Medication Claritin
“We strongly support the move to clear the contracts through central counterparties,” U.K; medication claritin.Treasury Minister Paul Myners said in an interview in London – medication claritin.“Where the derivative is exotic or non-standardized, then it should be supported by bilateral collateral arrangements and/or significantly more capital.” …
Myners said some of the more complex instruments and innovative financing structures of the last few years will probably disappear since they have not “added anything of economic or social value.” Click for ARTICLE
- U.K.May Force Derivatives Traders to Post Collateral (Update1)
- Bloomberg
- Gonzalo Vina and Caroline Binham
- June 18, 2008
The argument against legislation because it will drive dealers overseas is now officially dead! There is nowhere left to go. Asia wants tough regulation, Europe wants tough regulation, Obama has proposed exchange clearing and now the U.K – medication claritin.seconds the motion. Game over – medication claritin.
Claritin 10mg
“Finance ministers of the Group of Eight nations made little mention of currencies or bond yields as they ended their meeting on Saturday, but there was clear evidence of disquiet over oil and commodity prices.
French Economy Minister Christine Lagarde said ministers wanted measures to curb volatility in oil and oil products markets, where prices have climbed sharply this year as investors bet signs of an economic rebound will spark demand; claritin 10mg….
The finance ministers from G8 countries — Canada claritin 10mg, France, Germany, Italy, Japan, Russia, Britain and the United States — said volatile commodity prices put at risk growing signs that their economies were heading towards recovery.
“Excess volatility of commodity prices poses risks to growth,” the ministers said in their final statement….
But Italian Economy Minister Giulio Tremonti said the return of speculation to markets was unwelcome, and made clear that he was especially worried by commodity markets.
“Speculation is coming back, a certain type of finance is raising its head again and doing the same not very nice things it was doing until last summer,” he told reporters after the meeting.
“Concern about this came…from everybody; claritin 10mg.There is a return of speculation on derivative and commodity markets.” Click for ARTICLE
- G8 finmins want curbs on commodity speculation
- Jo Winterbottom
- Reuters
- June 13, 2009
This is following on the heels of a similar statement by G8 Energy Ministers last month. Good to see that policymakers are beginning to see the truth and grasp the implications.
Claritin Pill
“Finally, I have strong views on the regulation of derivatives – claritin pill. Claritin pill: the prevailing opinion is that they ought to be traded on regulated exchanges.That is not enough.The issuance and trading of derivatives ought to be as strictly regulated as stocks.Regulators ought to insist that derivatives be homogenous, standardised and transparent.
Custom-made derivatives only serve to improve the profit margin of the financial engineers designing them.In fact, some derivatives ought not to be traded at all – claritin pill.I have in mind credit default swaps; claritin pill.Consider the recent bankruptcy of AbitibiBowater and that of General Motors. Claritin pill: in both cases, some bondholders owned CDS and stood to gain more by bankruptcy than by reorganisation.It is like buying life insurance on someone else’s life and owning a licence to kill him.CDS are instruments of destruction that ought to be outlawed.” Click for OPINION
- The three steps to financial reform
- George Soros
- Financial Times Opinion
- June 16, 2009
George Soros wants to outlaw CDS and force all remaining derivatives onto an exchange. Warren Buffett calls derivatives “weapons of financial mass destruction.” His partner Charlie Munger thinks all derivatives should be banned. Myron Scholes, the inventor of the Black-Scholes model for options (which is the foundation of all derivatives), says that over-the-counter (OTC) derivatives ought to be “blown up” leaving only exchange trading. It sounds like Wall Street and academia have pretty clear opinions on the value of OTC derivatives – claritin pill.
