The Wizetrade Commodities Blog

Two days ago Representative Daniel Hannan, MEP from Southwest England addressed British Prime Minister Brown. It is uncanny how much the economic problems he addressed resemble ours in the U.S. The solutions undertaken for the recovery of Britain's economy resemble the same being applied by the Federal Reserve and the U.S Treasury Department.

Will the same failed solutions to bolster Britain's economy fail as well in the U.S.? And, if they do, will they have the same effect on our stock markets, our debt sales through Treasury auctions, and our currency?

Click on this link to view the text of his oral statement: YouTube or TEXT

Treasury Secretary Geithner’s bailout of toxic assets depends on private sector involvement to succeed. Therefore, hedge fund managers will require a set of incentives to insure profitable returns before sinking the last of their cash in Wall Street investments. One incentive focuses on the price paid for worthless CDOs. How cheap must these CDOs become before being deemed lucrative in view of current market conditions?

Certainly, confidence of success will have trouble building on a foundation of the DOW at 7,500. Skepticism is sure to reign unless the DOW exceeds 9000 and an acceleration to the ’98 – ’99 highs occurs with mainstream newswires hyping: BULLS BACK ON TOP! THE RECESSION IS OVER! THE ECONOMY IS SAVED!

Secondarily, the run up of the DOW above 9000 should encourage the pool of small investors to push their remaining cash reserves into the new bull market exuberance; the key to creating a bubble to pop. The new influx of speculative buyers allows the hedge funds to sell their CDOs at a profit as new housing starts and real estate values increase. Watching this movement with the eye toward profit taking at the exuberance high and reversing to sell the markets on the descent may prove to be the best strategy.

One key in timing such an event would be the mainstream analysts' advice to buy and hold stocks to 20,000 DOW, "at least."  This confidence, coupled with persistent  assurances that a twenty percent drop in value is just a pull back “necessary to stabilize” the markets before the next round of buying can begin, will keep the small speculators in the market.  

“Is this the bottom?” the analyst is questioned.

“Well, if this isn’t it, it certainly is close to it. We are finding some real bargains in the _________ sector at this level,” will be his answer all the way to a 5,000 DOW.

Buy and sell with caution.

“Just as your shareholders expect you to get a fair rate of return on your investments and to be wise stewards of your balance sheets, the American people are asking the same of us as we manage their resources," Secretary Ken Salazar said in a speech to the board of the directors of the American Petroleum Institute, the trade group for big oil and gas companies.”

Amazingly, I (included as an American people) now own oil and gas production in the U.S. Great news! Thanks, Secretary Salazar, for giving me a piece of that great big pie of shared resources. I would rather manage my resources, but whom else better than you could do it for all of us.

"But this is not, as some have suggested, a war on the oil and gas industry," he said. That’s a good thing because then I’d be at war with my resources.

"The American people want to know they are getting a fair deal," Salazar said. I didn’t know I did, but thanks for knowing what I am wanting. Are they tapping my phone again?

Salazar said oil and natural gas will remain "a cornerstone of our nation's energy base" for many more years, but alternative energy sources, like wind and solar power, must also be developed.

Surely I am concerned about a lot more of our resources than just these. What about my, I mean our gold and silver mines; our banks and automobile industry?

I will sleep better (and with only one eye counting your sheep) knowing the government, or should I say the all knowing EYE knows what I want to do with things I don’t know I have.  What else could I want? Doesn’t matter; the government will tell me.

Resource: No "war" on oil... by Tom Doggett, REUTERS

Today saw the launch of the e-Meats: E-Feeder Cattle, E-Lean Hogs and E-Live Cattle. The advantages of the electronically traded markets are longer hours, 23 hours instead of 4 hours in the pit. This means a stop loss (for those of you who use one) is working throughout the night while you sleep. Maybe that can make for a more restful night when not faced with the possible heart attack at the open in the pit at 9:05 a.m. Central.

Compared to the the side by side open outcry markets, Electronic volume is lighter in Feeder Cattle, about even in Lean Hogs and greater in Live Cattle. So the highest traded contracts are even higher in volume in electronic trading.

Currently, our Paper Trade Manager server is not accepting orders in this market while the integrated broker’s live access is wide open to trading. The paper problem is soon to be corrected. So…………Trade away, pal.

Why is the truth about the amount of Sweet Light Crude Oil available for extraction here in our own country not being made available to the public?

Amazing as it may be, the “Bakken find” is 8 times the oil reserve of Saudi Arabia. There is enough oil to eliminate the United States dependence on all foreign oil by supplying our needs for the next 41 years. This is the fourth such find in the world in the last 3 years and yet just last year we were being told about Peak Oil. The other three: Russia’s discovery in northern Russia estimated to be 1½ times the size of Opec’s oil reserve; Indonesia’s discovery estimated at close to the same size as Russia’s; and the Gulf of Mexico Reserve estimated to be the third largest oil reserve in the world.

