I told you before and I will tell you again: milk the farmer ahead of planting season. Fortunately, my two largest positions, AGU and MOS, are screaming higher today on the back of better than expected earnings from AGU. However, the strength is more than just one name. Look at ANDE. The entire farm industry is smoking hot, thanks to insane commodity prices. Farmers are rich as fuck now. Milk them.
Without a doubt, both AGU and MOS will eclipse $100 this year. I am not selling any time soon. As a matter of fact, I should not have sold out of my TEX. I need to buy that fucker back.
Look, last year I had epic debates with Jakegint, regarding inflation versus deflation. Jake was right. The Fed really is crazy and doesn’t give a shit about the guy working 3 jobs to put food on the table. This all ends badly, as this policy is unsustainable. But it can last a long time. Hell, by law, the Fed can lend money to people, directly. If the banks freeze up, look for the Fed to step in and be the lender of last resort. All of this fuckery leads to one destination: inflation
There are small stocks worth a look, like KBX and MDW. But don’t focus on the outliers. Buy the leaders first, then mess around with the garbage. Otherwise, you will build a reputation for playing with trash, like some sort of upright walking pig. The other brokers will talk shit about you in between long lines of blow. They will call you names like “piker” and “cold caller.” Trust me, you don’t want that.
Top picks into dollar death: EXK, NGD, AGU, MOS
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I like “milk the investor”…both GS & MS look great on a weekly chart.
Sorry, you don’t milk GS, they milk you.
When GS hits $200 in a few weeks – I’ll be doing the milking, of profits.
Quint,
I have tits, can you milk me?
disturbing
I wonder if Bernanke is going to come out and raise his S&P target price?
the fed is not printing money – QE is not causing inflation, people thinking QE causes inflation is. Real inflation occurs when wages increase and the money supply increases. neither of which is happening. this will end faster than you think……
Ummm, you sound like Bernanke. Please remind me that there is no inflation when Mrs Fly forces me to go to wfmi and my grocery bill is almost 1k.
1k in groceries? What the heck do you eat?
I do love that Ben doesn’t even flinch when he says theres little inflation – Don’t ever play poker with the Ben Bernank
The 100% comment got me. There is no such thing as 100% certainty in statistics. The fucker didn’t even bother to give a confidence interval, just road the BS express.
Don’t shop Whole Foods Bullish. It’s the only super market (Bristol Meyers an exception) where clerks speak in full sentences. That’s the great part, the rest is really about “ambiance” and comfortability away from the (thank the degenerate Democrat regeneration-pastured-offspring, food stamp mongers with their taser app’d cell phones and shiny sport shoes screaming on speaker from on aisle to another) riffraff.
I agree with you and Fly on never playing poker against the almighty Fed. But low and behold, no comments, yet, on Dr. Paul v. Sir Clam. Any impacts? Is “the Fed” on notice?
“Ummm, you sound like Bernanke. Please remind me that there is no inflation when Mrs Fly forces me to go to wfmi and my grocery bill is almost 1k”.
THIS^^^^
LOL I’m doomed they are just finishing up WFMI walking distance to my home here in lovely Encinitas, CA
Encinitas is lovely, even if it does sound like you live in some kind of skin disease.
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Shut up you rookie biotch.
You redefining what inflation is doesn’t make it go away, jackass.
Look at the price of commodities, then tell me nothing is happening.
@ Rookie: How is the US going to finance its debt, and meet its enormous future obligations without expanding the supply of money via monetization?
i know how.the ben bernank will have to make being a prostitute legal for everyone, ya know, to add to that other Part time” job that dont pay shit, then the irs can put a HO-TAX on us all,thats how we’ll pay off the debt,we all ho’s na. enough bs, i gots to get back to my paintin gig………shit tape anyway
Indeud. AGU to 106 soon methinks.