Claritin Dose
“Market forecast supply and demand, in my view, will not support an oil price above $50, let alone above $70,” [Fadel Gheit] says; claritin dose.”So, obviously, the oil price is inflated, and they are inflated in the hands of the same players that brought about the global financial crisis.” …
Gheit claritin dose, who has testified before Congress urging better regulation in the market, believes “financial players have seized” the oil business in the last four or five years, with major oil companies having less impact on the market than major investment banks.” Claritin dose: if Exxon makes an oil forecast tomorrow and Goldman Sachs makes an oil forecast tomorrow, the market will take Goldman Sachs and not pay attention to Exxon,” he says, adding, “it has nothing to do with supply and demand of the physical commodity.“ Click for ARTICLE
- Oil’s Paper Bubble
- Jesse Bogan
- Forbes
- June 16, 2009
Fadel Gheit said almost exactly one year ago, when oil was around $130 per barrel that Congressional action to crack down on excessive speculation would cut the price of oil in half and result in $2 gas. Many people ridiculed him. Congress did threaten to take action but never got a bill passed.. Yet the combination of the threat of regulation and then the financial system’s meltdown was enough to pop the oil bubble and send speculators running for the exits. The price of oil dropped over $100 per barrel and gasoline was as low as $1.35 per gallon. Haven’t we learned our lesson? Shouldn’t we be listening to Fadel Gheit now?
Claritin Allergies
Charles Ommanney / Getty Images for Newsweek
“Finally in late March, Cantwell and her confederates—Carl Levin of Michigan, Byron Dorgan of North Dakota, Dianne Feinstein of California, Jim Webb of Virginia and Vermont’s Bernard Sanders—met with Obama and members of his economic team in the White House….
The internecine war of wills between the insurgents and the White House economic team has occurred mostly out of sight.But it is part of a larger battle for the future of the financial system—and in some ways capitalism itself; claritin allergies.At issue is whether the financial landscape—the size of Wall Street firms, who regulates them and the kinds of things they will be allowed to trade—will look much different once the crisis passes – claritin allergies.These senators fear it won’t unless they are vigilant.” Click for ARTICLE
- The Insurgents: The Secret Battle To Save Capitalism
- Michael Hirsh
- Newsweek
- June 13, 2009
As we’ve mentioned repeatedly in this blog there has been a QUIET COUP where the Wall Street banks now exercise enormous control over Washington D.C. Thankfully there is a growing group of Senators that are not content to let that happen. They are eschewing Wall Street’s campaign cash and displaying real leadership at a time when our country needs it the most – claritin allergies.
Otc Claritin
” Otc claritin: this hits everyone,” said Robert J. Otc claritin: shiller, an economist at Yale.”It has the potential to affect your confidence.” He said that the recent rise in gasoline prices could effectively offset the new $400 to $800 payroll tax cut most employees are receiving this year as part of the Obama administration’s effort to stimulate the economy.
Consumers last summer were pulling $1.5 billion a day from their wallets to fuel their vehicles. Otc claritin: by January, as oil prices collapsed, they were spending only $600 million a day.But now they are back to daily spending of around $1 billion, Tom Kloza, chief oil analyst at the Oil Price Information Service, said.
The price increase mystifies some analysts, who say that oil demand remains weak – otc claritin.According to the International Energy Agency, worldwide demand is down 2.6 million barrels a day from last year, mostly because of declines in driving and slower economic activity in the United States and other industrialized countries – otc claritin.Oil inventories are high.
“I’m scratching my head,” said Adam Sieminski, chief energy economist at Deutsche Bank, who attributes oil’s rise to an influx of investment dollars. “Right now, the sense is the economy is on a path toward improvement, and there is a lot of cash sitting on the sidelines – otc claritin. Otc claritin: so hedge funds, sovereign funds, pension funds are investing in futures and oil stocks and commodity indexes.“” Click for ARTICLE
- High Gas Prices Could Slow Recovery
- Clifford Krauss
- The New York Times
- June 8, 2009
The Obama Administration must realize two things:
- Oil prices are being driven by speculation not supply and demand
- Oil prices are threatening to derail everything they are trying to achieve
P.S. Note that Robert Shiller has commented on the oil bubble before. Click here for POST.
