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Cotton may be the fabric of our lives. But to Chinese speculators a few days ago, it was apparently seen as a golden ticket.
They traded 3.6 million contracts of the fabric last Friday, the most in more than five years, on the Zhengzhou Commodity Exchange. Each contract covers 5 metric tons. So even adjusting for double-counting, we’re talking about 41 million bales of cotton, per Bloomberg.
Folks, that’s enough to make 9 billion pairs of jeans — or enough to give one to every single person on Earth! That wild orgy of speculation pushed cotton prices up 19% in just four days.
But it’s not just cotton. Aluminum trading at the Shanghai Futures Exchange just quadrupled in a matter of days.
Apparently, “expert” investors in China decided they really like steel rebar futures, too. Enough rebar futures contracts traded in one recent day to cover 223 million metric tons. That’s more of the construction material than the country produces in an entire year! Prices soared around 60% as a result.
But wait, you say. Couldn’t this be actual producers or commodity customers looking to hedge against price risk, or lock in future supply?
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This is one conference call Don’t miss Mike Burnick hold Mike Larson’s feet to the fire in an emergency briefing on May 2nd at 2:00 PM Eastern Time. Mike Larson has agreed to detail the reasons why he has released his disturbing new forecast and NAME the companies he sees getting hit the hardest. |
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Not according to Bloomberg. One analyst quoted by the news service estimates up to 70% of the volume is coming from Chinese retail investors. They’re also only holding these futures contracts for an average of four hours.
Herein lies the fatal flaw of easy money: Central banks can create all the easy, cheap money they want … but they can’t control where it goes! The massive orgy of commodity speculation in China is just the latest in a long line of examples, both overseas and here at home, of easy money-fueled bubbles and busts.
Just last year, China poured hundreds of billions of yuan in stimulus into the markets. Retail investors took the funds and dog-piled into stocks, sending them soaring … only to get wiped out a few months later when stocks crashed.
[Read More – The Consequences of Reckless Lending – Mike Larson]
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| The Federal Reserve over-stimulated the U.S. economy in the late 1990s and again in the early 2000s. |
Here in the U.S., the Federal Reserve over-stimulated the economy in the late 1990s. That helped fuel the dot-com bubble and bust. Then they did it again in the early 2000s. That helped fuel the housing bubble and bust. Then they did it again after the Great Recession. That helped create the “Everything Bubble” … which is now starting to bust.
It’s an absolutely ridiculous way to manage economies. But judging from the ongoing actions of central banks here and abroad, they haven’t learned their lesson yet.
As an investor, all you can do is ride these boom/bust cycles for all they’re worth. That’s exactly why I’m doing my best to help subscribers and readers like you do just that. So again, I urge you to …
Make sure you read this TIME-SENSITIVE report I’ve just released on the threats our economy and markets are facing. All you have to do is click this link.
Join me at the MoneyShow Las Vegas from May 9-12 at Caesars Palace. I have two presentation slots at this invaluable gathering, which will feature more than 160 hours of educational classes, engaging panel discussions, an exhibit hall filled with industry-leading companies, live trading & software demos, and unsurpassed networking opportunities. Click here or call 800-970-4355 to register today (please mention priority code 040948).
Participate in the Money, Metals, & Mining Cruise this summer from July 10-17. Departing from the Port of Anchorage, Alaska, the Crystal Serenity will set sail for seven fabulous days through some of the most pristine wilderness and breathtaking vistas in the Pacific Northwest.
You will also visit popular ports-of-call like Sitka, Juneau, Skagway, and Vancouver — and you’ll do it aboard the cruise line named "World’s Best Large-Ship Cruise Line" by the readers of Travel + Leisure and Conde Nast Traveler magazines for the last 19 years.
[Read More – Yet ANOTHER Billionaire Warns About Coming Chaos – Mike Larson]
I’ll be joined on this journey with three other experts who have decades of experience tracking the gold and mining share markets. You can get more information by clicking this link or calling our representatives at 800-797-9519. Just be sure to ask for the Money, Metals, & Mining special rates when you call.
