Friday Outlook: Commodities, Global Markets

<< Return to page 1 - Quad Witching

If we’re going to have a 1970s like reprise, then the place to be will be tech and commodity markets. The difference is of course Fed policy. Then authorities were fighting inflation and now it's the opposite. Current policies seem desperate and ultimately inflationary; at least that’s the current verdict from investors.

The downward move in the dollar is discouraging and is the price evidently authorities were willing to pay to move markets and the economy. Perhaps investors will take a step back and realize that these Fed moves are an indication that economic conditions are much worse than most pundits were stating. That’s scary.

I don’t think authorities were prepared, from a regulatory view, for the consequences of ending Glass-Steagall. The drive to eliminate the barrier prohibiting brokers and banks from joint ownership and securities dealings was led by bipartisan forces from Phil Gramm and Alan Greenspan to Bill Clinton and Robert Rubin. Toss in the man behind the curtain, 'Teflon' Sandy Weill, and the current result was inevitable. It’s pretty disgusting. Perhaps even more disgusting is the theater of the absurd taking place in the congress regarding bonuses which no doubt is unconstitutional.

Tomorrow is quadruple witching and volume should spike along with volatility. There wasn’t a lot of follow-through from bond markets, perhaps because yields can only go so low, or else buyers are just skittish.

Have a great weekend!

Disclaimer: Among other issues the ETF Digest maintains positions in GLD, DGP, DBP, DBB and USL.

The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward.

Comments

[ozcutty:]

You're comment about the fed buying up the housing industry is not such a stupid idea, if the government bought up all the unsold new construction for social housing, things could get interesting!

So i'm taking it that you expect a down day today......

Mar 20 04:19 AM

[Daniel Herkes:]

First the frightened, mean spirited tax on the poor fools who are still at AIG, next the US government taking control of the housing industry. Who's kidding who? The folks with the TV cameras are running the show, and the lawmakers are always willing to perform for them.

Mar 20 04:50 AM

[manya05:]

ozcutty, hate to keep repeating myself, but the Europeans seem to be way ahead of the curve when compared to the US on everything. When the real estate bubble burst big time in the US, it quickly moved to France and there was a sudden stop in construction activity. Rather than letting the industry fall off a cliff and see a spike in unemployment, the government did just what you suggest. Every new housing development on the pipeline, already permitted, was told to go forward that the government would buy, at market value, every unsold unit. It will not stop construction from going down eventually, but at least it will be an orderly shutdown and not a crash.

Mar 20 05:47 AM

[unfaire:]

Is our government now setting up Pimpco to be the next too-big-to fail, or rather, too-big-not-to-offend?

Mar 20 07:36 AM

[bthomas:]

Congress wastes the taxpayers' time going after government employees (technically 80% gov. stake). If senate goes along, the courts will likely declare it unconstitutional. The lawmakers need to focus on the deregulation issue that allowed this abuse. So GS was hedged against an AIG bankruptcy. Who insured it? AIG? Are we certain bankruptcy would have been worse? Glass Steagall or something better, (unlikely, I know) must be (re) instated. This keeps the giddy bankers aware they are playing with other people's money. They smeared the line like a one year old with his birthday cake. Lax regulation, when everyone was flush with cash, home values only rising, money was free, -that's what got us here as greed ruled the day. We must go From '08, '09 back to depression era regulatory policy.The deja vu all over again thing (thanks Yogi). We must blame ourselves, not the least of which: Phil, Alan, Billy, Bobby and "under the big" top Sandy. I am certain none feel personally responsible, as the "Maestro" has already stated he is not. Hold on kids inflation is coming.

Mar 20 08:55 AM

[Seeking Advice:]

While the clawing back of AIG's bonuses became very 'theatrical' (who knew that the House and Senate could grand stand?), it is based on popular anger and opinion and that's why there was strong bipartisan condemnation. While the amount of the bonuses is small compared to AIG's bailout, it's the impression that's created by rewarding those who made mistakes, that causes the problem. As with the stimulus bill where the amount of supposed "pork" was tiny as a percentage of the total bill, opponents were able to make 'political hay' off of those items because of the impression it creates. Same thing here.

Mar 20 09:18 AM

[Conan the B...:]

What would be nice is to have the American People, Buy American again.

Can't, not manufactured here. Re-Industrialize America.

Mar 20 09:22 AM

[Advexek:]

I tried to add XHB, the commodities ETF, to my watch list, but it read, "can't find XHB" although the site will give me a quote on it. What's up with this and how can it be fixed?

Mar 20 09:23 AM

[johnthebears:]

When a company falls on difficult times, one of the things that seems to happen is they reduce their staff and workers.. The remaining workers must find ways to continue to do a good job or risk that their job would be eliminated as well.

Wall street, and the media normally congratulate the CEO for making this type of "tough decision", and his board of directors gives him a big bonus.

Our government should not be immune from similar risks.

*Therefore:*

Reduce the House of Representatives from the current 435 members to 218 members.

Reduce Senate members from 100 to 50 (one per State).

Then, reduce their staff by 25%.

Accomplish this over the next 8 years(two steps/two elections) and of course this would require some redistricting.

