Maniac in Motion

Behind the Curve of Potash Prices

The drop today were institutionals unloading some of the position for end of 1Q'08. Watch for MOS earnings. It'll be very nice.

The biggest problem with just following analyst comments is they're never bullish enough in a strong sector like Raw Materials, and never bearish enough in a weak sector like Financials.

The New Pillars of Inflation

The article is a great argument. I saw a chart where historically commodity prices were way below benchmark compared to the S&P. And that is due to disinflation. I think it will go back to its benchmark less because of rising commodity prices and more from an S&P index correction.

That said, many of the commodity prices are rising becaus of the dollar devaluation. If oil were to, in a monumental OPEC announcement, be depegged from the US dollar, it would be good news for oil consumers, and bad news for the US.

The dollar has been resilient to depreciate much more quickly because so much has been pegged to it over the last 3 decades. However, it was only done so with the assumption that a strong dollar would alway be a strong dollar. That's why the Secretary and the President say they continue to support a strong dollar policy. Of course, what a politician says and what his central banker does are evidently 2 different things. To support a strong dollar, the Fed should be raising rates, be damned the consequences. That was the Volcker method, and he gave confidence to world markets even if he wasn't Mr October at home.

There's a saying that sounds much better in Spanish, but loosely translates like this: "Between the things you do and the things you say, I see a widening gap today."