Coupon Claritin
“Hedge funds and other large investors are leading a surge of commodities investment that may continue to grow as optimism increases that the worst global recession since World War II is easing, Barclays Plc said.
“People are investing in commodities again because the prices are going up and because the fundamentals look a lot better,” London-based Kevin Norrish, director of commodity research at Barclays, said in an interview in Perth; coupon claritin.”We’ve seen a lot of money come in. Hedge funds certainly have come back into commodities over the last few months in a big way.It hasn’t reached its peak.” – coupon claritin…
“There are a number of big investors who are very positive toward commodities now because they realize the supply-side constraints are really important,” Norrish said – coupon claritin.”If you have commodities in your portfolio coupon claritin, it does give you diversification that other assets don’t.”
Most large investors aspire to have 5 percent of their portfolios directly invested in commodities, Norrish said.
“If you look at the global portfolioable assets, then commodities as a proportion of that would be a fraction of 1 percent, so there’s lots of potential room for growth,” he said.” Click for ARTICLE
- Commodity Investment Surge Yet to Peak, Barclays’ Norrish Says
- Jason Scott
- Bloomberg
- June 12, 2009
Stop and think for a second what this man is saying: “People are investing in commodities again because the prices are going up.“ WHAT! Speculators see the price rising, so they pour their money in, causing the price to go even higher, attracting more speculators and creating a self-reinforcing BUBBLE in commodity prices.
Norrish thinks that speculators should continue to pour money into commodities because “It hasn’t reached its peak.“ This is directly stoking the speculative frenzy by saying essentially more speculative money will be flowing in tomorrow so you ought to profit by putting yours in today.
Worst of all he says that investors ought to have 5% of their portfolio in commodities and they’re currently at 1%. God help us if we get 5 times more money flowing into commodities!
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Drug Loratadine
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Allegra
The Senate Agriculture Committee held a hearing on “Regulatory Reform and the Derivatives Markets” on June 4, 2009. Mike Masters submitted a detailed blueprint for exactly what should be done to protect the American people from another financial system collapse and another excessive speculation bubble in food and energy prices.
Click for TESTIMONY
Unfortunately you cannot link directly to the Hearing’s page but I would recommend watching the video from the hearing and/or reading the written testimonies of the witnesses (many of whom were quite good).
Online Allegra
Allegra Order
“OPEC’s Secretary General said on Tuesday more balance was needed between the amount of oil traded in the physical markets and the “paper” markets allegra order, which the group has often blamed for causing price swings.
“The paper market should be a reasonable percentage of the physical market, of the real barrels,” Abdullah al-Badri said at the Reuters Global Energy Summit.
Badri said in June 2007, there was the equivalent of 3 billion barrels of oil being traded in paper markets, when 67 million barrels a day were traded in the physical oil markets.
He said it was not acceptable to have this imbalance….
The Organization of the Petroleum Exporting Countries has previously said there was a need to control speculation and Badri reiterated there was a need for standards.” Click for ARTICLE
- OPEC wants to see “paper” oil reined in
- Jane Merriman allegra order, Alex Lawler, Barbara Lewis
- Reuters
- June 2, 2009
If you were looking for a definition of excessive speculation this is it!
John Heimlich, the Chief Economist of the Air Transport Association pointed out that in the month of June the combined volume of the NYMEX WTI, ICE WTI and ICE Brent futures contracts just by themselves is over 1 Billion barrels per day (this does not include the OTC markets which are larger). There are only 85 million barrels per day produced and consumed in the world. If every barrel produced was hedged (most are not) with a speculator on the other side and every barrel consumed was hedged (most are not) with a speculator on the other side then at least 830 million barrels per day are traded BETWEEN speculators. Oil futures trading is well above 83% PURELY speculative!!
Using OPEC’s numbers it’s over 95% speculative!!!
These are NOT side bets. Futures prices determine spot prices. Clearly speculators with 83%+ market share determine futures prices.
