Comments on: What to Watch: Where the Commodity Money Flows http://briansullivan.blogs.foxbusiness.com/2008/09/03/what-to-watch-where-the-commodity-money-flows/ FOXBusiness Fri, 20 Nov 2009 18:24:21 -0500 http://wordpress.org/?v=2.8.5.2 hourly 1 By: Michael Kastner http://briansullivan.blogs.foxbusiness.com/2008/09/03/what-to-watch-where-the-commodity-money-flows/comment-page-1/#comment-751 Michael Kastner Wed, 03 Sep 2008 19:31:21 +0000 http://briansullivan.blogs.foxbusiness.com/?p=99#comment-751 Brian, Your observation of money flow is “spot on.” Observing the markets over the last six weeks, it’s clear that we’re in disequilibrium as the hot money flees losing, bubble-type trades and real money investors hide out in Treasury’s. In an attempt to find balance, there are 3 conflicting situations 1) the trend reversal trades (Commodities, energy, the dollar), 2) heightened volatility trading in stocks, characterized by sideways movement within a widening range, and 3) the credit market, which has been nearly devoid of volatility. Moreover, I agree that Treasury’s are not (and in fact are far from…) a perfect trade. While the 5-year Treasury note may look to be a safe place to hide, the Treasury has been ramping up new net issuance monthly. At some point, the flight to quality bid will leave the Treasury market and seek out risky assets and the virtuous circle will begin. When it does, it will be as exciting as a Mets/Angels World Series!!! Brian,
Your observation of money flow is “spot on.” Observing the markets over the last six weeks, it’s clear that we’re in disequilibrium as the hot money flees losing, bubble-type trades and real money investors hide out in Treasury’s. In an attempt to find balance, there are 3 conflicting situations 1) the trend reversal trades (Commodities, energy, the dollar), 2) heightened volatility trading in stocks, characterized by sideways movement within a widening range, and 3) the credit market, which has been nearly devoid of volatility.

Moreover, I agree that Treasury’s are not (and in fact are far from…) a perfect trade. While the 5-year Treasury note may look to be a safe place to hide, the Treasury has been ramping up new net issuance monthly. At some point, the flight to quality bid will leave the Treasury market and seek out risky assets and the virtuous circle will begin. When it does, it will be as exciting as a Mets/Angels World Series!!!

]]> By: Nate B. http://briansullivan.blogs.foxbusiness.com/2008/09/03/what-to-watch-where-the-commodity-money-flows/comment-page-1/#comment-746 Nate B. Wed, 03 Sep 2008 17:23:19 +0000 http://briansullivan.blogs.foxbusiness.com/?p=99#comment-746 My money will be kept in short term trades for now. As far as long term investments go, once the election cycle is over and people know what to expect in taxes - the money will surely flow heavy in one direction. I would hope by the end of the year, market conditions have improved and pro-capitalist McCain has been elected to office. Nothing would stiffen the money flow more towards stocks than a 13% tax hike on capital gains! My money will be kept in short term trades for now. As far as long term investments go, once the election cycle is over and people know what to expect in taxes – the money will surely flow heavy in one direction. I would hope by the end of the year, market conditions have improved and pro-capitalist McCain has been elected to office. Nothing would stiffen the money flow more towards stocks than a 13% tax hike on capital gains!

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