Until next time,
Mike Larson
P.S. Nothing will ever be the same again for you or for your family. The America we know and love will be no more. The fallout of this historic event will be horrific for the unprepared. It will trigger all-out panic — first in the U.S. bond market … and later in the stock market. It will destroy millions of jobs … sentence most Americans to a “dark age” of depression and poverty … send gold and silver prices careening higher … and push the U.S. government to the brink of collapse. Click here to learn how to protect you and your family in the upcoming crisis!Â
Recommended Articles by Mike Larson:
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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How much longer will this go on until Americans decide that the Chinese have become the enemy and demand that we tear up GATT and NAFTA and adopt a “Made In America” policy? Oh wait, which political party brought those trade agreements that so devastated the Middle Class and sent those millions of jobs overseas at great peril to our economy and manufacturing strength? Perhaps we might want to consider that political party, the enemy also, aye?
Hint: NAFTA was written and passed during the H W Bush administration with a Republican majority in Congress…. For those naysayer dimwits, it was a done deal when Clinton came to office… Really, go check it out on Google of Wikipedia or any other source not owned or funded by the GOP……
Time to drop your season ticket to the DC Kabuki Eagle. Sure it can be entertaining, but all should understand by now that both parties dance at the same cotillion & only the American People’s tax dollars are invited . Don’t believe me? Who brought us the TPP? Isn’t that just more of the same crony, corporate, globalist nonsense we see in “GATT & NAFTA”? Who recently voted in lock step to deny an audit of the Fed (Sorry, there was one lone Democrat who thought Americans have a right to know where all our national wealth has gone.). Why was this Administration’s Justice Department run for six years by a group of partners from the law firm Covington & Burling? If you ever want to know why not one banker sits in jail despite all their admitted fraud, then check that law firm’s client list (Hint: it’s bad for business to jail your own clients.)?
The corporate crony revolving door has been in place for a very, very long time & has flourished during the Administrations of both parties since at least Eisenhower’s MIC warning to us all (I myself suspect since at least 1913). BOTH PARTIES exist only to maintain their spot at the elites feeding trough. Further, I suspect no one currently in office for more than 2 or 3 terms has clean hands. We live in a country where it is 100% legal to bribe any politician (in the form of campaign finance or a contribution to their tax sheltered “foundations”) & where corporate attorneys are appointed to the very bureaucratic agencies created to regulate their clients (see particularly USDA & Treasury). Yet still many continue to be-LIE-ve that our Republic still represents the many rather than a tiny, international elite.
“All Wars are Bankers Wars”, “War is a Racket”, “War by Other Means”, “The Creature from Jekyll Island”, etc. Time for all of us to awaken.
Right, there is no difference, except that since 1929 $10,000 invested ONLY under Democratic Administrations would have grown to over $350,000 up until 2012 when the study was done….. To date it would be much higher…..
If you’d done the same ONLY in Republican Administrations it would have only grown to $11,000… In other words, you’d have been underwater…
No there is no difference, except there REALLY IS a difference….. And if I remember right, both parties have occupied the White House for roughly 30 some years each…
If you happen to take into account all of the wars caused by and under Democrap presidential administrations, there’s your economic growth. Republican administrations suffer from the demobilizing after democraps’ mismanaged foreign and domestic policies. So, are all of the lives of patriotic American men worth the few extra percentages in economic growth?
Yes and which candidate is farthest away from corporate rule? Trump. Which is closest to corporate rule? Clinton, always has been, always will be, despite her posturing to the contrary. What do you think about that , “eagle”?
The NAFTA also contains an escape clause. I haven’t seen ANY administration suggest it be invoked. There’s a reason for that. It makes great political chatter to blame trade agreements for problems caused by other forces but reality dictates that you put those forces to your advantage if you want to survive. If all those jeans Mike talks about were made in America they would cost you $500.00 a pair. If you enjoyed the inflation of the ’80’s or you want made in America to mean by illegal immigrants in unfit sweat shops then have at it.
Ht Jack.dont worry about the $500 jeans.The UK will make them for $200 with our illegal immigrants and at no extra cost will slap on a MADE IN USA label
Well, 495, your hero has been in the saddle for 7 years. Tell me, what has he done for us besides try to shift the blame as you constantly do? Please go troll elsewhere, no one here is interested in your political bile.
