Investors Head for Exit as Commodities Extend Slump – Bloomberg 09-30-14

Salient to Investors:

  • Investors pulled the most money from US ETPs backed by raw materials since April.
  • US corn and soybean crops are the biggest ever, global stockpiles of nickel are at an all-time high, the US is producing the most oil since 1986, while China is headed for its slowest expansion in two decades.
  • The Bloomberg Commodity Index is set for a fourth straight annual loss, the longest slide since data began in 1991.
  • Societe Generale lowered its price forecasts for more than half of the 43 raw materials it tracks, and recommended shorting gold on rising US interest rates and a rising dollar, target below $1,000 over the medium-term.
  • Citigroup pared its outlook on crude oil, gold, corn and wheat.
  • Goldman Sachs still expects losses in copper and gold.
  • In August, Citigroup forecast the Arabica-coffee crop shortfall may leave a global production deficit lasting into 2016. Citigroup is bullish on palladium, copper, nickel, lead, coking and thermal coal, cocoa and coffee.
  • Deutsche Bank forecast commodities will end 2014 in a positive run with nickel, zinc and lead outperforming.
  • Donald Selkin at National Securities said certain markets are bullish because of supply issues, including cattle, nickel and coffee, while the worst may also be over for the big three – gold, crude oil and grains.
  • Jeffrey Currie at Goldman Sachs expects gold to fall to $1,050 by year-end, copper to fall to $6,200 a metric ton over 12 months due to a major increase in stockpiles.
  • The IEA said global oil demand will weaken because of weaker growth in China and Europe, rising exports from Libya, and booming US output, all outweighing potential output disruptions in Iraq.
  • Economists expect China to grow 7% in 2015, the slowest rate since 1990.
  • Quincy Krosby at Prudential Financial said you need growth in China to support a rally in raw-material prices.

Read the full article at  http://www.bloomberg.com/news/2014-09-29/gluts-spur-investor-exit-signaling-prolonged-price-slumps.html

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U.S. Stocks Fall as Small Shares Tumble Amid Home Sales – Bloomberg 09-22-14

Salient to Investors:

  • JC O’Hara at FBN Securities said the spread between the Russell and S&P 500 is widening again and worrying traders who want to see small caps participate.”
  • Jonathan Krinsky at MKM Partners sees a good chance of US equities declining modestly into early October, citing deteriorating breadth and seasonal weakness. MKM said that when the Russell 3000 Index touched a intraday record on September 19, less than 55% of its stocks were above their 200-day moving average, and the last time that happened was on March 24, 2000 at the end of the dom-com bubble.
  • Donald Selkin at National Securities said people are looking for an excuse to knock the market back down a little bit.
  • William Dudley at FRB New York said the Fed is on the lookout for signs of asset-price bubbles, and financial stability is a necessary condition for effective monetary policy.
  • Julian Robertson at Tiger Mgmt said bonds are at ridiculous levels and their bubble will end very badly – governments worldwide are buying bonds to keep their countries growing.

Read the full article at  http://www.bloomberg.com/news/2014-09-22/u-s-stock-index-futures-fall-as-china-damps-policy-bets.html

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Hedge Funds Raise Gold Bets as Goldman Sees Decline: Commodities Bloomberg 07-29-13

Salient to Investors:

Hedge funds et al increased their net-long position in gold futures and options for the 4th consecutive week and the longest streak since October, while more than doubling bets on lower corn prices to a record net-short holding.

Jeffrey Currie et al at Goldman Sachs said gold will decline to $1,050 by the end of 2014 as the US economy improves, prompting less accommodative monetary policy.

Mark Luschini at Janney Montgomery Scott said buyers expect tapering to begin later than many anticipated.

IMF said Russia and Kazakhstan expanded their bullion reserves for a 9th straight month in June, and the World Gold Council said central banks will buy 400 metric tons in 2013, after adding 535 tons in 2012, the most since 1964.

Donald Selkin at National Securities Corp said resistance from people who got caught before will limit further upside and wait to see what the Fed will do.

Mining companies announced at least $15 billion of write-downs in the past 2 months.

John Paulson at PFR Gold Fund said accelerating inflation is a risk reiterated his commitment to buying gold and gold producers as a hedge against currency debasement as central banks pump money into economies.

Goldman pared its 12-month commodity-return forecast to 0.1 percent on July 22: agriculture and precious metals will lead declines.

Net-long positions in crude oil climbed to the highest since the CFTC data begins in June 2006.

Barclays expects copper supplies to exceed demand by 107,000 tons in 2013 and 387,000 tons in 2014.

Corn holdings are the most bearish since data began in 2006. US government forecasts American farmers will harvest record crops.

