Nikkei, Dow, Russell 2000 lead Finviz futures gainers YTD

Year-to-date futures gainers (via Finviz), a quick update.

 

US indices near the top of the list include S&P 500 up 18.8%, DJIA up 18.9% and Russell 2000 up 23.6%. The Nikkei 225 tops all with a 32% gain YTD.

Gold and silver continue to under perform this year (after a decade-long bull move), while corn takes second-to-last place with a -29.5% YTD performance.

Futures and stocks: YTD performance charts

A quick look at the year-to-date performance of futures and stocks on Finviz. 

Natural gas tops the futures list for relative performance. Nat gas is up 27% YTD. 

Right behind it is the Nikkei 225 index, up 27%, getting a boost from the latest BOJ monetary easing efforts (note: Yen is down 12% YTD). The Dow Industrials are up 13.5% YTD and the S&P 500 is up 11%. Remember what we learned from Ray Dalio: currency depreciation and money printing are good for stocks (at least in nominal terms). 

Gold and silver have been selling off in recent weeks. The precious metals took a hard spill today as the markets mulled a possible winding down of the Fed's QE program. It seems, in this instance, simply scaling back "money printing" efforts is enough to push gold and silver into free fall mode. 

Individual stocks have done pretty well year-to-date. Of all US-listed stocks, Finviz shows 4,713 are up (show a positive return) YTD vs. 1,744 down YTD. A simple screen of liquid stocks (greater than 100k avg. volume) shows 443 stocks up 30 percent or more year-to-date. 

The best performing industries YTD are: Credit Services (96%), Music and Video Stores (85%), Electronic Stores (69%) and Memory Chips (48%). 

The worst performing industries YTD include: Gold (-30%), Silver (-29%), Personal Computers (-17%), and Industrial Metals (-14%). 

You can follow me on Twitter and StockTwits for more real-time market updates and trading info.

Market Wizard, Vic Sperandeo interview: gold, inflation, and trading the QE wave

Trader, author, and Market Wizard, Victor Sperandeo joins us for an exclusive interview in our first Finance Trends podcast. To say we caught a lucky break with our first guest is a bit of an understatement. 

Victor is a highly regarded veteran trader who has been involved with the markets since his first job as a Wall Street quote boy back in 1966. When he began his independent trading career in 1971, his primary goal was to make money consistently, month after month, year after year. 

After 40+ years of consistent profitability, I'd say he's met that goal. 

Over the course of his career, Vic has traded independently, managed hedge funds and CTAs (commodity trading advisors), and ran portfolios for George Soros and Leon Cooperman. He has also written three books on trading, including, Trader Vic: Methods of a Wall Street Master, a personal favorite which interlaced Vic's trading insights with sections on Austrian economics and personal psychology!

In this rare, hour-long interview you'll hear "Trader Vic" discuss his recent editorial on Paul Krugman (a "political hack") and our debt problems, the Fed's quantitative easing program and prospects for future inflation, his outlook on gold prices, Austrian economics and economic and personal freedom (or lack thereof), as well as his insights on successful trading and the importance of trading psychology. 

Plus, you'll hear about the upcoming Trader Master Class with Vic in New York City (more info below).



Some highlights and quotes from our interview with Vic Sperandeo: 

On gold prices: "What gold doesn't like is higher growth...gold didn't do well from 1982 to 1999. Gold likes chaos and it likes inflation. With every central bank in the world inflating, long-term, gold is a buy. Short-term, there is someone putting pressure on the gold market. I believe it's the Fed or banks working through the Fed to keep gold prices down and to make money-printing policies more acceptable."

The effects of Quantitative Easing: "QEs have not worked to the degree that most people have assumed they would because nobody is spending the money. Money velocity (the turnover of money in the system) hasn't sped up to a degree that would create runaway inflation... and banks aren't making loans of any consequence. What it's doing [with the mix of current, offsetting fiscal policies] is slowing the economy and distorting the markets as people are putting their money in stocks, thinking that this is good for corporate profits."

Vic's insights on trading and the need for emotional discipline: "Sometimes the smartest people and those who have biases, like yours truly, can cost themselves money. You try to eliminate your biases. In my case, I'm biased against believing in the Fed and in Ben Bernanke knowing what he is doing. But that doesn't subtract from trading - if you're trading you really don't care what Bernanke knows or doesn't know [set aside your biases]." 

