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All this new money, stock markets rising, commodity currencies rising, it would seem the spare cash sloshing around is starting to push the price/cost of things up?

Will this be the start of the cost/pull/wage inflation?

The Aus Dollar is booming, is this carry trade or commodity based?

If so how long will it be until we start to import high cost inflation, are they bothered? :(

Edited by Panda

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Its all based on waves of liquidity, think about it..

2007 stocks/housing topped

early 2008 dollar bottomed, commodities topped, inflation was the theme

early 2009 everything bottomed, dollar topped, deflation was the theme

Now were seeing inflation themes are back, dollar bottom, commodities and stocks topping.

Everything is based on liquidity, because liquidity is all there is, not money, so as psycology or fear/optimism powers waves of liquidity everything rides on it. Its the most anomalous time in history to be looking at markets, you don't analyse one at a time, you analyse them all together.

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Its all based on waves of liquidity, think about it..

2007 stocks/housing topped

early 2008 dollar bottomed, commodities topped, inflation was the theme

early 2009 everything bottomed, dollar topped, deflation was the theme

Now were seeing inflation themes are back, dollar bottom, commodities and stocks topping.

Everything is based on liquidity, because liquidity is all there is, not money, so as psycology or fear/optimism powers waves of liquidity everything rides on it. Its the most anomalous time in history to be looking at markets, you don't analyse one at a time, you analyse them all together.

So where next? Commodity crash? The liquidity has to find a home? Property, Deposit? No Stocks/Commodities?Yes, but how high will they go?

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Its all based on waves of liquidity, think about it..

2007 stocks/housing topped

early 2008 dollar bottomed, commodities topped, inflation was the theme

early 2009 everything bottomed, dollar topped, deflation was the theme

Now were seeing inflation themes are back, dollar bottom, commodities and stocks topping.

Everything is based on liquidity, because liquidity is all there is, not money, so as psycology or fear/optimism powers waves of liquidity everything rides on it. Its the most anomalous time in history to be looking at markets, you don't analyse one at a time, you analyse them all together.

You are almost bang on, except about the inflation argument: have you seen what has been happening to the US treasury rates in the past 2 months? There is overliquidity and the bubble has been brewing in pretty much everything - haven't seen such euphoria in years.

Now, Realistbear will tell you that the smart money is going into bonds because they know it's deflation down the line and stupid people invest in commodities and stocks. If you insist on your inflation argument, the bond and credit investors are out of their depth.

IMO it's currently about setting up carry trades in just about everything, the chase for the leveraged yield is back and things people did not want to touch with a barge pole 1/2y ago are being squeezed upwards currently. Once there are forces (risk aversion) to unwind carry trades, everything except treasuries is likely to go down.

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Not everybody is out of work.

What needs to be thrown in the think tank here, is that many people are still paying into zombie pension funds and endowment policies, that are ending up in equities.

Not everybody keeps an eye on the investments in these products, fewer still have any comprehension of where their money goes.

As this money hits a market with low volumes it distorts it. I don't think it explains all the bounce, just a good part of it.

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http://www.bloomberg.com/apps/news?pid=206...id=aN1QyFidJWxA

How low will she go? Will the commodity buble burst, will the stck market rally tail off, is it deflation or inflation?

‘Funding Currency’

Benchmark interest rates are 0.5 percent in the U.K. and as low as zero in the U.S., compared with 3 percent in Australia, 7 percent in South Africa and 8.75 percent in Brazil. The yield gap lures investors to borrow low-cost funds and invest in higher-yielding assets in so-called carry trades.

Sterling will weaken in the coming months as the government needs to rein in spending and its central bank is likely to retain an expansionary monetary policy, BNP Paribas said.

“Sterling will degenerate from an investment into a funding currency,†said the analysts.

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http://www.bloomberg.com/apps/news?pid=new...id=a1B_ZBQfii8Q

Sept. 17 (Bloomberg) -- Private investors in China, the world’s largest metals user, have stockpiled “substantial†quantities of copper as the government ramps up stimulus spending to spur the economy, according to Sucden Financial Ltd.

Pig farmers and other speculators may have amassed more than 50,000 metric tons, Jeremy Goldwyn, who oversees business development in Asia for London-based Sucden, wrote in an e- mailed report after a visit to China. That’s about half the level of inventories tallied by the Shanghai Futures Exchange, which stood last week at a two-year high of 97,396 tons.

