Month: July 2012

Supply Management

Hamilton

cow1cow2

Each one of these is now worth $28,000, not the meat, not the milk, just the quota!

Farmers are the politicians greatest supporters, provided they get what they want. The simple way it works is you vote for me, and I will give you a monopoly. The system keeps on giving un till it hits a brick wall.  Apparently many recipients are no longer small farmers but big biz. We are good at it in Canada, we have it for milk, beef, poultry, potash mining, grain transportation,communications and banking, just to mention a few. We are not the only ones, The US is big at this through subsidies, a slightly different approach with the same result. Europe, once upon a time, had its “butter mountain” and certainly the idea has not been abandoned entirely. New Zeeland seems to be the only bright star in the firmament; they went capitalist overnight.

It is no different when Central Bankers practise supply management when they set interest rates far away from equilibrium levels, it hurts certain groups and favours others all on an arbitrary, frivolous and capricious basis. Keep an eye on this politically hot potato, it may shed some light on the future of Central Banking.

HXD, Horizons Bets Pro 2x bear, update

Hamilton

HXD JUL 12 2012

We do not tire from recommending this ETF either as a hedge or simple to make money. It has been disappointing as every single time when things seem to fall in place there is another Central Bank ready to spoil the fun with a twist, a QE3, a bribe or whatever it takes. This one is now up for about a year and one half, seemingly forever. The faster moves should not be that far away. Again , see previous blogs; we expect this one to go above $40+ but, as we are wont to do, only show the more immediate possibilities. We do not expect a triangle here at all, but show it simple as a possibility.

TSX update

Hamilton

tsx jul 12 2012

EW requires a daily chart that I do not have. Barring that here is the take on what I do have. There is a very clear, almost text book wave 1 down, followed by a retracement precisely as would be expected, that is to the top of the minor triangle wave 4. Then we do almost the exact same thing but on a slightly smaller scale. Though it is not possible to unequivocally draw a conclusion, the evidence suggests  that this was 1-2, 1-2 of different degrees and that things are going to accelerate.  This could make sense considering that the wave shown is itself a wave 3, perhaps, in a bigger picture. Furthermore there is no alternation which lowers the chances of this being a single wave. Time will tell.