Investing vs. trading in 2013: "We're not in a real good investment environment here. We're in a very good trading environment and a great liquidity environment. If you're a trader, you should be doing well following the uptrend in stocks because of QE. If you're taking bigger positions and you're betting on longer-term growth, there's where the differences lie and you have to be very careful. Trends and the technicals trump the fundamentals here [in a Fed-driven market]." 

How crucial is psychology in trading and in life?: "The fact is you can train a number of people to do the same thing and you get different results. Why is that? The difference is emotions - it's psychology. The problem is not in the knowledge, it's in the execution. Very few people can discipline themselves to execute the knowledge. It takes emotional discipline." 

Victor Sperandeo will be sharing his global macro outlook and his trading techniques with a select group of participants in an upcoming (March 22nd) Trader Master Class in New York City. You can learn more and sign up (class size is tightly limited) at the link above. 

I hope you enjoyed listening to this interview half as much as I enjoyed doing it. If you'd like to help us spread this discussion to more listeners, please share and retweet this post with your friends and readers by choosing from the ShareThis buttons below (email is included). Thank you for reading and come back often

If you're enjoying these posts and would like to see more, please subscribe to our free RSS updates and follow Finance Trends in real-time on Twitter and StockTwits. 

Related posts: 

1. Inner Voice of Trading: a lesson on ego and risk.

2. Nassim Taleb and Stan Druckenmiller on coming crisis (Bloomberg interviews). 

3. Lessons from Hedge Fund Market Wizards: Steve Clark (full post series).

Jim Rogers on Street Smarts and outsized investing returns

 
Jim Rogers has a new book out called Street Smarts and he's out talking about it, along with a few other favored subjects. 

Here are a few highlights from his recent interview with Open Currency: 

1. Asked about Germany's repatriation of gold from American vaults, Rogers says they're right to do it and he's surprised they haven't done it sooner. Recently, the Federal Reserve refused the Germans an audit of their own gold, and according to Rogers "it's clear some of that gold has been lent out, or something, as it will take 7 or 8 years to move the gold." 

2. Nearly all governments are printing money, for the first time in recorded history. All major banks are "printing" and debasing their currencies, which brings us to Rogers' favorite safe haven - hard assets. 

3. We are destroying all the people who save and invest. People are getting wiped out because interest rates are zero and below the rate of inflation. Those who borrowed huge amounts of money and went bust are being bailed out at the expense of those who saved. This is disastrous for society.

4. Is it possible for this generation's investors to replicate Quantum Fund's investment returns of 4,200% over 10 years? Rogers says such returns are entirely possible for those who work hard and are great investors. Of course not everyone will do it, but "there's gotta be someone who is smart enough and ambitious and driven enough" to achieve that. 

5. His new book, Street Smarts, contains much of what Jim has learned over the years and reflects on many of the things he has done. Jim's thought processes, mistakes, and successes are shared, along with his thoughts on how the world will look over the next 10-20+ years.

I've just received a review copy of Rogers' latest book, and I look forward to reading it. Look for a follow-up post on Street Smarts in the near future. Until then, you'll find a whole lot more from Jim Rogers in the posts below.

Related posts:

1. Jim Rogers' case for the Asian century (at CFA Atlanta via Jeffrey Tucker).

2. Jim Rogers interview: lessons on life and investing.

3. Jim Rogers interview with UK's Channel 4.

Pour some sugar on me

Sugar has been creeping higher lately, as seen on the daily futures chart. 

Here's the weekly view which shows the longer swings going back to 2006. 

Note the larger uptrends and ensuing deep retracements that have happened from the 2007 base, near 10 cents, on. 

Of course, the latest move is more of a slow edge higher off the recent price shelf of 23-24 cents. Sugar will have to clear the 30 cent level and the recent highs near 32 cents before any major move is evident on the weekly charts.

Here's the daily chart of SGG, the sugar ETN. I'll be watching for a pullback on lighter volume in the days ahead. Since I'm not active in the futures market, I'll consider a long position in SGG. 

Cautionary note: volume is very light in many of these single commodity ETNs. That may lead me to consider other, more liquid, trade opportunities instead.  

