Inflation Isn't Moderating, It is Consolidating before the Next Leg Up
Inflation numbers of late have been helped by the drop in fuel costs, the agricultural grains have been brought down in the futures market by the overplanting of corn, but eating out for the weekend where shrimp, steak, other seafood and vegetables are consumed at dinner brings home the idea that restaurant costs are only going up on the whole, and expect menu prices to continue to be raised at your favorite restaurant.
Lean hogs are up 26% year-over-year even after a sizable pullback in the futures market, the pork industry really got hit by a killer pig virus, but the trend in other meats for the year indicates that costs for this segment are broader-based than just the disease-specific issues.
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For example, Live Cattle futures are up 18% year-over-year due to
It has been a rough summer for the crude oil bulls. Way back in June as Middle East violence began to flare and reports of Russian meddling in Ukraine took center stage, the price of oil peaked at over $107. For a while, it looked like the August 2013 high of $112.24 was the next stop, but fortunes quickly changed.
As prices rallied from $100 at the beginning of June open interest, the total number of open positions in oil futures exploded higher. That open interest moved from 1.654 million contracts on June 1 to 1.76 million by the end of the month, an increase of 6.4%. Much of that increase was speculative long positions jumping on what they thought was the next big bullish move in crude oil, but they were wrong. By the end of June, the price of crude oil began moving lower.
A very bearish summer
- Stay long crude oil (ETF: DBO, USO, and OIL; Futures: CL).- The BUY rating was assigned at 84.03 on 6/19/2012.- The BUY rating has already helped investors receive potential profits of 13.91% before leverage.- Our target return is 24.80% before leverage.
Our investment analysts see greater upside on crude oil.
The dominant reason behind our expectation for decent performance in crude oil is the strength of the global economy. The cyclical picture in the global economy has generally been healthy. With gradually improving news on the economy, continued strength in corporate cash flows, and expanding private investment, we think the growth will persist into the next several quarters. With improving growth news and liquid financial conditions still in place, we think that the portion of energy commodities in the portfolio should now be quite substantial. And from that perspective our view on crude