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Global Commodity Prices Are Collapsing At The Fastest Pace Since Lehman
Nothing to see here, move along...
We are sure it's nothing to worry about, and in now way indicative of any global aggregate economic weakness, but global commodity prices (that would be the 'stuff' that is used to make the 'stuff' we all buy every day) are collapsing at the fastest rate since Lehman...
Of course, it's all about over-supply, not under-demand... just like the Baltic Dry was not low because of shitty trade volumes but because of too many ships... but it's just the other side of an uncomfortably real mal-investment-driven fiasco...
As the chart below shows... maybe it is the economy stupid and with US GDP expectations being ratcheted down after construction spending and trade deficit data, maybe the US is not decoupling after all.
But is merely 'lagging' as it always does...
Charts: Bloomberg
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For months the major world currencies had traded in a narrow range as if held in limbo by some great force. This has allowed people to think we were on sound footing as central banks across the world continued to print and pump out money chasing the "ever elusive growth" that always appears to be just around the corner. Recently several major currencies made multi-year highs or lows depending on the match-up .
The Fed recently whacked the dollar down but for how long? Because of weak demand for goods and most of this freshly printed money flowing into intangible investments inflation has not been a major problem, but the seeds for its future growth have been planted everywhere. John Maynard Keynes said By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
While there are not many Bond Vigilantes there are a slew of Currency Vigilantes and they are ready to make their presence known. Weakness in the value of the Yen, Pound, and Euro must not go unnoticed. More on why this may be a signal that currency trading is about to get very wild in the article below. Please note, this may also be sending a signal that the whole system is unstable and the stock market could drop like a stone due to contagion.
http://brucewilds.blogspot.com/2014/09/caution-alert-currencies-may-get-wild.html
The whole system is propped up on low latency HFT quote stuffing to give the mirage of liquidity that doesn't exist. The moment someone starts hitting the bid stack with large-scale sell orders on /ES, the market just evaporates.
Fuck it, just keep buying ridiculously overvalued stocks and bonds.
The CRIMINALS over at the "Fed" have our backs.
WAKE UP AMERICA, END THE FED.
Attempts to control large non linear non stationary multiple feedback loop susystems like our world economy are doomed to fail. It cant be done in a simpler chemical plant, that is why the systems are always run in stationary and mostly linear ranges. Except in specific design situations where the n9nlinearity helps stabilize the system.
You dont need any flash point to triger the departure from the current attractor, the system will leave it alone once it sops being a stable attractor and move towards another stable attractor. Once the process starts, control theory for these type of systems shows you beyond any doubt that all you can do is to spend energy trying to select which of the possible new attractors the system move to. But there is nothing you can do about the nature of the attractor you move to, the timing of the move, which will be sudden in system time scale and unavoidable.
THANKS Spine01 for the terrific comment!
So I can try to select the possible new attractor, but not the nature of the new attractor?
Yeah, like I really dig that blonde with the big hooters. She is HOT and I can't resist, but man is she a bitch. I just don't know why I keep going back for more.
Maybe the World has maxed out its credit card.
Enter the payday lenders...
Quick - what is the biggest difference between PayDay Lenders and Central Banks?
PayDay Lenders steal your money. Central Banks ...... oh.
Never mind.
USD. Printing less money will cause values to go up in the short term.
FED QE shutdown should cause a major disturbance in the flow, so USD "prices" are up.
For how long will USD be going up relative to other currencies ?
As USD value goes up all commodity prices go down, all else being equal.
Notice how JPY is going down due to massive Japanese printing ?
Supply and Demand.
ZH,
I don't get it. A few weeks ago you wrote about CME Rule 575 and how it will stop HFT maniuplations. Almost as soon as it was mentioned, commodity prices started falling. After it took effect, prices continued to fall and now look like the new normal.
Yet, you appear to have forgotton it and all market observers act as if HFT manipulations don't exist or never did exist. They still argue economics as the determining cause of keeping prices rising and elevated, as opposed to HFT manipulations.
The edge appears to have been removed. Prices, to me, now appear to be actually related to supply and demand and text book speculation methods.
As USD gets relatively stronger than other currencies, and commodities hold their value in the short term, then it takes less USD to buy the same basket of commodities.
Long term who knows ?
The economy is in a depression, so of course industrial commodities are declining. The only unexplained move here is in gold, which ought to be holding up well during a deflationary decline. The only explanation I can come up with is that the market fears rising real interest rates (and gold moves inversely with real rates).
in the new normal, recessions are not allowed.
'If you don't like the discussion, change the conversation." - BLS
King Dollar
The king is dead. Long live the king.
Not $NG or Power Prices, you know the other big ones that effect your montly costs.