P.S.OPEC got burned the most when oil prices crashed last year from $147 to $33 per barrel. They realize that they have little if any control over oil prices any more. Speculators are firmly in control; allegra order.
Effects Of Allegra
“As the financial crisis entered one of its darkest phases in October, a handful of the nation’s largest banks began holding daily telephone sessions; effects of allegra.Murmurs were already emanating from Washington about the need for a wide-ranging regulatory overhaul effects of allegra, and Wall Street executives girded for a fight.
Atop the agenda during their calls: how to counter an expected attempt to rein in credit-default swaps and other derivatives – the sophisticated and profitable financial instruments that were intended to limit risk but instead had helped take the economy to the brink of disaster.
The nine biggest participants in the derivatives market – including JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America – created a lobbying organization, the CDS Dealers Consortium, on Nov.13, a month after five of its members accepted federal bailout money.
To oversee the consortium’s push, lobbying records show, the banks hired a longtime Washington power broker who previously helped fend off derivatives regulation: Edward J; effects of allegra.Rosen effects of allegra, a partner at the law firm Cleary Gottlieb Steen & Hamilton.A confidential memo Mr; effects of allegra.Rosen drafted and shared with the Treasury Department and leaders on Capitol Hill has, politicians and market participants say, played a pivotal role in shaping the debate over derivatives regulation.
Today, just as the bankers anticipated, a battle over derivatives has been joined, in what promises to be a replay of a confrontation in Washington that Wall Street won a decade ago; effects of allegra. Effects of allegra: since then, derivatives trading has become one of the most profitable businesses for the nation’s big banks.”
A MUST READ article. Click for ARTICLE.
- In Crisis, Banks Dig In for Fight Against Rules
- Gretchen Morgensen and Don Van Natta Jr.
- New York Times
- May 31, 2009
“The battle lines are being drawn in the derivatives market, as Wall Street tries to pre-empt new laws that could drain a big source of banks’ profits.
A group of banks and money managers will next week present a plan designed to help fend off some rules proposed by the Obama administration, which wants to reform trading practices in the market for over-the-counter derivatives….
Potentially billions of dollars in revenue is at stake – effects of allegra. Effects of allegra: an effort earlier this decade to improve transparency in the corporate-bond market ended up cutting bank fees by more than $1 billion in a year, according to some studies….
Effects of allegra: one price-reporting model being considered for the market is a system akin to Trace, a system for corporate bonds. Effects of allegra: after Trace was implemented in 2002, the gap between bid and offer prices halved, cutting trading profits for banks.Many bankers still lament that the transparency made traders less willing to take big positions in corporate bonds and encouraged more trading in the opaque credit-default swap market.” Click for ARTICLE
- Banks Seek Role in Bid to Overhaul Derivatives
- Serena Ng
- The Wall Street Journal
- May 29, 2009
Wall Street wants reform as long as it makes them more profitable, more powerful and does not cost them a dollar. Otherwise they will pull out all the stops and spend as much (taxpayer) money as it takes to prevent any significant regulatory reform. A QUIET COUP has taken place and Government Sachs is running this country.
Buspar
” Buspar: he [Khalid A.al-Falih buspar, CEO of Saudi Aramco] suggested that additional government regulation of financial markets may be necessary after crude oil prices spiked in 2008.”We’re in the minority on what happened buspar, at least publicly.We felt the market was well-supplied.At the same time, we were on the phone literally begging our customers to take more barrels to reduce pressure on prices; buspar. Buspar: we continue to believe that speculators drove the increase a perception that supplies were tight.We found this odd since we had so much spare inventories and production capacity buspar,” he said.” Click for ARTICLE
- Saudi Aramco to stick with investment program, output rate, CEO says
- Nick Snow
- Oil & Gas Journal
The Wall Street Banks that were hyping the Oil Bubble worse than Henry Blodget hyping an Internet Stock kept telling us that Chinese Demand was insatiable and that Saudi Arabia and OPEC could not increase production capacity fast enough. Now we know that both points are baloney and most likely Wall Street knew it was baloney all along but profited greatly from the bubble they created on hype.
