Wednesday, February 2, 2011

Sugar spikes on futures trading re: Australian cyclone - damage to sugar plantations

And we still have riots/turmoil in the middle east, namely Egypt; which on all reports started or was ignited by the cost of food and living expenses increasing. Now with sugar spiking, also not to forget meat exports to the middle east falling off from Australia (also related to cyclone 'Yasi'), which in turn will effect meat/live export futures (upward price spikes). Flash point tensions (middle east) could get far worst as the inflation squeeze on food will now exasperate from natural disasters that have hit Australia.

+1.35 +3.98% Volume 80,122 Feb 2, 2011, 1:59 p.m. Previous close 33.93 ¢ 35.28 ¢ Change +1.35 +3.98% Day low 34¢ Day high 36¢ Open: 34.10

Tuesday, February 1, 2011

Cataogory 5 Cyclone "Yasi" about to hit East Coast Australia (Queensland) - update 1

USA and Cyclone 'Yasi'

Size composition for scaling (examples). Please go here for rest of set

Cataogory 5 Cyclone "Yasi" about to hit East Coast Australia (Queensland)

After the devastating floods in January 2011, now comes this monster cyclone:

Monday, January 31, 2011

Oil (Brent) breaks $100, oil up on risk aversion (Middle East)

Basically the middle east is heading into credit contagion, which means the longer there is uncertainly in that region, i.e civil unrest/political turmoil, credit spreads will widen and the costs to insure sovereign debt will blow out too. With Egypt's CDS spread widening to 4%, at the cost of $440,000 on 10 million (Sovereign Debt), at this point one has to expect, even with a possible China inflation crash scenario, that has spooked markets in the last week (note oil/gold under pressure). A follow on from China's inflation issue is the serious problems now occurring in the middle east, this will then feed back into the inflation problems of Asia/China etc. We are now in a extreme economic game changer, with oil/food prices spiking. Further oil prices may cause China to react. How? Well, if the US continues on a path of US dollar deprecation, China will force the interest rate hand and sell US Treasury's. They will do this quickly and spike up USD's and UST yields, with the 10yr going well over 5%, and a pressure the US fiscal policy to tighten. This will be forced upon the US by China.

As discussed in Oil on a 25mth cyclical bull run, China is a net importer of oil, that and they are hall-marks of hyper inflation ( eg tea price one week is a certain price, next week it goes up again). Oil (WTI) starts to head towards $95, at any case over $90, it will be a breaking point for China in it's inflation dilemma.

The other option? China crashes a potion of it's economy, say housing.

In the meantime, oil is going upward.

Note the narrowing Brent/WTI spread

Sunday, January 30, 2011

Doomsday Trading - Middle East/Africa turmoil

Turmoil has started on food inflation/price increases, potential to spread. Major hotspot is Egypt.

May become global i.e Europe (social unrest from food inflation).

Markets have moved into risk aversion with gold/oil buys, industrial commodities/stocks may still come under pressure.

Reuters 31/01/2010

"Cautious trading could also come if earnings do not outperform and erode optimism about profits. The government's January jobs report on Friday will highlight the week's economic data.

Worries that Egypt's unrest could spread to other countries in the Middle East, home to the world's top oil exporters, caused investors on Friday to pull out of stocks and into bonds and other safer assets. U.S. crude futures settled more than 4 percent higher on Friday.

Market volatility skyrocketed on Friday as indexes tumbled and investors scrambled to hedge against further losses. The VIX index .VIX, the market's fear gauge, rose 24 percent, its biggest daily percentage jump since May 20.

By Sunday, more than 100 people had been killed in Egypt after five days of protesting the government of Hosni Mubarak. Protests in other nations has investors worried about destabilization in the region.

"I don't like this. It is spreading and contagion risk is rising," said David Kotok, chairman and chief investment officer at Cumberland Advisors in Sarasota, Florida.

Investors were also worried that an extended rise in oil prices could hurt global recovery. Analysts had been forecasting a pullback in the market for weeks, given the recent sharp gains, and said the Egypt news could be an excuse for some investors to sell.

"It could well turn out to be a short-lived correction, and it would be dangerous to try and time this thing," David Kelly, chief market strategist for JPMorgan Funds in New York, said, noting he has a long-term bullish outlook.

The Standard & Poor's 500 index .SPX is still up 18 percent since the start of September, roughly when the current rally began.

The Dow Jones industrial average .DJI snapped an eight-week streak of gains with Friday's close. The S&P 500 and Nasdaq also ended with losses for the week.

The Nasdaq fell more than 2 percent on Friday while the S&P and Dow both were down more than 1 percent.


Monday could see a bounce-back after Friday's losses, followed by more consolidation, said Matt McCormick, a portfolio manager at Cincinnati-based Bahl & Gaynor Inc, which has $3.2 billion in assets.

"My recommendation for clients is that if you have profits, especially in lower-quality names that have benefited from QE2 (quantitative easing), now is the time to take profits and look at blue chip names that haven't gained as much," he said.

Marshall Gause, CEO and chief investment officer at asset management firm Geneva Funds Partners in Denver, said worry about Egypt could cause the S&P to drop between 0.5 percent and 0.75 percent at Monday's open, but he said there was a "good possibility" of closing positive on the day."

Thursday, January 27, 2011

Market correction imminent, Gold/Copper correlation corrections due (update 4) - SPDR Gold ETF sell off

Good to track against the Gold price, with rumored huge stop losses at $1300, a capitulate sell thereafter. If the ETF market collapses could see sells shift into other ETF commodity markets.

Market correction imminent, Gold/Copper correlation and corrections due (update 3) - sell signal on Gold

As discussed in Market correction imminent, Gold/Copper correlation and corrections due (update 2) if gold was to break the low of 1361 it was destine to enter a sell signal thus correction.

This has nothing to do with global economy improving or risk approving meaning shares are attractive, instead what we are entering into is a commodity correction most probably stemming from China i.e fears of hard landing.

Watch all risk crosses for unwinds, continued stock pressures emerging markets.