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KDavitt
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Kevin brings a wealth of derivatives experience to RCM Asset Management. Following graduation (Marquette University – Evans Scholar 1999) Kevin started working for LETCO Trading on the CBOE floor. Between 2000 and 2007 Kevin traded a variety of Equity and Index options products as a market maker... More
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  • Thoughts On The CRB 0 comments
    Feb 22, 2013 5:55 AM

    Current Reuters CRB Components
    SubgroupMarketsSubgroup
    Weight
    EnergyCrude Oil, Heating Oil,
    Natural Gas
    17.6%
    GrainsWheat, Corn, Soybeans17.6%
    IndustrialsCopper, Cotton11.8%
    MeatsLive Cattle, Lean Hogs11.8%
    SoftsCoffee, Cocoa, Sugar
    Orange Juice
    23.5%
    Precious
    Metals
    Gold, Silver, Platinum17.6%

    The CRB is a weighted Commodity Index. I think it gives some perspective. Chart attached going back about 2 years and 5 years.

    The Index is pretty much right where it bottomed in late 2012 (debt ceiling debate) around 550.

    The CRB also traded right around 550 last Dec (2011) (another bottom for Precious Metals).

    With the exception of March - early July 2012 (European elections and bad US economic data) the CRB has held the 550 level since October of 2010.

    I don't really have a point except that we're at an "interesting" level. If commodities do NOT hold here - I don't see how it augurs well for Equities (domestic or international).

    US, European, and Asian equities have been on an absolute tear for the past few months.

    Credit markets and volatility have been flashing concern for the past month and the equities may be "confirming". However - I DO NOT believe the efforts to reflate with easy monetary policies are coming to an end anytime soon. Deflation freaks out Central Bankers.

    You just can't have your cake and eat it too. Being honest and understanding WHY we've seen the runup in equities, commodities, etc is key. Psychologically we like a narrative to explain market movement. The answer (in my opinion) is easy money and yield chasing......not real global growth. I can't wait until that day comes, but I just don't see it yet.

    We'll get a reminder of the global picture tomorrow morning when we get the Eurozone GDP release where they expect contraction of 0.6%.(Lagging Indicator) The ECB also releasing economic "growth" (they use that term loosely) expectations tomorrow.

    (click to enlarge)

    (click to enlarge)

    Crude closing on lows.

    Stocks on lows

    Metals well OFF lows.

    Grain options expire TOMORROW.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: The sender relied on data sources believed to be accurate and that RCM did not take on measures to verify the accuracy of this data. It is believed to be accurate at this time and could result in large losses if read and acted upon at a later time.This electronic communication and its contents are intended for the recipient only and may contain confidential, non-public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). RCM Asset Management does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a solicitation to purchase or sell any financial product. This communication is for informational purposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not necessarily of RCM Asset Management. "RCM Asset Management" is a d/b/a of Reliance Capital Markets II, LLC, its affiliates and subsidiaries. Trading Futures, Options On Futures, And Retail Off-Exchange Foreign Currency Transactions Involves Substantial Risk Of Loss And Is Not Suitable For All Investors. You Should Carefully Consider Whether Trading Is Suitable For You In Light Of Your Circumstances, Knowledge, And Financial Resources. You May Lose All Or More Of Your Initial Investment. Opinions, Market Data, And Recommendations Are Subject To Change At Any Time. Past Performance Is Not Necessarily Indicative Of Future Results.“THIS MATERIAL HAS BEEN PREPARED BY A SALES OR TRADING EMPLOYEE OR AGENT OF RELIANCE CAPITAL MARKETS II, LLC AND IS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION. THIS MATERIAL IS NOT A RESEARCH REPORT PREPARED BY RELIANCE CAPITAL MARKETS II, LLC. IF YOU ARE NOT AN EXPERIENCED USER OF THE DERIVATIVES MARKETS, CAPABLE OF MAKING INDEPENDENT TRADING DECISIONS, THEN YOU SHOULD NOT RELY SOLELY ON THIS COMMUNICATION IN MAKING TRADING DECISIONS."The sender relied on data sources believed to be accurate and that RCM did not take on measures to verify the accuracy of this data. It is believed to be accurate at this time and could result in large losses if read and acted upon at a later time.

    Themes: CBR, Commodities
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