Morning Notes – 3/17/2022

Good Morning:

• As expected, someone was on the other side of those trades on the spikes in oil, wheat, nickel, etc.
• As I said before, it takes about a week for the bodies to start floating up.
• Actual commodities producers use options and futures to hedge or lock in prices. They are not traders per se, which is why commodities futures and options markets formed in the first place.
• Say you shorted your wheat crop to lock in prices, and prices double and triple overnight. But you have not harvested your crop yet. Guess what? You get a margin call.
• Trafigura (which trades hundreds of billion in commodities every year) – is facing “margin calls in the billions of dollars,” which means that the commodity “margin call doom loop” idea floated by repo guru Zoltan Pozsar is finally coming true.
• The European Federation of Energy Traders (EFET), a trade body that counts BP, Shell, and commodity traders Vitol and the margin-call stricken Trafigura as members, said the industry needed “time-limited emergency liquidity support to ensure that wholesale gas and power markets continued to function.”
• The EFET calls on governments and central banks to provide “emergency” assistance to avert a cash crunch as sharp price moves triggered by the Ukraine crisis strain commodity markets.
• This week reminds me that the next few years will be a true nightmare. Big money will come on the short side of the market.
• Bull markets condition you to avoid shorts, but they will pay handsomely over the next few years,
• Of course, this assumes the other side can honor the trade (see above).
• The Fed’s massive credit and liquidity creation, not traditional fundamentals, is behind current inflation.
• I am sick and tired of the Biden regime acting like the rest of us are as stupid as their fans. Pocahontas takes the cake.
• Is there something in the shot to help soften our judgment? It makes you wonder…
• The truth is that the Fed is responsible for any central bank’s most significant money and credit creation. Well-intentioned? Maybe. But they waited too long to rein it in.
• Yesterday, the Fed caught up with the market by raising 25 bps but did not announce the start of reducing its balance sheet. They instead said they would leave it for the meeting next month.
• The Fed is likely stalling as proper action will cause a recession that would jeopardize the mid-term election results for the cabal later this year.
• I am also worried that this regime will try coercive policies to stop prices from rising. Everyone will be blamed, such as “greedy business people” and “Putin,” but our state media won’t mention the real culprits.
• I have already heard about “rent controls.” Count on them. Then gasoline price controls, and then price controls on food. President Nixon tried price controls in 1971. It was a disaster.