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US Hog Herd Hit By Largest Monthly Drop Since 1999

US Hog Herd Hit By Largest Monthly Drop Since 1999

US hog herds experienced the most significant monthly drop in two decades, according to…

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This article was originally published by Zero Hedge

US Hog Herd Hit By Largest Monthly Drop Since 1999

US hog herds experienced the most significant monthly drop in two decades, according to new data from the USDA. The reason behind the drop is because farmers decreased hog-herd development over the last year due to labor disruptions at slaughterhouses plus high animal feed. 

USDA data showed the US hog herd was 3.9% lower in August than a year ago. It was the largest monthly drop since 1999 after analysts only expected a decline of about 1.7%, according to Bloomberg

On Monday, hog futures soared in Chicago after the news of tightening supply. Since contracts hit a seven-year high in June, they have plunged from $120 to $80 but have since recovered in recent days to $90. 

Supply chain woes at slaughterhouses, and declining cold pork storage in US warehouses, have pushed up pork consumer prices to record highs. 

Farmers are experiencing a challenging environment of skyrocketing feed prices and other commodity prices used to maintain and growing pig herds, along with the labor disruptions at slaughterhouses that sometimes force them to cull herds. 

Soaring supermarket meat prices have been devastating for working-poor families who allocate a high percentage of their incomes to basic and essential items. The Biden administration spent most of the year ignoring the dramatic increase in food prices and only addressed the issue earlier this month by blaming meatpackers. The administration even had the nerve to say that if meat prices are taken out of the equation, troubling grocery inflation would be lower. 

To sum up, shrinking hog herds means pork prices will stay high. 

Tyler Durden
Tue, 09/28/2021 – 20:25

Author: Tyler Durden

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WTI Crude Tops $85 For The First Time Since 2014 As Banks See Oil Surge Accelerating

WTI Crude Tops $85 For The First Time Since 2014 As Banks See Oil Surge Accelerating

It’s remarkable that just last April, West Texas Intermediate…

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WTI Crude Tops $85 For The First Time Since 2014 As Banks See Oil Surge Accelerating

It’s remarkable that just last April, West Texas Intermediate crude was trading at a negative $40. Well, fast forward to today when moments ago, the US black gold grade just topped $85 for the first time since 2014, the landmark in a global energy crunch that has seen prices soar. Brent traded about 150 cents higher as the spread between the two grades has narrowed sharply in recent weeks.

Oil has jumped in recent weeks as natural gas prices hit records; as a result of rising gas-to-oil switching overnight Goldman forecast that the surge in gas prices could add at least 1 million barrels a day to oil demand “with current gas forwards incentivizing this through winter.” In the note from Goldman commodity analyst Callum Bruce, the bank also estimated that global oil demand has surpassed 99 mb/d and will shortly hit its pre-COVID level of 100 mb/d as Asia rebounds post the Delta wave.

Goldman also cautioned that such persistence would pose upside risk to our $90/bbl year-end Brent price forecast (full note available to pro subs). Some more highlights from the Goldman note:

  • Goldman expects demand to remain near pre-COVID levels this winter even under average winter temperatures. Seasonality (+0.8 mb/d Dec-21 vs. Sep-21) and jet demand recovery (+0.5/+1.8 mb/d in Dec-21/Jul-22 respectively vs. Sep-21) will continue to drive demand higher, ensuring stock draws until mid-2022.
  • Goldman believes that neither the Chinese property sector challenges nor current oil price levels will derail this demand view.
    • First, Chinese demand remains strong, with potential COVID lockdowns likely to be brief. Further, gas-to-oil substitution in power and LNG trucking as well as higher coal mining are likely to be net bullish shocks relative to the potential demand losses from lower housing starts.
    • Second, Goldman estimates that oil prices are not high enough to generate demand destruction given falling energy intensity in DMs and rising income levels in EMs. Specifically, we estimate that the 2022 Brent price would need to reach $110/bbl to balance the deficit we expect through 1Q22 via the demand side alone.

The latest surge in the price of oil comes as OPEC+ are adding back output only gradually into a market where stockpiles are steadily declining and where JPMorgan warned on Friday, Cushing could be effectively empty in just a few weeks.

