Magox

For the record, I'm adamantly opposed to QE. And To be fair, some of that money is being circulated into the economy. It does create lower interest rates, it allows people to refinance their homes at lower rates, which in turn saves them on their mortgages that allows them to have more disposable income of which some of that flows into the economy. Secondly, there is a collateral impact on corporate bond issuance and rates. Corporate demand is higher because of lower rates, that allows companies to have more disposable cash for whatever purposes they need it for, which of course some of that flows back into the economy through more hiring and equipment. Third, there is the consequence of altering consumer and investor behavior. If an investor knows that he isn't making jack **** putting money away in his savings account or whatever bonds he's investing in, some of that money will then flow into riskier assets such as stocks, which of course has a short-term impact of higher stock prices that creates higher consumer confidence to spend money into the economy. Fourth, it does make our products more competitive, the lower the currency, the cheaper our goods are to foreign buyers with stronger currencies. So of course, this creates more demand for our products, which in turn leads to more profits and employment opportunities. In regards to your currency devaluation question. it's sort of like what Bill Gross says, the U.S is the "cleanest dirty shirt". Since the U.S dollar is fundamentally stronger than the Euro, the Dollar doesn't get devalued relative to the Euro. And since just about every other developed nation is doing the same, taking on monetary policy that devalues their currency, the Dollar really isn't dropping. However, if you place those currencies relative to tangible assets such as commodities, then they are for the most part getting devalued.

Allow me to answer you in this way. Remember, the goods of this world for the most part are traded in a market. Whether it's regulated or not, a market is a market, which means prices are determined by individuals and entities who willingly accept the underlying purchase and sale price. So, when you have monetary policy that is loose, in this particular instance QE, which is the printing of money, then there is first and foremost an impact on the currency itself. Market participants in most cases will reach an outcome of a lower value of that particular currency, simply because there is more of that currency available. General rule of thumb in most markets is that the more there is available of any underlying product, the lower the price that it will be. Same goes for the inverse. So now that we've established that the value of X currency is lower, how does that translate into higher commodity prices? So if you have an individual or entity that has a lower valued currency purchasing the same underlying product vs. a relatively higher valued currency, the individual or entity making that purchase of that product will pay more for the price because it takes more of that currency to purchase the same amount of that particular product than the person who has the higher valued currency. That's the main reason. Now of course there are collateral impacts to currency devaluation. Why do some central banks believe that devaluing their currency will stimulate their economies? There is an argument that can be made that these actions do stimulate the economies in the short-term, that produce more overall demand in those economies for virtually all goods, which leads to higher prices. But that's not the main reason why prices go higher due to currency devaluation.

Are you talking about interest rates?

You guys understand the concept of "baselines" right? The way I see it is that a result of ongoing loose monetary policy, the baseline for the price of oil is continuously rising. Having said that, that baseline or trend doesn't always move up or down in a consistent linear fashion. Think of it in a prism of a long-term chart. Of course there are plenty of fluctuations and volatility in the price of oil, but when you look at the charts there are other factors that affect the price of oil, such as supply, supply disruptions, demand, geopolitical risks etc. http://futures.tradi....com/chart/CO/M (I tried to paste image but was unable to) If you see, the trend for the past years has been rising. You can imagine drawing a line right through the trend line. If you see, with the exception of the big crash of 08/09, the lows are consistently getting higher. That's the baseline. There are two main factors that drive these markets, or for that matter in this case inflation, which is growth and currency. There are some years that growth/demand is the primary driver of the market and other years it's currency devaluation. In the earlier to mid to mid late part of the last decade, we had both growth and Dollar depreciation occurring which led to an explosive rise in commodities. Then of course we had the crash, which led to a significant drop off in demand and a run to safety to the dollar which led to its precipitous fall. In the beginning of the global "recovery", there was significant action from both the Fed with QE, which led to the erosion of the value of the dollar and we had lots of global stimulus in China, India and the US, which led to a increase in growth and demand, so we had both engines temporarily working again which led to a rapid rise in prices. Once stimulus wore off, growth world wide began to decline. So now, we have one of the two main engines that has broken down, which is growth. Since there isn't much of an appetite for more "stimulus" from governments across the world, actions from governments through out the world have relied on their central banks to try to help stimulate their own economies. The actions taken have been to further erode the value of their currencies in order to make their own goods cheaper and more competitive for exports to their global partners. In essence a currency race to the bottom. So we do have ongoing currency devaluation through out the world, which means we have one of the two engines that are operational. Growth: No Currency devaluation: Yes So even without growth, we still have prices that are slightly rising. Reason being is not because of a refinery shut down, or supply disruption or seasonality, those are just the day to day reasons why the markets move, the reason why the baseline is continuously and steadily rising is because of global monetary policy. If the world were to begin growing again at a normal healthy growth rate, then we would be seeing significantly higher prices. At least $120 a barrel Domestic oil and $135 Brent Crude. What will make this "bubble" end for the long-term, which is the term that TPS incorrectly likes to use will be the rise of currencies. Policy makers across the world will focus their shift to combat rising prices, which will become the predominant concern at some point moving forward, and monetary policy will change to a more hawkish stance, and then we will see both interest rates and currencies trend higher which will lead to the end of the commodity rise and flushing out of inflation.

