Are we left to reject the wisdom of a long-commodities position? I think yesterday’s behaviour is somewhat connected to our Thesis No. 3: “Knowledge of an exit plan is a condition for the stocks AND credit markets NOT to fall”.
The market has not heard anything positive on this side yet. I know, Thesis No. 3 is difficult to contrast, but I am not trying to hide here. The thesis is related to the more fundamental issue that is the non-neutrality of the monetary expansion we are in.
Please, click here to read this article in pdf format: may-14-2009
Weaker retail sales (-0.4%) sparked the retreat to “basics” yesterday, in a flight to quality/USD repatriation move that had stocks ending lower and Treasuries higher (see chart below, left). The retail sales figure had somewhat been anticipated when the April Federal Budget deficit was released, on the back of lower tax receipts. The 30-yr on-the-run yield came down to 4.087%. The S&P 500 ended at 883.91 (-2.69%). In Canada, the TSX closed at 9706.07 (-3.69%) with the CAD trading lower, at 1.1756 C$/USD. Credit also widened. The CDX IG12 closed at 153bps (+5bps) and the bond issuance window seems to be closer to a quick end. Libor continued to compress and 3-month ended at 0.88313%, with some analysts pointing out that $400Bn in deposits on the sidelines is the driving factor. The Fed did not conduct any Treasuries purchases yesterday. In the Agency market, the Fed’s steady purchases are nurturing a solid demand in this asset class, further supported by the fact that after the injection of Treasury capital, the US government will own an additional $85bn of preferred stock in Fannie and Freddie. Finally, RR Donnelley announced its interest to buy the assets of Quebecor World, which is in bankruptcy proceedings, for $1.35B ($957MM in cash and 30MM shares of RRD stock = $394MM (non-binding)).
Yesterday, we discussed how the correlation between oil and stocks (S&P 500) had weakened and suggested the possibility that the ongoing monetary expansion would disconnect commodity prices from aggregate demand. The logical question therefore rose, on whether this is the time to allocate capital into commodities and away from debt and stocks. Yesterday at 10:30am, the market was surprised by a drop in weekly inventories of 4.7MM barrels. The decrease is explained by the OPEC’s success in cutting output, rather than an increase in demand. On this news, crude oil rose to $60. However, the prospect of a weaker economy that retail sales had earlier shown, forced crude oil to follow stocks (chart below right).
Are we left to reject the wisdom of a long-commodities position? I think yesterday’s behaviour is somewhat connected to our Thesis No. 3: “Knowledge of an exit plan is a condition for the stocks AND credit markets NOT to fall”.
The market has not heard anything positive on this side yet. I know, Thesis No. 3 is difficult to contrast, but I am not trying to hide here. The thesis is related to the more fundamental issue that is the non-neutrality of the monetary expansion we are in. I will definitely elaborate more on this, which is also reflected on the negative 30-yr swap spreads we are currently seeing. Interestingly enough, there actually was an implicit commentary on the exit plan, when the Fed yesterday said that they consider the recent jump in Treasury yields more as a reflection of a better economic outlook than a signal it needs to step up purchases of U.S. government debt. Immediately after the release, an analyst made the comment that the Fed is approx. 20% ahead of schedule in its Treasuries purchases, a signal that it may extend or increase its program. Finally, in the middle of all this debate, the Financial Times published an article warning of the risk that the US will lose the AAA rating.
