The Next Event, Deficit Reduction

Here we are providing a table of numbers for the markets we watch most closely, a combination of ETF’s and Commodities.  The first calculation column is the percentage change from September 1, 2010, the announcement of QE2, and the start of the whole event that we have witnessed.  The second calculation is from January 4th 2011, what we feel is an important measuring point for the final exuberance thrust of that event. 

 I look at the today, February 11th 2011, as the start of the deficit reduction event

 The markets are arranged in order of the most to least gain from September 1, 2010.  While the QE2 stimulis has had the effect of raising all boats, here and Europe, the effect on long-term inflation and eventually interest rates will be a significant negative at some point.  To me major Fiscal efforts to alleviate employment issues and rewind infrastructure would have been the direction to go over the past two years.  Even though the Democrats had the majority the blue dogs effectively killed the option.  Obviously, a couple of markets, namely cotton and corn, got caught in a supply tightness situation during this period.  Probably most interesting to the big picture is that T-Bonds have fallen significantly during the period, the opposite of what Bernanke predicted.  Also the decline of the China ETF “FXI” during this period is interesting to note.

Cotton                                     127.9    31.2

Sugar                                       59.0     -6.2

Silver                                       52.3      -2.8

Corn                                        51.2       12.2

 SMH  ( semi-Cond ETF )     41.1        9.2

 XLE  ( oil ETF )                    38.3        7.1    

Soybeans                               37.9        2.2

DBA  ( AG ETF )                  31.5         8.6

Copper                                 29.6         1.7

QQQQ (Nasdaq 100 ETF)  28.5        4.7

Heating Oil                          27.6       5.8

MOO  (Ag Stocks ETF)       27.6       5.8

XLY  (cons Discr ETF)        23.6       3.5

S&P 500 Index                   21.6        4.0

SPY  (S&P ETF)                  21.3        4.2

XLF  ( Fin ETF)                  19.7        3.9

IEV   (Euo Stocks ETF)     16.8        3.9

Wheat                                 13.9       6.2

IYR (real estate ETF)        11.0        3.6

Crude Oil                            9.3        -6.2

GLD  (gold ETF)                8.7        -2.4

Gold                                   8.5        -4.0 

FXE  (Euro Curr ETF)     5.6           1.0 

Cattle                                2.9           0.6

FXI  (China ETF)            2.4           -5.9

Dollar                             -5.5            -1.6

UUP (dollar ETF)          -5.6            -1.5

T-Bonds                          -9.7           -3.0

TLT  (T-bond ETF)       -15.0          -4.9

Natural Gas                   -15.2         -15.5 

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