Chinese Demand: Below you can see the last 10 years of Chinese Oil Demand growth ranked top to bottom (according to the EIA). What you see is that 2008 ranked 6th on a percentage basis (5th on an absolute basis). Basically a boring middle of the road year. Chinese Demand is nothing new – it’s been around for more than a decade.
Year Growth
2004 859Kbpd +15.4%
2000 432Kbpd +9.9%
2003 417Kbpd +8.1%
2006 540Kbpd +8.1%
1999 258Kbpd +6.3%
2008 389Kbpd +5.1%
2002 243Kbpd +4.9%
1998 190Kbpd +4.8%
2007 330Kbpd +4.6%
2005 258Kbpd +4.0%
2001 122Kbpd +2.5%
Saudi/OPEC Supply & Inventories: According to the above article the Saudis were begging their customers to take oil and the customers were telling them to buzz off. Nobody wanted $140 oil beyond the bare minimum that they required. Wall Street looked at production figures and claimed that there was unmet demand because production was not increasing. Again total fiction. There is no way to measure unmet demand! If pressed for evidence of unmet demand, Wall Street would point to the rising price and say that if demand was being met then prices would not be rising (excluding obviously the fact that all this demand was coming from speculators in the futures market).
So the Saudis make a smart business decision which is to not pump (produce) any more oil than their customers are willing to buy. Which also happens to answer the questions of the Ivory Tower Academics as to why there was no inventory buildup. Why pump oil when nobody wants it!? Keep it in the ground where storage costs are zero.
Information Allegra
Allegra Effects Side
“Hedge funds are making the biggest bet in nine months that commodity prices will rise as the global economy rebounds from its steepest slump since World War II.” Click for ARTICLE
- Hedge Funds Bet Most Since August on Commodities
- Chanyaporn Chanjaroen
- Bloomberg
- May 26 allegra effects side, 2009
“Flows are being driven by the recovery in commodity prices,” Durham said in the e-mail.”Faint improvement in economic data recently is fueling hope of global economic recovery and demand for commodities.” ; allegra effects side…
Investors put $150.5 million into energy mutual funds in the week ended May 13 allegra effects side, the most in eight weeks, according to EPFR.Energy funds have drawn $1.2 billion this year allegra effects side, increasing total assets to $19.5 billion” Click for ARTICLE
- Commodity Mutual Funds Draw Most Money Since March, EPFR Says
- Chanyaporn Chanjaroen
- Bloomberg
- May 18, 2009
“Exchange-traded commodity products attracted $21 billion in the first quarter, the most since Barclays started collecting the data in 2005.The figure includes medium-term notes, which track commodities over a specific time period.” Click for ARTICLE
- Commodity Mutual Funds Favored Over Hedge Funds on Regulation
- Chanyaporn Chanjaroen
- Bloomberg
- April 2, 2009
People are stampeding into the commodities space to “hedge against inflation.” As all this money flows into commodities futures it is driving prices up. In other words it is creating inflation. So you’ve got a perverse dynamic where fear of inflation causes a spike in oil and other commodity prices which kills the economic recovery and actually prevents any real inflation from occurring.
Policy makers need to understand this dynamic for two essential reasons:
(1) These false signals do not presage true inflation
(2) These investors are threatening to wreck all the government’s efforts to right the economic ship; allegra effects side.
Augmentin Medication
“Commodity inflation is not real inflation; augmentin medication. Augmentin medication: commodity inflation is China- and speculation-driven inflation of imperfect commodities by fearful or greedy customers and traders.” Click for ARTICLE.
