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Melchett (very drunk): You twist and turn like a … twisty-turny thing. I say you are a weedy pigeon and you can call me Susan if it isn’t so. How fast do forecasters change their opinions? As we wrote some weeks back, the true fundamentals just don’t change as fast as the predictions coming from forecasters would seem to indicate. As far as energy and metals are concerned, there have been no demand-side drivers for maybe two years. I think the only thing that has kept oil prices up at all has been Libya and the spin about China coming from the bull lobby, which has also – somehow – managed to stop metals from collapsing.
Put simply, every piece of data is now a reason to trade or at least a reason to change one’s view. Long or even medium term considered prediction is out of the window. As the prospect of economic collapse and cumulative government defaults looms in front of them, the crowd is acting as if Armageddon is upon them and reacting to each and every piece of advice, rumour or news in case this could be their last chance to save themselves or their portfolios.
The last “bull theory” is that China’s soaring standard of living and rising middle-class demand will more than outweigh the loss of their export markets even if Europe and the USA slide into recession. I believe that argument is unsustainable in the face of facts, no matter which way you try to twist the data. There is very little demand for industrial commodities, base metals are NOT a proxy for buying the gold you missed a few hundred dollars ago and nor is crude oil.
In fact, the need either to churn out reams of opinion every day, commenting on the latest piece of data, or to fill the revolving 24-hour news channels with interviews giving a new slant on the economic picture is just producing noise. Behind the noise is a very serious fundamental problem – unpayable debts – and no amount of twisting and turning is going to change that.
Traders at Traderight write an off-the-cuff blog when moved to do so by the markets. Authorised and regulated in the UK by the Financial Services Authority (FSA). Member of the United States National Futures Assn (NFA). Registered with the US Commodity Futures Trading Commission (CFTC).