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A reversal in capital flows due to the end of QEII is likely to be the cause of the next leg...

A reversal in capital flows due to the end of QEII is likely to be the cause of the next leg down in commodities, argues UBS. Emerging markets, no longer needing to print domestic currency to sweep up dollars, will see a lending boom end. UBS is getting long greenbacks, long bonds, short commodities, short EM shares.
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Comments (6)
  • bbro
    , contributor
    Comments (10140) | Send Message
     
    Long Bonds...so Bernanke makes a profit...
    13 May 2011, 10:14 AM Reply Like
  • Duude
    , contributor
    Comments (3394) | Send Message
     
    I agree commodities might reverse dramatically if it becomes increasingly likely that QE3 won't happen. But the only thing certain here is that nothing is certain. I doubt Bernanke will offer up any definitive statement that QE3 will not happen. He'll leave the door ajar with his statements for the foreseeable future.
    13 May 2011, 10:21 AM Reply Like
  • WMARKW
    , contributor
    Comments (10672) | Send Message
     
    Duude.....I keep hearing, as in this UBS related article, that liquidity will change after the end of QE2.

     

    I have yet to see anything that convinces me there will not be ongoing QE regardless of whether they announce it, give it a name, or whatever. I don't see where the US will find the money to fund $1.5 trillion deficits and rollovers of $2+trillion in outstanding debt. I know that there are some investors purchsing US debt...but I don't know how much is being purchased by other Central Banks. Thus I can't tell how much QE is being accomplished in stealth under the guise of coordinated exchange activities.
    14 May 2011, 12:14 AM Reply Like
  • kashirin
    , contributor
    Comments (52) | Send Message
     
    Even if QE3 doesn't happen I don't see how can commodities reverse dramatically
    The world still wants to grow. The world still need more copper, oil, food by the day
    World population still exploding, monetary base still grows, US deficit still unsustainable
    Commodities have corrected already, OK maybe another 10-15% down but then up and up and up
    13 May 2011, 10:28 AM Reply Like
  • TKO
    , contributor
    Comments (156) | Send Message
     
    The Story goes something like this:

     

    QE2 Massive Liquidity (Get Paper)
    Put it somewhere (Buy Commodities + Bonds)
    QE2 Ends (Paper Recall! -- Need Paper)
    Free up Assets (Sell Commodities + Bonds)
    ...
    But wait, where do you put the profits?
    EM is cheap (see Brazil with what looks like commodity drop AND inflation priced in... yes, odd), US Eq is still fair (will do well with commod costs declining), but... 2 Yrs at 54bps... No.
    ...
    Buy Assets (EM & US Eq)
    13 May 2011, 10:33 AM Reply Like
  • atrios28
    , contributor
    Comments (54) | Send Message
     
    There's not enough glass, metal & fossil fuels to provide 7 billion people with the promise of a Malibu-style lifestyle advertised by corporations 365/7/24 on televisions & billboards from Beijing to the favelas of Rio.

     

    The fiction of endless growth - reinforced by booze & anti-depressants - is best reflected in the weekly headline "Recovery Stalls" ... yet again. Funny: that's what the newspapers were saying throughout the 1930s.

     

    I invest in what's real. food, fuel, materials. And as soon as I sell them for Federal Reserve Notes (even at a "loss") I don't feel right until I get rid of that "Legal Tender for All Debts Public & Private" as fast as practicable in exchange for something real again.
    21 May 2011, 08:26 PM Reply Like
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