The Big Boys, page-569

G'day Orwell, thanks for the update.

The main reason I took position yesterday was due to new regulations designed to temper the commodity trading bubble in China. To give you an idea of the scale of the problem, some days this year have seen more IO contracts traded than China imports in a year! It has also now officially surpassed Oil as the most traded commodity.....yes Oil....let that soak in for a moment. This is putting global market stability at significant risk and I'd be very surprised if a few of the global heavy hitters haven't been in the ear of Xi Jinping.

Unfortunately, BOJ's lack of action yesterday completely blind-sided the market. Consequently, DXY had the lead boots on again and commodities took off. You could very well be right in that BHP could push up into that $22 range. In hindsight I should've waited for BOJ, but assumed it fait accompli (as did the rest of the market apparently), a pure school boy error. That said, BHP could come under pressure in the coming days due to action in China and never get to that target.

Additionally the market has yet to react to a more hawkish Fed. They removed the comments re: global instability, which brings June/July into play. PCE the preferred inflation measure for the Fed and has rallied strongly on the back of oil move. The core rate (ex energy and food) is also trending up and now at it's highest level since early 2013, so it appears lower oil prices are starting to slowly impact the rest of the economy. (GDP overnight is seasonal so take with a grain of salt).


Treasury yields are not pricing in ANY rate hike in 2016, so these along with USD will need to re-rate significantly higher if that proves wrong.

Finally, Japan is going to have to act soon. Their data is noting short of abysmal. Yellen talks about global risks, but Japan in not often discussed. They are coming front and centre to my mind. Yen cannot be sustained at these levels for long.

Looking at the chart, BHP seems to have run into some oblique resistance and has touched the 61.8 retracement of the October 15 high before backing off. Anything over 20 presents a good risk reward profile for me. Significant horizontal resistance up to 22 and then 24. I would add again at these levels. I've taken out a Jan Put so plenty of wriggle room time wise. I'm maintaining a $12 target this year.