With corn and other food prices soaring, some firms will for sure make a few good deals. As the drought has spread around, the mighty commodities titans will be there to “sort it out”. Before proceeding to the article below, we suggest reading how Glencore plans making a killing.
With the US experiencing a rerun of the drought “Dust Bowl” days of the 1930s and Russia suffering a similar food crisis that could see Vladimir Putin’s government banning grain exports, the senior economist of the UN’s Food and Agriculture Organisation, Concepcion Calpe, told The Independent: “Private companies like Glencore are playing a game that will make them enormous profits.”
Let’s now turn to some thoughts by John Aziz.
From that sun which is truly ‘of this great world both eye and soul’ we derive our strength and our weakness, our success and our failure, our elation in commercial mania, and our despondency
and ruin in commercial collapse.
W.S. Jevons, 1909
With crop yields falling due to drought, and crop prices breaking out so much that some farmers are feeding their cows discarded candy, perhaps now is a good time to consider the slightly offbeat theories of English economist W.S. Jevons who believed that the business cycle is driven by the 11-year solar cycle:
W.S. Jevons and then his son H. S. Jevons believed that cyclical behaviour of solar activity cause changes in agricultural output and therefore general economic activity. This has been named the “sunspot” theory. Although sometimes regarded as bordering on the bizarre, it is not too farfetched. Non-irrigated agrarian societies obviously would suffer pronounced effects upon agricultural production (and therefore incomes) from climatic alterations. It follows that relative large variations in agricultural production would lead to variations in supporting industries (forward linkages) and then impacts upon industrial output which use raw materials from agriculture (backward linkages) and eventually overall economic activity.
Once again, the wise guys sold the top. In 2000 Goldman Sachs went public, in 2007 Blackstone went public, in 2011 Glencore went public, and the latest top seller is Facebook. Congratulations to the smart guys…
…and yes, FB is below the IPO price already.
Another no volume, no action day added. People have been busy buying lately, and volatility has collapsed. We are hearing the Goldilocks scenario about to unfold, while junior quants are telling us “time to sell vol”. Whatever one thinks of the market, please review what the market did did after the Real Smart Money sold. In 99 Goldman Sachs went public, in 2007 Blackrock went public, in June 2011, Glencore went public. This time, Facebook might just be selling the Top. On the other hand, many think “this time is different”….