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Brent
Austrian Economics is a school of thought, like Keynsian, its not the
economic well being of the Austrian economy. Your missing the point.
Knowing the difference betweeen Austrian & mainstream economics allows you
to be able to understand whats happening in Japan for example & whats
happening in Asia at the moment & why it occurred.. Austrian economics is
just one facet of fundamentals
You state " Economic forces are what move most everything but they are
difficult to fully understand and conceptualize"..... thats exactly my
point, . Without having a proper understanding of Fundamentals your not able
to understand whats going on.
Dont confuse this with trading. I said that a trader worth his salt
needs to understand fundamental but to ignore it in trading.
You keep on reffering to news, fundamentals is not about news, its
about "laws" that govern economics & markets.
how about we just leave the discussion at then
cheers
Peter
-----Original Message-----
From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Friday, 4 December 1998 9:32
Subject: Re: contango/backwardation
>Pete,
>
>This is getting close to splitting a hair but how do you get your
>information on Austrian Economics? Do you go there and personally collect
>data and measure it? I don't think so. You probably rely on the news like
>most all of us. I think that you are talking about how you utilize
>information that is most likely obtained from the news. Economics is simply
>the amalgamation of all input and output of an economic system and news is
>simply the reflection of that. Economic forces are what move most
everything
>but they are difficult to fully understand and conceptualize. In 1980
>everyone's idea of the economy didn't tell them that for the next 20 years
a
>bull market was going to ensue or everybody and especially the economists
>would be richer than Bill Gates. My point is that no one can possibly know
>all fundament input whether it comes from the news, the boardroom, or the
>local tavern. And one key missing piece of information can negate all the
>other input. For example a dock strike can cause a price rally even though
a
>large supply of something is produced and expected.
>
>Brent
>
>
>
>-----Original Message-----
>From: Peter [ KKD ] <derivatives@xxxxxxxxxxxxxx>
>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>Date: Thursday, December 03, 1998 12:49 PM
>Subject: Re: contango/backwardation
>
>
>>Brent
>> when I referr to fundamentals, Im not talking about news events (ie
>your
>>saddam comment), but rather things like "mainstrean econmics" vs Austrian
>>economics, capital flows, intermarket integration & correlations, being
>>aware of how portfolio mangers utilise CAPM & hence their capital
>allocation
>>to different asset sectors in general, what EMU integration means for
>>fiscal/monetary policy, & why it cant really work, hence what it implies
>for
>>US/EU risk premiums, hence ER, & int rates differentials. etc etc, etc etc
>> FUNNYmentals encompase a much wider scope than you mentioned
>>Peter
>>
>>-----Original Message-----
>>From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>>Date: Friday, 4 December 1998 6:23
>>Subject: Re: contango/backwardation
>>
>>
>>>Pete, although I agree with the sprit of your statement that it is
>>important
>>>to understand fundamentals, I don't believe that anyone understands
>>>fundamentals completly. For example you virtually have to be all knowing
>to
>>>know that Sadam ate something that gave him indigestion and kicks out
some
>>>UN guys or something. I followed a Copper backwardation for a while and
it
>>>was just market manipulation as near as I could tell. Surprise, there was
>>>more Copper in some wharehouse that they didn't count. You can't hardly
>>>believe a word of the news. So what else is new.
>>>
>>>Brent
>>>
>>>-----Original Message-----
>>>From: Peter [ KKD ] <derivatives@xxxxxxxxxxxxxx>
>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>>>Date: Thursday, December 03, 1998 9:35 AM
>>>Subject: Re: contango/backwardation
>>>
>>>
>>>>To be a trader worth your salt, you need to understand fundamentals
>>>>completely, but then when it comes to trading you need to forget about
it
>>>>totally. This however dosnt detract from its importance......... case in
>>>>point LTCM Euro positions
>>>>Peter
>>>>
>>>>-----Original Message-----
>>>>From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
>>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>>>>Date: Friday, 4 December 1998 3:20
>>>>Subject: Re: contango/backwardation
>>>>
>>>>
>>>>>I'll tell you what contango/backwardation means to me, it means that a
>>>hole
>>>>>bunch of fundamentalist traders are going to be taken to the cleaners.
