Now that some of the steam has come out of the recently raging commodities sector, Breakout invited independent trader and author of Oil's Endless Bid to come on the show and tell us how to play the "stuff" sector now.
Encouragingly for those still trying to catch their wind after the silver and oil collapse, Dicker says the next few months will be a time for the price action to chill and collect itself. "A couple of things have taken a little bit of the steam out of the commodity trade," says the always opinionated Dicker. For one, he notes that the end (possibly) of QE2 has traders a bit unsure of how commodities will react to the end of the "free money trade which fuels a lot of the commodities' rise."
The other confounding commodity question is how the Glencore IPO will impact the markets. Glencore? Check out the full story here but, in summary, Glencore consists of a bunch of traders in Switzerland who seem to more or less control the price on the margin for a slew of commodities. He's not kidding. What's more, like most good traders, Dicker doesn't much mind or debate the implications of Glencore's hiding-in-plain-sight efforts to set the price for the components of the global economy.
Away from the evil Swiss cabal which controls our fate, Dicker also has uncertainties about the semi-communist dictatorial regime we generously refer to as a trading "partner." Dicker is one of many recent Breakout guests raising red flags over China's possible economic slowdown. Citing money manager Jim Chanos and others, Dicker notes the possibility that China is, as alleged, building "ghost towns" in order to keep demand looking robust. If Chinese demand collapses -- a possible if not probable outcome -- the base metals will obviously fall with it. If the long-awaited Chinese collapse does not manifest itself soon, Dicker says he could see as much as a 50 percent gain in Dr. Copper.
An uncertain trader is an idle trader, and that brings us back to where we came in: a less volatile outlook for commodities for the next few months.
Bottom line: Watch the dollar at around .75 vs. the euro, watch copper and $4 and see if the Chinese and/or Glencore cause a global implosion. Hey, I said Dicker wasn't going to be trading much -- not that he didn't have plenty of things to consider.
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- Jim Chanos
- base metals