The Hightower Report made the following on the mark comments about the pervasive deflationary psychology at least as it related to raw goods and commodities. The same can be applied to credit instruments. I've been watching every commodity like a hawk for openings when commercials are long, so as to jump in. Have had a couple great trades: corn, and natural gas so far using this strategy:
"Last week an article in the WSJ suggested that inflation could be a little more of a threat than many would expect. However, given the entrenched bearish opinion toward inflation, we suspect that the journalist responsible for the article is rebuked by economists, as inflation is ruled by the establishment to be an "impossible" development. We also get a sense that many traders, commercial buyers, and maybe even producers of commodities fail to realize the potential for commodity prices over the coming twelve months. After being coached for twelve years that commodity supply is unending, that holding supply is unfruitful and that inflation won't contribute to higher price pressures, we sense complacency. Certainly, the recent sharp price response in beans, cotton, cattle, and natural gas have sent a warning out to the world that the tide has turned and that strong demand and tight supply can no longer be ignored. In fact, for the last decade, most markets have been conditioned to discount supply threats as long as minimum supply is on hand." |
