negative yields for bills in 2008? Accordingly, bears shouldn’t complacently believe that rates “can only go up from here” (which means bond and notes would fall).
Cash for trash in the EU
Desperate attempts by the European Central Bank to pump air into the deflating Eurozone are encouraging leading European banks to load up their portfolios with potentially risky debt. This could lead to big problems down the road if some Eurozone countries do actually default or force the banks to accept big writedowns on loans.
Natural gas inventories down more than expected; prices jump 7%
NEW YORK (AP) — Natural gas prices climbed 6 percent Thursday after the government said the nation's supplies shrank last week. Gas supplies dropped by 132 billion cubic feet last week, according to the Energy Information Administration. The decline was more than analysts expected, but the overall storage level of 2.97 trillion cubic feet remains well above five-year levels for this time of year.
Platinum fund "convoluted"
The recently registered Sprott Physical Platinum and Palladium Trust is just convoluted. A few weeks ago, Sprott Asset Management, a Canadian firm owned and operated by Eric Sprott, filed to launch its third physically backed closed-end fund, worth $115 million.
5 New Commodites ETF's Launched - A Sign Of A Top?
iShares Launches 5 Commodities ETFs
iShares launched five separate equity ETFs today focused on commodities, in the latest sign the world’s biggest exchange-traded fund firm is willing to compete by rolling out increasingly granular investment strategies. With the new commodities-focused equities ETFs, iShares is offering exposure to almost the whole world of natural resources, including industrial metals, precious metals, agriculture and energy. The new funds are part of a push among ETF firms to serve up different types of commodities funds related to rising global demand for everything from oil to copper to corn and even gold.
Its deja vu all over again with the gold bugs
The 1980 presidential election was fought by a Democratic incumbent weakened by a poor economy amid worries that the United States had lost its ability to compete in the world. Gold prices had risen to unprecedented levels as the election approached, and the Republican nominee hinted he might propose a return to a gold standard.
Dollar mixed after frustrating unemployment data
NEW YORK — The dollar is mixed against other currencies at midday. The government says unemployment claims fell last week, but Federal Reserve Chairman Ben Bernanke tells lawmakers that the economic recovery is “frustratingly slow.” The Labor Department says unemployment applications fell 12,000 to a seasonally adjusted 367,000. The four-week average dropped for the third straight week to 375,750, the second-lowest level for the four-week average since June 2008.
Options on futures trading strategies
F&O stand for futures and options and though clubbed together, they don't mean the same thing. Future refers to a standardized contract that requires the delivery of an underlying asset, which could be a commodity, bond, currency, or a stock index, for a specified price at a predetermined date in the future. Options, on the other hand, are contracts that give the holder the right to buy or sell the underlying assets for a specified price during a specified period of time. The element of obligation, which is present in futures trading, is not there in the case of options. F&O trading can be very profitable for investors provided they are cued in to the stock markets. If you're a newbie F&O investor and would like further information please contact us at www.therobertcharlesgroup.com to get started.
And I thought margin calls sucked!
In recent weeks, Iran's foreign currency and gold markets have experienced sharp fluctuations, which many analysts have linked to the intensification of international sanctions against Iran. A number of high-ranking Iranian officials, however, have blamed the market instability on disruptive plans implemented by the regime's enemies.
Mid-session grains turn higher
Corn futures are trading higher at midday. After opening lower futures turned higher as the dollar index fell. Strong export demand and firm basis levels are also supportive factors. Weekly export sales reported this morning of 38.3 million bushels were at the high end of trade expectations. March is 3 cents higher at $6.45 and May is 3 1/4 cents higher at $6.51 1/2.
$100 million CME fund set up for farmers/ranchers
CHICAGO, February 2, 2012 – CME Group today announced that it will establish a $100 million fund designed to provide further protection of customer segregated funds for U.S. family farmers and ranchers who hedge their business in CME Group futures markets. In light of the recent MF Global failure, in which a clearing firm violated CFTC regulations and misused customer monies that should have been kept segregated, CME Group is adding this extra security measure to protect the country’s food producers who are using CME Group futures markets to hedge their crops and livestock that feed the world.
Under the Family Farmer and Rancher Protection Fund, expected to be in effect by March 1, 2012, farmers and ranchers using CME Group products will be eligible for up to $25,000 per account in the case of losses resulting from the future insolvency of a clearing member or other market participant. Farming and ranching cooperatives also will be eligible for up to $100,000 per cooperative. If losses in a future failure total more than $100 million, participants will be eligible for a pro-rata share of the fund, up to $100 million. This new fund is expected to be backed by an insurance policy and will not be available retroactively.