The advance in oil prices is the latest leg higher in a surge in broader energy costs that is adding inflationary pressure to the global economy as policymakers begin to taper stimulus. 

Meanwhile, keep an eye on gasoline prices. At a $3.387 nationwide average (with most metroareas seeing prices far higher) this is already the highest gasoline price since 2014. At the current rate of ascent, and should winter see an aggressive spike in gas usage as switching accelerates, it would not be surprising if gasoline takes out its all time highs of $4.11 set back in July 2008.

Needless to say, this will be an increasingly political issue for the Biden administration.

Tyler Durden
Mon, 10/25/2021 – 08:44

Author: Tyler Durden

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Bob Farrell: 10-Investing Rules For A “QE” Driven Market

A recent post on CNBC discussed Bob Farrell’s 10-Investing Rules. These rules have withstood the test of time as it relates to long-term investing.


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A recent post on CNBC discussed Bob Farrell’s 10-Investing Rules. These rules have withstood the test of time as it relates to long-term investing.

Here’s a list of Farrell’s 10-rules:

  1. Markets tend to return to the mean over time
  2. Excesses in one direction will lead to an opposite excess in the other direction
  3. There are no new eras — excesses are never permanent
  4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
  5. The public buys the most at the top and the least at the bottom
  6. Fear and greed are stronger than long-term resolve
  7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names
  8. Bear markets have three stages — sharp down, reflexive rebound and a drawn-out fundamental downtrend
  9. When all the experts and forecasts agree — something else is going to happen
  10. Bull markets are more fun than bear markets

However, given more than a decade of QE-driven bull market advance, I wondered what they might be like if Bob Farrell was alive today. Would he have changed his mind?

With this in mind, I present Bob Farrell’s 10-Investing Rules For A “QE” Driven Market. (Tounge firmly implanted into the cheek, of course.)

1) Markets Remain Deviated From The Long-Term Means Over Time

Bob believed that stock prices get anchored to their moving averages. As such, with regularity, prices must and will revert to and beyond those means over time.

However, as any young retail investor will tell you, such “boomer” ideas must be “put out to pasture,” as they say in Texas. All you need is a fresh round of “stimmies,” some “rocket emojis,” and you have all the ingredients necessary for a bull market.

Sure, prices certainly get overextended, but any dip is a buying opportunity because the “Fed put” ensures any downside is limited.

2) Excesses In One Direction (On The Upside) Lead To More Excesses

“Ole’ Boomer Bob” antiquated notion that markets, which can and do overshoot on the upside, will also overshoot on the downside, is also clearly wrong. The further markets swing to the upside, the higher they should go.

There is no reason not to buy stocks as long as there are low interest rates, liquidity, and a mobile trading app. Sure, prices are a “smidge” above fair value, but valuations are such an antiquated metric. Also, plenty of articles suggest the “P/E” ratios are terrible market timing devices, so why even pay attention to them?

Sure, the market-capitalization ratio is almost 3x what the economy can produce, but we have never been in a market like this before. With all the Fed and Government money paying for everything, there is no reason to be productive when everyone can stay home, trade stocks and play “Call of Duty – Warzone.”

3) There Are No New Eras – Except This Time As Excesses Are Permanent

There will always be some “new thing” that elicits speculative interest. Over the last 500 years, there were speculative bubbles involving everything from Tulip Bulbs to Railways, Real Estate to Technology, Emerging Markets (5 times) to Automobiles, Commodities, and Bitcoin.

Jeremy Grantham posted the following chart of 40-years of price bubbles in the markets. During the inflation phase, each got rationalized that “this time is different.” 

Bubbles Evident Pop, Technically Speaking: Bubbles Are Evident After They Pop

But Jeremy is an old “boomer” that doesn’t understand current markets.

Multiple media sources pen articles stating valuations don’t matter. As long as interest rates are low, the Fed provides liquidity; stocks can only go up. That is a much better narrative, and if I put out a 1-minute video on “Tik-Tok, I can get a bunch of followers.

4) Rapidly Rising Markets Go Further Than You Think, But Correct By Going Even Higher.