Sucden’s estimate underscores the difficulty analysts face in gauging metals demand in China amid increased speculation by retail investors, whose holdings remain outside the reporting framework undertaken by exchanges. Private investors in China also had as much as 20,000 tons of nickel, Goldwyn wrote.

“People who have nothing at all to do with the copper trade have been buying copper as a store of value, much like they would with gold,†said Jiang Mingjun, an analyst at Shanghai Oriental Futures Co.

Copper on the London Metal Exchange has more than doubled this year as China’s 4 trillion yuan ($586 billion) stimulus plan and record $1.1 trillion of lending in the first half spurred purchases of the metal used in construction and autos. The metal traded today at $6,470 a ton, which would value a holding of 50,000 tons at $324 million.

‘Private Stockpiles’

“Private stockpiles, built by many including the much- vaunted, pig-farming speculators, have clearly absorbed substantial quantities of metal,†Sucden’s Goldwyn said. “Much of this metal will remain out of the normal market place.â€

Scotia Capital Inc. analyst Liu Na highlighted the role of Chinese pig farmers and other private speculators in the metals markets in an Aug. 17 note that cited reports from state-owned China Central Television. These speculators may become “quick sellers†if sentiment turned, Liu said in that note.

To be sure, Sucden’s Goldwyn wrote that the stockpiles of copper and nickel held by farmers and others in China may “not be ‘dumped’ back in the foreseeable future as some have recently suggested, wherever prices go.†Goldwyn didn’t give a reason.

The metals holdings by pig-farmer investors and other private speculators give “the impression that there is strong demand in China,†said Jiang at Shanghai Oriental. “But it is actually those who take a pessimistic view of the economy and are looking to preserve their wealth who are buying.â€

Rising Imports

China’s imports of refined copper rose to a record 2.1 million tons in the first seven months, driven by purchases by the State Reserve Bureau and other consumers, and shortages of scrap. The State Reserve Bureau had contracted to take 300,000 to 400,000 tons of refined copper into its stockpiles from overseas this year, according to Macquarie Group Ltd.

“Restocking continues, though it seems to have moved further downstream, including manufacturers building end-product stocks,†Goldwyn wrote. In some industries, such as the makers of copper tubes for air-conditioners “demand is back to pre- crash levels stimulated by government incentives, and will show significant year-on-year gains in the coming weeks and months.â€

Edited by ParticleMan

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Is there really a commodity bubble or does the £ or $ in you pocket simply buy less.

In a depression demand for commodities decreases (notwithstanding copper hoarding by chinese pig farmers).

I dont see prices going up much but the unit of currency I use is the sovereign.

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You are almost bang on, except about the inflation argument: have you seen what has been happening to the US treasury rates in the past 2 months? There is overliquidity and the bubble has been brewing in pretty much everything - haven't seen such euphoria in years.

Now, Realistbear will tell you that the smart money is going into bonds because they know it's deflation down the line and stupid people invest in commodities and stocks. If you insist on your inflation argument, the bond and credit investors are out of their depth.

IMO it's currently about setting up carry trades in just about everything, the chase for the leveraged yield is back and things people did not want to touch with a barge pole 1/2y ago are being squeezed upwards currently. Once there are forces (risk aversion) to unwind carry trades, everything except treasuries is likely to go down.

Yes this is what I think, and the dollar will rocket too, as it did during the crisis. We will have 90%+ contraction in the money supply.

As you say Treasuries have already topped out, the same thing has happened with metals, gold, oil, its like a non-comformation of the stock market top.

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Its all based on waves of liquidity, think about it..

2007 stocks/housing topped

early 2008 dollar bottomed, commodities topped, inflation was the theme

early 2009 everything bottomed, dollar topped, deflation was the theme

Now were seeing inflation themes are back, dollar bottom, commodities and stocks topping.

Everything is based on liquidity, because liquidity is all there is, not money, so as psycology or fear/optimism powers waves of liquidity everything rides on it. Its the most anomalous time in history to be looking at markets, you don't analyse one at a time, you analyse them all together.

quite right

it is something of a repeat.

where there any good pointers as to when it was all about to go tits up?

i see the baltic dry index is well down already.

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Guest Parry aka GOD
Is there really a commodity bubble or does the £ or $ in you pocket simply buy less.

In a depression demand for commodities decreases (notwithstanding copper hoarding by chinese pig farmers).

I dont see prices going up much but the unit of currency I use is the sovereign.

Ever since QE was invented and put in the hands of evil, this has been a really fear. I always suspected a commodity bubble (human needs) would be leveraged using QE money to off-set the losses in the burst housing bubble.