“I told you before and I will tell you again: milk the farmer ahead of planting season.” lol, you are too funny…..Hey! Part of my Feb ag play is IPI, too bad you missed that 12%+ Feb seasonality play.
I caught that move too, cashed some in, and still holding some. BTW, love your avatar.
The thing that got me to back off the inflation trade was essential this, although I didn’t know the specifics at the time:
http://www.dallasfed.org/news/speeches/fisher/2011/fs110208.cfm
The Fed has a full uprising on its hands, except that it’s internal. This guy, Ken Fischer, and others like him, are not going to sit idle while Bernanke runs amok. The ability of the Fed to ease further is going to be put into check. However, given how much the balance sheet of the Fed has expanded, further easing may not matter. They were fucking lunatics and it could show, as Bernanke is unable to contract the money supply.
http://www.reuters.com/article/2011/02/09/us-usa-fed-idUSTRE7183J220110209
“Bernanke said inflation remains quite low in the United States, a tough message to deliver amid headlines of rising food and commodity costs across the globe.”
@ Mr. Thaler: How does QE contract the money supply?
QE doesn’t change the quantity of money in the system, but changes risk and maturity profile. As for the inflation, don’t forget its definition, which is an overall rise of general price level, not of certain groups (e.g. commodities). As I said before, it will be tough to create inflation when there is -3.7% output gap (unused capacity, which can be expanded without causing price increases) and steady 9% unemployment (which means the demand-pull inflation is also steady and low). However, after this earnings season it is clear that we’re on the growth path, and although corporations operate lean and aren’t in a hurry to hire additional workers they gradually will, as the increased demand for output will force them to. And as this will cause unemployment to reduce, we will see more of the demand-pull inflation, which will be a sign of increased competition for economy’s output via consumption growth.
Just in case you want to check the numbers:
http://www.economywatch.com/economic-statistics/economic-indicators/Output_Gap_Percent_of_Potential_GDP/
http://www.economywatch.com/economic-statistics/economic-indicators/Unemployment_Rate_Percentage_of_Labour_Force/
Look, I keep hearing people talking about the definition of inflation, as if it somehow matters that “wage inflation” whatever the fuck that is (classically, not a part of the defintion of inflation, that’s a newer term), has remained non-existent.
While I agree that just because the price of silver goes up, that doesn’t necessarily translate to the price of a computer going up, all inflation in the commodity line cuts into the profits of corporations, which is going to make them less able/willing to hire.
There are limiting agents at work here, which will necessarily cause populations to break, regarldess of what inflation is doing “in the mean” or “in the median.” Those statistical terms are meaningless compared to the specifics.
If you have forgotten that fact, you can go talk to an Egyptian, or a Tunisian, or a…
I’m sure they would all be more than willing to remind you that inflation, even concentrated inflation, can inhibit quality of life.
Cain, my point was that the inflation thesis is valid not because of “new money in the system”, but because of increased aggregate demand. I know, it pisses you off, but adding reserves into the system is not inflationary. Reserves will translate into loans only when credible borrowers show up, not when banks have this ability.
Inflation can of course affect the quality of life, if looked at as cause. However it can also be an indicator of improving economy. This is precisely the difference between cost-push and demand-pull inflation.
Look I do get your point – expansion is not exactly the same as inflation – but if you look at the banks, they actually don’t wait for borrowers to show up. Many of them invest their own reserves, and more of them have very lax standards. Coupled with the realization that these expanded reserves tend to come through facilitating one part of the economy to spend, without demanding reservation on the part of the rest of the economy – that with expanding the money supply there is no trade off – and expanding the money supply may as well just be called inflation.
It is a distinction without a difference.
But I will ask, do you really believe the spike in basic commodities, many of which are inferior goods, is merely a product of increased aggregate demand?
