It was a wild ride this week, especially in commodities.  Everything peaked  on Tuesday, and at one point the broad commodity complex was outperforming the stock market by about 5%.  Then the exchanges started to raise trade margins, and speculators were forced to post cash, reduce, or close positions.  The result was a whopping sell-off that kept going all the way through the close today.

As for QE, it looks like a case of buy the rumor, buy the news, and sell the living shit out of the actual event.  QE cash injections (POMO) will be an ongoing thing for the foreseeable future, but if today is any indication, the Fed has been frontrun many times over.  The second half of this week took a lot of froth and short-term speculation out of the markets.  The start of next week will be very interesting, as it should be an indication of how much speculation on QE remains.

Results to date for our fund battle:

The wealth fund is still a bit ahead of the investment fund, but the difference is down to about one percent.  In the short term (especially early next week), the relative performance is likely to be based on how much speculation remains to be shaken out of risk assets.  In the longer term, I'm still a firm believer in wealth preservation over investment.  That won't change until the Fed stops debasing the dollar.

No changes to the Bernanke betting game.  See last week's post for the odds on the fate of Bernanke by the end of 2011.

Posted by: Hermit Dave at 01:48 PM | No Comments | Add Comment
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