For those who'd like to read more about sugar from a futures trader's point of view, please see Peter Brandt's recent blog posts. He is an experienced trader and knows far more about the long-term price action, as well as building a trade via back month futures contracts.

Disclosure: no position in SB_F or SGG at the time of writing, may initiate long or short positions any time after. Educational post, not a recommendation for readers to buy/sell any security.

Felix Zulauf interview: storm clouds ahead

FT.com interviews Swiss investor, Felix Zulauf, who sees storm clouds ahead for world markets. 

Always worthwhile to hear Zulauf's views on the economy and investment markets. He feels we are entering a rough period ahead for emerging markets as they work to tighten inflation. He also anticipates a double dip in Europe, as well as a "tremendous slowing" in China. 

Felix also makes some interesting forecasts on the US dollar, bonds, commodities, and the shape of quantitative easing (QE) to come, which he believes will be global in nature.

Great response from Zulauf when asked about recent boom conditions in Germany: "I like to look forward not backwards". An excellent reminder that markets are forward looking in nature and "always run ahead of the fundamentals".

Commodities update: May futures performance

An infographic look into the dark heart of the commodities complex, via Finviz' 1 month futures performance chart (period ending June 1, 2011). 

As you can see, May has been no picnic for much of the commodities world. We saw a notable sell-off in crude oil in early May, coinciding with the reported killing of Osama bin Laden. 

Speaking of energy, natural gas has shown some strength in recent days. While it was slightly down on the month, the relatively clean energy option for electricity, heating, and transport has moved higher since the recent nuclear catastrophe in Japan.

Some soft commodities, such as cocoa and coffee, sold off or remained depressed. 

However, orange juice futures were able to post some nice gains for the month. In fact, along with oats, OJ was one of the top performers among the Finviz-tracked futures performers (up 8.7% for the month).

Of course, anyone keeping up with the markets knows of silver's recent plunge off its April highs. While silver may have to consolidate a bit more before resuming its long-term upward trend, gold weathered the early May rout quite well, and is now within striking distance of its early May high of $1,577.40 an ounce. 

That's a wrap. Thanks for checking in. You can follow Finance Trends on Twitter and StockTwits for more real-time info on the precious metals and investment markets.

Commodities rout: evening update

So by now, I'm sure most of you have digested much of the news surrounding this week's commodities rout.

What started out as a noteworthy plunge in silver, helped along by an 84% increase in margin requirements over the past two weeks, quickly spread across the commodities complex. From gold and crude oil to natural gas and heating oil, few were left unscathed.

Here's a quick summary of the day's events from Bloomberg:

"Commodities plunged the most since 2009, led by oil and silver, and stocks posted the biggest three-day drop since March as selling of energy futures drove down equities. The dollar strengthened and Treasuries jumped.

The Standard & Poor’s GSCI index of 24 commodities sank 6.5 percent at 4:32 p.m. in New York and has lost 9.9 percent this week. Oil tumbled 8.6 percent, the most in two years, to $99.80 a barrel. Silver dropped 8 percent, extending the biggest four- day slump since 1983 to 25 percent."

The article's quoted source went on to describe the selling as a "classic liquidation move in a crowded trade". Indeed, I've seen a fair bit of talk suggesting that margin increases in silver and the accompanying plunge led to forced selling of other assets, including stocks.

I posted this Finviz 1 week relative performance chart of commodities on Chart.ly earlier tonight.


As you'll see, orange juice and 30 year Treasury bonds held their own during this recent decline. Most of the other commodities were not as fortunate, with silver and crude oil leading the declines so far this week.

So far, we're hearing a lot to suggest that this is the start of a needed correction in an overheated commodities sector, rather than a harbinger of a longer-term bear market. We'll keep our eyes peeled and focused on the futures complex in the weeks ahead.

Related articles and posts.

1. Flash crash commodities edition with Greg Simmons & Co. - MissTrade.

2. What does Jim Rogers think of the silver crash? - Credit Writedowns.

Interview with futures trader, Peter Brandt

Mercenary Trader has been posting segments of an in-depth interview with Peter Brandt, trader and author of the recently published, Diary of a Professional Commodity Trader.

As I recently started reading Brandt's new book (which I'll try to review in the near future), and have been following him on StockTwits, I'm interested to hear more of his thoughts on trading and risk management.