The reality is that excesses, such as we are seeing in the market now, can indeed go much further than logic would dictate. However, these excesses, as stated above, are never worked off simply by trading sideways. Instead, excessively high prices are “corrected” by prices just going higher in this new market.

That makes complete sense to me.

5) The Public Buys The Most And The Top, And More At The Next Top

After more than a decade of Fed interventions, investors believe that buying at the current “top” will be a bargain compared to an even higher top coming. Sure, logic would dictate the best time to invest is after a sell-off, but if you have “Diamond Hands,” you need to keep buying because prices will only go up.

6) Fear (Of Missing Out) And Greed Is All That Matters

As stated in Rule #5, emotions cloud your decisions and affect your long-term plan.

“Gains make us exuberant; they enhance well-being and promote optimism,” says Santa Clara University finance professor Meir Statman.  His studies of investor behavior show that “Losses bring sadness, disgust, fear, regret. Fear increases the sense of risk and some react by shunning stocks.”

What is clear is that Meir Statman does not have “Diamond Hands.” While he is correct, there are only two primary emotions any investor should have.

  1. FEAR – The “Fear Of Missing Out;” and,
  2. GREED – The “Cojones” to take out debt, lever up. and ramp your “risk bets” in this one way market.
Markets Minsky Moment, Technically Speaking: The Markets Next “Minsky Moment”
Markets Minsky Moment, Technically Speaking: The Markets Next “Minsky Moment”

In the words of Warren Buffett:

“Buy when people are fearful and sell when they are greedy.”

Clearly, “Boomer Buffett” doesn’t get it either. But, of course, he is the same idiot sitting on $150 billion in cash whining because he can’t find anything to buy. So if he was indeed an “Oracle,” why didn’t he load up on AMC and GameStop?

7) Markets Are Strongest When The Fed Is Dumping Liquidity Into The System

“Breadth is important. A rally on narrow breadth indicates limited participation and the chances of failure are above average. The market cannot continue to rally with just a few large-caps (generals) leading the way. Small and mid-caps (troops) must also be on board to give the rally credibility. A rally that “lifts all boats” indicates far-reaching strength and increases the chances of further gains.” – Every “Old” Technical Analyst

Sure thing, “Boomer.”

To crush the market, all you have to do is buy the 10-fundamentally worst companies that have the highest short-ratios, leverage it up with margin debt and options, and sit back. Then, the “ATM” will start spitting out money.

All you need to watch is for a change in the Fed.

The high correlation between the financial markets and the Federal Reserve interventions is all you need to know to navigate the market.

Those direct or psychological interventions are all you need to justify taking on all the speculative “risk” you muster.

8) Bear Markets Have Three Stages – Up, Up, and Up.

“We don’t have no stinkin’ bear markets.”

Any decline in the market is just a good reason to take on even more risk. Given the Fed will stop any market crash by injecting trillions in liquidity, buy.

After all, before the “economic shutdown,” I had to work three jobs (Uber, Lyft, and Amazon delivery) to make ends meet. Now, I sit at home, trade stocks, and make “TikTok” videos about all the money I am making. Plus, once I get to 100,000 followers, I increase my income by doing affiliate marketing and getting my followers to trade on Robinhood.

What could go wrong with that?

9) When All Experts Agree – Whatever They Agreed On Is Likely To Happen

Another old “boomer,” Sam Stovall, the investment strategist for Standard & Poor’s, once quipped:

“If everybody’s optimistic, who is left to buy? If everybody’s pessimistic, who’s left to sell?”

Well DUUHHHH!!! Who wants to sell? That is just stupid.

10) Bull Markets Are More Fun Because Bear Markets Don’t Happen Any Longer.

What should be clear by now to anyone is that after 12-years of monetary interventions, “Bear Markets” can no longer happen.

So, suck it up, quit your complaining, and “Party On Garth.”

This Time Isn’t Different

If you detected a hint of sarcasm in today’s post, don’t be surprised.

Like all rules on Wall Street, Bob Farrell’s rules are not hard and fast. There are always exceptions to every rule, and while history never repeats exactly, it often “rhymes” closely.

Nevertheless, these rules get ignored during periods of excess in markets as investors get swept up into the “greed” of the moment.

