Big Picture

Just posted this on Winterwatch comment section:

The past couple of years of market watching has impressed me with the following trend: The speculative wave has progressed from housing to copper to oil to corn to iron and now to coal.

I don’t see this as a trend of all commodities rising. Rather, what is see is the progression to more and more basic and necessary things. At the same time, finished products are plunging in value and retailers can’t pass price increases along. What gives? Since I don’t understand it, I will bet (I think along with Russ, if I may be so bold) that this is a bubble resulting from malinvestment. Demand keeps getting more and more basic. The fact that it keeps getting sharper, I believe, is a distraction.

As a trader, I’ve played more and more basic commodities along the way. As an economic watcher, I expect that China will have awesome price contractions later this year. They can’t buy their own stuff, so when we and the Eurozone stop buying, they will have too much production and not enough demand. Then you will see the speculators abandon these plays like lemmings off a cliff.

I think this happens this year.

Deflationista and Proud of It!