If you had a dine in an investment account of 401-K you would want to be kissing his hand for saving that. When he took office the markets had lost 60% in only 14 months at the hands of “do nothings” Cheney/bush, just as “do nothing” Hoover. Since March 9th 2009 all of your losses would have been recovered and you would know be at new highs… Of course, you have to have a dime in the market to know that, aye?
No, Hoover started the policies that Roosevelt just followed.
The markets were preparing for a hawkish response and instead we ended up with a can. Better to face the music and rebuild while learning from that lesson than forgetting what the lesson was all about after eight years. True the markets have improved but at the expense of so many other things like real job growth, reinvestment of capital, wages growth, genuine confidence in our own manufacturing. You can’t throw a party and expect everyone else to pay for it forever. Someone has to lose and would have been far better to see the wolves of Wall Street go down than millions of ‘mom an pop’ investors.
Just read, Eagle, that Obama is the first president not to see at least 3% growth in any year of his term. And isn’t he the one blowing his horn for the Trans Pacific Partnership (TPP)? That will doubtless take more jobs elsewhere.
Hi Mike
This explosion of Chinese speculation on the Zhengzhou Commodity Exchange has been showing up on other bourses. Share prices in some commodity rich countries have jumped disproportionately to their normal demand and supply volumes. It is a win for the quick and a trap for the foolhardy.
The win will continue for at least 2 years.
Right again Mike.
The Fed has never stimulated nor overstimulated the economy. It merely makes money available to banks. It is the banks that choose to lend it to a) individuals and small businesses, or b) to themselves and/or to large corporations. Money that is lent to individuals and small businesses goes into M1, a stimulant; and money going into stocks, bonds, commodities, and real estate (M2 – M1), is the choice of banks, not the Fed, An overstimulated economy is marked by inflation, something we do not have. Too much money going into stocks, bonds, commodities, and real estate pushes prices up and up ultimately resulting in speculation and bubbles. There is your problem.
It’s just a pity, that stocks, property and bond prices are not also included in Inflation figures…
Oh yes, back when we had such thing as the Retail Price Index (still used in some parts of Britain for example – by wage negotiators) the RPI includes property/rent/mortgage prices.
Let’s hope the population force those in the corridors of power to do so again…
W.
‘Just read about another effect of the Fed’s low interest rates. At a hearing by the MD Insurance Administration, a man told how, when he was 56, in 2001, he took out a long term care policy for he and his wife, with a reputable company. Cost, $2800/yr. In 2009, he got notice of an 11% increase – more later. Just told it was rising to $5000. He is 71, and retired on fixed income. The Insurance Admin., which caps premium increases at 15%, is in the hard place of wanting to protect policy holders and make sure companies can make good on policies. Some states don’t cap increases, and they can be upward of 100%. There used to be 100 companies licensed to offer such policies in the state – 80 have dropped out. They can’t invest safely to make a return on such policies anymore. New buyers of such policies turn up their noses at the cost asked. Low rates are killing the insurance industry, and harming existing policy holders.
I know the world or economists and others interested in the dismal science have settled on the “Bubble” as the metaphor of choice to describe our current predicament but I suggest that “Foie Gras” is a more accurate description of the worlds central bank policies.
The practice of over feeding the geese so as to fatten their livers for the purpose of making pate to me seems appropriate, as the practice never ends until they are slaughtered.
I for one am feeling stuffed and wondering how long it is till my liver is served to the bankers, brokers and politicians who have instituted and benefited from this practice.
Forgive them oh lord for they havnt got a clue. Thier is GOING to be a bear When it rains they cat h some water o their roofs The rest goes out to sea In a drought they catch no water on their roofs and they die of thirst I have searchred the world for seven long years and I cannot find one single resposible government or non goverment financial organisation with a usefull positive sustanable idea.Follow George Soros He says the bear cometh AND the bear shall cometh AND we dont want anymore silly mamby pamby from the IMF WHO if they had functioning brain would back the niciraguan canal BECAUSE the panama cannel cant get enough water in it which will discourage shipping from Texas / Europe to asia Will somebody take notice of the truth every so often Frank
Did someone ask for Obama’s accomplishments? Lemme know when to stop!
