Biggest weekly drop in commodities in 50 years.
Technically speaking, the CRB index chart does not look like a pullback. it looks like the beginning of a breakdown. It was too sharp, too fast, and too widespread to be a short to mid term pullback.
Commodities across the board were knee capped, which means something big, something really big happened.
At first, i assumed, that the drop in commodities was due to the Bear Stearns debacle and the unwinding of their derivatives. Then, briefly, i considered that the market was looking for a bigger cut, but 25 bpts isn't really that much. and we all know they will probably cut again next meeting.
so what gives? what could it be?
a few people on SI have pointed out that it might be a drain on liquidity brought on by an outright coupon sale of Permanent Open Market Operations. newyorkfed.org
i will admit that my knowledge base on FED actions of this detail is rather limited. But i am smart enough to recognize that drain of this size is going to have an impact on where speculators are going to put their $$, at least in short to mid term.
Anybody remember what happened in May of 06??? Japan did a massive drain on the Yen. This effectively stopped the run on gold and kept it range bound until Sept. '07.
This might be another one of those game changing events, at least for quite some time.
Slider thoughts?
EDIT: PS(i really really hope i'm wrong, cause i'm holding commodities and got kicked in the nutz last week) |
