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Message: Scaled-Back QEII Expectations Boost Dollar-European Debt Issues, Chinese Rate-Hi
http://www.kitco.com/reports/KitcoNewsMarketNuggets20101117.html
17 November 2010, 8:35 a.m.
By Allen Sykora
Market Nuggets: Gartman: Scaled-Back QEII Expectations Boost Dollar, Hurt Commodities This Week
(Kitco News)
-- The dollar has strengthened and commodities fallen this week, in part on ideas that the Federal Reserve may scale back the amount of its second round of quantitative after criticism for undertaking this in the first place, suggests newsletter writer Dennis Gartman. "Commodity prices have quite literally collapsed as the dollar has gone skyward and as the markets are now convinced that the QEII shall be a small boat rather than an ocean liner," he says in his daily The Gartman Letter. Further compounding the weakness were margin hikes in a broad range of commodities. The dollar has strengthened lately, which also tends to pressure commodities, as traders apparently unwind short dollar positions that previously had become the "de rigueur trade of the month" ahead of QEII. The trade had become "heavily crowded" with dollar shorts, Gartman says. "Crowded boats tip badly, and the crowded boat that was the dollar short position has not only tipped, but it has turned over and trapped those who were aboard." Gold is one of the commodities that have fallen lately. However, Gartman still describes himself as "bullish of gold" but preferring to hold the metal in euro, sterling and yen terms, in which gold has not fallen as much in the last three days as it has in dollar terms.By Allen Sykora of Kitco News;
asykora@kitco.com
Market Nuggets: European Debt Issues, Chinese Rate-Hike Worries Pressuring Base Metals—MF Global
17 November 2010, 8:51 a.m.
By Allen Sykora
Of Kitco News
http://www.kitco.com/
(Kitco News)
-- Weakness in most base metals has continued with investors unable to "see any light at the end of the tunnel with regard to the weighty issues that have been hovering over the markets during the last week or two," says MF Global analyst Edward Meir. Uncertainty about Ireland’s financial condition persists, with some apparent dissension among European Union policy-makers on how to deal with the situation. And while Ireland is likely to get some kind of bailout, investors may also be looking at the rest of the "walking wounded," including Spain, Italy, Greece and Portugal, Meir says. The European issues have boosted the dollar, which tends to hurt commodities. "The deteriorating situation in the euro zone is dovetailing with an increasingly worrisome situation in China," Meir says. "Markets there are definitely picking up a ‘tightening scent’ wafting through the economy, as the government is showing increasing concern about rising inflation--now at a two-year high." At its recent lows, LME copper lost $1,000 a metric ton in a span of just five trading days, Meir points out.By Allen Sykora of Kitco News;
asykora@kitco.com
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