1. Signed an Executive Order on government contracting to fight waste and abuse.
2. Signed the Lilly Ledbetter Fair Pay Act, restoring basic protections against pay discrimination for women and other workers.
3. Renewed dialogue with NATO and other allies and partners on strategic issues.
4. Announced a plan to responsibly end the war in Iraq.
5. Provided funding to families of fallen soldiers have expenses covered to be on hand when the body arrives at Dover AFB.
6. Ended media blackout on war casualties and the return of fallen soldiers to Dover AFB.
7. Signed the American Recovery and Reinvestment Act which has created 2.1 million jobs (as of 12/31/09).
8. Launched Recovery.gov to track spending from the Recovery Act, an unprecedented step to provide transparency and accountability through technology.
9. Announced the “Making Home Affordable” home refinancing plan.
10. Launched a $15 billion plan to boost lending to small businesses.
11. Invested heavily in education both as a way to provide jobs now and lay the foundation for long-term prosperity.
12. Provided the Department of Veterans Affairs (VA) with more than $1.4 billion to improve services to America’s Veterans.
13. Signed an Executive Order establishing the White House Office of Urban Affairs.
14. Limited lobbyist’s access to the White House.
15. Issued an Presidential Memorandum to restore scientific integrity in government decision-making.
16. Answered questions at the first online town hall from the White House that were submitted and voted on transparently by the public at WhiteHouse.gov.
17. Established a central portal for Americans to find service opportunities.
18. Launched Business.gov – enabling conversation and online collaboration between small business owners, government representatives and industry experts in discussion forums relevant to starting and managing a business.
19. Appointed the first ever Federal Chief Information Officer to provide management and oversight over federal IT spending.
20. Signed the Children’s Health Insurance Reauthorization Act on February 4, 2009, which provides quality health care to 11 million kids – 4 million who were previously uninsured.
21. Issued an Executive Order repealing the Bush-Era restrictions on embryonic stem cell research.
22. Signed the Christopher and Dana Reeve Paralysis Act, the first piece of comprehensive legislation aimed at improving the lives of Americans living with paralysis.
23. Announced creation of a Joint Virtual Lifetime Electronic Record for members of the U.S. Armed Forces to improve quality of medical care.
24. Ended the previous stop-loss policy that kept soldiers in Iraq/Afghanistan longer than their enlistment date.
25. Committed to phasing out the expensive F-22 war plane and other outdates weapons systems, which weren’t even used or needed in Iraq/Afghanistan.
26. Provided federal support for stem-cell and new biomedical research.
27. Provided new federal funding for science and research labs.
28. Played a lead role in G-20 Summit that produced a $1.1 trillion deal to combat the global financial crisis.
29. Signed the Weapons Systems Acquisition Reform Act to stop fraud and wasteful spending in the defense procurement and contracting system.
30. Ordered the closure of the prison at Guantanamo Bay and a review of our detention and interrogation policy, and prohibited the use of torture.
31. Appointed Special Envoys for Climate Change, Southwest Asia, the Middle
East, Sudan, and a Special Representative for Afghanistan and Pakistan.
32. Empowered states to enact federal fuel efficiency standards above federal standards.
33. Increased infrastructure spending (roads, bridges, power plants) after years of neglect.
34. Increased minority access to capital.
35. Developed a comprehensive new strategy on Afghanistan and Pakistan that will help defeat Al Qaeda and authorized the deployment of more than 21,000 troops to Afghanistan.
36. Signed the Fraud Enforcement and Recovery Act which gives the federal government more tools to investigate and prosecute fraud, from lending to the financial system, and creates a bipartisan Financial Crisis Inquiry Commission to investigate the financial practices that brought us to this point.
37. Signed the Helping Families Save Their Homes Act.
38. Increased, for the first time in more than a decade, the fuel economy standards for Model Year 2011 for cars and trucks so they will get better mileage.
39. Issued a Presidential Memorandum to the Department of Energy to implement more aggressive efficiency standards for common household appliances.
