Coffee update: new lows, traders still very bearish.

Positive divergence on RSI though. At this point, I would say the market can continue to make marginal new lows for a while, but that a significant rally may be imminent. This market has continued demonstrate how relentless a downtrend can be after a mania (mid-2010 to mid-2011). As often as not, such a market returns to the base from which the ramp started (around $1.30/lb in this case). 

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Keynes vs. Hayek, Round 2

I like how at the end Keynes is pulled up to his feet and declared the victor (no matter how obvious a failure, the corrupt system keeps applying his theories). Then the Washington mandarins, Wall Street bigwigs and press all gather around him while the nerds come to congratulate Hayek. The press often implies that the Wall Street crowd loves Hayek and laissez-faire (“unrestrained markets” and all that), when in reality the moneyed political players support intervention since they are successful rent seekers and bailout recipients.

The key point that well-intentioned supporters of government (like most everyone in Europe) often miss is summed up in this phrase from Hayek:

“With political incentives, discretion’s a joke.
Those dials they’re twisting, just mirrors and smoke.”

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For those who haven’t seen it, this is the first video:

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And the real Hayek on Keynes:

What comes after a sugar high?

Sugar futures are down about 20% in one month (ahem):

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Look at that contracting triangle last fall — it is a thing of beauty and foretold higher prices, especially since DSI was only 20% by the end.

Let’s put this in perspective:

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I was stopped out of my short from 29 cents at 24 last week after tightening the stop too much. Once more the market schools me to let my winners run. I’ll be looking for a re-entry before long since there is a lot of dowside left.

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Here’s an earlier post from last fall with some historical charts.

Lagging Inflation Indicator: 99 Cent Only Stores Raising Top Price to 99.99 cents

The CEO is on Bloomberg right now, blaming commodity price increases for squeezing margins. The joke is that commodity prices across the board are down massively this summer, so this must be the implementation of a months-old management decision. Here’s another look at various commodity indexes from Bloomberg:

Retailers should prepare for the mother of all price wars and a dismal Christmas season.