Readings: Bespoke commodity charts, Dorsch on inflation, Credit Crunch by Satyajit Das
- Bespoke: Crossing the Line
. . . we highlight one year trading range charts of ten major commodities. Most of them are currently trading near the top of their historical ranges, but Oil, Gold, Wheat and now Coffee are trading well into overbought territory.
Note that Natural Gas is nowhere close to overbought yet.
A Food Commodity Index, which tracks a dozen agricultural raw materials used by food companies including wheat, barley, milk, cocoa and edible oils, show cost inflation of 21% this year – the biggest increase since the index started almost a decade ago. In the past 12-months, the price of milk futures have soared 70% on the Chicago Mercantile Exchange, and in most of Europe, is up 50% this year.
- Prudent Bear: Credit Crunch – The New Diet Snack for Financial Markets
As of August 2007, $300 billion of leveraged finance loans made by banks is effectively “orphaned” - they can’t be sold off. One bank recently offered $1 billion to a client to walk away from an underwriting commitment where it stood to lose more if the transaction proceeded. Another bank, active until recently in making multi-billion dollar commitments to private equity transaction, told clients that “they were not in leveraged lending business any more”.
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