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Very much my own feelings. This is not a bull market, fear is in charge.

Author's analysis is a bit logic-lite.

She claims there is a gold bubble and then says there is a national debt bubble with fear of default driving up gold price. It can't be both. Either it is an irrational bubble or a rational response

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Question is how much longer will the markets be rallying? The dead cat's upward trajectory must now be slowing and soon it will reverse course!!

Will that be before the end of QE or at the time off?

Timing is everything and the time to jump is approaching!!

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Question is how much longer will the markets be rallying? The dead cat's upward trajectory must now be slowing and soon it will reverse course!!

Will that be before the end of QE or at the time off?

Timing is everything and the time to jump is approaching!!

Six weeks max! ;) I need to buy a load of Oz dollars for my hols? ;) Otherwise its going to be one hell of an expensive trip! :(

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All this new money, stock markets rising, commodity currencies rising, it would seem the spare cash sloshing around is starting to push the price/cost of things up? Will this be the start of the cost/pull/wage inflation? (...) If so how long will it be until we start to import high cost inflation, are they bothered? :(

I think you are right. All this extra money must, will, at some point, cause inflation. Fundamentals will alwys prevail - in time. "Sentiments" and "expectations" only influence the short term. The question is WHEN fundamentals impose themselves over "expectations" - the timing of it?

This is indeed the most extraordinary moment in the economic history of the world. It is MUCH more complex than the 1930s, due to the huge interventions by governments now.

Years ago, in the 90s, I was working with international development and I had to research the Brazilian debt crisis of the 1980s. Despite Brazil having only about 1% of the world GDP at the time, it affected the whole world. Now, the current crisis was triggered by the "de facto" bankruptcy of the whole American and British financial systems! These 2 countries account for about a third of the world GDP! I can't imagine what will happen next.

And apparently nobody can. The "The Economist" had an article recently trying to analyse the situation, and concluded that we can have either hyperinflation, or deflation, or anything in between!

But I still think they are wrong though. We can't allow ourselves to be confused by all this "smoke and mirrors" talks about the complexities of markets and finances. I think traders get caught up in these short terms movements and instruments and lose the broader, longer term picture. The bottom line must be: too much money around, for the same amount of goods (or even fewer goods) = inflation!

I think...

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I just have this itchy feelin interest rates will start to head up, due to inflation expectations.

Merv is threatening to pull the base rate below 0, so negative, so to encourage lending, this is posturing, just idle threats, so this is pulling down sterling against commodity currency's.

Sooner hopefully, we are going to see inflation of essentials/commoditys, due to sterling at lows, importing inflation, but this 175bn of QE cash sloshing around has to find a home.

I think the 175 bn, will be the end, the end of QE, we will then get inflation, they will tell us inflation is about, sterling will pick up, the base rate will take a upward trjectory? Sometime between today and a year today? :lol:

This will not help either;

http://news.sky.com/skynews/Home/Business/...Pounds_In_Augus

The Chancellor has forecast public sector net borrowing will reach a record £175bn this year, with falling tax revenues being one of the main drivers.

August saw a 9.2% fall in tax receipts, bringing the total reduction in tax revenues to £23bn for the financial year so far.

Sooner or later this is all going to go BANG, it just cannot carry on!

Edited by Panda

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Sooner or later this is all going to go BANG, it just cannot carry on!

Of course. But how? When? And what is the best way to minimise our individual losses?

Perhaps it helps if we start trying to see the diferences between our UK crisis, the American, and the global.

The USA had a housing bubble about 20% overvalued, and we had about 30%. The rest of the world didn't have much. They were affected by reduced exports to us and USA, but I think will recover first, by dealing more with each other, in a few years (3-5?). The USA has an economy much more dynamic and diversified than us, and I guess will recover next (4-6?). But we had nothing but a huge bubble - not only in properties, but on finances, and consumers also, fuelled by debt. Our whole economy was a bubble. And we have only the City.

Our national productivity didn't grow at all in the past decade, to justify that "GDP growth". Think of its 2 main fundamentals: infrastructure and educational level of the labour force...

It was all debt based. It was all a bubble - the whole thing!

In short: yes, we are doomed.

It will take a decade or more to get back to our 2007 GDP. And we will be for ever behind countries we thought were "similarly rich" - Germany, France, BeNeLux, Scandinavia, etc.

(I have to stop here - work calls. Sorry.)

Edited by Tired of waiting

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