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With hedge fund manager, CNBC regular and long-time veteran of the Russian markets Tim Seymour at the helm, Emerging Money ( provides education, trading analysis and comprehensive views of emerging markets around the world. As economies in the BRIC group and beyond... More
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  • Watch commodities in the crowded DXY trade
    The dollar is selling off this morning but this may be more due to a big test in the equity market than anything else.

    Even though the DXY — the dollar index — is trending 1% lower this morning, there is no real accompanying move in the copper or oil markets. Normally, a substantive move in the dollar would trigger an opposite swing in the commodity markets, so a real dollar dip would leave copper and oil on the rise.

    But with commodities actually retrenching a bit from their highs, this looks like crossover action related to the S&P 500′s test of resistance at the 1,287-point level today. This is a very important test and the very fact that demand for dollars is weaker tells us quite a bit about how it may turn out.

    And the other side of the coin is that if commodities have decoupled from their once-slavish reverse correlation to the DXY, then fundamental supply and demand are a factor again. When that happens, as we say at, “You don’t buy commodities when they are cheap. You buy them when they are expensive.”

    The trend is your friend.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: copper, DXY, oil, SPY
    Jan 13 12:14 PM | Link | Comment!
  • Look out below in Asian markets
    Bangladesh is following the Indian market downward, but with its smaller scale, the market in Dhaka is plunging whenever Mumbai takes a negative turn. Multiply that by Indonesia and the Philippines and you have a big regional slide.

    Indian stocks sank 2.38% today but the Dhaka exchange plunged a record 9.25% last night in the first half hour of trading and shut down.

    Bangladeshi investors took to the streets and were only dispersed by tear gas.

    Meanwhile, in Indonesia, stocks fell 4.2% and in the Philippines, the market slid 2.2%. The associated ETFs IDX and EPHE are plunging in early U.S. trading as well.

    Many of last year’s outperformers are having a rough start. Part of it is inflation and policy concerns, but it is mainly the feeling that these markets are overvalued given the prospect that rising interest rates will now start choking off growth.

    India, which was hitting record peaks as recently as November, is now down 8.2% year to date.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jan 10 3:55 PM | Link | Comment!
  • Coal squeeze may make steel a short
    People still do not seem to understand that higher prices for coal and iron ore are logically a bad thing for the steel manufacturers that consumer these substances by the ton.

    Believe it or not, this is not as obvious in the market as you might think. People seem to think that iron and coal prices are so hot because steel mills are pushing out as much rolled and flat product as they can right now to meet global demand.

    It is true that the world is hungry for steel, but the critical thing is that there are a lot of steel mills out there competing for iron and coal — and customers. This drives up demand for input materials but depresses the price they can charge on the other end, and that is just not a recipe for a healthy business.

    As supply problems emerge, the situation gets even worse. The floods in Australia have knocked out around 19 million tons of steel production capacity, simply because the mills can’t get the coal they need. Everyone who wants to make a ton of steel has to pay a lot more to do so, but as yet those costs have still not translated into higher prices for steel consumers.

    Add in the prospect that a fresh round of euro madness will spark yet another global growth scare and you have a situation that encourages shorting.

    Look at the run that X and NUE have had. Look at the way the mothership MT  is leading the sector downward.

    X is down a quiet 7.5% in the last two days and NUE looks vulnerable.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jan 10 3:51 PM | Link | Comment!
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