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4/29/05
What the Commodities Markets Are Saying

One of the purposes of markets is to signal to decision-makers what is urgently required. It provides this message very well to owners of resources and consumers as they channel their production and purchases into areas that are in shortage and abundance. It provides the same function to operatives in government who seek to make decisions a la the theory of public choice to maximize their own welfare.

The market is providing a signal to the Fed now that inflation is well under control; presumably, that is the purpose of the declines in oil and grains and energies and stock market--- to keep them at bay. At the same time, like before the election, the people who wish to have government control the allocation of resources have an interest in keeping the stock market down so they can say how risky Social Security is if people were free to invest at a 10% a year rate in the stock market and take those five-year periods once a decade where the return is negative, as compared to investing in Social Security and being assured of 1% a year return.

Naturally, the command-society people are doing everything they can to keep the market down in this critical period that would make our public pro-business and win-win, rather than a society based on compassion and taking from Peter to pay Paul that the stock market bears would wish.

The Real Inflation Story: Commodities Since the Last Fed Meeting

(March 21 close to today's open; Source: Bloomberg generic futures)

SYMCOMMODPRICECHG%CHG
NGNATURAL GAS6.67-0.88-12
HUGAS (UNLEAD)153.50-6.06 -3.8
CLCRUDE OIL51.25-5.37-9.5
COBRENT CRUDE52.59-3.06-5.5
HOHEATING OIL147.35-10-6.4
C CORN204-10.50-4.9
CTCOTTON56.5-5.08-9.9
LCLIVE CATTLE92.354.505.1
SISILVER6.95-14.7-2.1
KWKANSAS WHEAT341.50-6.25-1.8
S SOYBEAN616.5-5.00-1.6
LPCOPPER3300-49-7.5
W WHEAT319-23.50-6.9
FCFEED CATTLE108.053.8753.7
QSGAS OIL472.50-22.25-4.5
GCGOLD434.503.100.7

If only FOMC members would follow markets and not artificial constructs like CPI and PPI, they'd know how tame inflation is.

4/27/05
20-Year Bull Market, from Steve Wisdom

SYMCOMMODPRICECHG%CHG
NGM5NATURAL GAS6.79-0.391-5.44
HUM5GAS(UNLEAD)154.75-8.28-5.08
CLM5CRUDE OIL51.55-2.65-4.89
CON5BRENT CRUDE52.65-2.04-3.73
HOM5HEATING OIL147.4-4.19-2.76
C N5CORN217-4.75-2.14
CTN5COTTON56.4-1.07-1.86
LCM5LIVE CATTLE85.625-1.5-1.72
SIN5SILVER7.181-0.121-1.66
KWN5KANSAS WHEAT331.5-5.5-1.63
S N5SOYBEAN633.75-9.75-1.52
LPM5COPPER3231-49-1.49
W N5WHEAT329.25-4.25-1.27
FCQ5FEED CATTLE108.025-1.325-1.21
QSM5GAS OIL473.5-5.5-1.15
GCM5GOLD434.1-4.9-1.12

4/27/05
Markets are Ahead of the Form, by Victor Niederhoffer

The last time the Fed met on March 22, the commodity index GIK5 was about 387. Now it's 361. Presumably even they look at markets rather than last month's seasonally adjusted.

 DATE    |OPEN     HIGH     LOW      CLOSE
 W  4/27 |373.90   374.00   361.50   361.60
 T  4/26 |374.30   375.30   370.75   374.25
 M  4/25 |381.60   381.60   375.60   375.60
         |
 F  4/22 |375.80   380.50   375.60   379.20
 T  4/21 |368.20   374.25   368.20   374.00
 W  4/20 |371.30   373.50   369.25   372.75
 T  4/19 |362.00   369.50   361.45   369.10
 M  4/18 |358.30   362.70   356.30   358.40
         |
 F  4/15 |362.00   362.00   359.50   360.45
 T  4/14 |361.90   365.80   358.75   364.50
 W  4/13 |364.60   365.50   359.90   360.70
 T  4/12 |375.90   375.90   369.15   369.15
 M  4/11 |369.90   375.15   369.20   374.75
         |
 T  3/21 |387.30   388.50   385.00   387.30

 

 

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