Jeff Sica at Sica Wealth Mgmt said supplies are high in many commodities amid economic slowdown that is accelerating worldwide.

Read the full article at  http://www.bloomberg.com/news/2013-07-28/hedge-funds-raise-gold-bets-as-goldman-sees-decline-commodities.html

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Gold Falls Below $1,200 to 34-Month Low on U.S. Economy – Bloomberg 06-27-13

Salient to Investors:

Donald Selkin at National Securities said when the market gets into a trend, people want to follow it, and now we’re in a severe downtrend, so the psychology is terrible, and if any of the big holders that are still in the SPDR Gold Trust start are forced to sell, it could be big a wild card. Selkin said gold may fall to as low as $800 in panic selling – which would be the cheapest since December 2008.

Credit Suisse said gold fell into a bear market in April, and the decline has shattered the confidence of investors betting on an extended rally. Morgan Stanley and Goldman Sachs cut price forecasts.

Frank McGhee said nobody wants to own gold anymore, and we are getting a continuous grind down with heavy liquidation.

Michael Smith at T&K Futures & Options said supply side concerns in South Africa remain, while strong US economic data is providing support to precious metals that have industrial use.

Read the full article at  http://www.bloomberg.com/news/2013-06-27/gold-rebounds-with-silver-from-lowest-levels-since-august-2010.html

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The Price of Gold Is Crashing. Here’s Why – Bloomberg Businessweek 04-15-13

Salient to Investors:

The most important factor in gold’s decline is that global inflation is falling and gold bugs are scrambling to exit their gold positions at any price.

The JPMorgan Chase global consumer price index shows global inflation peaked at 4 percent in 2011 and has fallen steadily since.

JPMorgan’s main bottom-up collection of analysts’ forecasted price trends sector by sector around the world shows inflation rising very slightly for the rest of 2013: and its top-down analysis shows inflation moving down closer to 2 percent in half2 2013.

Joseph Lupton at JPMorgan Chase said the inflation decline is partly due to supply bottlenecks easing and demand growth slowing.

Goldman Sachs warned last week that the retreat in gold was accelerating after the longest rally in nine decades.

Donald Selkin at National Securities Corp. said the perception is that gold is not needed as a safe haven and people are looking at the stock market and are stunned, and there’s no inflation.

Read the full article at http://www.businessweek.com/articles/2013-04-15/the-price-of-gold-is-crashing-dot-heres-why#r=read

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Gold Bets Cut by Most Since 2007 as Sugar Bears Grow – Bloomberg 02-25-13

Salient to Investors:

Hedge funds et al reduced net-long positions in gold futures and options by 40 percent last week, the biggest drop since July 31, 2007. Commodity bets across 18 US raw materials tumbled to the lowest since December 2011. Global holdings of gold ETPs fell by the most since August 2011.

James Dailey at TEAM Financial Asset Mgmt said talk about an exit strategy for the Fed has frightened people, and there’s a confluence of weak gold owners.

Adrian Day at Adrian Day Asset Mgmt said China’s demand for commodities will continue to support prices as it imports more energy, metals and grains.

SA Commodities said Brazil’s ports have 192 ships waiting to load 10.8 million tons of commodities versus 90 ships waiting to load 4.1 million tons a year ago.

Jeffrey Sica at Sica Wealth Mgmt said China can’t get enough to meet their demand for agriculture – despite sentiment around the funds selling off, the demand is still very much there.

Cameron Brandt at EPFR Global said money managers withdrew $828 million from commodity funds last week, while gold and precious-metals funds lost $870 million, the 7th straight week of net withdrawals.

Macquarie said world sugar output may exceed demand for a third consecutive year.

Donald Selkin at National Securities said the big crops indicate supply concerns will be lessened.

Read the full article at http://www.bloomberg.com/news/2013-02-24/gold-bets-cut-by-most-since-07-as-sugar-bears-grow-commodities.html

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U.S. Stocks Rise to Highest Level Since 2007 on Earnings – Bloomberg 02-08-13

Salient to Investors:

James Paulsen at Wells Capital Mgmt said people are finally deciding that this looks more like a sustainable recovery.

75 percent of 341 S&P 500 companies so far reporting have beaten estimates, 67 percent have beaten sales estimates. The S&P 500 P/E is at 15 versus the average of 16.6 for the past decade.

John Fox at Fenimore Asset Mgmt doesn’t see anything changing the rising trend in oil exports.

Donald Selkin at National Securities Corp said stocks are fairly valued, and as long as interest rates stay low, we won’t get much multiple expansion.

Read the full article at http://www.bloomberg.com/news/2013-02-08/u-s-stock-futures-are-little-changed-linkedin-rallies.html

 

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