>>>Just
>>>>>another good reason to trade 99% technically.
>>>>>
>>>>>Brent
>>>>>
>>>>>-----Original Message-----
>>>>>From: I4Lothian@xxxxxxx <I4Lothian@xxxxxxx>
>>>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>>>>>Date: Thursday, December 03, 1998 8:19 AM
>>>>>Subject: Re: contango/backwardation
>>>>>
>>>>>
>>>>>>You normally hear contango and backwardation in relation to New York
>>>>>>contracts. In Chicago the terms I hear used are a "Normal" market
(one
>>>>>with
>>>>>>carrying charges ), and an "Inverted" market (one with nearby prices
>>>>higher
>>>>>>than deferred prices). Just different terms to describe the same
>thing.
>>>>>>
>>>>>>An example of a normal market to an extreme is the Lean Hog market.
>>>There
>>>>>is
>>>>>>a glut of available nearby supply, not much capability to store
>product,
>>>>>and
>>>>>>weaker demand than anticipated when the farrowings were planned.
>>>>>>
>>>>>>Given our glut of supply in most all commodities, and weak worldwide
>>>>>demand,
>>>>>>there are not any significant inverted markets I can see right now.
>>>>>However,
>>>>>>the corn market of 1996 would be a good example. Nearby prices gained
>>>>>>dramatically on deferred prices.
>>>>>>
>>>>>>Sometimes markets will go inverted when there is a shortage of the
>>>>>commodity,
>>>>>>like the 1996 corn market. Other times you will see an inverted
market
>>>in
>>>>>the
>>>>>>first couple of months, despite a glut of supply. This will occur
>>>because
>>>>>the
>>>>>>owners of the commodity, like farmers holding and storing soybeans,
are
>>>>>>waiting for higher prices in the future to sell their crop. In the
>>>>>meantime,
>>>>>>processors of soybeans need to buy them to fulfill their nearby meal
>and
>>>>>oil
>>>>>>contracts. This creates a strong basis, which supports the nearby
>price
>>>>>due
>>>>>>to the relationship of the cash prices in the country to delivery
>values
>>>>of
>>>>>>the futures contracts.
>>>>>>
>>>>>>Regards,
>>>>>>
>>>>>>John J. Lothian
>>>>>>
>>>>>>Disclosure: Futures trading involves financial risk, lots of it!
>>>>>>
>>>>>>
>>>>>>In a message dated 12/3/98 7:53:09 AM Central Standard Time,
>>>>>stansan@xxxxxxx
>>>>>>writes:
>>>>>>
>>>>>><< Ketayun:
>>>>>> This is my understanding of these terms.
>>>>>> In commodities, e.g. oil, cocoa, etc., the contracts for
>>>>>> future delivery carry a higher price than contracts for
>>>>>> near term delivery.other factors being equal.
>>>>>> So a contract for oil expiring in 6 months would usually
>>>>>> cost more than the same contract expiring in 30 days.
>>>>>> This is due to several factors one of which is the carrying
>>>>>> cost. This normal situation is called "Contango" but I'm
>>>>>> not sure the origin of the term.
>>>>>>
>>>>>> However, a year ago long-delivery oil was priced below the
>>>>>> short-delivery oil and this unusual situation was referred
>>>>>> to as backwardation. I believe this term is appropriate
>>>>>> because the relationship of long term to short term is
>>>>>> backwards.
>>>>>>
>>>>>> I hope the RT'ers who deal in commodities can give
>>>>>> a better explanation.
>>>>>> BTW at the time of the backwardation in oil occurred
>>>>>> it was explained partly as due to temporary loss of
>>>>>> refinery capacity and was a near term factor only.
>>>>>>
>>>>>> Regards,
>>>>>> Stan R. >>
>>>>>>
>>>>>
>>>>>
>>>>
>>>>
>>>
>>>
>>
>>
>
>
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