Yes, I think so, though it is debatable. The thing is that reserves dramatically increased in the system after the QE1 when Ben B. had provided liquidity to the financial system. However we didn’t see price inflation at that time and the unemployment situation hasn’t really changed that much between then and now. What has really changed? Yes, the Fed took out toxic stuff from certain institutions and exchanged it for reserves. The risk profile has changed, maturity profile changed, but was it really sufficient to cause this market rally from September? I am not really sure that this is Ben’s call to action which led the prices up. As I said, it is debatable, and I think that we are dealing with real output growth here, not with just increased consumption (via wealth effect caused by appreciation of financial assets held by the private sector).
Obviously, I would argue with that. As someone (perhaps yourself) already stated, the spikes in price could be just as much a product of people believing the inflation story as money flowing directly from the Fed into these sectors.
But, that’s tantamount to the same thing.
The system is inherently non-linear, in the sense that people’s assessment of affairs is as much a part to play as the other conditions. And, that non-linearity is recursive.
What Bernanke has done, more than just increase the monetary supply, is to instigate a panic.
Given how the commodity run happened so abruptly, right around the time the first rumors of QE2 began to circulate last summer, I’d say that people began looking for places to store their money…and with the run in the stock market adding risk, they found commodities.
Even if you can’t follow the dollar out the Fed’s door and into the futures market, I still lay that at Ben’s feet.
Exactly. This is what I was saying.
WTF is talking about Modern Money Theory (http://pragcap.com/resources/understanding-modern-monetary-system) which I believe is NOT the understanding of a majority of market participants. Because of this inherent fact, MMT is not necessarily wrong on an operational level but from an asset manager level one must be able to distinguish when the perception switches to the reality. That is when you’ll get your gestalt shift (maybe) or more likely I think the scenario that plays out is that dollar-commodity based economies unable to sustain growth from crippling commodity prices rebel or suffer other consequences.
I think the issue shark man is missing is that sterilizing the shit assets is inflationary in itself. If you replace mispriced assets with hard cash, you are allowing for those assets in turn to become leverageable once again.
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It should be noted that GDP-per-capita is actually decreasing, which is a more telling harbinger for multi-decade policy decision.
Part of that is demographics (region, age, ethnicity, fertility rate, etc.). Most of these changes in demographic are unfavourable to per capita GDP growth.
It doesn’t contract the money supply. It expands it.
My point is that with rampant insubordination, the ability of Bernanke to engage in QE further is questionable.
My final comment was simply that I could be wrong, and inflation could continue drastically, even if not another dollar is added, simply because the currency added hasn’t had time to fully flush through the system. The ability of Bernanke to keep inflation in check is contingent on his ability to get the money back out before it starts bidding up…well, everything (looking around, too late, but…).
However, because of the relationship between the central lending rate and treasuries/mortgages/etc. Bernanke is in a bind, and really can’t raise rates (a.k.a. contract the money supply) without causing havoc.
Rates stay where they are, it would appear. So the million dollar question would be, “If no knew money is added, is this all there is?”
*new
Lots of new money has been added. But its not turning over. Once we get more turnover of the money supply inflation will burn bright on all the new fuel from the Fed.
Hence you support the inflation thesis. I’m not advocating the opposite, but I have let off the gas a bit, because of the “no new money” line of reasoning.
Thanks for elaborating.
The Fed’s message I believe is changing and putting more pressure on fiscal policy. Check out Bernanke’s speech from last week. He spent a few paragraphs talking about Congressional spending, the same as Fisher.
They both bring up good points: it’s Congress that’s spending (issuing debt) and the Fed who is “monetizing” it. I say that gingerly because 92% of corporations report that their biggest concern is not credit availability or lending requirements but fear of waning sales. The St. Louis Fed has a bunch of charts for commercial and industrial loans which you can compare to excess reserves held by banks. That will show you whether the demand deposits created by banks through reverse repurchase agreements of US Treasuries actually get monetized. The prevailing trends for commodity inflation are largely based upon the pressure building in excess reserves that have not been fully loaned to corporations/consumers along with growing middle classes in emerging economies, adverse weather effects, and speculation. The Fed is hellbent on achieving increased inflation which is difficult seeing as how core-CPI is 40% based upon housing. Now that people are anchored to inflation expectation, it will continue until the Fed hits their 2.5% inflation target in my opinion.
