TPS

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.

I'm sure I haven't done a good job of making my point...1. Speculators have always been acceptable forces in markets, but their influence was capped by position limits to ensure that commercial interests mainly dominated prices. Speculators were kept to about 20% of the market. 2. The 2000 CFMA essentially ended position limits on non-commercials, so financial flows now dominate price discovery. Tradititional speculators are a small part of the new financial flows caused by swaps, etfs, etns, etc. Financial players now account for almost 80% of the market. 3. The important part, They create greater volatility in the short term, and their bullish bets tend to push prices significantly above what the fundamentals would determine. All it takes is a whiff of recovery or some supply disruptions for prices to make a 10% jump. Since food and oil are demand inelastic, you can maintain the higher prices (higher than what the fundamentals alone would determine) for a few months, but prices pushed up by financial bets are unsustainable, and the game ends. At least until the next bout of good news, and it begins again. It's not a radical or clueless position: if the price discovery function of the futures markets is dominated by financial bets, it distorts the fundamental prices that would be determined by consumers and producers of commodities. As i said about the current increase, HFs were betting on a recovery based on some improving news; however, by driving up prices, they kill that which they perceived.

I think he should be a good fit in, and benefit from, Pettine's system, vs Wanny's vanilla system.

Yes, yes, yes, it's all just technical analysis...related to money printing...

And another article today... http://www.reuters.com/article/2013/02/13/energy-speculators-idUSL1N0BCHJS20130213 A I suppose GS, MIT, and the Fed are clueless too...

This is the reason I predicted the markets (S&P) would rise 15% last year, there's no place to put all of the money INVESTORs have from the Fed buying bonds. The impact comes from what investors decide to do with the additional funds. Investors are desperate for yield, and they'll look anywhere and everywhere. Look at what's happened to junk yields. Or was your real point that someone else says the government lies about inflation? It's a pretty simple test M, so we'll see how clueless i am. I made a prediction based on how i view the markets. It shouldn't take more than a month or two for this to happen, or not...

Your article stated that gas prices are the highest they've ever been "for this time of year." The articles I posted stated that bets by investors are the highest ever for this time of year, do you think it's just a coincidence? I guarantee you that HFs and other investors will bail from these bets very soon because the combination of higher prices and payroll tax is causing the economy to slow, so oil and gas inventories will rise, and this "mini bubble" will pop, all while the Fed continues to pump more liquidity into the system.

I'm sure this is just a coincidence... http://www.latimes.com/business/autos/la-fi-hy-betting-on-higher-gasoline-prices-20130211,0,6691385.story And then there are the bets on oil... http://www.reuters.com/article/2013/02/12/us-oil-speculators-gasoline-idUSBRE91B1L520130212

I looked at data going back to the 1970s, and there isn't much of a relationship until after 2000. I wonder what happened that year...?

And I say look in the mirror. You want to start from a point when the Great Recession caused prices to collapse, so of course you'll get a big % jump from a depressed level--you are the intellectual fraud pal. My point is that QE was ratcheted up several times since commodity prices came back from the crisis-induced lows. Seriously, you don't get that? You don't get it because it doesn't fit your theory. The Fed has pumped in an additional trillion dollars going back to late 2010, but prices are lower today. All you can say is, "well they are higher than their depressed levels." Any good theory would explain why additional rounds of QE have not caused commodity prices to maintain the trajectory they were on from late 2008 to 2010. No, as I wrote, how does the currency devaluation lead to higher prices of commodities? What is the mechanism where the additional money injected into the economy gets translated into higher commodity prices? The Fed doesn't hand people money, so how does it happen?

I agree with much of what you wrote. What is the transmission mechansim in which currency devaluation changes the price of oil? Ronnie is now considered a liberal given the swing to the right by the right! Says the guy who can't explain why commodity prices are lower today than they were 2 years ago, even though QE is ongoing. Maybe you can point me to a wiki you wrote where you explain it?

To quote Ronald Reagan, "Well, there you go again..."You continue to try to attribute things to me that YOU make up. If you want to find posts that back up your creations, please do. I'll be happy to debate them. Otherwise, STFU.

Maybe my response was too difficult for you to understand. There is no smoothly differentiable curve, either supply or demand. There are plots of points that will never fit on a smooth curve, but you can esimate a line of best fit using regressions.

Curves only exist in text books. In real life, there are general forces of supply and demand, but no curves. I'm not sure how you come to that conclusion, as I've said over and over that prices, like that of oil, are determined by the real forces of supply and demand over the longer run. The difference is I argue that financial players have the biggest influence in the short run, but their bets are government by underlying S&D in the longer run. I'm not sure how you can be so dense as to not see that.

Thanks, I thought I did too.

Here's the thread: http://forums.twobillsdrive.com/topic/131205-spr-release-targeted-at-speculators/page__st__40 As I stated, I supported the idea of using the SPR as "threat" against speculative froth. Of course it would have no long run impact. By definition any release would be about trying to impact the very short run. The idea, as I said earlier, is that the threat is used when the Saudis/Administration believe financial flows are behind any short term run ups.

Here's what was said: You: My response:

Supply reacts to demand in the current environment. Since oil "inventories" are stored in the ground, the Saudis have reacted when those "external forces" push prices above their target, which is about $110 for Brent, and when prices fall they cut output. Regarding WTI, BO has threatened to release oil from the SPR when its price exceeds $100. They (Saudis and their muslim brother BO) have done this when they think the underlying driver is financial, not real. The better question to ask, regarding this current argument, is what has caused oil (both Brent and WTI) to increase $10 in the past couple months? Without that increase and the refinery issue, gas prices are below last year's at this time, and that article would not have been written. Again, QE policies have been ongoing since fall 2008, and ratcheted up several times (end of 2010 and end of last summer), yet oil prices have been essentially flat for the past 2 years. The facts don't fit your theory.

Oh gosh, you mean refinery issues and positive employment data are behind this? Who would've guessed?