Commodities Charting Extravaganza! Gold, Silver, Oil, Gas Wheat, Corn and Many More

Bottom line, you need to know what is driving cost at the store and where those prices are likely headed. What's expensive and what's not? Look below to find out. (Oil, Gold and Silver are at the bottom)


Cocoa - So, why am I still like paying a gazillions dollars for my Snickers fix?

Cotton -

IsThe Writing On The Wall?

The piece by Hoenig is either total manipulation BS being spewed but the powers that be to quell the Tea Party followers or there is one person at the Fed that has a brain. Actually they all have brains, it it morals they severely lack.

Mish has praised Knocking on the Central Bank’s Door by Thomas M. Hoenig, President, Federal Reserve Bank of Kansas City in his post "Three Paths Forward" - Kansas City Fed on Current U.S. Fiscal Imbalance, Hyperinflation, Printing. I guess having someone at least attempt to lay out some sort of exit strategy is nice. The only problem is he left the full frontal out of the equation.

Hoenig says, "I see just three ways forward in dealing with our current and prospective fiscal imbalances. While each involves considerable pain only the third will resolve the imbalances without eventually causing inflation to accelerate or precipitating a financial and economic crisis." 

Option 1 - Monetize. "One option for dealing with a fiscal imbalance is for the central bank to succumb to political pressure and monetize the debt. ... This process often appears benign at first, but if it goes on unchecked, the outcome is almost always higher levels of inflation and ultimately a loss of confidence in the value of the currency and the economy." News flash! We're there already. With the Primary Dealers now buying huge chunks of the auctions and promptly being refunded those funds by the Fed and the recent increase in the treasurt debt ceiling limit by $1.9 T, we're there. So seeeeerike one!

Option Two - Policy Stalemate. "The second path forward is a stalemate between the fiscal and monetary authorities. In such a stalemate, the fiscal imbalance grows while an independent central bank maintains its focus on long-run price stability. ... Eventually, this combination of large debt, and high cost of borrowing and capital weakens economic growth and undermines confidence in the economy’s long run potential. Slowly, but inevitably, if the fiscal debt goes unaddressed, the currency weakens, as does access to global financial markets. And the cycle worsens, leading ultimately to a financial and economic crisis." We're already there again. The key words are "undermines confidence" and weakens economy". What's that about China pulling out (China Pulls the Plug on U.S. Treasuries)? Who bought what last year? Large debt and high cost of borrowing will lead to that $1.9 T being spent in a few months and the drug addict will be back at the door looking for another fix. As DP used to say, "And the whiff." Steeeeerike two!. 

Option Three - Equitable Fiscal Discipline "Knowing inflation is not an acceptable alternative to strong fiscal management, a government faced with rising debt levels must provide a credible long-term plan to reestablish fiscal balance. The plan must be clear, have the force of law and its progress measurable so as to reassure markets and the public that the country has the will and ability to repay its debts in a stable currency." Steeeerike three! Flat footed watching a fastball down the middle! Plan? Anyone seen that plan laying around? You know the one with all those new job programs, ways to increase lending to small business and other measures to stimulate the economy while increasing regulations to ensure none of this ever happens again? Wait, not not that one, you mean the one to save the banks, funnel all of the TARP funds and increased taxes to the TBTFs? Oh, yeah, that one is right over here. They got a plan alright. One that puts us in the default line.

The Financial times picks up on Hoenig's speech in Lone voice warns of debt threat to Fed "The hawkish Kansas Fed president also warned against “dire” consequences of the central bank prolonging its holdings of mortgage-backed securities, which it purchased in an effort to prop up the US housing market. Mr Hoenig painted a picture of a slippery slope, where a less independent Federal Reserve was asked to find ways to support other ailing sectors, such as agriculture." LOL, don't forget about the Fed's balance sheet that is absolutely bloated with toxic debt and how their efforts to save the RE/CRE markets may have amounted to a big fat zero. 

For those of you looking for a good debate on whether to hyperinflate ot not, here you go. And I quote, "While Donovan is correct in principle, the opportunity cost, should debt levels become insurmountable, of a devaluation will likely be actively considered by all financial "experts" in the administration. Coupled with a prevalent expectation that this kind of action, especially in light of Donovan's analysis, and coupled with a short-maturity focused debt curve, means that the likelihood of just such a policy is becoming increasingly likely."

You can chew on this as well - The Minneapolis Fed President Kocherlakota Warns Massive Debt Load Can Only Be Paid By Tax Collections Or Debt Monetization - Our options are fading fast and none of then are very appetizing. Tough times are coming.

Have a good one.

Morning Post

Fed day today. Ya think they are gonna surprise and raise rates? I doubt it. With 1mo treasuries yielding zero and the equity markets the only play in town where any money can be made, why screw up a good thing? (ghood thing for whom can be debated) They will have to raise them eventually, but I'm not going to hold my breath. CPI and housing numbers are being spun on CNBS. So are you in the deflation of inflation camp? I think we deflate first with some signs of specific pricing pressures that eventually leads to inflation. Its like having a bad tooth that you know needs to be extracted, but you don't want to face the surgery. You deal with the pain and deal with the pain, yet eventually you will have to go under the knife.

SPX daily- I just do not know what it will take to get this market out of this trading range. BB width is 29. That is under 30 folks. That is 15 up or 15 down is all you are theoretically gonna get. Narrow BB's usually lead to volatility, so I still expect a breakout one way or the other. CCI may have topped and RSI stopped at the blue divergence line. Now RSI is running in a range between the 50 line as support and the upper divergence lines getting pinched down. I'm not sure how long it can stay in this range. At this time I'm leaning to a push south to the 1085 level.

SPX 60m - This chart says fall, but I would caution bears to look out for the 1103 level where the 50ma and the lower BB sit. If that cracks the bears may be in business.See my 15m chart for the most detail on fibs, TLs and S/R.









E- minis - Up 4.5 at this time and were as high as 1112 overnight. Currently 1108. Trading at the upper end near resistance of the upper resistance line of the past few weeks and backtesting the lower P2 support line. So that should be a double doozie.

DXY - Ending a rising wedge and should rollover here. The daily indicators are getting pretty toppy.

Oil - If you look at the chart I showed yesterday am, you will see the lower channel line held and there is a good chance it is going to pop from here. I'll do an energy post today I think.

Natgas - /NG futures have moved above NT resistance, but will that move hold? Indicators are a little toppy with a divergence in RSI showing upside should be limited from here. I'll get a UNG post out soon.

/ZN 10yr treauries futures - looks like an ABC corrective is just about complete and the daily indicators are about to show some buy signals.


EUR/USD continues to fall and has taken out all support lines I have. Daily indicators are embedding on the low end. I think the 1.51 high is set.

EUR/JPY - Holding the 128.50 support. We'll know more in January when it nears it's upper TL.

Inflation? Frozen Concentrated OJ - No there has not been a big freeze. Like I said- It will and is happening in specific areas, thus not the perfect storm. This chart demonstrates there is some inflation out there.

GL out there and happy holidays.