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Mascoutah, Illinois | I don't think we have unless you count the massive move in wheat in 2008 or the big move in cotton in 2011.
It appears to me based on past history, this should be the year of a very sharp decline if (BIG WORD "IF") we have somewhat of a normal year. It may be difficult to define normal, but I would base it on a crop of 150bpa or better nationally.
However, with this being said we are in a unique situation in terms of the calender. Last year, the bean market did not make its move until the middle of February. The crude market is starting to get its mojo which should help propel grains higher. Corn is basically a dollar off its high and any kind of weather issue could set us up for a momentum move to the upside and springboard us to new highs. If the next few weeks play out like I think it will, the stock market will correct and the rotation will be into grains and other commodities just like we see it every spring. Money is flowing into stock funds similar to the magnitude of which we saw in February of 2000 a month before the huge tech correction. Why is this time different for me? Money is JUST STARTING to flow into the stock market and if the dam bursts in treasuries, we could see the mother of all tidal waves flow into equities and hard assets.
If you remember 2008, the stock market had peaked in the middle to latter part of 2007. As the stock market was heading south, money was pouring into commodities. This market is downright scary because the stock market is close to matching all time highs and the money flow is just starting. If the money flows keep coming and this is maybe the bottom of the first inning or the top of the second, we could have a huge march to the upside in front of us. Commodities should go up just because this money has to be invested. When we get to inning eight or nine in the stock market and the rotation of this cycle runs into hard assets just as in 2008, we could see prices none of us thought would ever be realistic.
It is just a thesis on my part and it could be totally dead wrong. I have to believe in the end, this is what Helicopter Ben wants in order for us to ever pay back our 16 trillion plus debt. We are sloshing around in money and liquidity and with the first phase of the stars aligning, massive wealth on paper could be created. Will it be another bust cycle like the rest of them? It sure will because every cycle ends in a bust. However, could this be the steroid era of markets? I believe so.
I was watching a piece on President Reagan and it highlighted his first term. As I sat there and for days after, I kept thinking to myself we could be seeing an economy and markets which are poised to rocket higher. Some of the pieces of the 80's and today really got me to thinking we could be setting up for numerous years of "up" markets. Are there plenty of issues to derail it? Of course there are. But when you start to think of all the money printed worldwide, one has to wonder when will this motherload of cash be used? Can these Central Banks absorb all of this liquidity to stop a parabolic move higher?
BLU, I am holding onto the notion money flow is going to trump many of the supply and demand numbers going forward. Should it be this way? No!!! The Central Bankers have orchestrated this concerto and when the whole symphony is playing at the same time, the numbers could be astounding. | |
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