Hey here's a crazy thought: Maybe it's time that it should be about Conserve and not about Consume.
Pure heresy!
Off with his head!
Now that is Anti-American. Don't you love your country? Don't you want to support your troops in foreign lands? You must consume, consume, consume. Don't need it, buy it anyway.
Yeah, he's a HATER!
Another 4% off on silver! How low can the PAPER go? Strange how one has mixed feelings whether it goes up or down.
paper can go to the () - it's zero or even below - to negative territory
philosophers bone:
I sunk my canoe when silver was about $20.02, thinking anything near $20 is a good time to buy. Just now, silver spot is $15.51. I'm not even a good speculator! NOW, I think I'll wait until it's closer to $14, since it seems to beheaded (sic) that way.
#Gold Crash?
They did it again last night. “Someone”, not looking for the best price for their gold, flushed 13,000 contracts through Gold – amounting to over $1.5 billion notional and knocked gold down to $1,137 per ounce, the lowest level since April 2010. The…
Latest on Gold:
http://tersee.com/#!q=gold&t=text
Let them send it to $137 an ounce. I will have a gigantic pile of it and sleep on it like Smaug.
pods
Didn't end well for him in the book.
Maybe Peter Jackson will correct that in the film.
I wish I could upvote this more than once.
And maybe it is due to the strengthening of the USD, as it seems that some persons on the other side of the Atlantiic feel that 1.2 rate is a nice number.
For Gold, . that I do not put in the same category as other commodities, looks like a Blitzkrieg to show that gold is not safe as a reserve curency.
Oh Shit, the last time when Republicans were in power and Obama on the sidelines, the markets crashed.
Republicans in power.... Lol, that's a good one. Like any of these people have any real power.
C'mon, you know what I mean. :p
Do I have to use italics, quotations, sarc tags etc all the time?
They'll probably crash it again here attempting to punish the insolent peasants. Fried chicken apparently didn't work...shoulda promised some grits n gravy too.
Grilled steaks NOT fried chicken is what the Kirchner use in Argentina to get out the vote, us the threat of prison if you don't vote. Even if you are certified insane you MUST vote.
i suppose this caused by Saudia Arabia's "grand strategy" too?
It's the economy, stupid
Simply stated - Demand Destruction continues.
Banzi's image of Oblamo sitting in a chair on a Depression era street is an realistic possibility.
NoVa
More of this coming......
$5 will be like $50 ...for a short time.
Then holding paper will be a very bad thing...
A regular buying plan might be wise...
Prepare accordingly..
Less and less owning more and more has been the set up for 6 years now. All these corporation making profits overseas will get hammered on the exchange rate. Strong $$ is no good for multinationals, but not to worry these companies can just buy back their stock. Remember profits dropping don't matter in the new economic world. Good luck to all those shale oil companies too. $5 more dollars on the downside and goodbye profits and jobs. We'll at least I can save $10- 12 next time I fill up, should do wonders for the Christmas shopping season.
And somebody with highly levered positions is going to be on the wrong side of this trade...
an elderly elephant wanger has a higher correlation with world gdp growth estimates than the continuous commodity index. when shit goes up it is blamed on inflation but shit goes down and it's due to a shitty economy around here. it's just a bunch of leveraged assholes dumping contracts. there is no market, there is only old yeller.
Yep. QE moonshot metals prices and everyone here bitched about the fed.
Bwhahahahahahaha.
Now their "beautiful madness" has collapsed. Shall we blame the Fed?
Of course!
Ridiculous...the whole thing ESPECIALLY EQUITIES are just hyper debt driven INSANITY.
Metals prices AND OIL collapsing are sending a warning to the levered: you might not have a bailout this time.
But WTF about Ebola???
Soon after it got airborne, it just vanished from the news!
#BringBackOurEbola
Maybe after Ebola got airborne it said 'Screw this stupid planet, let's go to outer space!'
LOL. Good one.
We the people just voted that off the island. Poof. Gone back to Africa to play with the fly covered mud hut tribes along the mogambo.
The US, Eu nnd Japan Central Banks are all on the same team...just passing the ball between themselves...its the other team of Russia, China, and the Bricks that I think are going to start playing..and they will play hard...and dirty....when the game really gets going..then its going to become scary to watch...its going to be a currency war....and I think the trophy is going to change hands...
I wish I had a supertanker that I could just park in port for a while until prices rise again.
too bad I already pre-bought my heating oil back at the start of the year when it was 3.60 a gallon.
Notional tankers are surely for sale, right? Failing that, assume one.
The gargantuan government and corporate debts all over the world ensure very low interest rates and deflation. Normalizing interest rates would increase growth but would also cause sovereign defaults.