- It’s still not inflation
- Jim Cramer
- BloggingStocks.com
- May 21, 2009
“…because we all learned a vital lesson last year, which is that a $2 billion to $3 billion hedge fund in cahoots with another $2 billion to $3 billion hedge fund can easily rig the oil futures higher on no volume….Oil is too easily manipulated for my taste augmentin medication, and we have a government that just seems clueless to these manipulations and to the overpowering ETFs that are also used to take commodities up and down with ease.” Click for ARTICLE (subscription required).
- Can the Market Rally Without Oil?
- Jim Cramer
- TheStreet.com RealMoney
- June 4, 2009
“It’s now easier to invest in commodities and hedge against inflation.Before ETFs came along investors had to deal with tricky and pricey futures or the cumbersome act of physically holding and even storing a commodity.
Right now augmentin medication, there’s huge access that wasn’t there just a few years ago, and there are billions now flowing into ETFs. Augmentin medication: oil didn’t spike from $30 to $150 a barrel simply on rising demand or a drastic drop in supplies – speculation had a role. Augmentin medication: if you can’t beat ‘em, join ‘em. Augmentin medication: the speculators are a powerful force in the markets these days.” Click for ARTICLE.
- Commodities and Inflation: How to Trade Now
- Tom Lydon
- CNBC Stock Blog
- June 9, 2009
Speaking of bubbles, Congress is living in a bubble. They are still listening to Wall Street Banks whispering in their ear that last year’s historic boom and bust in oil prices was supply and demand driven. While up and down Wall Street everyone is talking openly about last year’s bubble, this year’s approaching bubble, the impact of speculators and how they rule the markets. We are seeing research reports on a daily basis from all the big banks talking about speculation and how it’s driving prices.
All you have to do is turn on CNBC and it’s right there in your face, over and over again.
Speculators aren’t even hiding any more. The more blatant this becomes the more impotent the U.S.Government looks.
Triamcinolone
” Triamcinolone: on paper, the Waxman-Markey bill puts a cost on carbon dioxide by imposing a ceiling, or cap, on greenhouse gas emissions and then setting up a market for regulated industries — such as the electric power sector — to buy and sell allowances to pollute under that cap. Triamcinolone: as the cap is reduced each year, market participants will exchange allowances in a complex auction market.
If you liked what credit default swaps did to our economy, you’re going to love cap-and-trade. Just read Title VIII of the bill, which lets investment banks, hedge funds and other speculators participate in the cap-and-trade market.They don’t have emissions to cut; they have commissions to make.”
- Let’s Have Cap and No Trade
- David Sokol
- Washington Post Opinion
- May 19, 2009
We are aggressively agnostic when it comes to climate change but if you are going to cap please do NOT trade.
The Cap and Trade system, as provided for in the proposed Waxman – Markey Legislation, has all the ingredients of a large-scale speculative bubble waiting to happen. In fact triamcinolone, this Carbon Bubble has the potential to be worse – by orders of magnitude – than the 2008 Oil Bubble.
Carbon Supply is finite and shrinking making it prone to excessive speculation and manipulation.
Carbon Demand is growing naturally with the economy and giving investors the ability to buy carbon credits and bank them forever allows highly leveraged derivatives traders to buy huge amounts.
Unchecked this will lead to a massive supply & demand imbalance that will result in a huge price spike.
The result is that financial trading firms will push carbon prices through the roof (like Enron did with Electricity on the West Coast) and all of America will suffer while these firms mint huge profits.
Buspirone Dosage
“Commodity revenues [for Wall Street Banks] will likely hover at about $15 billion in 2009 buspirone dosage, holding steady from last year as bank business lines such as equities and deal advice shrink, according to a recent estimates by Morgan Stanley and consulting firm Oliver Wyman….
