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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Canuck Dave who wrote (29746)	3/31/2005 2:29:14 AM
From: TobagoJack	Respond to of 110194

Hello CD, On reflection, searching deep, looking everywhere, trying to discern truth from amongst the facts, I would have to say, "it is both", and so heinz covered himself by tipping his hat to longer term bull market for commodities. It is just that, in order to ever get to the longer term, we must first suffer the short while. :0) Chugs, Jay

To: Canuck Dave who wrote (29746)	3/31/2005 2:36:10 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Heinz violates his own premises. On the one hand, he says malinvestment has caused commodities to be under-financed (and by implication in short supply). Then, in the next breath, he says don't worry, there's lots of supply out there in hoards, and the CRB has had a blow off extreme and will collapse. Which is it? CD Both? Bear in mind there are some new copper mines coming on line next year. Aluminum too? I seem to recll something in Africa. You did not discuss oil but I am 100% positive that he believes in peak oil problems. Perhaps this is a question of timeframe. I believe he is short term bearish as opposed to long term bearish. Note too the key word that you missed. "ARTIFICIAL" demand. Rocketing commodities prices stand as a stark reminder of yet another policy maker failure – a massive ongoing misallocation of resources is revealed, as the credit boom creates artificial demand that current availability of resources can't satisfy. Secondly, it is assumed that commodity warehouse stocks reported by the exchanges mean that no significant inventories exist. It is however certain that this is not the case - they DO exist. Panicked commodity users have without a doubt hoarded as much as they could get their hands on, and the same goes for speculators.A good recent example for this phenomenon is the palladium bubble of '97 to '01. At the very height of the supply scare, Ford made the cardinal mistake of buying 200,000 ounces in the cash market paying 500 dollars over the ruling price at the exchanges (reportedly they paid $1,600/oz.) - unwittingly, this capitulation helped put in the top, and the 200,000 oz. quickly turned into part of the supply that has been overhanging the market ever since. Ford has lost a fair chunk of money on that trade, namely $1,400 per oz. at last count. I do not think he is being inconsistent but I can see how it might seem so. Read it carefully and you can see he thinks there is a short term bounce in the US$ that goes nowhere really. As for me, I wonder about the latter. It all depends on the FED and the consumer and the actions of foreign CBs (Europe and the UK) as to how high the US$ gets. Does the stability pact get trashed or not? IMO Japan is a basket case and the YEN could correct significantly. Mish