February 10th, 2012 at 2:31 PM
Sources…
[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]……
February 10th, 2012 at 2:53 PM
Links…
[...]Sites of interest we have a link to[...]……
February 10th, 2012 at 4:06 PM
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
February 10th, 2012 at 4:40 PM
Cool sites…
[...]we came across a cool site that you might enjoy. Take a look if you want[...]……
February 10th, 2012 at 6:42 PM
Awesome website…
[...]the time to read or visit the content or sites we have linked to below the[...]……
February 10th, 2012 at 7:17 PM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 10th, 2012 at 7:28 PM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 10th, 2012 at 8:01 PM
Recent Blogroll Additions……
[...]usually posts some very interesting stuff like this. If you’re new to this site[...]……
February 10th, 2012 at 8:27 PM
Awesome website…
[...]the time to read or visit the content or sites we have linked to below the[...]……
February 10th, 2012 at 8:46 PM
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
February 11th, 2012 at 10:14 AM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 11th, 2012 at 10:42 AM
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
February 11th, 2012 at 10:50 AM
Superb website…
[...]always a big fan of linking to bloggers that I love but don’t get a lot of link love from[...]……
February 11th, 2012 at 11:17 AM
Cool sites…
[...]we came across a cool site that you might enjoy. Take a look if you want[...]……
February 11th, 2012 at 11:51 AM
Gems form the internet…
[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]……
February 11th, 2012 at 11:59 AM
You should check this out…
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]……
February 11th, 2012 at 4:14 PM
Recommeneded websites…
[...]Here are some of the sites we recommend for our visitors[...]……
February 11th, 2012 at 7:40 PM
Blogs ou should be reading…
[...]Here is a Great Blog You Might Find Interesting that we Encourage You[...]……
February 11th, 2012 at 7:48 PM
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
February 11th, 2012 at 8:34 PM
You should check this out…
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]……
February 11th, 2012 at 9:21 PM
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
February 11th, 2012 at 9:41 PM
You should check this out…
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]……
February 11th, 2012 at 10:36 PM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 12th, 2012 at 1:11 AM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 12th, 2012 at 6:44 AM
Recent Blogroll Additions……
[...]usually posts some very interesting stuff like this. If you’re new to this site[...]……
February 12th, 2012 at 7:37 AM
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
February 12th, 2012 at 9:47 AM
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
February 12th, 2012 at 10:10 AM
Sources…
[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]……
February 12th, 2012 at 11:00 AM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 12th, 2012 at 11:12 AM
Cool sites…
[...]we came across a cool site that you might enjoy. Take a look if you want[...]……
February 12th, 2012 at 2:23 PM
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
February 12th, 2012 at 4:08 PM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 12th, 2012 at 4:11 PM
Awesome website…
[...]the time to read or visit the content or sites we have linked to below the[...]……
February 12th, 2012 at 7:11 PM
Recent Blogroll Additions……
[...]usually posts some very interesting stuff like this. If you’re new to this site[...]……
February 12th, 2012 at 7:38 PM
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
February 12th, 2012 at 7:54 PM
Websites we think you should visit…
[...]although websites we backlink to below are considerably not related to ours, we feel they are actually worth a go through, so have a look[...]……
February 12th, 2012 at 8:47 PM
Superb website…
[...]always a big fan of linking to bloggers that I love but don’t get a lot of link love from[...]……
February 12th, 2012 at 9:18 PM
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
February 13th, 2012 at 4:28 AM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 13th, 2012 at 4:28 AM
Blogs ou should be reading…
[...]Here is a Great Blog You Might Find Interesting that we Encourage You[...]……
February 13th, 2012 at 5:26 AM
Related……
[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]……
February 13th, 2012 at 5:35 AM
Links…
[...]Sites of interest we have a link to[...]……
February 13th, 2012 at 5:44 AM
Blogs ou should be reading…
[...]Here is a Great Blog You Might Find Interesting that we Encourage You[...]……
February 13th, 2012 at 7:18 AM
Cool sites…
[...]we came across a cool site that you might enjoy. Take a look if you want[...]……
February 13th, 2012 at 9:13 AM
Related……
[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]……
February 13th, 2012 at 10:07 AM
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
February 13th, 2012 at 10:37 AM
Related……
[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]……
February 13th, 2012 at 10:49 AM
Recent Blogroll Additions……
[...]usually posts some very interesting stuff like this. If you’re new to this site[...]……
February 13th, 2012 at 10:58 AM
Recommeneded websites…
[...]Here are some of the sites we recommend for our visitors[...]……
February 13th, 2012 at 4:46 PM
Gems form the internet…
[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]……
February 13th, 2012 at 5:46 PM
Links…
[...]Sites of interest we have a link to[...]……
February 13th, 2012 at 5:55 PM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 13th, 2012 at 7:41 PM
Sources…
[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]……
