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Current Markets Macro Economics

China’s Economy is Hitting the Brakes

Andy WaldockComment on China’s Economy is Hitting the Brakes

This year, it is quite possible that China sees annual growth of less than 10%. While this is by no means a recession, if their economy slows down 4-6% it will have a global impact. Based on their holdings and consumption patterns we could see declines, in order of magnitude, precious metals, oil, mid level luxury brands and global interest rates. The continued development of the Chinese middle class will continue to support food and agricultural prices as well as textiles.

Current Markets Trading Strategies

Ending on a High Note

Andy WaldockComment on Ending on a High Note

This past week, commercial trader momentum in the S&P 500 turned negative to join the Dow and Nasdaq, which had already turned. Negative momentum across all three major indexes has been a reliable forecaster of topping action in the stock markets including the recent tops in April. When we combine this with the strong buying action across the short to mid term treasuries this past week, it’s clear that professional money is moving to safer bets to start the new year.

Current Markets Exotics Trading Strategies

Coffee Topping Out?

Andy WaldockComment on Coffee Topping Out?

Traditional agricultural commodity markets have always been subject to supply disruptions. Think about the mid-west flooding of the mid 90’s, mad cow disease, Florida orange crop freezes as well
as labor strikes and political coups. Almost two months ago, we talked about trading the coffee market. We noted that the two major growing regions both had weather related problems and that’s what
was driving up the price. There’s one other primary reason for commodity market supply shocks and that is the lack of substitute goods.

 

All commodity markets have very specific contract specifications that …

Current Markets Macro Economics

Commodities Still Strong Amid Global Uncertainty

Andy WaldockComment on Commodities Still Strong Amid Global Uncertainty

These ideas will continue place us on the long side of the commodity markets, while trading both sides of the Stock market and the U.S. Dollar. The markets should become less predictable and volatility should increase as the risk premium between the currency, equity and commodity trades continues to tighten. This will place many asset classes on equal footing and leave alpha to be gained only through the careful examination of the individual issues within those asset classes.

Current Markets Gold and Silver Macro Economics

J.P. Morgan Locking in Silver Losses?

Andy WaldockComment on J.P. Morgan Locking in Silver Losses?

History has shown that traders who lock into one idea, like selling the silver market, typically go broke before they are proven correct. J.P. Morgan’s dominant purchases in the copper market reflect their fear of outright loss in the silver market. Considering the notional amount (3.3 billion ounces) they are short relative to the size of the silver futures market and the global supply of physical metal, it will be interesting to see how they manage to divorce the loser they’ve inexorably hitched their wagon to.

Current Markets Energy Markets Trading Strategies

Diversification is not Immunization

Andy Waldock1 Comment on Diversification is not Immunization

Most people live their lives reacting to new stimulus. If something hurts, they don’t do it again. If something works, there’s no reason to change. Portfolio managers attempt to anticipate areas of pain and mitigate that pain wherever possible. However, there are times when efficient portfolio analysis, modern portfolio theory and just plain common-sense investing will still force one to endure periods of pain.

Current Markets

Sugar Tops 2010 Commodity Market Volatility

Andy WaldockComment on Sugar Tops 2010 Commodity Market Volatility

It’s been a banner year for commodity markets as many of them have witnessed unparalleled growth. The one sided movement in many markets in 2010 has made commodity funds quite favorable as they
are only able to invest through the purchase and ownership of their respective niche markets. However, long only commodity funds and Exchange Traded Funds miss out on one of the biggest advantages of
trading commodities. That is, the ability to sell a market short and profit from an anticipated decline in prices.

Commodity contracts have set expiration dates. This makes them a very …

Current Markets Exotics Gold and Silver Trading Strategies

Trading the Coffee Market

Andy Waldock1 Comment on Trading the Coffee Market

Is the price of that morning cup of coffee doing more to wake you up than the coffee itself? Lost among the commodity headlines of gold, silver and oil prices, the price of coffee has risen to a
thirteen year high over the last three months. Starbucks, Millstone, Caribou and others have all been forced to raise their prices to account for the increased price of their raw materials and the
rise in prices has not been confined to high- end purveyors. Both J.M. Smuckers and Kraft Foods have been forced to raise prices on their Folgers and …