Bearish EIA report takes oil down
As I pointed out earlier in the week the correlations between the price of oil and the macro or external price drivers have been changing with more emphasis being placed by market participants on the fundamentals and technicals of oil. This shifting of price drivers has continued for the last few days with oil prices (basis WTI) now trading at the lowest level in about the last six weeks or so while the externals are trading in a direction that would have normally pushed oil prices higher. Yesterday's EIA oil inventory report was bearish (see below for a more detailed discussion of the inventory report) and has played a major role in the most recent leg down in oil prices.
Support holds for S&P
The market has continued to chug its way higher into the next month with a solid start on Wednesday. A rally in Europe following a report on slowing inflation boosted the index futures, leading a strong opening gap to kick off the session.
Abundant drilling yields cheaper natural gas
Stupid is as stupid does and after Exxon Mobil, the world’s largest publicly traded oil company, reported a net income of $9.4 billion for the quarter, up from $9.25 billion the year before and revenues of $121.6 billion, up 16 % from the year before, T. Boone Pickens seemed to suggest that it was stupid. You see Pickens, according to The Associated Press, after his company, Clean Energy Fuels Corp., announced a deal with truck maker Navistar to make more vehicles that run on abundant fuel and build more fueling stations, which seemed to suggest that the only way to bolster U.S. natural gas prices and cut the market's massive oversupply is to stop drilling.
Breach of support puts dollar at risk
The greenback was markedly weaker at the close of North American trade on Wednesday with the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) off by a nearly 0.50% on the session. Data out of China, Germany, the UK, and the US all showed expansion in the manufacturing sector with high beta assets advancing as investors chased yields at the expense of the reserve currency.
Rain drops wheat prices
Feb. 2 (Bloomberg) -- Wheat slid from a four-month high in Chicago as rain predicted in the U.S. boosted prospects for winter crops planted last autumn and now lying dormant. Corn and soybeans dropped.
MF Global Trustee neither encourages nor discourages claim trading
MESSAGE REGARDING CLAIMS TRADING
Date: February 1, 2012
Both commodities futures and securities customer claims and general creditor claims may be transferred in the MFGI SIPA liquidation proceeding. To receive notices and distributions with respect to a transferred claim, notice of a claim transfer (if any is required to be filed with the bankruptcy court) must be provided in accordance with Bankruptcy Rule 3001(e).
The Trustee neither encourages nor discourages claims trading. Potential transferors and transferees of claims should make their own independent evaluation of whether to enter into a claims trade based upon the public record in this case. The Trustee notes that a properly transferred claim merely provides the transferee with the right to pursue distributions on account of such claim. It is not a determination of the validity, amount or priority of such claim, nor of any claim or defense that the Trustee may have with respect to that claim or as against the transferor or transferee of such claim.
Despite a glut in China copper prices are still high enough for thieves
Recent thefts of copper wiring along the Regional Transportation District’s West Rail Line have not yet affected the schedule for the line’s opening. However, repairs are needed in the areas where the thefts occurred and more thefts would almost certainly cause a delay. “It’s a tough situation. It has the potential to impact the schedule for opening day. It’s very labor intensive, in some cases they have to go underground,” said Pauletta Tonilas, public information officer for RTD’s FasTracks program.
Goldman Raises Grain Price Forecast
Feb. 2 (Bloomberg) -- Goldman Sachs Group Inc. raised its three and six-month corn forecasts to $6.90 a bushel, from $6.30, citing lower production from South America.
China's not exempt from the worldwide housing bubble
The housing bubble was a global rather than US event. The bubble outlasted the US experience in several other countries such as Australia and Canada which are experiencing some weakness. However, the one I’ve worried about is in China. Keep your eye on this one.
Free markets don't make people poor
Restricting free trade arrangements (beyond preventing the use of force and fraud on others) cannot solve the real problem, yet it hobbles the market’s ability to coordinate people’s cooperative and productive plans, causing harm in the misguided attempt to accomplish good.
Is it dangerous to return to the gold standard?
To start with, inflation is not a problem right now. The Fed has effectively controlled inflation since Paul Volcker, who was appointed by President Jimmy Carter, began to rein in inflation 30 years ago. (Most important, inflation rates have been stable and predictable, which allows for economic planning by firms and households.)
Jobs Outllook Dampens Buyers For 30-Year Bonds
Feb. 2 (Bloomberg) -- The Treasury yield difference between 10- and 30-year securities widened to the most in four months as data forecast to show a boost in employment spurred investors to sell long-dated bonds on speculation inflation will accelerate.
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