Commodity Slaughter Shouldn't Be Bought, Yet

Commodities slaughtered?

There is a sense that the big brokers not only financed the buying of mortgage bonds with repo money, but that they also may have financed the buying of commodities on a similar outrageous ratio.

I don't know if this is the case, but I do know that the group was certainly vulnerable to a correction. Oil went up $10 on no outages or disruptions. That seemed wrong. For now.

My problem with blaming the hedge funds for the commodities is that the companies themselves can't produce enough to satisfy countries like China. I doubt that their deals for coal for steel and for oil are affected by speculators. It is true that we are in a wildly deflationary moment. Think about the crunching of Bear. That's hardly inflationary.

I always want to buy the commodities after a couple of days of the charges of "liquidation of hedge funds" clock the group. In the end I think these are long-term trends up and I am not fretting them. You can't buy them while they are running.

You wait until they are down.

Today's really day one of the collapse. Wait three days and then give me a call, or, more accurately, read me, and I bet we will have to be buyers of this stuff.

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