FWIW – Market wise…

It appears from my humble perch that the UNWIND in speculation has hit the crude oil market first (it’s down almost 20% from ‘09 highs)…whereas the EM play (vis-a-vis China) is only down 7%…

This…to me…is a dna helix…

Meaning…Crude may settle here, China sells off next, as it does, BOTH take out the 20% threshhold…When they do, the SPX will follow…

750 here we come…(bounce?)…and then some…

buy dollars & treasuries for the balance of ‘09…

Unless you want to play Doug Kass & sell CALL PREMIUMS…

I suppose his book is different than mine in terms of tax exposure…

4. Next May-July (2010), we’ll be back to talking about what we’re talking about now…

It’s a YAWNER…But I’m with DL…Might as well PROFIT from it…Hey – I’ll pay taxes off those profits…

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I think the unwind of late is influenced by the possibility of real change this time. People are walking briskly towards the door.

If your point 4 about happens, then this means the crooks still run the markets. I’ll probably feast off it too and donate a little off the top to a food bank.

The IRA: So you do not object to a derivative so long as it tracks the cash basis. After all, if and when such a deal diverges from the cash market basis, that would put the risk back to the derivative’s sponsor, who would be sued by the investors for fraud!

Rutledge: That’s the way markets should work.

comment:
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Exactly. Right now, the tail wags the dog. Derivatives cause oil prices to rise and fall. It should be the other way around. I suspect nobody would be very interested in them if they really did track oil prices, rather than substantially control them.

Problem is…In farmland USA, they’re culling dairy cow herds (because of a recent milk price glut)…Ostensibly reducing methane output…

Oh the complications!

I once typed that EXACT reply in a post…

It got eaten, and I never used that F word again…

” Right now, prices are erratic and biased upwards due to creative oil speculation via parasites who try to look like legitimate liquidity providers. Once they are expelled from oil markets”

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I’d wager to guess the following…

1. The “erratic – upwards bias” you refer to (since February) is SQUARELY due to GS & Morgan Stanley bidding up prices based using the TARP money that the US Government so generously donated on the taxpayer behalf…

2. The recent unwind (almost 20% decline in just 10 or so trading days), reflects a reversion to reality…I suspect there is FURTHER unwind to go…I think even the ‘geniuses’ at GS & MS are going to have to eat some of their own feces in the next 6 months…They were TOO clever this time…

3. Once the next round is unwound, and everyone starts crying “woe is me” again, the issue will be forgotten (as gas prices come down again to $1.80)…We’ll create other bogeymen…

4. Next May-July (2010), we’ll be back to talking about what we’re talking about now…

It’s a YAWNER…But I’m with DL…Might as well PROFIT from it…Hey – I’ll pay taxes off those profits…

‘Back to Basis for Securitization and Structured Credit: Interview With Ann Rutledge’, June 22, 2009
http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=367

But look…There is no way in hell that India, China, Russia, or the Middle Eastern region countries are going to grow a conscience overnight…

reply:
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I’m not opposed to prices rising from real demand. Right now, prices are erratic and biased upwards due to creative oil speculation via parasites who try to look like legitimate liquidity providers. Once they are expelled from oil markets, prices will reflect a more natural process, if OPEC can be considered ‘natural’.

Philosophically I’m not opposed to your argument…

But look…There is no way in hell that India, China, Russia, or the Middle Eastern region countries are going to grow a conscience overnight…

They’re looking out for their own economic interests, and since the resource is traded globally, there is no way there won’t be speculation going forward…

So going forward…America will need to wall itself off by tapping into the resource it can produce domestically IN ABUNDANCE…

That is nat gas…