Looming Market Risks

[errolanderson]

An opinion but; serious risks surround
markets right now. Greece is a write-
off, Germany is not pleased. It's almost
like a dog burning down his doghouse and
still barking about it. Odds of Greek
follow-through on austerity appears low.
They are nodding their heads to get the
cash. A bottomless pit.

Italy, Spain, Portugal bank downgrades
yesterday. No surprise.

Loonie working below parity. 95 cents or
bust? if equities start a quick descent.

U.S. grains and cattle might be in for a
rough day sometime soon.

Errol

[Kodiak]

Another opinion, although not one I buy into completely. However, it is plausible, and I think we have to respect it.
All the news about Greece, Moody's ratings, Italy, Spain, - even China real estate- is old news. The markets have that well priced in long ago. Markets are forward looking and peer ahead into the future for new factors. Factors which individual participants, and certainly observers, don't fully comprehend until the event(s) are over. Greece, Germany, France, Moody’s et al-- it is all in.
There is a good chance that for example the price action we are seeing now in soybeans (5 month highs) has South American weather long priced in despite the daily chatter by the talking heads on CNBC and Bloomberg. The market is looking way past that. North American and China production are now being factored. Chinese ending stocks could be the most important determinant of summer and fall soy prices. Same for corn. Why is wheat stabilizing and rallying in the face of the well known situation with world stocks? The whole world knows we're awash in wheat....it's conventional wisdom. Yet the market is 40 cents off its December lows.....
Interesting.

[cottonpicken]

Imo,its the bond market.

The central banks of the world are making it clear
that they will step in.

Japans huge move today of a 130 billion asset
purchase is evidence that the can will be continually
kicked,good for gold,good for commodities,bad for
bonds and purchasing power of currencies.

[hobbyfrmr]

John Deere does not need to build a front boom.
There is enough farmers that automatically buy
the name and green paint. Deere will end up
buying a front boom sprayer manufacturer and
then painting it green to present to farmers. Its
just business.

[TOM4CWB]

tipsy,

The more time passes... the less likelyhood any court would shut this C18 operational legislation down...

[TOM4CWB]

I am Annoyed JOE!

I posted on the Court case...and it got lost... while the JD machinery post got inserted instead here... I wonder how that happened??? Joe???

[TOM4CWB]

Tipsy,

I think you answered your own question...

[TOM4CWB]

Tipsy,

It was rumoured that Oberg and Co were offering fall 2012 cash wheat prices... on their SHortline/elevator system...what does that tell you about what Oberg himself is expecting to happen???

[Kodiak]

It seems politicians and central bankers have the same interest.....don't let anything painful or bad happen on my watch.
So what's the result? It can't be anything but what we are seeing. They will do what they do because they can....devalue the debt (not through default but by forced writedowns) and devalue their currencies.
I agree cott, its inflationary. But look out when they need to tighten. Could be painful then. We experienced it in the 80's

[errolanderson]

What's interesting about these global
economic discussions is we can either
take an 'inflationary bent' on market
direction (which I respect) or take a
'deflationary bent' (which is my
personal view). What's interesting is,
market bumps are seen ahead regardless
of inflation/deflation viewpoint.

I'm still of the opinion that global
credit deleveraging (now in its early
stages) may be cause for a general
commodity price drop over the next 2 to
3 years. My concern is central
governments (U.S. Fed and friends) may
actually make the long-term situation
worse with their money printing
policies. That's why Bernanke is likely
hesitant over announcing QE3.

Errol

[boarderbloke]

I think Bernanke and the IMF(remember she's from Chicago, IMF head) will do what ever Obama wants him to do, and I think they'll keep the equity market rolling even with $4.50/gal gas till pass the election or perhaps let it all crash down maybe 2 or 3 weeks just prior to the US general election.(depending on whether he's polling ahead or behind the GOP
This thing is all fixed, that's why gold hasn't broke $2000 yet.

[cottonpicken]

Its a complicated topic,that has so many
variables,that predicting the outcomes is possibly an
act of futility.

So the quote "i'm no gynaecologist but i'll take a look"
means its interesting and fun non the less.

The system is inter connected.

If greece out right defaults and triggers a cds
payment(credit default swap) it is very very possible
that the top 5 us banking institutions are DEAD.

Why?because of the leverage in the banking
system,which a whole topic unto itself.

People and institution who where buying bonds would
also goto the cds market to insure their investments.

But the cds market was also selling more than what
was required to cover the total bond market.

Astute investors like Kyle Bass who seen what was
happening placed large bets in the cds market and
now are looking multiple thousands of percentage
point gains,like 6500% gains.

The funny part is the people who regulate the cds
market-the isda-are the very same people who sold
the cds in the first place.They decide who gets paid.

It doesn't take much analysis that the cds payout will
never be triggered .

So the question is-if these bonds are not
insurable,what are their value?

Greek bond holders are facing a 70-80% and they
probably want a 100% to trigger a cds payout,because
the excuse the isda will use is that its not a default.

So now we start wondering about all the bonds
around the world.

We wonder about the big bond holders-aka the
banks-and we wonder if those banks are solvent
when those bonds they hold are devalued.

That is why you keep hearing about bank
recapitalization.

Which brings us to central banks backstopping
everything-aka qe

Which brings us to the early 80's,lol.

The market functioned properly,let interest rates rise
and we survived,barely.

Let interest rates this time-total system failure why?
total debt is unserviceable in a high interest rate
environment.

[cottonpicken]

Errol,my argument on deleveraging is that the central
banks and tax payers are taking on the bad debts in
an effort to recapitalize commercial banks.

[hobbyfrmr]

Agreed , I answered a question in the machinery
forum and it's posted over here. This is supposed
to happen April 1! It would be no surprise if I am
responsible for the error, ultimately, it's no big
deal to me. Stuff happens.

[cottonpicken]

People post in other forums?