The Bear in Winter
AS 2012 COMES to an end, there is one question that may be more important than whether bulls or bears are in control of the market. Were the Mayans right and the calendar truly will run out on December 21? Or, will there be a sunrise on December 22? Recently I was told a story that might shed some light on the
answer. A friend of mine was on a mission trip to Belize, and among the group was a gentleman of Mayan heritage. My friend asked him directly, “Are you concerned about the predicted end of the world?” The Mayan looked at him, smiled, and simply said, “No.” What’s my take on the Mayan calendar running out in 2012? For want of another slab of rock the following centuries are filled with senseless hubbub. Still, recent events could be enough to give even
the most hardened calendar cynics pause. The US has just come out of another divisive presidential election where, no matter who won, the financial health of the nation meant the budget would have to lose weight in dramatic fashion. China will also have a new president in 2013, though not much difference in political or economic ideology is expected to be seen as out with old and in with the new takes place. News regarding the European economy, on hiatus
as the US election moved toward its conclusion, re-emerged in November, dominated by talk of a double-dip recession. Even more disturbing to those looking for a sign that the end is near are the renewed hostilities in the Gaza Strip as the Israeli army and Hamas lob missiles back and forth at each other. Surely the familiar “not one stone here (Jerusalem) will be left on another” has been recalled by many as a precursor to the end of times. Last, but certainly not least, is the fact that
Mother Nature continues to play hardball. 2012 was filled with incredible weather events as some sort of weather problem hit agricultural production in South America, the United States, key parts of Europe, Australia, areas of China, and the Black Sea Region. This list is the Who’s Who of global agriculture and sets the stage for another explosive year in 2013, particularly if the lingering effects of 2012 aren’t corrected. If there is one word that strikes fear in the heart of the deepest
Mother Nature continues to play hardball ... 2012 was filled with incredible weather events
pockets in the investment world, it is uncertainty. Taking another look at the factors above, that’s all we see. Uncertainty. And it is that which could possibly keep bears from hibernating this winter, instead feasting on slow market bulls that strayed too far from the herd.
Continuous Commodity Index (CCI) calculated using commodities from a number of different sectors. Others use the S&P GSCI or the CRB Index, all reflecting the general trend of commodities, though different in their composition and sector weighting. Given the role the U.S. dollar index plays in the direction
December 2012 9
By Darin Newsom There are a number of global
commodity exchanges, but the most powerful are based in the United States and trade U.S. dollar backed products. This creates a natural inverse between moves in the U.S. dollar index (an index value of the U.S. dollar based on its relation to a basket of foreign currencies) and the commodity sector. The best way to view the latter is through a commodity index such as the
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