I think its just lining up someone to point at in the giant blame game. “It’s not our fault you are seeing rampant inflation due to directly monetizing debt. These guys (points finger at US gov’t) shouldn’t hvae spent money that they don’t have. Akin to a get-away driver pleading innocence.
The monetary system operates in such a way that the government spends first. It doesn’t need to actually “have” money, as it is the only issuer of its own fiat currency. Then this money ends up as reserves in the banking system, which drives down the Fed’s target funds rate. Then, in order to keep it at the desired level the Fed exchanges newly issued bonds for these reserves in order to drain the reserves from the system and thus take away excessive pressure on the rate. The monetary policy of the Fed is responsible only for keeping the cost of money in the economy at the chosen level. It is the fiscal policy which stimulates aggregate demand and provides spending when there is a leakage via saving of the private sector or takes away spending power via increased taxes during booms (when output gap is negative).
This is a false statement:
“”it (the gov’t) is the only issuer of its own fiat currency. “”
The Fed issues currency. Pull out a $1 bill– it says right on there, “Federal Reserve Note”. The Gov’t issues Treasury securities which are sold to raise dollars and spend them.
The Govt calls to its bank (which happens to be the Fed) and tells it to credit accounts of commercial banks. That’s how it spends. Even if has negative balance on its account in the Fed. It spends anyway. These deficits end up as reserves on commercial banks’ accounts in the Fed. They push the fed’s funds rate down, and the Fed has to drain them via open market operations. Here’s when bonds are employed. The Congress demands the Govt to issue bonds, it’s true. But it is not necessary for operation of the monetary system. It is just a legacy from the gold-brick standard.
You have this monetary/fiscal stuff all mixed up.
No. It is the reality of fiat monetary systems. However I admit, it does sound as mixed up because we are used to golden-standard-based explanation of money and the policies.
We’ve been off the gold standard for a long time now. And yes it is somewhat of a ‘fiat’ monetary standard. But the fiat standard is set by the Bernank– the Clam decides how much currency to create. Congress is making noises like they’d like to take over that function. The Paul(s), etc., think they are smarter than the bernank. I think that would be a huge mistake. Imagine a future Barney Frank type person taking over the printing presses. That would be a future disaster; to put fiscal (gov’t spending/budget) and monetary policy (Fed printing presses) in the same asshole’s control.
All the stock “renters” are leaving the market.
Went long SMH 35.51.
Limit stop @ 35.46.
I show it as a go long.
Fly you are like a vegemite topped crumpet delivered to me in bed with a short macchiato every morning.
Is that a compliment?
Vegemite is for shat.
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Is DE too obvious? Farmers like shiny new tractors. They will/do have cash….. Deere reports in a week.
Added some MOTR down here and AMSC closed the gap so I added that too
You really like MOTR here? Bought some of that about a month ago and let it roll to earnings. You see something positive in those reports and call? Is 25% down a bit overdone?
Time to put some shorts on…not because it is warming up outside, but in case we get an afternoon meltdown.
Does anyone give a fuck that Brazil and China have almost collapsed?
US and Europe as well. Almost collapsed. LOLOLOLOL!!!
i am hearing that hedgehogger paul tudor jones is calling for a rally in bonds and a sell off in stock now $$
Read more: http://www.businessinsider.com/rumor-ptj-is-calling-a-top-2011-2#ixzz1DUFeinIL
He invited us to his place for a concert to celebrate – must be true.
CTBK… ripping tits go get some…
man,i’m really not missin nothin today
Out of GDX with ~7.5% gain. Entire proceeds (and then some) rolled into TLT
Cheerio
also does not hurt that MOS was rumored (again) as a takeover target at $110 yesterday