The Right Moves

Does this article sing to you Soul? It doesn’t? Well, if things continue, it will most certainly blare its siren song to your pocketbook. Lump iron and iron pellets are base materials for Steelmakers. They are already rather high in Price, and negotiations will drive them higher, but can the World economies pay Increases of 65-71% and 86% for the coming year? Ore Producers and Steel Mills think that the World can, and are backing their beliefs with signed Provision contracts. This basic mess is occurring throughout the Materials provision markets, and with 85% of Commodities markets expecting Price increases in excess of 30%, what does it say about the possibility of Recession? It can only mean real Price-Markups for the total range of Consumer Products, during a Period when the basic components of Household Income is not rising, and accessory components of Household Income are showing the least resiliency expressed since 1993. I think the Speculators are finally going to get their serious Recession, this due more to financial and productive mismanagement, than it was ever due to Fundamentals.

Markets show almost no loyalty to Anyone, and Oil dropped below $100/barrel because of the drop in World consumption of the stuff, in view of the increase in Price. My Sketch-Pad is the most victimized thing in the World, and slandered by almost Everyone, but to my method of Thinking, consistent Oil Consumption patterns for 4 months should push Oil below $80/barrel. Does this seem like a Relief? It really should not, as Fundamentals would claim Oil should carry a Price-tag of about $63/barrel, and there is only a 40% chance Oil will reduce to $80/barrel due to massive liquidity in the Markets; accounted by Hedge Fund invasion of the Commodities. The Funds are fleeing everything, except the Markets which cannot endure liquidity.

I still would favor an exclusion policy signed by the major industrialized Players in the World, which set Purchase limits on Commodities by any entity in their national markets, until such time as the Entity can present residual proof of designed Consumption of the Product. This would basically limit allowed Buyers and Sellers to Those involved in the production or consumption of the Commodities. Most of my colleagues in the blogosphere will acclaim this as incipient communism, but the practice of Registered Participants in the Markets is old, and it puts all Buyers and Sellers into the same Pit based upon common directional need. It might be the Cure, and could not possibly be worse than the disease. lgl