Dude, I've spent a fair amount of time trying to explain this to him. No luck How so? That they taught those evil speculators a lesson?

Thank you for the link. Pretty much nailed it

So what was the "message" and objective of the release of the SPR suppose to be? Why did you applaud it if it achieved virtually nothing? Also can you link me the thread so that I can see exactly what i was responding to? Thank you for bringing this up, because it pretty much backs up my account, which was that you supported the release of the SPR, because you did believe that it would have an impact. Sorry, but a 1-2 day impact on prices affects no one other than traders. Also I seem to remember that I made this prediction before the release of the SPR and we both argued over it's impact then and after the release of the SPR. Correct? And when you said this What was the point that you were making? If you "agree" that it doesn't have a long-term impact, and let's be real here, you only agreed with it once you realized that it didn't have an impact on prices as I told you that it wouldn't, then why support the release of the SPR?

I can safely say you have no clue in what you are saying. Remember when you incorrectly believed that the release of the oil reserves would have an impact on the price oil and I told you that it wouldn't? Ya, that was hilarious And the only person who ignores facts here is you.

Exactly

You are one hard headed dude. The economy sucks and is flat lining, global growth is considerably weaker than it was last year or the year before, demand for oil in the US is dropping, global oil supply and production is rising, domestic supplies are 10% higher than it was last year at this time and YET Brent crude WHICH IS THE OIL THAT IS TRADED GLOBALLY averaged a record high last year and on pace to go higher than last year, AND We have record high gasoline prices for this time of the year. You know when you parrot something that you read a trader comment on, you do know that the rationale given for the price rise was for that particular day don't you? So when you say "good employment numbers and refinery issues". All you did was repeat that particular traders analysis for what he attributed for that particular day or days rise. We had a guy at our firm that use to be quoted occasionally at IBD and when they called him for his opinion he'd give them his best opinion based on the word at the floor. It's not long- term analysis, it's extremely short-term.

Again, everything with you is in a vacuum. Thats not the way things work TPS. World growth was considerably stronger then than it is today, not to mention the turmoil and supply disruptions in the Middle East were pushing prices higher. With considerably weaker domestic and global growth we have the highest energy prices EVER for this time of the year. The main driver for the inflation we are experiencing today is more currency driven than anything else. I'm not arguing its the only factor, yet somehow I explain it to you over and over and over and you still keep failing to grasp the concept of relativity of growth from then to today. Why do you keep doing that? It's one of two things, either you are purposely ignoring what I'm saying or that you are too dense to fully comprehend what I'm saying. One of the two

What the hell are you talking about? Of course it will affect almost all asset prices. What are you, a moron? You keep sinking lower and lower. You are incapable of understanding what inflation truly means. Your main flaw and its a big one is the failure to recognize the impact of what currencies do to assets such as commodities. Until you correct this failure of yours we will continue to go in circles, in the meantime, real every day Americans see rising prices ie. inflation as their chief concern . But in your in bubble world, they are wrong, because your metrics say differently. Who cares that the price of gasoline and food continue to rise, despite seeing their wages stagnate. Also commodity prices will one day tumble, for a long period of time, but it will because of one of two reasons. And you can take this to the bank, either the world falls into a long- term slump or the return of hawkish monetary policy will return, which is the most likely scenario. Monetary policy is the number one driver of commodity valuation. More so than actual physical demand and supply. . This is lost upon you no no, you simpleton, TPS' metrics says differently. There is no inflation. Everything is a fantasy, it's just a bubble waiting to burst. In the meantime just about everyday that passes your wages are buying you less and less. But that's not real because TPS says so

I haven't been able to access the RCP site

Just wonderin, how many of you were offended by the interrogations of waterboarding?

