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To: ecrire who wrote (8934)	5/22/2012 10:20:51 PM
From: Keith Feral	of 13213

US growth has been at the mercy of global growth for the past 10 years with hyper inflation of commodity currencies. Suddenly, Asia realizes they have enough PM's to last a long time and are backing away from the commodity steam roller. China and Korea were busy diversifying away from the dollar and Euro and into metals for years. Now, the dollar and the euro are outperforming every commodity and commodity currency out there. I'm not sure why China and Korea were so gung ho on the commodity carry trade to set up alternative currencies to protect themselves from something bad happening to the Dollar and the Euro. Those appear to be the 2 safest currencies out there at the moment. Korea started stockpiling massive gold and copper positions at the top of the market last year. I still see more downside than upside to metals over the next 3 to 6 months. Cantango was replaced with backwardation this year in most commodity assets, and they just can't seem to flush out the premiums. But, it's not nearly as bad as a couple weeks ago with oil at $110. Gas prices are the one commodity where there is still a lot of backwardation left in the pricing curve through the end of the year from $2.93 down to $2.55. I just noticed that gas prices are starting to reflect July options prices around $2.85 vs $2.93. As we move into June, that will bring gas prices back under $3.40. Still on target for $3.00 gas by the end of the year. The key for oil prices this year will preventing oil and gas prices from spiking 40% from their October lows.

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From: Keith Feral	5/22/2012 11:08:42 PM
	of 13213

French bond yields falling to 2.78%, Italian bond yields falling to 5.88% and Spanish bond yields falling back to 6.07%. Probably part of the reason why European markets were doing so well yesterday. French bond market is rapidly gaining credibilty by the day, and yields look like they want to get into the 2.5% level from last Sept. That would help get yields on Italian and Spanish bonds back towards much more sustainable levels - 5% would be a good start. The yield compression in Europe will keep some pressure on the Euro vs the dollar. I think the bond market in Europe will continue to tighten a noose around Greece. Let them keep screaming about systemic contagion all they want, the Euro bond markets are telling a different story. They are gaining confidence in all sovereign bonds every day for anyone hasn't declared participation in the Euro as being optional.

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To: Elroy who wrote (8940)	5/23/2012 12:42:10 AM
From: Keith Feral	of 13213

No such luck for the investor. Only way to participate in cheap leveraged loans is mREIT's. They get the benefit of cheap money. Japan put the nix on more intervention. That's 3 in a row between the US, ECB and BOJ. They seem determined to put a little monetary "discipline" back in the system. At the margin, doing nothing is almost as good as raising rates against the commodity orgy. Still, people keep calling for QE. Ain't gonna happen this year, with the exception of a rate cut by ECB if Greece goes haywire. Too many good things happening to the dollar and the euro compared to commodity currencies. As I look back at the highs in the dollar the past few years, I say there is no way the dollar can go much higher without raising interest rates. At the same time, it's easy to see that currencies in Brazil or Australia only have 1 way to go as they keep hacking away at interest rates. It could be years before commodity currencies start to appreciate again.

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