A commodity boom led by derivatives from China

Posted: April 29, 2016 in Uncategorized
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This start of the year has been led by a commodity boom. Why is that.

Definitely nothing is changed in the market to warrant such a rally.

If you look through the money flow and the behavior of Chinese/ Hong Kong authorities – you find the answer and you will not like it.Dalian Commodity Exchange, Shanghai Futures Exchange and Zhengzhou Commodity Exchange just put new curbs in place

It seems that all the speculative money (specially Steel Rebar) that where driving the massive rally in the Chinese A share market turned to….commodities derivatives.

It is practically the same thing which two scarier features:

  • commodities influence the entire world
  • derivatives are inherently more dangerous

Insto analysts of Bank of America Merryl Lynch put it correctly ” it is like watching The Game of Thrones again, in the Game of Commodity Trading you win or you die”.

Last time in the Chinese A shares rally, you know how it ended if you played. You died.

This is really where the FED should intervene and help the PBOC (the FED has much more experience).

Capture Commoditiess

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