Archive for the ‘Ethanol’ Category

Notes From Underground:Just A Few Quick Hitters After Last Night’s Deluge

March 11, 2013

Today was a very slow news day and thus little news to slow the steady rise of equities and the sell off in other asset classes. There was a story in the Financial Times about the Brazilian government cutting the tax on ethanol producers. The government is going to cut the tax on sugar-based ethanol producers by 80%–from 120 REALS per cubic meter to 25 REALS. It is an effort “… to support ethanol producers, many of whom are facing bankruptcy because of heavy debts and DIFFICULTIES COMPETING WITH SUBSIDISED PETROL PRICES IN BRAZIL.” There has been a global sugar surplus, which has kept pressure on sugar prices, but this move may help lift sugar prices and allow Brazilian growers to grab some of the agricultural profits that have supported the Brazilian economy. The U.S. economy is a corn-based ethanol producer and this has helped put upward pressure on global grain prices which has benefited Brazil’s farmers.

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Notes From Underground: Mario Draghi Reveals He’s A Fleetwood Mac Fan; Says GOLD IS A “Mystery to Me”

November 8, 2012

As today was central bank day in Europe, both the ECB and the BOE had rate decision meetings and left their current policies in place. The BOE did announce that it was “halting” the expansion of the QE¬† program at 375 billion pounds as it deems the recent increases in its bond buying program to be less effective. Recently, BOE Deputy Governors Paul Tucker and Charles Bean have stated that “asset purchases may no longer have the same impact on the economy as when first introduced.” (Bloomberg) The market had different interpretations as to the reason that why the BOE was curtailing the QE bond purchases. 1. The recent rise in inflation was causing the halt; or 2. the lessened impact of recent QE was going to mean that the bank was going to increase the funding for lending scheme in which the BOE provides incentives for commercial banks to lend more money to small and medium businesses. This is of interest for FED watchers because BOE Governor Mervyn King has been a trail blazer for creative central bank actions and the FOMC may mimic some of the BOE actions to get a boost to a low velocity of money situation.

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Notes From Underground: All My Words Come Back to Me in Shades of Mediocrity (Homeward Bound)

April 9, 2012

Friday’s weaker than expected JOBS REPORT caused AGITA in the BOND and EQUITY MARKETS. Early in the week, the markets had punished the BONDS and EQUITIES as the FOMC MINUTES caused the purveyors of QE3 as a SURE THING to stop, look and listen. The sounds that they had listened to were from the previous speech by Chairman Bernanke as he voiced his deep concerns about the persistent drag of unemployment on GDP. The rush of FED governors and District presidents to any microphone to undermine the chairman’s views caused the market to pause and reconsider its stance on possible FED normalizing rates quicker than the “extended period” language presumed. Stocks were under pressure and U.S. Treasuries were offered as hints of FED buying grabbed traders attention.

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Notes From Underground: S&P, The Insider’s Trading Edge

January 16, 2012

It is startling to think that the S&P downgrades could have any sort of effect on the markets. The sovereign debt markets have been telling those who are attentive that not all countries in the European Union are equal. Several of the GIIPS have had interest rate yields far above those of the German benchmark for almost two years. Even the French 10-year note has widened to 150 BASIS POINTS over the German 10-year BUND during the last six months. DO WE REALLY NEED S&P OR OTHER RATING AGENCIES TO CERTIFY WHAT THE MARKETS HAVE BEEN SAYING?

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