Economic Growth Is Just Around the Corner

If seems that every which way we look, evidence continues to mount in support of economic growth. We have our suspicions as to why this is happening but to be honest these suspicions are of little significance. What's important is simply that it is happening.

Note how the US Treasury market is behaving. TIPs are on the verge of breaking out against non inflation protected treasuries and long dated US Treasuries (20 & 30 yrs) are trading at multi-week lows.

Of course for some time the price of crude and gold has been suggesting that something is up on the inflation front.....but few took notice!

Since the start of October, what has happend to the the cost of hiring dry bulk carriers? Ships are being hired, and the demand for coal is increasing (note: coal still accounts for about 70% of global electricity production). You cannot store electricity and it is expensive to store coal.

Given that the trends above are all confirming each other we think that there is considerable more upside to come in commodities and US Treasury yields. There are two trades that we like that would catch rising commodity prices and US Treasury yields - long DBC and TBT and there is nothing more to it than that.

Disclosure: Long DBC, TBT, SLV.

Comments

[frdm45:]

Tips are breaking out.........gee, ever hear of stagflation?


..

Nov 06 03:55 PM

[The Greates...:]

Please,

Nov 06 08:24 PM

[ussmls7:]

The Dems policies are forcing small businesses to cut workers,move their offices to their homes,anything they can do to stay open. My son-in law & his dad runs a small biz that built homes,factories,churches & at time paid $17 per hour for un skilled labor, the skilled non-union made 6 figures & up. They & many others in the same line of business have been forced to rent or close their huge office & warehouses. Many went belly up,but my son-in law moved all of their operations to his home & farm. This is going on nation wide. We have a huge solar energy complex being built between Memphis & Jackson,TN.,it has put local non-union businesses with highly skilled workers on the side lines because of the federal government has gave contracts to union owned out of state companies.Maytag closed & moved to union run plant up north.People dont take kindly being forced to join a union to get work.The project will cost way more & the tax payers will pay dearly for it. The news papers are full of "going out business ads" P&G & all the big corps are cutting their work forces, car dealerships are closing,crime has increased to all time highs,homes are being broke into in broad daylight. Banks are not lending money & homes have for sale signs from Memphis to Jackson as more lose their jobs. The pawn shops stay busy & flea markets are packed with folks trying to sell what ever they can to pay bills. Coin shops have pleny of gold coins but silver coins is hard to find unless you shop ebay & the net.
That "corner" seems to be getting harder to see for millions of people & if HC reform & cap & tax is passed by the nuts that call them self law makers,that damn corner will become a "blind corner"!

Nov 07 03:14 PM

[The Recusant:]

It seems we always put on our political party glasses that enable us to only see what we want to see and blame the other side when a crisis hits. Our current mess started decades ago and neither party nor the people who voted them in did anything about it. We all saw the usury of the credit card rates and risky mortgages but did nothing to stop the banks. We saw the gigantic volumes of gasoline being imported to fill the tanks of our monstrous SUVs but embraced over-sized vehicles anyway. We overspent and got into debt more than any other generation or country and yet bought more junk from China. To quote an old Pogo cartoon: "We have met the enemy...and he is US!" We have to stop pointing fingers and get on to fixing the country back up.

Nov 07 08:13 PM

[Bonemann:]

We were supposed to stop the risky mortgages and stop people from getting credit cards with high interest? We are supposed to save people for making stupid mistakes? I guess the human brain has quit functioning.

Nov 08 07:54 AM

[The Recusant:]

Bonemann wrote: "We were supposed to stop the risky mortgages and stop people from getting credit cards with high interest? We are supposed to save people for making stupid mistakes? I guess the human brain has quit functioning."

No, we pass laws that prohibit usury (we used to have them). It's the unprecedented high interest on debt that is causing the mounting default rates not the principle debt. Check your own credit card interest rate as of the last few months and be prepared for a shock. Some have gone as high as 30%! Decades ago 10% was considered usury.

Nov 08 04:46 PM

[April May:]

I agree with you. Laws should prevent abuses, and we need those usury laws back on the books.

If I owed money to a credit card company, why would they raise the interest rate which would only limit my ability to pay them back? Makes no sense.

On Nov 08 04:46 PM The Recusant wrote:

> Bonemann wrote: "We were supposed to stop the risky mortgages and
> stop people from getting credit cards with high interest? We are
> supposed to save people for making stupid mistakes? I guess the human
> brain has quit functioning."
>
> No, we pass laws that prohibit usury (we used to have them). It's
> the unprecedented high interest on debt that is causing the mounting
> default rates not the principle debt. Check your own credit card
> interest rate as of the last few months and be prepared for a shock.
> Some have gone as high as 30%! Decades ago 10% was considered usury.

Nov 09 01:20 AM