Tusker’s Bearish Commodity Outlook

Q1-2013 Tusker Investor letter. Market top, rallying on QE, displaced from weak fundamentals.  Handpicked commodities and indices that have recently faltered used as evidence: Pound, Sensex, Bovspa, China.  Similarly capital on margin is at all time highs, signaling market peak.  The point: the end of a 10-year commodity bubble caused by overproduction due to QE.

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  1. Bloomberg reports (3/18/13): Investors increased wagers on a commodity rally by the most in eight months as signs of a U.S. economic recovery bolstered the outlook for demand and drove rallies in crude oil, cotton, copper and gold. Hedge funds and other large speculators raised net-long positions across 18 U.S. futures and options in the week ended March 12 by 30 percent to 528,680 contracts, the biggest gain since July and up from a four-year low the previous week, U.S. Commodity Futures Trading Commission data show. Money managers raised bullish bets on corn by 39 percent, cotton holdings were the highest since 2010, and gold wagers increased 9 percent.

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