Let’s keep this in mind as the effort to eliminate oil exploration and production increases from Washington’s elite and Environmental lobbyists in the next few years.

Thanks to Carlia Warden for forwarding the link to the story about the Bakken Oil Reserve, the “largest oil find since Alaska’s Prudhoe Bay.” Link to story.

May Soybeans are at a point of no return. They either need to extend past yesterday’s high of 895 or sell off. The downturn may lead the way back to 838 ‘2 posted on March 9, 2009.  

The May Corn contract seems to be in the same position as May Soybeans today, and Crude Oil yesterday. Corn’s high of yesterday, 384 ‘0 must be exceeded followed by a push past $400 to consider a trend change in this market.

Yesterday, Oil needed to exceed $48.80/BBl to continue to keep pace with the buying pressure in the market. When it reached $48.30/BBl, the market sold off to close down at $45.71BBl. At this point, selling continues to carry the market south toward $33.50/BBl.

We have seen Crude prices gradually inching higher to top out so far at 48.80, which remains below the Mid Term Channel high of 50.05.  We have had a nice pullback to the $45 levels overnight, and projections are for demand to remain low as globally, we are travelling less and projected to continue to travel less.  OPEC recent moves to limit production have again failed to raise the price per barrel as demand side remains low.  It may take a sustained bull rally in the markets to get these ranges to break, and I haven't seen bullish enthusiasm for more than three days in a very long time. Crude Oil continues to move lower from highs this morning.

Breaks above 48.80 need to push us back towards $50.

Both the House of Representatives and the Senate are asking the Federal Reserve to account for the 2.1 Trillion dollars of our money they gave away to unknown sources. The following is from Ron Paul's web site:

Recently, it has come to light that there is little to no accountability to the people on the part of the Federal Reserve. While the citizens of this country are required by law to give an accounting of every penny they come in contact with, the Federal Reserve has never been held to the same standard. During this time of extreme economic crisis, the people deserve an accounting of where our money is going.

Currently there are 11 co-sponsors for this legislation, and it is enjoying bi-partisan support. Your efforts in supporting this important legislation would go a long way in proving to your constituents that you not only hold the Federal Reserve to the same standard as you do your constituents, but it would also show that you believe in transparency. Anything less than support for this resolution suggests that you are in favor of secrecy and a lack of accountability to the people who pay the bills. We pay the tab; we have a right to know where our money is going.

Read the bill.  http://www.ronpaul.com/2009-03-04/ron-paul-audit-the-federal-reserve/ and see what you can do to help.

It appears that a run at 332 is on for March Corn. Yes, we have moved into the May contracts in all the markets, but March is still the front month and all my projections are still for that month. It just means more to the downside in all the grains for awhile.

Financials are trading below recent support, but at least they still move opposite Indexes. The rallying of the US dollar and falling Indexes make Notes attractive considering the perilous position of most European currencies. It’s the “better a return of your money than return on your money” scenario. As soon as the George Soros gang finish demolishing the eastern European emerging nation’s currency, Poland’s Zloty, the Hungarian Forint, the Czech Koruna, the Euro will tumble with the Pound. Then all that would remain is selling the US Dollar. More money; more money!

The final dagger in the dollar may make central banks distribute a Gold backed world currency to which all other currencies are tied (Breton Woods, 1944 revisited). Then a CB would have the luxury of ratcheting up the printing press for national currency distribution while maintaining a safe and stable international currency for bank to bank transactions. The best of both worlds could occur if the price of gold was frozen to International Bank “units” and public ownership was illegal except as jewelry.

The Indices need a break. I wouldn’t want to see everyone united in selling out on the same day. That would be too easy, too quick to the bottom. We need a “Relieve the Pain” rally in the stock markets; something that convinces all the small speculators that the “Bottom” is in so they can commit the last of their reserves to buy and hold.

Crude Oil reserves in Exxon amount to a larger cash reserve than any competitor’s net worth. Look for them to start buying out competitors in a large way in 2009.

Meats look like the final of the sell off is underway. They should rally soon.

Not only did Oil fail to break resistance at 45.275 as it stopped short at 44.90, but now it has broken through support at 42.525 tio trade as low as 42.175 before rebounding but remaining below the previous support at 44.525.  The US Market futures are down this morning and setting up for a bearish open as the Asian Markets dropped 2.0% and the early European session has their indexes down by 3.0% to 4.0%.  This market bearishness could continue to drag on oil prices (and other commodities) this morning.  Should we see some recovery in the US Session later today, we could get a continuation of recent buying pressure to provide a nice pullback and set-up, but I'm not banking on a recovery with the tumble we have seen overnight, so make sure prices bottom out before looking for a long side opportunity.