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Mystery of Missing U.S. Pigs, Swine Fever Spark Hog-Price Surge

Published: 09:24 26 Oct 2018 BST

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Comments of the Day

26 October 2018

 

 

Video commentary for October 26th 2018

 

 

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area.

Some of the topics covered include: Wall Street bounces but Amazon and Google down in the after hours, short term bonds oversold, Euro weak, China bouncing.

 

 

Japan's Record Shorts Hint Stocks Have Finally Bottomed

This trading note from Bloomberg may be of interest to subscribers. Here it is in full:

Japanese stocks may have finally bottomed after the ratio of short bets on shares trading on the Tokyo Stock Exchange climbed to a record high. Spikes in bearish bets indicate extreme pessimism and can lead to a short squeeze if stocks rebound, driving up prices further. When the ratio reached near current levels in March, it marked the start of a 9 percent rally over the next two months for the Topix index. The gauge has since lost all those gains and is trading near a one-year low amid growing concerns over upcoming corporate earnings and a slowdown in China’s economy.

 

Eoin Treacy's view

The Nikkei-225 broke below the trend mean in a dynamic manner this morning in sympathy with the wider corrective phase evident on major stock markets globally.

 

 

What's Wrong With the 2 Percent Inflation Target

This article by Paul Volcker may be of interest to subscribers. Here is a section:

Only once in the past century, in the 1930s, have we had deflation, serious deflation. In 2008–2009 there was cause for concern. The common characteristic of those two incidents was collapse of the financial system.

We can’t expect to prevent all financial excesses and recessions in the future. That is the pattern of history with free markets, financial innovation, and our innate “animal
spirits.”

The lesson, to me, is crystal clear. Deflation is a threat posed by a critical breakdown of the financial system. Slow growth and recurrent recessions without systemic financial disturbances, even the big recessions of 1975 and 1982, have not posed such a risk.

The real danger comes from encouraging or inadvertently tolerating rising inflation and its close cousin of extreme speculation and risk taking, in effect standing by while bubbles and excesses threaten financial markets. Ironically, the “easy money,” striving for a “little inflation” as a means of forestalling deflation, could, in the end, be what brings it about.

That is the basic lesson for monetary policy. It demands emphasis on price stability and prudent oversight of the financial system. Both of those requirements inexorably lead to the responsibilities of a central bank.

 

Eoin Treacy's view

It has been a very long time since Paul Volcker was the head of the Fed and there has been a distinct change of culture since then. The Fed is now a serial bubble blower and the decision to adopt quantitative easing has created massive excesses in the global economy, which the market is now exploring.

 

 

Mystery of Missing U.S. Pigs, Swine Fever Spark Hog-Price Surge

This article by Lydia Mulvany for Bloomberg may be of interest to subscribers. Here is a section:

For weeks now, traders have been expecting U.S. slaughter rates to jump as the government has consistently reported a swelling domestic herd this year. Hurricane Florence hit North Carolina, one of the top hog states, in mid-September, slowing down processing operations. But that bottleneck should have cleared by now, and analysts were expecting a sudden rush of hogs to market. Instead, slaughter rates have stayed low, raising questions about whether the animals were ever really there, said Rich Nelson, chief strategist at Allendale Inc. in McHenry, Illinois.

The lower-than-expected U.S. slaughter is coming at a time when a highly contagious, pig-eradicating virus is spreading through China, the world’s top pork consumer. African swine fever continues to spread in the country, with several new outbreaks reported this week. The combination of supply woes sent hog futures in Chicago up by the exchange limit of 3 cents on Wednesday to settle at 57.525 cents a pound. Prices have surged 11 percent this week.

“We don’t have this backup in market hogs like we expected,” Nelson said, adding that U.S. Department of Agriculture estimates for rising animal inventories may have been miscalculated.

 

Eoin Treacy's view

This sounds like a case of supply inelasticity meets rising demand.

 

 

Long-term themes review October 4th 2018

 

 

Eoin Treacy's view

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

 

 

The 49th year of The Chart Seminar

 

 

Eoin Treacy's view

The next Chart Seminar will be held on 12 and 13 November 2018 at The Army and Navy Club in London.

If you have an interest in attending an online Chart Seminar please contact Sarah and we will arrange times based on the time zones of those who wish to attend.

I am also in initial discussions with a potential partner about organising a New York Seminar.

If you would like to attend or have a suggestion for another venue please feel to reach out to Sarah at sarah@fullertreacymoney.com.  

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non EU residents are not liable for VAT). Subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

 

 

 

 

 

 

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