40. Unveiled a program on Earth Day 2009 to develop the renewable energy projects on the waters of our Outer Continental Shelf that produce electricity from wind, wave, and ocean currents. These regulations will enable, for the first time ever, the nation to tap into our ocean’s vast sustainable resources to generate clean energy in an environmentally sound and safe manner.
41. Announced a new U.S.-Mexico border initiative.
42. Concluded cyberspace policy review.
43. Announced a strategy to address the international nuclear threat.
44. Established a new “U.S.-China Strategic and Economic Dialogue”.
45. Announced new policy steps towards Cuba.
46. Provided funding for advanced manufacturing technologies.
47. Issued a Presidential Memorandum on the Freedom of Information Act instructing the Attorney General to issue new guidelines to the government implementing those same principles of openness and transparency in the processing of FOIA requests.
48. Funded the design of a new Smithsonian National Museum of African American History scheduled to open on the National Mall in 2015.
49. The Executive Order on Presidential Records brings those principles to presidential records by giving the American people greater access to these historic documents, severely curtailing the ability to use executive privilege to shield those documents.
50. Signed the Edward M. Kennedy Serve America Act, a hallmark piece of legislation.
51. Signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act to protect Americans from unfair and deceptive credit card practices.
52. Signed an Executive Order establishing a White House Council on Women and Girls to provide a coordinated Federal response to the challenges confronted by women and girls and to ensure that all Cabinet and Cabinet-level agencies consider how their policies and programs impact women and
families.
53. Launched a U.S. financial and banking rescue plan.
54. Ordered secret detention facilities in Eastern Europe and elsewhere to be closed.
55. Ended the previous policy; the US now has a no torture policy and is in compliance with the Geneva Convention standards.
56. Launched U.S. Auto industry rescue plan.
57. Provided better body armor to our troops.
58. Authorized cutting the missile defense program by $1.4 billion in 2010.
59. Restarted the nuclear nonproliferation talks and building back up the nuclear inspection infrastructure/protocols.
60. Reengaged in the treaties/agreements to protect the Antarctic.
61. Reengaged in the agreements/talks on global warming and greenhouse gas emissions, and addressed the U.N. Climate Change Conference.
62. Supported the first steps of a legally-binding treaty to reduce mercury emissions worldwide.
63. Visited more countries and met with more world leaders than any president in his first six months in office.
64. Managed several natural disasters successfully, including severe winter ice storms and flooding in several states.
65. Provided new car tax credit.
66. Provided attractive tax write-offs for those who buy hybrid automobiles.
67. Purchased fuel efficient American-made fleet of vehicles for the federal government.
68. Endorsed Foreign Account Tax Compliance Act of 2009 that would close offshore tax havens.
69. Nominated Sonia Sotomayor to Supreme Court. She’s confirmed and becomes the first Hispanic Supreme Court justice.
70. Helped reverse a downward spiral of the stock market. On January 19, 2009, the last day of President Bush’s presidency, the Dow closed at 8,218.22. Today, the Dow closed at 10,309.24 (February 2010).
71. Earned an unprecedented success rate of 96.7% on winning congressional votes on issues where he took a position. He did even better than legendary arm-twister Lyndon Johnson who had a 93% success rate in 1965.
72. Provided affordable, high-quality child care to working families.
73. Restored America’s reputation as a global leader that will do the “right thing” in world affairs.
74. Issued an executive order to create the National Commission on Fiscal Responsibility and Reform.
75. Increased funding for student loans and pell grants for 2010 students.
76. Negotiated deal with Swiss banks to permit US government to gain access to records of tax evaders and criminals.
77. Provided tax credit to workers thus cutting taxes for 95% of America’s working families.
78. Cracked down on companies that deny sick pay, vacation and health insurance to workers by abusing the employee classification of independent contractor. Such companies also avoid paying Social Security, Medicare and unemployment insurance taxes for those workers.
79. Signed the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act that made it a federal crime to assault an individual because of his or her sexual orientation or gender identity.
