Think most of it is fundamental, centering around all the things we've talked about over the last couple years: the one disruption away, or run of hot (or cold) weather stuff. But now there is a powerful inflationary psychology that is influencing both NG users and speculators. These guys no longer believe the govt statistic clap trap about no inflation threat. Plus users are willing to pay up (or price hedge) for fear that they could get caught in a serious price spike or interruption. Add groups of speculators and "flucht in die sachwerte" (flight into real goods) investors who are using all the excess cheap liquidity and loans out there to both gamble and protect (substitute) their assets from inflation or even hyperinflation. Using NG, oil, etc as money is a particularly dangerous development for the real economy. Besides the strong prices of energy, the clues to this are the big buildup in bank lending for this kind of activity. It's in here believe me.
federalreserve.gov
That's a footprint, that the Fed (sycophants, not leaders) just ignores.
My theory though is that the world economy is much closer to a real bust (caused in large part from these spikes and also the US consumer hitting the wall) from these maladjustments than is commonly perceived. So my sense of it is we are in a blow-off, that will precipitate a severe contraction of economic activity. I feel it is close at hand. In terms of NG and coal, it might mean an even further price spike from here, followed by a large correction (but from high levels). Or prices could just sustain here and cause a Chinese water torture duration effect. I can see this scenario underway, but naturally it will be difficult to time (*)even well, just be careful if you are long resources, because this is the fool's rush in phase (now you can even borrow money to drive up resource prices, how wonderful for Bully and Pig Men). For me, it's a distribution phase.
(*) I'm trying to develop real time or short time (forget the 4th Q stuff, worthless now) indicators that give some clues on this. Just one developing (?) example (there are others that maybe others too can offer? some of this is subscriber based, I'd like to get rail loadings), yoy US steel output (source Barron's lab section), this may be reflecting less auto output in the US, as well as cost of steel starting to eliminate projects? By the way the BBC seems to be a real business news operation, not subject as much to Ministry of Propaganda Kudlowian/Joe Goebbels doctrine and pom pom waving.
news.bbc.co.uk
Electric output would be good too, if you had a way of smoothing out weather? How does this one look to you in the last month?
2-12 2,065 vs 2,071
2-19 2,033 vs 2,094
2-26 2,044 vs 2,121
three week - 2.3% |
