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Europe's energy prices are going through the roof and it's already making waves...
In Spain, PM Sanchez promised to reduce energy taxes AND 'redirect' company profits to reduce energy bills
This sweeping measure hasn't gone down well...
Italy is also looking to take action:
"Bro, it's just the commodities supercycle, everything's been going up"
Let's compare YTD Lumber & Iron Ore (blue) vs Coal & Nat. Gas (orange) 👇
Clearly there's something else going on here...
It's usually not just one thing either...
Maybe it's the EU and their mechanism to punish polluters with higher carbon prices... 👇
Maybe it's a gas supply crunch...
Concerns about tight supplies started with a prolonged cold winter that drained natural gas storage. Normally this would be refilled over the summer when demand for heating largely evaporates. But storage filling has not happened at the pace traders would have liked in 2021.
Russia has been sending less gas to Europe, for reasons fiercely debated in the industry. These range from Russia’s need to refill its own storage to suspicions that it is trying to pressure European governments, including Germany, to approve the start-up of the highly controversial Nord Stream 2 gas pipeline.
Surely, Russia would NEVER resort to such underhand tactics...
Overdependence on unreliable renewables such as wind power just aren't going to cut it.
Hopefully the uproar over increasing energy bills will force policymakers to accept the inevitable... 👇👇👇
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"COT positioning suggests that..."
You often see the COT report used as an explanation for a trade idea, but it really isn't anything magical.
While it's definitely something worth monitoring, it's just another tool in the box.
Take the recent AUD example.
Iron ore prices are falling, Australia's taken an economic hit with the slow vaccine rollout and there's every chance of a double dip recession, especially with China's economic issues.
Traders have had good reason to get shorter and shorter the AUD in recent months, and yet... the AUD has rallied over the past couple of weeks.
How can traders distinguish signal from noise? 👇
It only matters when it matters.
The COT report is most useful at market extremes, mainly when used together with other indicators/reasoning.
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Tax The Rich, Start A Socialist Utopia...
AOC's statement dress has generated a huge wave of coverage. 👇
Is it a fashion statement? Is it a display of hypocrisy? No, it's Luxury Beliefs!
Rob Henderson has done superb work on this and why these strange beliefs have become so common...
The 'old' status symbols have lost their prowess.
Any idiot can wear a '£545 Louis Vuitton bucket hat'... 👇
Nah, luxury beliefs are the status symbols now...
Hence the consumption, or even the sight of such goods, is inseparable from an odious suggestion of the lower levels of human life.” The affluent do not want to be seen with “common” goods. They view them as distasteful.
Today, it’s not just common goods they view as distasteful—it’s beliefs too. The affluent, dreading an “odious” designation, resist displaying commonplace beliefs. Those beliefs are for the little people. Instead, the upper class want to be seen displaying luxury beliefs.
Give it a read 👇