TPS

I found this interesting, but I know it will not sit well with my friends here. http://finance.yahoo.com/blogs/breakout/critics-damned-bernanke-getting-munson-141630347.html

Crap! You beat me to two responses in this thread, and you are correct with both. The double whammy of the payroll tax rise and gas prices will make this a dismal first quarter.

There is such a thing as trading up, but it's a little premature to start thinking about the 2014 draft before the 2013 draft...

we should've stopped a few pages ago when I said I agreed with most of what you said. :-)Your example is too simplified. The change is this: in either markets, who will dominate price when 80% of traders are commercial vs when 80% are financial? Once markets become dominated by speculative forces they become subject to bubbles or herd mentality like all financial markets. It's pretty clear there were two commodity bubbles, one in 2008 and the QE bubble of 2010-11. This doesn't preclude that prices haven't been influenced by factors you have mentioned. Personally, I think sophisticated investors have learned that their actions can put the brakes on their long bets by causing demand destruction, so we won't see extended price rises, unless justified by the fundamentals, like the previous two bubbles.

Interesting read on the second link:http://www.thewashingtonnote.com/archives/002471.php A quote from his letter to GWB: "An approach such as this would strengthen our ability across the board to deal with Iran. Our friends and allies would be more confident to stand with us if we seek to increase pressure, including tougher sanctions on Iran. It could create a historic new dynamic in US-Iran relations, in part forcing the Iranians to react to the possibility of better relations with the West. We should be prepared that any dialogue process with Iran will take time, and we should continue all efforts, as you have, to engage Iran from a position of strength. We should not wait to consider the option of bilateral talks until all other diplomatic options are exhausted. At that point, it could well be too late." And the author of the piece linked to said "I am in complete agreement" with the content of Hagel's letter. It would be good to have someone with an alternative POV rather than a team of lemmings. I'm sure the other items need to have some context as well, as opposed providing a list that makes a republican senator look like a radical Muslim...

Btw, in case you get bored, here are few other people who agree with my view... http://www.makefinancework.org/IMG/pdf/evidence_on_impact_of_commodity_speculation.pdf

Someone's in bad mood.

A good parody of the absurdity of Hagel being attacked for saying our interests don't always coincide with Israel's.

All of those collateral effects are related to increased spending and demand. QE has been operating because of the lack of demand. If QE has had an impact on underlying economic growth and demand, then I would tend to agree with you. As you stated earlier, the price of oil will fall if there is another recession, despite the quantity of money that's been pumped into the economy via QE. My argument re QE, as I wrote about with QE2, is that it initially caused a huge flow into oil (and other commodity) bets that raised the price above what the underlying fundamentals dictated. That couldn't and didn't last. There is no argument about the long run price determination.

Any piece that starts out by using the phrase "hero of the left," is a good indication of how it will conclude...

I think Byrd has really improved against the run over the past 2 years. I think he's a good fit into the new D. I'd be shocked if they don't use the tag on him.

What would prices be without monetary policy? What should be the 'correct price" in your view, that is given the current global demand-supply?

You provide conflicting influences. You say that the gap between consumption and production has narrowed, which should lower prices, but the saudi's spare capacity has shrunk, which should raise the risk premium. This is all in support of your claim that a whopping 3.5% price jump is due to money printing? Then of course none of this incorporates the various geopolitical risks that occurred during this period. One of your articles attributed a large run up in brent to the Iran embargo. Where's the QE dude? And despite the "relative" improvement in demand being greater than supply, it still is greater. Seems to me the better question is why aren't prices even higher?

Old stuff. Guess what's happening to the Saudi's "spare capacity" as we produce more and import less?

The entire point of the Saudis being able to manage prices somewhat is related to your point.

It's pretty simple, the marginal cost of producing the last barrel of oil puts a floor on the price, for the most part. The value has been estimated to be $85-90. This has nothing to do with monetary policy. Your Brent comment is ignorant, if by most used you mean actual consumption.

Provide a link to your data that shows this. The IEA data that I've seen on global demand shows supply below expected consumption. Not just a slow growth world, but also one prone to speculation with so much money concentrated at the top. There's a reason there has been a proliferation of new HFs.

Brent has essentially been below its April 2011 peak. As I said earlier in this thread and as was stated in the article from the FT today, the Saudiis adjust production to meet demand, so supply has not been chugging along; and from that data I have seen from the IEA, global demand has not declined, but it has slowed. If you have other sources, I'd like to see them.

It was posted on Bills web site I believe.http://blogs.buffalobills.com/2013/02/12/barnett-failed-physical/

You've missed the point. I've never said they are responsible for trend. Their dominance in the futures markets creates bigger short run movements away from trend. Yes, those bets can't be sustained and also create demand destruction, so prices come back to trend (a trend that has been flat for 2 years now). We are talking past each other. It's all been said.

I understand the point, prices move in long term trends. The difference is that I argue short term fluctuations are now dominated by financial bets, creating greater volatilty. You apparently can't see how futures markets dominated by investment flows has created a new restraint on economic growth, which is the process I describe. Keynes said it best: Yes, we all agree, speculators are fine and necessary, but not when they are the dominant force in a market. And just to add, I've certainly beat this horse to death, so we disagree and I'm clueless. You win.

I didn't see this posted anywhere, but a good piece on needs and possible draftees. http://sports.yahoo.com/news/nfl--2013-nfl-draft-team-needs-buffalo-bills-200829323.html

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/367d1436-75da-11e2-b702-00144feabdc0.html#ixzz2KsP8eyww http://www.ft.com/intl/cms/s/0/367d1436-75da-11e2-b702-00144feabdc0.html#axzz2KsOhcq2J From this morning's Financial Times: “The cuts  in Saudi production indicate Opec’s ability to fine-tune output to meet global appetite. The price ceiling may not be as well-articulated as the price floor, but it is clear that Saudi Arabia remains well placed to ensure a price environment that it desires,” says Gareth Lewis-Davies, energy commodity strategist at BNP Paribas. “Oil as an investment class has seen a surge of non-commercial money, which is driving prices higher. That means there is clear potential for a correction over the next one to three months,” says David Wech, head of research at Vienna-based JBC Energy. I'm going to have to drop this paper because they clearly only quote clueless people...

Maybe we're just talking past each other. I'm not talking about long periods. Think of it this way, if there are 10 traders and 2 are speculators while the rest are producers and consumers, then the real users/consumers dominate prices, and speculation has a very small impact. When 8 traders are speculators, their actions influence prices, especially when they believe markets will move in a particular direction. However, they can't push prices up or down for too long as the fundamentals eventually take over. As to your other point, as long as expansionary M-policy isn't expanding the economy and real demand, then money printing can't sustain higher commodity prices, which is why the price of oil hasn't changed in 2 years despite all of the "money printing."

The price of wti is exactly the same as it was 2 years ago, despite an additional $1 trillion of Fed buying. Explain it mr market.