You can check out the first few sections of MT's interview with Peter Brandt here at Peter's site, and check in with either blog for the forthcoming final part.

Finviz 1 month futures performance chart

Keeping it short and sweet. Here's a chart snapped earlier today, showing the 1 month relative performance view for futures tracked by Finviz. 

Natural gas, silver, and live cattle lead the gainers column. Cocoa, Nikkei, and orange juice futures put in the worst performance over the past month. 

Looking over the full chart, it seems that livestock and energy (crude oil, nat. gas) had a pretty good month, while softs (orange juice, sugar, coffee), metals, and grains tended to be laggards in March. 

Who knows what April will bring? One thing's certain, we'll be watching.

Weekly futures chart: Trend in oil prices

Taking a gander at the longer-term trend in crude oil prices via this Finviz weekly futures chart.

You can plainly see the bull move of 2007-2008 and the ensuing correction (plunge) from $140 that followed here. Then we see the bottoming process and rally off the early 2009 lows, when crude oil traded near $30 a barrel. The uptrend of the past two years has taken us back above $100 a barrel.

You'll also notice the COT (commitment of traders report) data below the price chart. It seems the commercial hedgers are the savvy players in the oil market. Their relatively infrequent net long exposure seems to occur near cyclical bottoms in crude oil prices. Of course, their net short positions tend to increase as the price of oil trends higher. 

Perhaps some of our commodity-savvy readers can fill us in on any useful ways to read & use the COT data. If you have some helpful insights, please add them in the comments.

Recap: Sunday $Macro chat on StockTwits

Last night on StockTwits, the Sunday $Macro gang convened for a global macro chat in 140 characters.

I hosted the chat, and with the help of some Sunday macro regulars and some new faces, the discussion was rolling in no time (see screenshot below).



Here's a partial recap of some important themes and debate points from our macro discussion:

• Early on the discussion centered around Japan and the currency interventions designed by the G7 nations and BOJ to make the Yen cheaper. As I was not following the currencies closely, it was good to have the other stream members fill me in and offer their views on the likely impact of the recent Yen strength on Japan's economy.

• The Yen discussion carried over into a thread on Japan's rebuilding efforts, and how a "repatriation of assets" held abroad might bring renewed Yen strength. Some debated the effect (if any) Japan's investors would have on global stock and commodity markets.

• Jack Barnes offered up the view that Japan would drive "an increase for refined hydrocarbons worldwide" as it sought to restock and repair its economy.

• Some debate followed on various beneficiaries in Japan's rebuilding phase. LNG, shippers, copper, and timber were some materials and sectors thought to offer upside in coming weeks and months. Demand for cotton was also discussed briefly on the stream.

• We discussed the media's coverage of the nuclear crisis in Japan. I highlighted James Altucher's recent post on the subject and asked the stream participants if the threats from this disaster were being over-amplified by the media. Some discussion on risks of nuclear power and plant siting ensued. Some stream members also highlighted the risks to food and the latest movements in grain prices.
  

• Our chat was moving along so well that some of the stream participants moved to keep chatting beyond the conventional 1 hour time slot, so we continued the discussion ("$macro overtime") for another 30 minutes. I cannot recall the last time this happened. It was great to see the discussion take off and branch off into many smaller side discussions on a variety of topics, including geopolitical events, war, and energy issues.

Lastly, I'd like to thank all the regular and newer $Macro 140 participants for their insights and questions on the stream. It's been great reviving the spirit of the old Sunday global macro chats (hosted by Gregor Macdonald) with you, and I'd especially like to thank Jim Gobetz for his help in bringing these discussions to life during the past few $Macro 140 sessions.

I'm hearing that StockTwits TV will be producing a new $Macro show with (I believe) Jack Barnes and Robert Sinn. I will be sure to tweet the details of this new program when I have them. See you on the stream!

Is QE fueling commodity, food price inflation?

Is the Federal Reserve's quantitative easing policy fueling inflation in asset prices, including the price of commodities and foodstuffs?

That seems to be the big question in recent days, as civil unrest in Egypt and in other parts of the Middle East and Asia demonstrate how long-simmering tensions can quickly boil over when grain prices rise and the spectre of food shortages looms over a population.

