Chris Damas submits:
In the early '80s, I read a paperback by famed Toronto stock
speculator, TV commentator, Chief Coroner and Parkinson's disease
treatment advocate, Morty Schulman. At the time, I was a neophyte
investor with little cash.
It was titled "How to Make a Million Dollars in Commodities" or
something to that effect. By the time I had bought it, interest
rates had already been ratcheted up by Fed Chairman Paul Volcker
and were taking the steam out of the markets. The big mid to late
'70s bull market in commodities was already dead in the water. I
found Dr. Schulman's book in the used book bargain bin.
Well, I've had this feeling all summer that we are going back to
the '70s trading environment. Tuesday's market action supports this
view. Huge government debts will be less of an issue when they are
trading in tomorrow's devalued currencies. The USD in particular,
looks orphaned now that QE II has been christened, if not launched.
The Fed's laissez faire policies have opened the door to the
commodity markets. Canadian rates could be on hold…. what's not to
Tuesday shows benchmark near-month commodity futures enjoying
price spikes for Gold ($1,340 up $24), Base Metals (Copper at
$3.735 up 7.7 cents), WTI Crude Oil ($82.68 up $1.21). Combined
with low and declining U.S. interest rates (bonds are actually
rallying), this provides a potent mix for commodity and equity
speculators. Let loose the animal spirits!
The U.S. bellwether S&P 500 index (SPX) is currently at
1,154.67, up 17.7 points (1.6%) and a hair away from the previous
intraday high of 1,157.16 reached on September 30. Any higher and
that would be the best level since late April's peak.
The DJIA is up 135 points at 10,885.8 (1.26%) but still below
its intraday high of 10,949 set on September 30.
But the commodity-filled Canadian S&P/TSX index is already
AT a new year high, 12,449.74 up 126.8 points (+1.0%), breaking its
previous intraday level of 12,446.85 set on October 1st. This is in
spite of a stronger Canadian dollar, now at 98.4 cents.
I think it might be a (read my lips PermaBears)…..BULL
Having said all this, we have the September ADP employment and
U.S. Non-Farm payroll numbers to contend with Thursday and Friday.
These have been the
Scylla and Charibdis
of any Greek odyssey to higher stock prices; sucking the indices
down or plucking profits from trader pockets, to their dismay.
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