The Weekend Commodities
Review Presents a Preview of
James Mound’s 2010 MEGA
COMMODITIES FORECAST
By Head Analyst James Mound
General Comments
Enjoy a free sneak peak at the
“2009- A Look into the Rearview” section of the 2010 MEGA Commodities
Forecast. The full report, set to be
released Tuesday January 5th, 2010, is 20+ pages covering nearly all
the U.S.
futures markets and includes detailed charts, trade recommendations and price
forecasts. Find out all the details at http://www.futurespress.com/mega-forecast.html
2009 – A Look into the Rearview
The new American President brought with him a bloodbath start
to stocks and commodities in 2009 as the epic market collapses continued
through inauguration. However, shortly
after President Obama took office the markets bottomed and began a choppy rally
that would last the year in most market sectors. Overall the markets stabilized from the
destructive nature of the banking and credit crisis. One of my favorite sayings from 2009 referenced
the so-called recovery in the housing market by suggesting the rate of decline
was declining, meaning the percentage month-over-month of the failures in the
housing market were decreasing. If that
doesn’t sum up the situation I don’t know what would – talk about finding a
needle-like bright spot in a very negative haystack! And yet there was some validity to the
concept as traders practice this idea in technical analysis all the time.
A critical part of the stimulus concept involved the Fed
dropping rates to literally nothing and keeping them there. They had no choice because the housing crisis
was already a crisis – what would happen if no one could borrow money? Oh wait, that happened too. So the government gives the banks money and
then let’s the public borrow at zero interest.
Sure a few months went by with the banks being super tight on loans, but
a bit of under-the-table shin kicking by the Fed and the Prez
and the money began to flow. Then the
argument ensued about the inevitable inflation caused by lower rates, but this
argument is not 100% foolproof.
Does inflation automatically occur when interest rates remain
low? Case in point Japan, who after nearly 6 years at
zero interest raised rates in 2006 because fears of deflation from rate hikes
subsided and their economy looked to be on the rebound. Even during economic turmoil the Japanese yen
is showing nice gains in 2009 against the dollar. This country went through one of the worst
economic downturns in its history, came out of it for a moment and fell back
into it because of global meltdown in 2008 and early 2009. It goes to show interest rate policy is
relative to the economic condition.
Let’s throw out all the analyst jargon that is out there about this
issue and break it down layman’s terms.
The idea behind lower interest rates causing inflation is founded on the
basis that lower interest rates means increased money flow. In the current condition this is far from the
reality of the situation. It doesn’t
take a genius to realize it is harder to borrow money now than it was two years
ago! Less money flow means reduced
inflation risk. In my opinion this was
one of the few intelligent must-do things the government achieved in 2009. On the flip side the stimulus was increased
money flow and government spurred inflation is very possible. For inflation to truly occur the costs of
core goods and services needs to increase, also known as the CPI or consumer
price index and on a production level the PPI or producer price index. The reduced cost of commodities, strengthening
U.S. dollar and successful commodity crop production in 2009 saved
inflation.
The connection between stocks bottoming and commodities
bottoming is an important one to discuss.
Historically in a bear stock market commodities tend to rally, so why
would one of the worst collapses in the history of the stock market also
collapse commodity prices? The collapse
had two critical elements to it that brought both industries to their
knees. First, it was global. The ’29 crash was about a lack of belief in
the U.S.
stock market. The savings and loan
crisis was a run on American banks. The
9/11 crash, well you know what I am getting at.
Simply this collapse affected the world and the world’s money supply
froze. No money means demand for
commodities evaporated and it also meant mass liquidation - the second critical
element. Panic selling triggered more
panic selling and liquidation over time destroyed both markets. Turning this money supply into cash takes
time and happens in bursts. A ton of
sellers with no money combined with over-extended investors meant goodbye
stocks and commodities!
Tensions also built in 2009 with Iran throughout the year, but for
the most part geopolitical issues have only recently come to the
forefront. Obama’s time in office has
focused primarily on domestic issues, but with the holidays bringing an
attempted terrorist attack one has to wonder if 2010 is going to be nearly as
quiet. As we exit 2009 the volatility
that brought many investors panic in the beginning of the year has, for the
most part, subsided, giving way to a trending rally that looks more like the
beginning of congestion to me. The once
value buying opportunities in commodities have now become sells or congestion
plays. Heading into 2010 the risks have
reverted back to the downside.
So what’s in store for energies, metals, softs,
grains, meats and financials in 2010? In
the 2010 MEGA Commodities Forecast I
will tell you 3 commodities I feel
are set to move 50% or more in 2010, 4
commodities I expect to see drop 30% plus in just the first three months and 1 very special commodity I anticipate
will make the largest move in its futures contract history. Plus get a free signed edition of my
book, 7 Secrets Every Commodity Trader Needs to Know,
and 4 free trade recommendations
from my Mound Trade Signals service as special bonuses. Buy the report before Midnight Eastern Time
on Tuesday, January 6th and save
75% so it’s just $49! Get all the details by going to http://www.futurespress.com/mega-forecast.html