The recent situation recalls the commodity and grain price surges of 2007-2008, when food stocks were diminishing and shortages and worries over food riots were a global phenomenon (and news item). Then, as now, grain ethanol and "excess speculation" were offered up as contributing causes to rising food prices.

Image via: FAO Food Price Index.

So what about the role of quantitative easing and increased money creation by the Fed and other central banks? Might that sort of liquidity operation be fueling a rise in asset prices across the globe?

Or are prices rising due to demand from increased populations and rising wealth in emerging nations as Fed Chairman Ben Bernanke would have it?

Last night, while reading through some interesting reactions to this topic on Twitter, I decided to do a little quick research and see what sort of answers I could find. As rising food prices and global inflation have been a big theme with economists and macro analysts in recent months, it didn't take long to find some worthwhile articles and posts addressing this topic.

One particularly interesting article from October 2010 anticipated a great deal of what we currently see unfolding in the world. Here's an excerpt from, "Bernanke sets the world on fire":

"...In 2007-2008, Bernanke's loose monetary policy fueled unprecedented commodity price inflation. But Bernanke put the blame on China and on oil producers.

So far in 2010, the price of crude oil has jumped by 27%, of corn by 63%, of wheat by 84% , of sugar by 55% , and of soybeans by 24%. Without the Fed's unprecedented loose monetary and near-zero interest rates, it would have been highly unlikely for commodity prices to increase at these alarming rates...

...The frightening food price inflation has raised the specter of another food crisis and food riots... Since liquidity for commodity price inflation is abundant and cheap, food price inflation could run up, stall world economic growth and spread social unrest. "

Certainly many other factors, including the use of food for ethanol, growing populations, increasing standards of living (changing diets), weather events, and gradual loss of prime arable land to urbanization are playing a large role in ongoing food price rises.

Still, is it possible that the role of cheap money flowing into asset markets (including commodities) is an under-acknowledged spark fueling higher prices?

Related articles and posts:

1. Bernanke says policies boost stocks, not food prices - Barron's.

2. Countering the myth that "World is running out of food" - Big Picture Ag.

3. FAO food price index and reports - United Nations, FAO.

Cotton, palladium, silver lead futures gainers YTD

Did some charting on Finviz yesterday and came across this relative performance chart of the year's top futures gainers (year-to-date).

As you can see from the chart, cotton, palladium, and silver lead the performance YTD. We all know gold's been having a headline-grabbing year (+25%), but silver futures have handily outpaced the yellow metal (+71.5%).

Interesting to note that lumber is up 40% YTD, second only to top-performing cotton (+93%) in the soft commodities group. Lumber futures had a very poor showing in '06 - '08 as the housing bubble collapsed and the homebuilders fell on hard times. However, we saw a pickup in '09 and the rebound seems to have gathered steam all through 2010.

Natural gas futures were a bottom-dweller this year, down (-)27% YTD. There were a few other poor performers, but for the most part we see green on this chart, reflecting a year of strong commodity demand and QE (money printing) operations in the US.

As Jim Rogers has pointed out many times in recent interviews and talks, cheap money will only fuel advancing prices of in-demand commodities in the months and years ahead. Stay tuned for 2011.

Jim Rogers at Reuters 2011 Outlook Summit

Jim Rogers said that the US government's inflation data was "a sham" and that interest rates would be heading "much, much higher" in the next few years while speaking at the Reuters 2011 Outlook Summit.

You'll find video of his chat w/ Chrystia Freeland at Investment Postcards or you can check the related video links in this Reuters article to see the full panel discussion.

As usual, Jim pulls no punches while discussing Ben Bernanke's foibles as Fed Chairman and the difficulties facing the US and European economies as inflation and runaway deficits take their toll.

He also points out some potential bright spots that could come about if the US government were to reduce its out of control spending and simplify (or do away with) the tax burdens on its citizens. Long term strength of the developing economies, commodities, and the rise of Asia are also highlighted.

StockTwits TV interviews Jim Rogers

Through the magic of Skype and the internet, Howard Lindzon interviews Jim Rogers on StockTwits TV and pitches him a barrage of questions sent in by StockTwits members.

Everything is up for discussion here, from Rogers' opinion on stocks and commodities, to his early days working on Wall Street and running a hedge fund, as well as his more recent adventures. Also, plenty of focus on family life and raising his kids (who speak Mandarin and English) in Singapore.