So countries are caught in a trap of their own making. If they try to create inflation to shrink their debts, they risk a currency collapse like Japan. Deflation is slowing economic growth causing the debt to become more onerous.
This unstable situation with no way out will prevail until its inevitable collapse. Or the world may seek a way out with a massive war. There are no happy solutions left.
Speaking of massive wars, I see the "USAF" (i.e. the Regime) has fired and demoted another batch of high-ranking nuclear weapons commanders, continuing a trend which has now resulted in dozens facing the same fate. What the hell is going on here? It's not exactly as if the Obola Regime has exacting standards of probity. Taken in conjunction with the endless provocation of Russia it's a serious cause for concern. Is it that those officers are believed to be not 'up to the task' should a shooting war finally be accomplished?
Yes, I suspect something like that is going on. God help us all.
Selling paper gold certificates should be illegal because the banks give customers a false impression that the gold is there when in reality, its not.
The lies and manipulation needs to stop !!
As the bankers get more desperate they resort to greater manipulation.
It's all about power/control.
>>>Selling paper gold certificates should be illegal<<<
What??? Are you suggesting the financial industry cease selling what they don't have? It's not just gold they sell. They also sell shares they don't have, promises they can't keep and loans that can't be re-paid. Gov't has joined them as well with pensions and promises that will never be kept.
Cease all this and we'd have all these clowns begging on street corners or even worse, pick pocketing passing pedestrians.
In preparation of the Ruble failing. They can't have people flocking to the commodities. Have to knock the prices down.
Commodity producers are being taken to the woodshed.
Seems like thats where the bankers be heading next, pennies to the dolla.
Oil prices knocked down to make Russia fail.
I'm sure Russia's oligarchs are fully hedged.
They are the only people who matter.
Where did all the simple minds come from?
it would make more sense if you said " oil prices knocked down because world business is FAILING "
cpt obvious
Russia produces oil with rubles
And sell it in dollars.
Knocking down the ruble has no effect, nor does knocking down the price of oil.
And I really doubt if Russia is selling alot of oil at spot price.
China, Japan, US, Europe... all have bulging baby boomer generations moving or well into retirement. Yet not one article recognizes what this demographic change results in.
Instead, all the articles pretend now can be compared to the last 50 years.
We have oversupply of money. We have a temporary oversupply of raw materials.
I follow Jim Rogers on commodities.
Commodities are in a lt bull market.
Buy the dips.
do you follow him in the crapper, too .... to wipe his butt !!
do you think this dip may last years ... like the great depression DUH.
BUSINESS DOES NOT MAKE JOBS !
lol... can we get hillary to comment on commodities,aswell !! we need some wisdom here to smooth this ripple over ..
Its not rocket science,
Labor + Raw materials + Energy + Investment of capital = Production of Goods of Value.
This is the basis of an Economy.
Take out any part of the equation, The Economy fails.
This is all academic since the Economy has already failed and the world is existing in an illusion fueled by the Central Bank creation of infinite Debt.
Perpetual motion machines do not exist in reality.
I do not believe anything from anyone any more... There is nothing based upon facts or truth or reality, as no one really knows any facts, or truth, or reality. We are living in a totally dysfunctional world right now, led by people who have no integrity, no morality, no ethics, and no common sense. Very sorry but the situation is dire and there is no solution except to see it destroyed and then start agin.
Commodities, Gold, Silver .... not down so much in AUD.
Which is a bastard....since I Want to buy a bit more gold because of the dump.
So hoping for a bounce in AUD...and a continued dumping of gold... pls.
Jesus...the Yen looking shaky
Loving it. Anyone not long stocks in this environment just hates money. Keep flushing yours.
its just your average inflationary equity and deflationary real asset moves... nothing unusual ... ha
The Fed wants to keep boosting stocks and knocking down gold.
It's can't get any better for them.
we are having the second Lehman moment
Gold will follow commodities in the deflationary vortex. The best way to track its progress is explained here...
http://www.globaldeflationnews.com/a-great-model-to-understand-golds-pri...
My step sister's aunt from Topeka Kansas makes $85 an hour from home selling silver and gold certificates to bored, white, married women for pennies on the dollar. See how you can make a fortune selling pieces of paper and then rolling that into investment property in the richest areas of the city. Live the life you always wanted to live and die rich and powerful.
This ad is not responsible if you die poor and destitute.
Remember that commodities started collapsing a few months before Lehman and subsequently stocks collapsed in 2008.
Nothing like cheap commodities during this amazing recovery.
The decline in commodities may be simple coincidence, as the causes vary among the different components. Gold and silver are lower due to manipulation by central banks and ETF liquidations. Oil is lower due to Saudi attempts to bankrupt US fracking and to punish Russia. Grains are lower due to excellent US harvests.