Peter Dag & Friends

2/27/11

Observations

A subscriber and long time business acquaintance, WH for short, called me a few days ago with a very interesting question. “George, we are a large buyer of natural gas. What is your outlook for this commodity?” he asked.

What a great question! It reminded me of the time when I was teaching Economics for Management. I have always thought that most commodity prices move in the same direction, at the same time. Business cycle forces are the main drivers. Special factors, such as weather, play only a minor role.

My students, with a respectful smile, used to tell me that this was one of my “sweeping generalities”. There was an untold and subtle sense of respect in their words. Their smile was an acknowledgment that they were being challenged by the idea. But they did not accept it, yet.

These thoughts were crossing my mind as I was trying to answer WH’s question on the phone. I asked him for some information on the price patterns of natural gas. His words confirmed what I was thinking. Natural gas began to rise in 1999 and peaked toward the end of 2000 like most other “commodities” such as the price of the commodity money (short-term interest rates), crude oil, the CRB futures index, and copper.

The economy began to slow down quite sharply in mid 2000. After the typical 6 month lag, by the end of the same year, all the lagging indicators started to decline in late 2000 and early 2001 (including natural gas). Their trend is still down.

When will they rise again? These commodities will rise when the economy begins to expand rapidly, as it did in late 1998 and early 1999. Until this configuration becomes a reality -- which I do not expect to be the case in the coming months -- all commodities will remain weak. I do not believe they can move higher in any meaningful way, including natural gas, until business activity booms again. And this is not in the cards any time soon.

I hope WH is satisfied with my answer. It is the best I could do. Good luck, WH, and keep in touch!

(This Observations appeared in the 6/11/01 of The Peter Dag Portolio)

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

2/26/11

The last shoe to drop?

Their states on the brink of financial catastrophe, governors pleaded Saturday for the divided federal government to avoid doing anything that would hamper the tenuous economic recovery back home.

Their message to Washington: prevent a government shutdown, abstain from spending cuts that dramatically will affect states and end even preliminary discussions about allowing states to declare bankruptcy. (CNBC News)

The country is running out of money. The country is running out of people who can pay the bills. Everybody wants something. The bottom line is that we over-promised and we did not generate to wealth to pay the bill.

We all agree we have to make sacrifices. But nobody wants to be the first one.

The tragedy is that the market will force the politicians to do the unpleasant things they are trying to avoid.

Uncle Ben, meanwhile, will keep printing money.

Reminder

Greece's debts are rising rapidly despite radical austerity measures. Now a group of leading European economists has warned that creditors might have to write off more than 30 percent of their loans. Greece might even have to reintroduce the drachma to overcome its debt crisis, they argue.

The European Economic Advisory Group (EEAG), a group of leading European economists, has warned that Greece may need another bailout by 2013 at the latest.

The European crisis is far from over.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

2/25/11

Incredible!

Click here to see what the problem really is. I know for a fact that a highly paid corporate employee receives a pension one half that of a teacher. Furthermore, thanks to Obamacare, his/her healthcare premium increased 30% this year.

Incredible!

Technical patterns

Are the markets trying to tell us something?

JNK and LQD were very strong. This happens when the economy slows down and inflation remains under control.

If JNK and LQD are strong in a strong market, what will they do if the market declines?

My guess is that they will go up. Time will tell.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

About revolutions

It has been more than a month since Zine El Abidine Ben Ali, Tunisia's president, was forced to leave office, but many people say they are yet to see the benefits of their revolution.

Many citizens, particularly in smaller towns, say they feel disconnected from Tunis, and that the root causes of the uprising - spiralling unemployment and widespread poverty - remain unaddressed. Al Jazeera's Nazanine Moshiri reports from Gafsa, one such region of Tunisia.

The more things change, the more they stay the same. I know, it is too early to say. But I still keep thinking about the outcome of the revolutions of the past. The futility of hope, to paraphrase a famous saying.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

2/24/11

Technical patterns.

I watch yields closely. I know, it is not a surprise for you. But they are trying to tell us something.

JNK and LQD are up at 12:51 pm. What is interesting is that both bonds ETFs are strong as the market weakens.

Are they sensing a slowdown? Watch also copper and agriculturals.

About revolutions

The French revolution was an exciting one. It was about democracy. About bringing a new order.

What happened, however, was that after toppling the regime, the various factions started fighting each other. Eventually a new dictator, Napoleon, emerged and put order to the great mess existing in the country.

Another example? The Shah of Iran was followed by the power of the current clerics. When all is said and done, the reports from Iran suggest that things are not much different now.

The Russian revolution toppled the czar, but was followed by Lenin and Stalin.

Are the revolutions in the Middle East going to bring “democracy’ and be different from the teachings of history?

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

2/23/11

Very interesting pattern today

Market sharply lower. LQD down. JNK up.

I think this is a very interesting pattern promising some attractive profits ahead. How? Any suggestions?

While you were asleep

Commodities very weak, including agriculturals. Copper sinking. Oil and gold holding up. Equity markets down around the globe.

Is this the correction everybody was waiting for? If so, when will it end? Does the weakness in commodities reflect an economic slowdown? Is LQD the right investment in times like these?

These are the kind of issues we deal with in The Peter Dag Portfolio.