Enjoy the discussion, and Happy Thanksgiving!

Jeremy Grantham 3Q letter - Night of the Living Fed

I know everyone's been looking for the recent 3Q 2010 GMO update from Jeremy Grantham, so I thought I'd post the Scribd doc. version here.

Tuck in and enjoy Grantham's macro view of the markets and the economy, from gold and commodities to real estate, stocks, and quantitative easing in, "Night of the Living Fed".


Night of the Living Fed Jeremy Grantham

CME's big day: clearing interest rate swaps

That big spike you see on the chart above is, partly, a reaction to today's news that CME Group would begin clearing interest rate swaps.

As Reuters points out, a huge chunk of the $615 trillion derivatives market is being forced onto exchanges and into clearinghouses thanks to recent reform legislation. Contracts that used to trade over the counter (OTC) between two private parties are now being cleared through exchanges. CME will compete in this area with LCH Clearnet and the Nasdaq OMX-backed IDCC.

Jeff Carter at Points and Figures has a timely post on CME entitled, "CME Group: Buy It, Close Your Eyes". As you can tell, it's mostly a bull case, but Jeff adds a few caveats and some straight talk about the CME's competition (and there political forces at work here too). Full disclosure: I have family who are long-time CBOT members and current CME shareholders.

When you're done reading Jeff's post on the CME, take a look at his home page for more great stuff on the markets, trading, and the city we call home, Chicago.

CNBC chats w/ Kyle Bass, Alan Fournier

CNBC took their porta-studio down to Texas to chat with Kyle Bass (Hayman Capital) and Alan Fournier (Pennant Capital) at the Barefoot Economic Summit earlier today.

Since I got a heads up on this interview from some folks in my Twitter stream, I thought I'd track down the interview clips from CNBC and post them here for all to see.

Kyle Bass is well known for his big picture macro views, and he's made some pointed remarks recently about the path the US is heading down given the Fed's quantitative easing efforts. You'll hear Bass compare the monetary situation in the US with the hyperinflationary episode of Weimar Germany, and the more recent case of Zimbabwe, in this discussion.

This interview also offers him a chance to elaborate a bit on his recent call to avoid stocks (in general) and instead look to real assets, such as commodities and gold, in an inflationary environment. Enjoy the discussion and the insights from Bass and Fournier in this 3 part interview.

CNBC talks with Kyle Bass & Alan Fournier at the Barefoot Economic Summit: Part 1, Part 2, Part 3.

Michael Burry bullish on farmland, gold

Michael Burry, the California investor who profited by foreseeing the subprime mortgage collapse, is investing in farmland, small tech companies and Asian stocks, and gold.

Bloomberg has the details:

" “...I believe that agriculture land -- productive agricultural land with water on site -- will be very valuable in the future,” Burry, 39, said in a Bloomberg Television interview scheduled for broadcast this morning in New York. “I’ve put a good amount of money into that.”

Burry, as head of Scion Capital LLC, prodded Wall Street banks in early 2005 to create credit-default swaps to bet against bonds backed by the riskiest home loans. The strategy paid off as borrowers defaulted, letting his investors more than quintuple their money from 2000 to 2008, according to Michael Lewis’s book “The Big Short” (Norton/Allen Lane).

Burry, who now manages his own money after shuttering the fund in 2008, said finding original investments is difficult because many trades are crowded and asset classes often move together.

“I’m interested in finding investments that aren’t just simply going to float up and down with the market,” he said. “The incredible correlation that we’re experiencing -- we’ve been experiencing for a number of years -- is problematic.”..."

With so many hedge funds and investment firms following the same research and stalking the same ideas, it seems the larger companies and sectors are crowded trades. Burry is going further afield with his entry into farmland and smaller Asian stocks; it will be interesting to see if rising inflation from global money printing leads cash-averse investors to pile into some of these areas in the next few years.

More on the issue of gold and paper money inflation, currency devaluation in Bloomberg's article. You'll also find video interviews with Burry on Bloomberg TV, so be sure to check out the video tabs.

For more on Michael Burry and his successful subprime trade, see, "Michael Burry explains subprime CDS trade", as well as Michael Lewis' discussion of Burry and The Big Short with Charlie Rose. You can also click the "Michael Burry" label in our post footer to find more.