Some Yearly Monetary Gains Include:

* $44,108,400 for elimination of base pay for congress.. (267 members X $165,200 pay/member/ yr.)

* $97,175,000 for elimination of their staff. (estimate $1.3 Million in staff per each member of the House, and $3 Million in staff per each member of the Senate every year)

* $240,294 for the reduction in remaining staff by 25%.

* $7,500,000,000 reduction in pork barrel ear-marks each year. (those members whose jobs are gone. Current estimates for total government pork earmarks are at $15 Billion/yr)

* The remaining representatives would need to work smarter and improve efficiencies. It might even be in their best interests to work together for the good of our country!

We may also expect that smaller committees might lead to a more efficient resolution of issues as well. It might even be easier to keep track of what your representative is doing..

Congress has more tools available to do their jobs than it had back in 1911 when he current number of representatives was established. (telephone, computers, cell phones to name a few)

*Note:*

Congress did not hesitate to head home when it was a holiday, when the nation needed a real fix to the economic problems.. Also, we have 3 senators that have not been doing their jobs for the past 18+ months (on the campaign trail) and still they all have been accepting full pay. These facts alone support a reduction in senators & congress.

*** Summary of opportunity per YEAR:

$44,108,400 reduction of congress members.

$282,100,000 for elimination of the reduced house member staff.

$150,000,000 for elimination of reduced senate member staff.

$59,675,000 for 25% reduction of staff for remaining house members.

$37,500,000 for 25% reduction of staff for remaining senate members.

$7,500,000,000 reduction in pork added to bills by the reduction of congress members.

$8,073,383,400 per year,

estimated total savings. (that's 8-BILLION just to start!)

That is hope and Change I can believe IN Big Time!

Big business does these types of cuts all the time. If Congresspersons were required to serve 20, 25 or 30 years (like everyone else) in order to collect retirement benefits, tax payers could save a bundle.

Now they get full retirement after serving only ONE term.. IF you are happy with how Congress spends our taxes keep on doing as we are.

I think it is time for real change. In the meantime, my observation from all the wonderful charts provided by Mr. Fry suggest long term down lines as reflected by the MACD charts on everything, including commodities.

Did you notice that Russia is about to default in a major way today?

Mar 20 09:48 AM

[David Fry:]

Johnthebear..........good ideas although the constitution might get in the way but that little inconvenience never stopped big govt. types before.

So, which is more difficult? Term limits or voting their seat out of office permanently? Hmmm.

Mar 20 10:03 AM

[the humble ...:]

Johnthebear,

This is a splendid idea, now which are the senators or representatives that will have the cojones to put this to a vote in the senate and in the house.


On Mar 20 09:48 AM johnthebears wrote:

> When a company falls on difficult times, one of the things that seems
> to happen is they reduce their staff and workers.. The remaining
> workers must find ways to continue to do a good job or risk that
> their job would be eliminated as well.
>
> Wall street, and the media normally congratulate the CEO for making
> this type of "tough decision", and his board of directors gives him
> a big bonus.
>
> Our government should not be immune from similar risks.
>
> *Therefore:*
>
> Reduce the House of Representatives from the current 435 members
> to 218 members.
>
> Reduce Senate members from 100 to 50 (one per State).
>
> Then, reduce their staff by 25%.
>
> Accomplish this over the next 8 years(two steps/two elections) and
> of course this would require some redistricting.
>
> Some Yearly Monetary Gains Include:
>
> * $44,108,400 for elimination of base pay for congress.. (267 members
> X $165,200 pay/member/ yr.)
>
> * $97,175,000 for elimination of their staff. (estimate $1.3 Million
> in staff per each member of the House, and $3 Million in staff per
> each member of the Senate every year)
>
> * $240,294 for the reduction in remaining staff by 25%.
>
> * $7,500,000,000 reduction in pork barrel ear-marks each year. (those
> members whose jobs are gone. Current estimates for total government
> pork earmarks are at $15 Billion/yr)
>
> * The remaining representatives would need to work smarter and improve
> efficiencies. It might even be in their best interests to work together
> for the good of our country!
>
> We may also expect that smaller committees might lead to a more efficient
> resolution of issues as well. It might even be easier to keep track
> of what your representative is doing..
>
> Congress has more tools available to do their jobs than it had back
> in 1911 when he current number of representatives was established.
> (telephone, computers, cell phones to name a few)
>
> *Note:*
>
> Congress did not hesitate to head home when it was a holiday, when
> the nation needed a real fix to the economic problems.. Also, we
> have 3 senators that have not been doing their jobs for the past
> 18+ months (on the campaign trail) and still they all have been accepting
> full pay. These facts alone support a reduction in senators &amp;
> congress.
>
> *** Summary of opportunity per YEAR:
>
> $44,108,400 reduction of congress members.
>
> $282,100,000 for elimination of the reduced house member staff.<br/>
>
> $150,000,000 for elimination of reduced senate member staff.
>
> $59,675,000 for 25% reduction of staff for remaining house members.
>
>
> $37,500,000 for 25% reduction of staff for remaining senate members.
>
>
> $7,500,000,000 reduction in pork added to bills by the reduction
> of congress members.
>
> $8,073,383,400 per year,
>
> estimated total savings. (that's 8-BILLION just to start!)
>
> That is hope and Change I can believe IN Big Time!
>
> Big business does these types of cuts all the time. If Congresspersons
> were required to serve 20, 25 or 30 years (like everyone else) in
> order to collect retirement benefits, tax payers could save a bundle.
>
>
> Now they get full retirement after serving only ONE term.. IF you
> are happy with how Congress spends our taxes keep on doing as we
> are.
>
> I think it is time for real change. In the meantime, my observation
> from all the wonderful charts provided by Mr. Fry suggest long term
> down lines as reflected by the MACD charts on everything, including
> commodities.
>
> Did you notice that Russia is about to default in a major way today?

