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by Ashraf Laidi
Posted: Mar 30, 2010 17:14
Comments: 41
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Signals from Commodities & LIBOR

Yield differentials, LIBOR developments and the failure in the CRB and Crude Oil continue to boost USD
 
Stationdealer
London, UK
Posts: 715
12 years ago
Jun 2, 2010 17:03
Liquidity is drying up. This is a very bad sign. This will be the catalyst for the next financial crisis and central banks have no more bullets in the guns.
Stationdealer
London, UK
Posts: 715
12 years ago
Jun 2, 2010 17:02
Contagion from Europe's debt crisis has caused Brazil to cancel an auction for its longest-term government bonds. It's the third time this has happened in just a month.

Bloomberg:
The government received no bids it found acceptable for the 150 million reais ($81 million) of 10 percent notes due in 2021 offered yesterday. Theres 6 billion reais of the securities outstanding, less than 20 percent of the 34 billion-real average for the countrys six other fixed-rate notes, according to data compiled by Bloomberg.
Demand has dried up for less-traded emerging market securities such as these long-term bonds from Brazil...

Foreign investors have disappeared from debt auctions, adding to the Treasurys struggles, said Paribass Donadio and Tony Volpon, Latin America strategist at Nomura Holdings Inc. in New York. International money managers have backed off amid concern Europes debt crisis will spread, said Volpon.

Deputy Treasury Secretary Paulo Valle said volatility in global markets has created a yield premium that Brazil wont sanction. The government doesnt release average yields bid at failed auctions.
...but there's more to it, as the comment above shows. It's another example of bond issuers not believing the ugly yields on offer in the market. Sort of like what is happening in the U.S. as well.

Ashraf Laidi
London, UK
Posts: 0
12 years ago
May 10, 2010 14:45
FXT, GOLD/COPPER Ratio hit the highest level since Nov 2009. it may be time for the ratio to pullback down but the big question is how will this fecline occur; a rally in copper and decline in gold or a rally in both but more weighted to copper.

Ashraf
FXT
london, UK
Posts: 13
12 years ago
May 3, 2010 17:54
Hi Ashraf and others

Copper is taking a hit for the past few days, any views?

Gold continues to rise, can copper play catch up?

Any thoughts Ashraf?


Thanks
kukqebtugy
kukqebtugy, Somalia
Posted Anonymously
12 years ago
Apr 20, 2010 20:35
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Ashraf Laidi
London, UK
Posts: 0
12 years ago
Apr 4, 2010 1:11
Ginger, yes those are valid points. BDI falling despite rallying commodities. Note the Index topped out in May 2008, 3 months before the crash in oil prices. This could be due to soaring commodity prices slowing down shipments. Also the index is highly inelastic.

Ashraf
Ginger
UK
Posted Anonymously
12 years ago
Apr 3, 2010 9:42
I'm trying to understand for myslef why BDI should fall from mid-March to now given economic activity is reported to be increasing around the world. The Baltic Dry Index indicates the real demand and supply for dry bulk cargo space - only those who have cargo to ship will buy space and anyone with the available space would supply it (because it's very costly to keep an idle ship) - hence it's not subject to speculation. Given this, what we have currently with the rise in commodity prices is pure speculation. In fact if we take the BDI at face value given the fall since mid March of some 20% commodity prices should be falling not rising as economic activity seems to have stalled again. There is a lot of news out of China about growth but chances are the numbers have been fabricated as is the norm there. Certainly Jim Chanos thinks China's a big bubble - some 60% of the economy is construction of high rise buildings which are non-productive.
At some point (may be 2/3 months max if not much sooner) economic reality will mean base metals such as copper will correct and trade much lower in line with true economic fundamentals.
Hence shorting base metals, especially copper in May/June may reap good returns.
...just my views - interested to hear what Ashraf and others on here think.
said
mulhouse, France
Posts: 2822
12 years ago
Apr 3, 2010 9:16
ashraf

did this dead crosss can it be a hook on macd?
catnip
Frankfurt, Germany
Posted Anonymously
12 years ago
Apr 2, 2010 17:48
Agree on BDI. Has anyone access to most recent BDTI Baltic dirty tanker ( i.e. crude oil) index?
Imo industry metals copper lead nickel do not reflect supply demand - supply inclusive of LME & Shanghai stocks outstrips demand. Not sure about crude but imo commodities are USD inflation hedges. This could change if FED tightens discount by more than a quarter.
Ginger
UK
Posted Anonymously
12 years ago
Apr 2, 2010 17:11
Ashraf

I'm interested in your views of the Baltic Dry Index as a leading economic indicator for the stock market. May be you could be kind enough to open up a new discussion based on this subject. What is perplexing to me is that the BDI has been falling steadily from 15th March, yet the stock market has continued to soar. From 15th Jan to 12th Feb the BDI went from 3299 to 2571 i.e. a fall of some 28%. This corresponded with a sell off in equities of around 9%. Currently the BDI stands at 2991 and is down 20% since 15th March. This seems to me to be a good leading indicator for an imminent fall in commodity prices as well as stock markets. I'd say another 2/3 weeks of modest gains for the stock market or sideways moves before a sell-off, a head and shoulders formation following a rebound followed by a large sell off in the summer. In the mean time the $ will strength all through this year.

On commodities I believe copper is the most overextended and should retrace significantly in the summer.

Thanks
Ginger