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A Tribute to the Thoughts of Another and his Friend
"Everyone knows where we have been. Let's see where we are going!" -Another
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4 comments:
Let's get this party started!!!
HI.
You rock FOFOA. Appreciate your blog and the time you dedicate to it. Though we all know spending time conveying that which a person possesses a passion for is a release. A comfort rather than a burden. :)
JNI
Help me with the second one. I wrapped my head around contango and backwardation finally, but want to make sure I understood Mr. Woo correctly. Spot price is stable because nobody wants to bet that "today is the day", but futures are volatile because FX traders are all betting on when, not if, waterfall happens? Might as well draw up one of those Superbowl betting grids and buy a square.
FWIW - We recently saw (and to some extent still do, Ag in particular) both the IR and PM's markets simultaneously waxing into backwardation..
...an out again.
This, coupled with the recent (6 odd months ago) flurry of activity in PM's acquisition where "price" increases were absorbed to a large extent by simply declaring the product "unavailable", has drawn me to this simple conclusion.
Those of us expectant of what should be rampant price increases in PM's due to the fundamentals, have been are being gamed by those who's role (and very existence)it is to firstly paperise pretty well everything so as to enable "price control" via paper futures.
The achilles heel of this little monetary engineering construct is a market abandonment of all "future" expectations in favour of the "here 'n now".
This, in modern parlance (but not quite correct however) is the essence of DEflation and IMHO is what our friend from Barclays Cap above is unwittingly alluding to.
http://3.bp.blogspot.com/_EZMGVwURo3M/Sp3HrsXxN2I/AAAAAAAABoY/zjmG3AFPslM/s1600-h/US+Money+Supply+and+Monetary+Base-753910.PNG
Nice (pleasantville) chart from Eric deCarbonnel.
B.
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