80. Appointed the first Special Assistant to the President for Disability Policy.
81. Signed the Veterans Health Care Budget Reform and Transparency Act authorizing advance appropriations for the Department of Veterans Affairs by providing two-fiscal year budget authority thus enabling better medical care for veterans. Endorsed by the American Legion, American Veterans, Blinded Veter…ans Association, Disabled American Veterans, Jewish War Veterans, Military Officers Association, Military Order of the Purple Heart, Paralyzed Veterans of America and Vietnam Veterans of America.
82. Held impromptu press conference to urge Congress to investigate Anthem Blue Cross and other corporate health insurance companies that raise premiums in high amounts without explanation. Rep. Henry Waxman launches probe. In this case, Anthem Blue Cross wanted to raise premiums 39%. They have now put the increase on hold for two months (as of February 2010). Legislation preventing such increases pending.
83. Designated $1.5 billion from the Troubled Asset Relief Program to fund programs at local housing finance agencies in the states hardest hit by the housing crisis: California, Florida, Nevada, Arizona and Michigan. The MBA forecasts that foreclosures will peak in the last quarter of 2010.
84. Protected 300,000 education jobs, such as teachers, principals, librarians, and counselors through the Recovery Act that would have otherwise been lost.
85. Extended discounted COBRA health coverage for the nation’s unemployed from 9 months to 15 months. Workers laid off between September 1, 2008 and February 28, 2010 qualify.
86. Extended unemployment benefits for 2,000,000 unemployed Americans by 20 weeks. At the time the bill was signed 7,000 unemployed Americans were losing their unemployment benefits each day.
87. Eliminated federal funding for abstinence-only education which was significantly increased during the Bush Administration to $176 million annually.
88. Rescinded the Global Gag Rule.
89. Appointed the most diverse Cabinet in history including more women appointees than any other incoming president.
90. Committed to no permanent military bases in Iraq through the Defense Authorization Act. For your reference.
91. Provided tax credits to first-time home buyers through the Worker, Homeownership, and Business Assistance Act of 2009 to revitalize the U.S. housing market.
92. Provided the Department of Veterans Affairs the largest spending increase in 30 years to improve medical facilities and national cemeteries, and to assist states in acquiring or constructing state nursing homes and extended care facilities.
93. Strengthened the Endangered Species Act.
94. Empowered states that legalized medical marijuana to regulate themselves. Fourteen states have allowed some use of marijuana for medical purposes: Alaska, California, Colorado, Hawaii, Maryland, Michigan, Montana, Nevada, New Mexico, Oregon, Maryland, Rhode Island, Vermont and Washington.
95. Enhanced earth mapping.
96. Increased funding for national parks and forests in 2010, and plans to do it again for FY 2011.
97. Changed failing war strategy in Afghanistan.
98. Allocated special funding to the Labor Department to provide green job training to veterans.
99. Allocated funding to states and the Department of Homeland Security to save thousands of police or firefighter jobs from being cut during the recession.
100. Created and sustained 2.1 million jobs and stimulated the economy 3.5% [as of December 31, 2009] through the American Recovery and Reinvestment Act.
101. Signed on to the UN Convention on the Rights of Persons with Disabilities.
102. Responded with compassion and leadership to the earthquake in Haiti.
103. Signed the Ryan White HIV/AIDS Treatment Extension Act of 2009. The Act extends the Ryan White programs through 2013.
104. Ordered a review by the Sentencing Commission of mandatory minimum sentences.
105. Signed the Travel Promotion Act of 2010 to increase travel to the United States.
106. Expanded the Rural Energy for America Program and USDA energy grants to empower farmers that want to use renewable energy.
107. Increased funding to the Land and Water Conservation Fund.
108. Launched and extended the “Cash for Clunkers” program.
109. Donated his $1.4 million Nobel Prize to nonprofits.
110. Revitalized and empowered the EPA, OSHA and the SEC to protect workers and consumers by regulating business practices.
111. Signed the HIRE Act.
Sent from my Verizon Wireless 4G LTE smartphone
Nobody likes the International Monetary Fund, if anyone did, it would be a bad sign. For the IMF is a lender of last resort for national governments, it is the place they go for money when they are in trouble. And lenders of last resort are supposed to practice tough love, to give you what you need rather than what you want, and to force you to pull yourself together in the process. A warm, cuddly IMF wouldn’t be doing its job.