Oil, gas .... same thing. The reason why I brought up gas was because that was the news of the day. To your point that we aren't experiencing high inflation, most every day Americans would disagree with you. Who gives a **** what their metrics say? Real every day people spend money on housing, clothing, food, gasoline, health care, education and other goods. For people who are in the lower to middle class, every dollar matters, so when you have costs of essentials such as food and gasoline rising, then it makes a difference. You and I will never see eye to eye on this, you live in a bubble world, whereas most people live in the real world where these things matter. So yes, we are experiencing high inflation, specially considering job creation is barely keeping up with population growth and wages are stagnant. It's simple, if you were able to get out of your bubble and apply common sense you would agree. If wages remain stagnant and the price of essentials such as food and gasoline have risen considerably, then that means disposable income continues to drop. That is what real people in the lower to middle class have to go through. Right here on Page 23, a recent poll showed when asked: 31. Which of the following is the biggest economic problem facing people like you? You know what the number one answer they gave? You guessed it, Rising prices. Rising prices over housing, taxes, unemployment etc. People worry about inflation because they see it.. They see it in their day to day costs, meanwhile you sit in your office or wherever you do, and crunch numbers using metrics that every day people don't give two ***** about. Let that poll sink in for a while. Seriously, let it sink in, read the question a few times, and think about what the result tells us. The reality is that once QE began, the price of virtually everything went up afterwards, just as many people including myself predicted. In regards to this point you made: I guess you missed or didn't understand what I was saying when I responded to your shallow year over year gasoline argument, when I said this: In other words, that of course I don't believe that the price of gasoline rise is completely attributed to QE. There are many other factors, but it certainly is one of the main drivers, without a doubt. I'm gonna try this one more time with you, since you are having a difficult time understanding why your year over year argument is a dishonest argument, and for your sake, I just hope it is dishonest, if not, then you should completely get out of the work you are doing because you are doing no one any good. You are using the year over year argument as your justification that inflation is tame. But you don't account for growth and supply. Without these two variables, your case is non existent. If growth is slower, which means demand for oil is relatively the same, yet supply is increasing, then even if you have a price that is static implies inflationary pressures. If you were to have similar 4.1% GDP growth from where we were one year ago here in the U.S and a world economy that was performing similar to then, then the price of oil would be considerably higher than it is today. Do you understand this? Seriously. I'm curious. It's not that difficult to understand, or is it? When did I imply this? So your argument is that employment figures that are barely showing employment growth relative to population increase is "good economic news" ? Wow! That's how bad the economy is, where we have anemic job growth and flat lining GDP growth and somehow that is misconstrued as "good economic news" In regards to Refinery closings. I traded these markets on the NYMEX for the firm I use to work for and my clients for years, and I can tell you that this is nothing new. So when you dug up an article that stated this as a reason, that means absolutely nothing. Every one in the business understands that what happens is when prices rise for any commodity or stock, they will interview one of the traders or analysts, and that analyst and trader naturally gives their best opinion on why the market went up or down for that day or week. So the refinery closings is nothing new, it is a common occurrence.

Read more: http://www.nydailynews.com/life-style/health/organic-food-healthier-stanford-researchers-nutrition-organic-meats-produce-dairy-better-article-1.1151470#ixzz2K99sSMHJ

Libyan oil production is higher today than it was in the first quarter of 2012. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8749925 Read more: http://www.upi.com/Business_News/Energy-Resources/2012/07/31/Libyas-oil-production-below-pre-war-level/UPI-70431343736840/#ixzz2K4J4HvdE http://www.reuters.com/article/2012/11/13/iea-idUSL5E8MD38820121113

Yes, you are the dingbat. Specially considering that you STILL aren't able to grasp the growth relativity argument that I made, which has EVERYTHING to do with the point I made. You at times can be pretty damn dense. Take a deep breath, re read what I wrote, let it digest a bit, and then get back to me. You would have a point if that article was Feb. 2013, but since you posted one from Feb. 2012, which shows strong growth UP TO that point. However, Demand for oil globally the past year, has flat lined. You must have missed this part from my post

We all know DC TOM, and we all know he can be insufferable at times, but we also all know that he's the smartest guy that posts on TBD... When it comes to physics, I'll take the published physicists word over someone who did some reading on Physics.

Oh, you want to play this shallow game? Sure, if the shoe fits So the price of RBOB gasoline on the NYMEX back on March 18th of 2009 the beginning of QE was at 1.36 a gallon. Today it trades north of 3 a gallon. it's an increase of 127% in less than 4 years professor dingbat. Yup, better tell the Fed to put the metal on the pedal. http://futures.tradi...com/chart/RB_/M Now of course, if you wanted to take a more intellectually honest approach, which you don't, you would factor in other variables such as relative growth. How can it be that last year, 2012, GDP for the first quarter of the year posted it's highest number since Obama took office, posting a 4.1% GDP. Yet this year, we are flat lining, and the price of gasoline is higher today than last year? http://www.tradingec...ates/gdp-growth Not to mention Global growth is markedly slower today than it was in the first quarter of last year. http://www.economist...focus-world-gdp How can it be possible that the price of gasoline is higher today, with a considerably weaker domestic and global economy? If growth is much slower, how can gasoline prices be higher without any supply disruptions? So how can that be Professor Dingbat? Think long and hard before you respond, would hate to see you get embarrassed again.

I guess you missed the part of the highest on record for this time of the year? With an economy that is flat lining. Yep, no inflation at all

I never quite understood the "need" argument. What business is of anyone to say what they do and don't need. I can say this, anyone who has this mentality certainly doesn't have the make up of a libertarian minded person.

!@#$