February 14th, 2012 at 3:08 AM
Related……
[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]……
February 14th, 2012 at 5:47 AM
Superb website…
[...]always a big fan of linking to bloggers that I love but don’t get a lot of link love from[...]……
February 14th, 2012 at 6:08 AM
Awesome website…
[...]the time to read or visit the content or sites we have linked to below the[...]……
February 14th, 2012 at 6:24 AM
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
February 14th, 2012 at 7:00 AM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 14th, 2012 at 7:12 AM
Awesome website…
[...]the time to read or visit the content or sites we have linked to below the[...]……
February 14th, 2012 at 7:30 AM
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
February 14th, 2012 at 7:56 AM
Sources…
[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]……
February 14th, 2012 at 7:58 AM
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
February 14th, 2012 at 8:16 AM
Links…
[...]Sites of interest we have a link to[...]……
February 14th, 2012 at 9:21 AM
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
February 14th, 2012 at 11:02 AM
Gems form the internet…
[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]……
February 14th, 2012 at 11:17 AM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 14th, 2012 at 2:12 PM
Youre so cool!…
the next time I read a blog, I hope that it doesnt disappoint me as much as this one. I mean, I know it was my choice to read, but I actually thought youd have something interesting to say. All I hear is a bunch of whining about something that you coul…
February 14th, 2012 at 5:52 PM
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
February 14th, 2012 at 6:13 PM
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
February 14th, 2012 at 6:53 PM
Related……
[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]……
February 15th, 2012 at 3:42 AM
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
February 15th, 2012 at 3:55 AM
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
February 15th, 2012 at 4:10 AM
Visitor recommendations…
[...]one of our visitors recently recommended the following website[...]……
February 15th, 2012 at 8:28 AM
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
February 15th, 2012 at 1:13 PM
great site dod…
you have a great blog here! would you like to make some invite posts on my blog?…
February 15th, 2012 at 2:56 PM
great site dod…
you have a great blog here! would you like to make some invite posts on my blog?…
February 15th, 2012 at 3:07 PM
thanks a million…
This is the right blog for anyone who wants to find out about this topic. You realize so much its almost hard to argue with you (not that I actually would want…HaHa). You definitely put a new spin on a topic thats been written about for years. Great st…
February 15th, 2012 at 5:19 PM
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
February 15th, 2012 at 7:34 PM
Gems form the internet…
[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]……
February 15th, 2012 at 7:35 PM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 16th, 2012 at 12:34 AM
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
February 16th, 2012 at 2:32 AM
Surfing around…
While I was surfing yesterday I saw a great article concerning…
February 16th, 2012 at 3:31 AM
Sources…
[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]……
February 16th, 2012 at 8:40 AM
Links…
[...]Sites of interest we have a link to[...]……
February 16th, 2012 at 8:46 AM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 16th, 2012 at 9:46 AM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 16th, 2012 at 10:24 AM
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
February 16th, 2012 at 11:14 AM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 16th, 2012 at 12:59 PM
great blog here…
This really answered my problem, thank you!…
February 16th, 2012 at 4:23 PM
Youre so cool!…
the next time I read a blog, I hope that it doesnt disappoint me as much as this one. I mean, I know it was my choice to read, but I actually thought youd have something interesting to say. All I hear is a bunch of whining about something that you coul…
February 16th, 2012 at 4:24 PM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 16th, 2012 at 5:35 PM
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
February 16th, 2012 at 5:38 PM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 16th, 2012 at 7:25 PM
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
February 16th, 2012 at 7:47 PM
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
February 16th, 2012 at 8:29 PM
Recent Blogroll Additions……
[...]usually posts some very interesting stuff like this. If you’re new to this site[...]……
February 16th, 2012 at 8:41 PM
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
February 16th, 2012 at 9:07 PM
Sources…
[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]……
February 17th, 2012 at 3:10 AM
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
February 17th, 2012 at 3:42 AM
Sites we Like……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]……
February 17th, 2012 at 4:26 AM
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
February 17th, 2012 at 10:46 AM
Awesome website…
[...]the time to read or visit the content or sites we have linked to below the[...]……
February 17th, 2012 at 11:03 AM
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
February 17th, 2012 at 11:38 AM
Great website…
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
February 17th, 2012 at 1:02 PM
Links…
[...]Sites of interest we have a link to[...]……
February 19th, 2012 at 9:52 AM
great blog here…
This really answered my problem, thank you!…