A sparser field has spawned opportunities for Wall Street firms that stuck with commodities as credit and equities markets crashed over the past year; buspirone dosage.With less competition, the margin between bids and offers has expanded, meaning greater profits for commodities dealers. “We’ve seen a trend of a smaller number of financial institutions with larger market share,” said Joe Gold, ; buspirone dosage…
Banks able to buy buspirone dosage, sell and store barrels of oil, in addition to trading oil derivatives, scored as oil inventories surged to the highest levels in more than a decade. Buspirone dosage: the situation depressed spot oil prices relative to prices for delivery months from now, making storing oil for sale in the future a profitable enterprise.Goldman Sachs, Morgan Stanley and Barclays all have access to storage facilities – buspirone dosage.J.P.Morgan entered the physical oil market late last year as it pursues aspirations to become what a recent investor presentation called a “top 3 player globally” in commodities.” Click for ARTICLE
- Commodities Trading a Bright Spot for Banks
- Gregory Meyer
- The Wall Street Journal
- April 23, 2009
“Each Federal reserve bank shall keep itself informed of the general character and amount of the loans and investments of its member banks with a view to ascertaining whether undue use is being made of bank credit for the speculative carrying of or trading in securities, real estate, or commodities.”
- ^ U.S – buspirone dosage.Code Title 12, Chapter 3, Subchapter 7, Section 301 – buspirone dosage.Powers and duties of board of directors; suspension of member bank for undue use of bank credit
So let’s just get this straight. Goldman Sachs, Morgan Stanley and J.P; buspirone dosage.Morgan (who aspires to be lumped with the first two) all have three things in common:
(1) They are expected to earn the lion’s share of $15 Billion in commodities profits. They do this in three ways (1) making wider bid-ask spreads a.k.a – buspirone dosage.gouging their customers even more (2) buying and hoarding physical oil for contango trading and (3) most likely hyping another oil bubble in 2009 to benefit their proprietary trading operations.
(2) They have all received Billions in TARP money from the U.S – buspirone dosage.Taxpayer. The same people that will pay inflated prices during the next oil bubble.
(3) They have all been exempted from Federal Reserve Regulations that prohibit banks from owning commodity businesses. We highlighted the Fed’s dubious actions back in this September POST.
So the U.S. Buspirone dosage: government takes the taxpayer’s money and gives it to Wall Street banks then bends the rules for them to use that money in the commodities markets to engage in trading which results in higher costs to hedgers and inflated prices for consumers. Is this a great country or what!?
P.S. Does anyone else find it to be very strange that banks are making more profits in commodities (which are still tiny markets) than they are making in equities or fixed income!?
Order Allegra
” Order allegra: oil has doubled in price since the market turmoil of late last year, with WTI gaining 60 per cent since January 1, as speculators have begun to take bets on a rebounding global economy resulting in higher crude prices.” Click for ARTICLE
- Oil breaks through the $70 level
- Javier Blas and Miles Johnson
- Financial Times
- June 10, 2009
All pretense of supply and demand has been dropped and everybody (except Congress) admits and believes that oil prices are climbing because speculators are betting on an economic recovery occurring at some point in the future. The “financialization” of oil is complete. Wall Street traders are treating oil just like a stock or a bond.
The huge problem is that unlike stocks or bond which have cash flow payment streams extending many years into the future, a barrel of crude oil for delivery in one month’s time will be literally “up in smoke” in 2 months’ time. There is no rational explanation for why a CONSUMABLE commodity with a 2 month life span should be skyrocketing in price based on where the economy will be in 6-12 months time.
One could make the argument that people are buying oil to store it for 6-12 months in order to meet demand in the future. But does this fit at all with reality? NO! There is no storage left. Every single tank is full to the brim with oil. So much so that they are taking supertankers filling them with oil and parking them in the ocean. Why? To profit from the cash and carry trade due to the contango in oil futures.
The fact is that supply TODAY is near a 20 year high and demand TODAY is near a 10 year low. Prices TODAY should be in the mid-30s. The only reason prices have doubled in under 6 months is that Wall Street traders have hijacked the oil futures market and now treat oil like an alternative currency with which to express their trading views on inflation, economic recovery, etc.