DB Commodity Long ETN (DPU)
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Everyone Wants the Commodity Bubble To Be Pricked [view article]
Russia would be *nowhere* without the run up in commodities in the last years (not just oil), it is rising from its ashes and flexing... Let commodities crash, and Russia would be broke. Latin America is absolutely booming thanks to commodities. Australia is making tonnes. High prices gives these countries power, look at Russia, Venezuala posturing like they do. Argentina, Malaysia, Venezuela are no longer interested in IMF membership. If you have expensive commodities, people are nice to you and will take you to dinner. These countries have nothing to gain from lower commodity prices. Now, if they would stop printing their fiat papers (and in some cases let the dollar peg go), they would have less inflation too.Reply
Everyone Wants the Commodity Bubble To Be Pricked [view article]
I would like to clarify certain points:-It's not that only those countries who are buying the commodities are feeling the heat.
Take the case of Russia and Saudi Arabia- Oil rich and flushed with money. A jump in crude Oil has ensured a steady climb in the amount of money supply in the commodity based economy leading to an ever more sharp jump in inflation numbers which is ruling way above the double digit. It's not that they are not worried.
Coming to demand side of the commodities. I accept that I havent much emphasised upon the agri/soft commodities much. The reason being, the two fastest growing economies i.e, China and India are still technicallly self sufficient when it comes to food grains and essential items. A good monsoon ensures the steady supply of agri products on annual basis in the Indian subcontinent, which in itself is home to a large proportion of human population.
In recent times, In India due to outsourcing euphoria, IT, ITES and Financial services industry had enabled a large section of population to spend. Mr. George Bush/Ms. Rice had exactly this particular section in mind when they pronounced their now famous comment regarding India and China.
Commodities like Crude Oil, Zinc and Lead are fluctuating as much as 8-10% in a single day which is pretty abnormal since demand and supply fundamentals dont change in a single day. Earlier, even if Crude Oil made a sharp jump, as in the case when Katrina happened, it retreated later when things normalised.
I still feel that the entire world is betting too much upon the China and India factor. Credit consumption is yet to take off. Six months of moderation and we will stop buying homes, cars, motorbikes. Jobs are being lost, wages have frozen. Though I am still optimistic about these economies, I feel that the world need to be patient. Reply
Everyone Wants the Commodity Bubble To Be Pricked [view article]
chistletoe, you are spot-on. Collectively speaking, the world population is no smarter than bacteria in a petri dish. They will continue multiplying and growing until they have exhausted all resources; then..... colony collapse. Looking at a graph, world population has grown in sync with the extraction of oil. Now we are outstripping our ability to meet the world demand for it. 70,000,000 new oil consumer appear on Earth every year. Chindia wants to become a car society like America and eat the 3,000 mile cesar salad, but we're too busy on a witch hunt looking for the oil-price-pumping bogeyman. ReplyEveryone Wants the Commodity Bubble To Be Pricked [view article]
Salman, you make some valid points. However, I believe it's important to differentiate among commodities. In my article Not All Commodities Are Created Equal (the link is: seekingalpha.com/artic...), I point out that people need to eat, and gold and copper cannot be eaten. Population is growing, and that's a fact, while arable land remains basically the same. Moreover, climate changes affect agricultural commodities and such a way that the increase in production simply cannot meet additional demand. ReplyEveryone Wants the Commodity Bubble To Be Pricked [view article]
Not everyone wants it pricked, just those countries that have to buy them from the producers ;)Reply
Guru
Everyone Wants the Commodity Bubble To Be Pricked [view article]
I wouldn't say there is a bubble. For the most part, the run up is a genuine consequence of a spike in demand over the last few year due to the emerging markets. One would expect the run up to continue in the near and far future, as demand will increase once Africa can stand on its feet. ReplyEveryone Wants the Commodity Bubble To Be Pricked [view article]
It's either an "abnormal" runup or not..the question is hardly answered by "whatever the case." Every bubble I can think of either involved something that was frivolous or didn't exist (tulips..South Sea "markets") or was something people could easily live without (garbage technology or houses)...People need to live somewhere..but they don't need to "buy" where they live. In fact..I'd argue they didn't buy anything..they rented a pretend life for a year or two.
Food..metals..oil/gas are the stuff of life..and billions..not millions..more people need them than ever before. If anyone thinks these critical denominators are coming down more than marginally anytime soon they must either be living in an alternate universe...or they believe a truly devastating depression is near. At least that would be a point of view..you offer NO point of view..NO investable ideas..NO NOTHING! Reply
Everyone Wants the Commodity Bubble To Be Pricked [view article]
The ultimate culprit for the rise in commodity prices,seldom ever mentioned,
is the population "bubble".
More and more people on earth chasing fewer and fewer resources.
If all the people who believe that prices will go down
would simply kill themselves right now,
then prices would go down.
But that's the only way ... Reply
Tiedeman
"Images of a Shrinking and Damaged Planet" and High Commodity Prices [view article]
Fanning, last I checked the Europeans were the ones building the V-12's. Reply"Images of a Shrinking and Damaged Planet" and High Commodity Prices [view article]
North America is still the biggest consumer of oil because of the gas guzzling auto engines. A recent trip to Thailand, I can see a lot of small engine Mercedes and other high end auto with smaller engines.The looks are as good and saving gas. No wonder the big 3 are loosing out as they did not face the facts. What is a V12 or V8 doing this days. ReplyETF Watch: New Listings (April 25 - May 6) [view article]
I have been eagerly awaiting these. Hurray!I am curious to see in the future if these inverse commodity ETFs keep a lid on commodity prices. I doubt it, but will be watching to see. Reply
Editors
General Discussion on DPU
Is this a buy or a sell? Reply