Mar 20 10:25 AM

[Emerald:]

Perhaps all the pundits and talking heads can ask the following to give back their bonuses from 2005 to the present: Robert Rubin, Alan Greenspan (speaking fees), Sandy Weill, John Mack, Phil Gramm (at UBS) and the former heads of WaMu, Merrill Lynch, Fannie Mae, IndyMac, Lloyd Blankfein, Sullivan, etc. Add in the automatic pay raises for Congress that need to be recinded. Put all this money in an unemployment insurance fund for people who need it. Oh, I'm sorry, that would only happen in Oz.

Mar 20 11:24 AM

[AndrewBaker:]

Markets are poised to go either way, only the only sensible way on the numbers is down. The dollar is also going down, particularly due to "quantuitive easing," so buy gold, oil and agri commodities; most are priced in dollars and will go up in dollar price because of it, and because they are real assets we all need.

Mar 20 01:39 PM

[Conan the B...:]

I give you a loan...

What? You are using it for what.

You can't do that.

This will apply to Frannie as well. You can kiss TALF goodbye. You can Kiss off International Contracts as well.

Buy Gold and buy it soon. Trade Contracts, why bother. Will the US Government Change how the Debt it issues can be used?

We are Dead Meat.

Mar 20 05:54 PM

[johnthebears:]

David: Are you sure the Constitution required that there be 435 congressmen and 50 senators to RUIN the country?

I have no idea how to implement this suggestion, but who ever could do it would sure get my vote. John

Mar 21 12:45 AM

[MBL:]

Its nice that the media has found the concept of outrage and is finally highlighting wasteful spending - the giving of money to those who realy don't deserve it AIG executives over 160 million dollars!!. However on the flip side at least American are at receiving end of this and will probably pay taxes on it. Can anyone explain to me why when we give tens of billions of dollars of money to various parties in our mideast fiasco where non Americans are on the receiving end (for construction projects and other initiatives). there's been barely a wimper. Why I hope this brand new trend of highlighting fiscal irresponibility continues, even though 160 million is peanuts to Washington nowadays, if there has to be theivery at least take some comfort that tax paying US citizens are getting in on the money for a change.

Mar 21 01:35 PM

[Paul H. M.:]

The inflation we're all expecting is already priced in for gold.

Is buying gold now is like buying oil in early 2008?

When most investors agree on a certain investment being the best, that usually means it's an overpriced bubble.


On Mar 20 05:54 PM paultaut wrote:

> I give you a loan...
>
> What? You are using it for what.
>
> You can't do that.
>
> This will apply to Frannie as well. You can kiss TALF goodbye. You
> can Kiss off International Contracts as well.
>
> Buy Gold and buy it soon. Trade Contracts, why bother. Will the
> US Government Change how the Debt it issues can be used?
>
> We are Dead Meat.

Mar 22 02:01 PM

[Paul H. M.:]

Good point. Where was the outrage when Cheney was overpaying Halliburton without giving competing firms a chance to bid.

Where was the outrage when foreign mercenaries were being payed 3x as much by the U.S. government than our own soldiers?

Are we entering an era where people are finally holding politicians accountable for whom the give money to? Hopefully this trend continues no matter if a we have a black man & democrat in charge or not.

The "Pork" that the GOP screams about is a few drops in the bucket compared to what their leaders needlessly waste by overpaying corporations to do our fighting in Iraq.

I want to see people talk more about the "Pork" abroad. If we're giving out pork, let's give it to our guys at home and not to outsiders who contribute nothing to our system.

On Mar 21 01:35 PM MBL wrote:

> Its nice that the media has found the concept of outrage and is finally
> highlighting wasteful spending - the giving of money to those who
> realy don't deserve it AIG executives over 160 million dollars!!.
> However on the flip side at least American are at receiving end of
> this and will probably pay taxes on it. Can anyone explain to me
> why when we give tens of billions of dollars of money to various
> parties in our mideast fiasco where non Americans are on the receiving
> end (for construction projects and other initiatives). there's been
> barely a wimper. Why I hope this brand new trend of highlighting
> fiscal irresponibility continues, even though 160 million is peanuts
> to Washington nowadays, if there has to be theivery at least take
> some comfort that tax paying US citizens are getting in on the money
> for a change.

Mar 22 02:45 PM