We spend a lot of time at Breakout talking about companies that have the most coveted thing on Wall Street right now: pricing power. The ability to raise prices and pass along your own rising input costs is pure gold, if you can manage it. Of course, there's also a flip side to this trade that Yahoo! Finance's Economics Editor and Columnist Dan Gross has seized on. It's currently roiling markets everywhere, and we call it ''the down payment effect.''
When people have to pay more for something -- amazingly! -- they don't want it as much anymore. "Whether it's houses, cars or commodities," Gross says, "when the down payment or out-of-pocket cost goes up, the price of the underlying entity goes down." This is true today with the margin limit for trading crude futures going up 25%, just as it was for silver and corn.Read More »from Dos Hombres: Price Matters and Other Observations