Inflationary Shocks and Some Positions....
As you know I am still long on US10 YR Treasuries on my CFD position. I am short oil again from around the 64 level with a stop above 67 and looking for a pull back to at least the 58 level before any sign of a continued uptrend will manifest. Yes I was wrong last week. Not a big deal.
For Oil to continue its march unabated there would have to be a severe inflationary shock. You are hearing this almost daily from all the pundits now which is one of the reasons why I doubt that it will happen. You know, "the inflationary shock that everyone saw coming". That is not how the markets work even with the Federal Reserve pulling the stings.
There are a number of scenarios that I can paint why this is unlikely to happen but price action at the moment tells all. There simply is no indication in the CRB yet (even though it is grossly oversold) that would allow me to conclude that indeed commodities are heading higher.
Recently the Fed admitted that it needs to somehow unwind its VIX position in an orderly fashion which tells all. Volatility was being controlled by the Fed. It successfully did that along with a number of other markets.
Why would anyone think that this is likely to change in the short to mid term?
I don't know?
Something to talk about or rant over like the past ten years of certainty that something is going to happen based on forty years of market data.
When the Fed steps in along with all the other central banks to control things that is precisely what happens because you have no means to offset the order flow the other way. You can't fight an entity that can print endless amounts of money or issue unlimited amounts of derivatives.
It doesn't stop higher costs from trickling into other areas of the economy that feel the pinch like food and other staples I have talked about in the past but that is consumer driven. With minimum wage being raised it will find its way into price eventually. There really is no choice. It is either that or go out of business.
My take on inflationary pressure you read about six months ago. It hasn't really changed at all. There will be some inflation but a shock?
Not very likely.
Crypto currencies too at the moment are looking like a risky bet at least. I liquidated my own long on Bitcoin after booking nice profits because it is not showing any signs of making any sort of move higher. In fact it looks to be headed lower. A lot lower.
Even if commodities are a screaming buy at the moment I would not back up the truck just yet. Most commodity funds are still underperforming and this is a tell tale sign. Just because everyone is all in with stocks is no longer a reason to go short anymore either. It does not guarantee a sell off. If credit violently contracts then this is the area you might be looking for shorts but that has not happened yet. It is still expanding.
Cheers!
For Oil to continue its march unabated there would have to be a severe inflationary shock. You are hearing this almost daily from all the pundits now which is one of the reasons why I doubt that it will happen. You know, "the inflationary shock that everyone saw coming". That is not how the markets work even with the Federal Reserve pulling the stings.
There are a number of scenarios that I can paint why this is unlikely to happen but price action at the moment tells all. There simply is no indication in the CRB yet (even though it is grossly oversold) that would allow me to conclude that indeed commodities are heading higher.
Recently the Fed admitted that it needs to somehow unwind its VIX position in an orderly fashion which tells all. Volatility was being controlled by the Fed. It successfully did that along with a number of other markets.
Why would anyone think that this is likely to change in the short to mid term?
I don't know?
Something to talk about or rant over like the past ten years of certainty that something is going to happen based on forty years of market data.
When the Fed steps in along with all the other central banks to control things that is precisely what happens because you have no means to offset the order flow the other way. You can't fight an entity that can print endless amounts of money or issue unlimited amounts of derivatives.
It doesn't stop higher costs from trickling into other areas of the economy that feel the pinch like food and other staples I have talked about in the past but that is consumer driven. With minimum wage being raised it will find its way into price eventually. There really is no choice. It is either that or go out of business.
My take on inflationary pressure you read about six months ago. It hasn't really changed at all. There will be some inflation but a shock?
Not very likely.
Crypto currencies too at the moment are looking like a risky bet at least. I liquidated my own long on Bitcoin after booking nice profits because it is not showing any signs of making any sort of move higher. In fact it looks to be headed lower. A lot lower.
Even if commodities are a screaming buy at the moment I would not back up the truck just yet. Most commodity funds are still underperforming and this is a tell tale sign. Just because everyone is all in with stocks is no longer a reason to go short anymore either. It does not guarantee a sell off. If credit violently contracts then this is the area you might be looking for shorts but that has not happened yet. It is still expanding.
Cheers!
No comments:
Post a Comment