Yes, this time certainly seems different. However, a look back at history suggests it isn’t.

When the eventual reversion occurs, individuals, and even professional investors, try to justify their capital destruction.

 “I am a long term, fundamental value, investor. So these rules don’t really apply to me.”

No, you’re not. Yes, they do.

Individuals are long-term investors only as long as the markets are rising. Unfortunately, despite endless warnings, repeated suggestions, and outright recommendations, getting investors to manage portfolio risks gets lost in prolonged bull markets. Unfortunately, when the fear, desperation, and panic stages get reached, it is always too late to do anything about it.

Those with “Diamond Hands” will eventually sell at the worst possible time.

Just remember, “Old ‘Boomer Bob’” did warn you.

The post Bob Farrell’s 10-Investing Rules For A “QE” Driven Market appeared first on RIA.

Author: Lance Roberts

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The Market’s Fear of Stagflation Is Your Opportunity to Score VC-Style Gains

Suddenly, everyone and their best friend is worried about stagflation.
Source: Shutterstock
Long story short, that “transitory” inflation everyone…

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Suddenly, everyone and their best friend is worried about stagflation.

Source: Shutterstock

Long story short, that “transitory” inflation everyone was talking about earlier in the year is proving to be a lot less transitory and a lot more stubborn than anyone expected.

That’s because most of the world’s supply comes from Asia – which remains on quasi-lockdown due to Covid-19 – while most of the demand comes from North America and Europe – which are largely open at the current moment.

The result is this enormous supply-demand imbalance that is pushing prices higher, and keeping them there.

At the same time, the global economic recovery is losing momentum, as supply chain disruptions in developed economies are stifling growth while Covid-19 continues to hamper emerging economies.

The International Monetary Fund just issued a new economic outlook a few days ago, and in that outlook, the world’s leading economists basically said that the global economy is slowing rapidly.

Slowing growth… rising inflation… it looks a lot like the 1970s, which stock market historians dismiss as a “lost decade” due to gripping stagflation.

Now, to be clear, we do not agree with this thesis. We don’t think we are due for a decade of stagflation ahead, or really any period of stagflation. We see Asia coming back online in 2022. We see global consumer demand cooling. We see inflation subsiding and growth normalizing.

All will be fine.

However, we acknowledge that stagflation fears do exist, especially with a potential Fed taper on the horizon, and that’s what is causing so much turbulence in the stock market these days.

Our two cents? Ignore the volatility.

We’ve long told you that the stock market is unnecessarily short-sighted and overreacts to everything. That’s why when we say “follow the smart money,” we don’t mean to follow hedge fund managers – we mean follow venture capitalists.

VCs don’t react to near-term volatility and always stay focused on the big picture. As a result, they consistently double the performance of hedge funds every single year.

Well… what are those VCs doing in the face of rising stagflation fears? They’re pouring more money than ever into tech startups.

While the S&P 500 bounced around last quarter on stagflation fears, global venture funding soared 105% year-over-year to a record-high $158.2 billion.

The number of VC “mega-rounds” – or funding rounds in excess of $100 million – jumped 136% year-over-year to a record 409 mega-rounds.

In other words, VCs are staying bullish on tech in the face of stagflation fears.

You should follow their lead…

Forget stagflation fears. Follow the smart money, and pour into disruptive tech stocks – because, in the long run, they’re going to power through these stagflation fears and soar way, way higher.

That’s why I’d like to introduce to our flagship investment research product, Innovation Investor, an investment product dedicated entirely to investing in the world’s most innovative companies, transformative megatrends, and breakthrough technologies.

It’s a VC portfolio, applied to the stock market.

And, as you know, VC portfolios tend to crush stock market portfolios.

We have the utmost confidence Innovation Investor will do just over the next few years. And now… well, put frankly, right now represents the best time to join our research advisory.

Because, when you’re invested in world-changing companies, near-term weakness is always a buying opportunity.

Right now, we have one of those opportunities.

Are you going to take advantage of it?


Luke Lango

Editor, Hypergrowth Investing

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

The post The Market’s Fear of Stagflation Is Your Opportunity to Score VC-Style Gains appeared first on InvestorPlace.

Author: Luke Lango

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